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PT. TÜV NORD Indonesia

Audit Report

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RSPO ANNUAL SURVEILLANCE ASSESSMENT 2

PUBLIC SUMMARY REPORT

PT. TUVNORD Indonesia System Certification Management

Has assessed

PT. SAHABAT MEWAH dan MAKMUR

Date of assessment: July 2-6, 2012

Report Number: P&C-G-121

Head Office System Certification Management Perkantoran Hijau Arkadia Tower F, 7th Fl Suite 706 Jl. Let. Jend. TB Simatupang Kav. 88 Jakarta 12520 – Indonesia Tel : +6221 7883 7338 Fax : +6221 7883 7336

Laboratory Division Jl. Jababeka XVII E Blok U No. 27B Kawasan Industri Jababeka I Cikarang Bekasi 17530 – Indonesia Tel : +6221 898 403 18 – 19 Fax : +6221 898 403 20

Branch Office Intiland Tower 11th Fl, Suite 1E Jl. Panglima Sudirman 101-103 Surabaya 60271 - Indonesia Tel : +6231 53 444 54 Fax : +6231 53 4 44 82

President Director: Mr. Robert Napitupulu

Email: [email protected] Website: www.tuv-nord.com or www.tuev-nord.de


Audit Report

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List of Contents

1 Scope of The Certification Assessment ..............................................................................................................4 1.1 Type of Assessment (Mill, Estate and Mill, etc.).....................................................................................4 1.2 Location, mill, and or hectare statement ................................................................................................4 1.3 Description of Mills and Its Supply Bases (Fruit Sources)......................................................................4

1.3.1 Description of Mill(s)..................................................................................................................4 1.3.2 Description of Estate (Fruit Sources) ........................................................................................4

1.4 Date of Planting and Cycle.....................................................................Error! Bookmark not defined. 1.4.1 Replanting Program for Each Estate.........................................Error! Bookmark not defined. 1.4.2 Time-bound Plan (for other management units and justifications). ...........................................4

1.5 Other Certifications Held (ISO, etc.).......................................................................................................4 1.6 Organizational Information/Contact Person ...........................................................................................4 1.7 Tonnages Certified .................................................................................................................................4

2 Assessment Process...........................................................................................................................................4 2.1 Assessment Methodology (Program, Site Visits) ...................................................................................4

2.1.1 General Overview......................................................................................................................4 2.2 Date of Next Surveillance Visit ...............................................................................................................4 2.3 Lead Assessor/Assessment Team.........................................................................................................4

2.3.1 Lead Assessori..........................................................................................................................4 2.3.2 Assessment Team Members.....................................................................................................4

2.4 Certification Body ...................................................................................................................................4 2.5 Outline of How Stakeholder Consultation Was Managed ......................Error! Bookmark not defined.

2.5.1 Summary ...................................................................................Error! Bookmark not defined. 2.5.2 List of Contacted Stakeholders .................................................Error! Bookmark not defined.

3 Assessment Findings ..........................................................................................................................................4 3.1 Summary of the Findings by Criteria ......................................................................................................4 3.2 Identified Non Conformances.................................................................................................................4

3.2.1 Detail of Non Conformity ...........................................................................................................4 3.2.2 Resume of Audit Results...........................................................................................................4

3.3 Issues Raised by Stakeholders ..............................................................Error! Bookmark not defined.


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4 Certified Organization’s Acknowledgement of Internal Responsibility ................................................................4 4.1 Formal Sign-off of Assessment Findings................................................Error! Bookmark not defined.


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1 Scope of the Certification Assessment

1.1 Type of Assessment (Mill, Estate and Mill, etc.)

The scope of RSPO annual surveillance assessment phase 2 for PT Sahabat Mewah dan Makmur (herein after called as ASA-2 SMM) includes the production from 1(one) palm oil mill and 5 (five) company owned estates, using Indonesia National Interpretation (INA-NI) on Indicators and Guidance ver. May, 2008. SMM RSPO membership number: 1-0084-09-000-00. SMM Certificate number: TNI –RSPO 005.2009

07-11.12.2009, Date of certification: 06.01.2011 and valid until 2016.01.05

1.2 Location of Mill and Estates

GPS GPS Name of Mill and

Estate Location

E N

JKM Jangkang Mill Desa Jangkang , Kecamatan Dendang 33464, Kabupaten Belitung Timur, Propinsi Bangka Belitung – Indonesia

107° 52' 30.4" 02° 59' 55.2"

JKE

Jangkang Estate Desa Jangkang, Kecamatan 33464 Dendang, Kabupaten Belitung Timur, Propinsi Bangka Belitung – Indonesia

107° 52' 28,1"

02° 59' 45.0"

BLE

Balok Estate Desa Balok, Kecamatan Dendang, Kabupaten Belitung Timur, Propinsi Bangka Belitung – Indonesia

107° 54' 53.9"

03° 02' 00.8"

LJE

Ladang Jaya Estate Desa Jangkang, Kecamatan Dendang, Kab. Belitung Timur, Propinsi Bangka Belitung – Indonesia

107° 53' 00.2"

02° 36' 43.3"

SBE

Sari Bunga Estate Desa Nyuruk, Kecamatan Dendang, Kabupaten Belitung Timur, Propinsi Bangka Belitung – Indonesia

107° 52' 11.3"

02° 55' 16.0"

ARE Air Ruak Estate Desa Simpang Tiga Kecamatan Simpang Renggiang, Kabupaten Belitung Timur, Propinsi Bangka Belitung - Indonesia

107° 56' 03.8" 02° 59' 59.9"

Figure 1: Map of SMM location

1.3 Description of Mill and Its Supply Bases (Fruit Sources)

1.3.1 Description of Mill

Certification volume

2009 (ton)

Actual production

2010 (ton)

Actual production

in 2011 (ton)

Projected

production

2012 (ton) Name of mill Mill Capacity

(ton/hour)

CPO PK CPO PK CPO PK CPO PK

Jangkang Mill 65, 518 13,977 60,166 13,836 62,931.56 13,531.99 70,063 14,750

1.3.2 Description of Supply Bases (Fruit Sources)

Fresh Fruit Bunch (FFB) for Jangkang mill is supplied by five (5) estates owned by SMM. In

calendar year 2012, each estate with distinguish planted areas could supply FFB to Jangkang

mill as much as shown below.

Table 1-1 Description of supply base (fruit sources)

Estates

Certified volume

in 2009

Actual production in 2010

Actual production in

2011

Projection in 2012

Jangkang Estate 58,571.69 56,426.74 59,414.00 66,192.00

Balok Estate 59,904.81 56,458.30 58,530.00 65,030.00

Ladang Jaya Estate 45,052.65 41,990.35 43,373.00 41,662.00

Sari Bunga Estate 38,451.47 36,196.32 36,840.00 45,014.00

Air Ruak Estate 71,009.69 71,167.01 79,451.00 77,102.00 Total

272,990.30 262,238.72 277,218.00 295,000.00

1.3.3 Time-bound Plan SMM does not have any mill and estates than other than those which being certified in this certification process, so there is no time bound plan for other unit mill and estate.

1.4 Year of planting and cycle 1.4.1 planted area for each estates

Planted Area

Year of planting

Jangkang estate

Balok Estate

Jadang Jaya Estate

Sari Bunga Estate

Air Ruak Estate

Total Planted Area

1990 940.84 207.20 824.30 1,972.34

1991 83.20 640.20 501.41 186.7 1,411.51

1992 118.54 631.90 435.02 259.5 1,444.96

1993 88.90 - 1148.3 1,237.20

1994 - - 81.8 81.80

1995 400.50 672.40 1,072.90

1996 79.56 283.40 727.9 1,090.86

1998 203.40 792.199 267.2 1,262.80

1999 234.60 - 400.2 801.2 1,436.00

2000 360.90 - 463.59 430.23 1,254.72

2001 - 43 43.00

2004 129.97 239.20 369.17

2005 581.06 359.83 361.73 1,302.62

2006 38.63 210.8 249.43

Total 3,018.07 2,877.70 2,117.91 2,151.17 4,064.46 14,229.31

Total area of HGU: 16,276.87 Ha.

1.4.2 Five year replanting program for each estate from 2013 to 2017

Planted Area (ha) Total Area to be planted (ha) Year of

Replanting Jangkang Estate Balok Estate Ladang Jaya

Eestate Air Ruak

Estate Sari Bunga

Estate

2013 - - - - - -

2014 300.46 300.46

2015 335.00 335.00

2016 207.20 824.30 157.27 1,188.77

2017 940.84 70.02 1,010.86

TOTAL 940.84 207.20 824.30 862.75 2,835.09

1.5 Other Certifications Held (ISO, etc.)

Certification Name Certification Num. Date of Certification

Valid until

Safety and Health Management System 148/126/Sucofindo/2011 20 Mei 2011 19 Mei 2014

ISO 14001 EMS 00127 10 April 2012 09 Mei 2015

ISCC ISCC – Reg - 1400 20 june 2012 19 june 2013

1.6 Organizational Information/Contact Person Organizational Information

Principle Contact Person Mr. Philip Liu

Position Head of Sustainable Departement

Business Address PT. Sahabat Mewah dan Makmur (PT. SMM)

Group Name (If applicable) Wisma BII Lt. 7 Jl. Diponegoro No.18

Office Telephone Number 20152 Medan, Sumatera Utara

Mobile Telephone Number Indonesia

Fax +62 61 4537480

E-mail address +62 61 4538366

Web site www.SMM .co.th/

2 Assessment Process

2.1 Assessment Methodology (Program, Site Visits)

2.1.1 General Overview

The assessment was carried out by referring to TÜV NORD Indonesia Certification Procedure,

PRSPO-TNI-01 Rev. 0, dated 01.06.2008. This procedure described the assessment

processes, which consist of several stages, such as contract review and offer preparation,

audit preparation, certification audit, certificate issuance, and surveillance audit. Audit

preparation included off site review of client document’s such as RSPO manual, procedures,

and working instructions. The surveillance audit was conducted July 2-6, 2012.

Table 2-1 Audit Schedule Date Location P&C Main Activities

Opening meeting. Introduction by team leader. Introduction of team members and assessment agenda. Presentation by Group Manager (Estate and Mill).

1.1, 1.2 Request of info and respons

2.1, 2.2, 2.3, 3 Regulation compliance, land-use right, customary right, actual and budgeted production

4.1 – 4.8 SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt

Day. 1 02.07.2012

Jangkang Office Jangkang Estate

5.1-5.6 EIA, HCV, Burning Issues, Waste Mgt., Agrochem




5.1-5.6 EIA, HCV, Burning Issues, Waste Mgt., Agrochem.

Day. 2 03.07.2012

Jangkang Mill

6.1-6.11 SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR

1.1, 1.2 , Request of info and respons

2.1, 2.2, 2.3 Regulation compliance, land-use right, customary right, actual

Day. 3 04.07.2012

Public Consultation at Jangkang Office





5.1-5.6 EIA, HCV, Burning Issues, Waste Mgt., Agro chemical.

Day. 4 05.07.2012

Air Ruak Estate


Day. 5 06.07.2012

Balok Estate 1.1, 1.2 Request of info and respons


4.1 – 4.8 SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt 5.1-5.6 EIA, HCV, Burning Issues, Waste Mgt., Agro chemical. 6.1-6.11 SIA, Communication, Complaint, Customary,

Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR

Day. 5 06.07.2012

Jangkang Mill Office All Closing Meeting Chaired by the assessment team leader. Presentation of findings by the assessment team. Questions and answers. Final summary by team leader.

2.2 Date of Next Surveillance Visit

The third annual surveillance audit (ASA-3) will be scheduled on 2013. Surveillance audit is

conducted once a year for a 5-year period of validity certificate.

2.3 Lead Assessor/Assessment Team 2.3.1 Lead Assessor: Anita Masduki (AM)

Qualification Compliance

Educational Background

A minimum of post high school (post secondary school) training in, and either agriculture/ forestry, environmental science or social science;

Chemical Engineer, Bandung Institute of Technology-Indonesia, passed 1987

Diploma of Biological Treatment Management, Name of University etc. Hiroshima University-Japan, 1991-1992

Diploma of Environmental Management, Institute of Environmental Management and Assessment, London- United Kingdom, 1999

Magister of Social Education, Ibnu Khaldun University, Bogor-Indonesia, 2007-200

Candidate Doctoral Program of Education Management, Ibnu Khaldun University,Bogor-Indonesia, 2010-present

Yes (Y)

Working Experience • At least 5 years

experience in area of work relevant with the audit (e.g., oil palm management; agriculture, ecology; social science);

• Environmental/ ecological , safety and health assessment

1992-1995: Assessment the environmental impact for several industries of pulp and paper, wood product, pharmacy, at Java, Sumatera, and Kalimantan

1996: Cleaner Production Division for GTZ-Germany and Environmental Impact Control Agency - Indonesia) and Swiss Contact; responsible for research and develop program to integrate cleaner production in the strategic planning of industrial development program, including identifying candidates for implementing cleaner production program in Indonesia. The project include of information dissemination, assist on pilot projects, develop guidance manual for cleaner production integration, develop cleaner production training workshops, deliver training for trainer, etc. This project based on social services provided by GTZ-Germany and Environmental Impact Control Agency of Indonesia as Awareness for Indonesian Cleaner Production Program.

1997- 1998: Global Climate Division of State Ministry of Environment, Jakarta and World Bank – Washington; responsible for preparing Investment Project Proposal for Ozone Depleting Substances Phaseout in Indonesia to be granted by Montreal Protocol Multilateral Fund through World Bank. This project focused on research in identifying industries as candidates for investment project. The project covered dissemination of information, assist on pilot projects, develop guidance manual for cleaner production integration, develop investment project proposal, delivered training, workshops for trainer, public training, etc.

1998-2011: Audit and consultancy experiences for more than 80 companies for ISO 9001, ISO 14001, OHSAS 18001, SA 8000, since 1996 up to 2011 in wide range of audit scope, such as estates, oil and gas, pulp and paper, electronic manufacturing, school and university, contractors, etc.

Y

RSPO Training:

Trained in practical application of the RSPO criteria, and RSPO Certification System;

Certified RSPO Lead Auditor Training by Wild Asia, May 2011, Kuala Lumpur, Malaysia

Workshop on Indonesia Sustainable Palm Oil, February 2012, Indonesia Palm Oil Community, Jakarta

Y

Completed ISO 9001/ 14001/18001 Lead Auditor course and audit experiences.

ISO 9001:2000 Advanced Lead Auditor Training Course, by SGS International Certification Services, 2002, Jakarta-Indonesia

Certified Auditor Training of Environmental Management System (ISO 14001:1996) EARA -RIET - REDECON Jakarta

Occupational Safety and Health Audit Scheme (OSHAS) 18001, SGS-Jakarta 2002

Y

Experience related to RSPO:

A supervised period of training in practical assessment against the RSPO criteria or similar sustainability standards, with a minimum of 15 days assessment experience at least 3 assessments at different organisations

Having more than 15 days of audit in more than palm oil companies (Feb 2011 – June 2012) 1. RSPO PNC Auditor for Main Audit of Mill and Estates London Sumatera Musi

Banyuasin, Palembang-Indonesia, Feb. 21-25, 2011 (5 days) 2. RSPO PNC Auditor for Pre Audit-1 of Salim Ivomas Perkasa Mill and Estate, Riau-

Indonesia, April 25-28, 2011 (4 days) 3. RSPO Supply Chain Lead Auditor for Main Audit of Wilmar Group, 2 mills and 2

refineries, Sumatera and Kalimantan-Indonesia, May 23-25,June 13-17, 2011 (7 days) 4. RSPO PNC Auditor for Main Audit of Mill and Estates London Sumatera, Site North

Sumatera-Indonesia, June 20-28, 2011 (9 days) 5. RSPO PNC Auditor for Tapian Nadenggan-SMART Group, July 4-8, 2011 (5 days) 6. RSPO PNC Lead Auditor for Pre Audit of PT ANJA Agri Binanga Mill and Estates, Site

ANJA Binanga & Tungkal Ulu, North Sumatera -Indonesia, Juli 18-20, 2011 (3 days) 7. RSPO PNC Lead Audit for Main Audit of Inti Indosawit Plasma Estates, Site ANJA

Binanga and Tungkal Ulu-Indonesia, Sep 12-14, 2011 (3 days) 8. RSPO PNC Lead Auditor for Pre Audit -2 of Salim Ivomas Perkasa Mill and Estates,

Riau-Indonesia, September 26-30, 2011 (5 days) 9. RSPO PNC Lead Auditor for Main Audit of PT ANJA Binanga Mill and Estates, Site

ANJA Binanga & Tungkal Ulu, North Sumatera -Indonesia, October 11-14, 2011 (4 days)

10. RSPO Supply Chain Lead Auditor for Main Audit of Dr. Oetker Foods Industry,

Y

Qualification Compliance Oerlinghosen-Germany, November 7-11, 2011 (5 days)

11. RSPO PNC Lead Auditor for Pre Audit of Austindo Nusantara Jaya Agri Mill and Estates, Site Binanga, North Sumatera -Indonesia, November 28-December 2, 2011 (5 days)

12. RSPO PNC Lead Auditor for Main Audit of Salim Ivomas Perkasa Mill and Estates, Riau-Indonesia, December 19-23, 2011 (5 days)

13. RSPO PNC Lead Auditor for Pre Audit of SMM Thailand, Feb 8-9, 2012 (2 days) and June 2012 (6 days)

14. RSPO PNC Lead Auditor for Pre Audit of Perkebunan Nusantara !V Mill and Estates, North Sumatera -Indonesia, Feb. 20- 24, and May 28-31, 2012 (10 days)

15. RSPO PNC Lead Auditor for Main Audit of Austindo Nusantara Jaya Agri Mill and Estates, Site Binanga, North Sumatera -Indonesia, March 5-9, 2012 (5 days)

16. RSPO Supply Chain Lead Auditor for pre audit of Lam Soon Thailand, March 13-15, 2012 (5 days)

17. RSPO Supply Chain Lead Auditor for Main Audit of Lam Soon Thailand, April 29-May 5, 2012 (6days)

18. RSPO PNC Lead Auditor for Surveillance Audit of PT Aek Tarum Mill and Estates, South Sumatera -Indonesia, May, 2012 (5 days)

19. Lead Auditor for RSPO New Planting Procedure of First Resources Group, PT Borneo Persada Energy Jaya and Citra Agro Kencana, Indonesia, May, 2012 (4 days)

20. RSPO PNC Lead Auditor for Main Audit of SMM Thailand, May-June 2012 (6 days) 21. RSPO PNC Lead Auditor for Surveillance Audit of PT Sahabat Mewah Sejahtera Mill

and Estates, Belitung Island -Indonesia, July, 2012 (6 days) 22. Lead Auditor for RSPO New Planting Procedure of First Resources Group, PT Borneo

Surya Mining Jaya and Maha Katya Bersamaa, Indonesia, September, 2012 (4 days)

2.3.2 Assessment Team Members 1. Auditor: Karlina Bone (KB)

Qualification


- Bachelor of Science in Biology from School of Life Sciences and Technology, Institut Teknologi Bandung – Indonesia in 2005.

- Master of Science in Aquaculture from Ghent University, Belgium in 2008

Working Experience

- October 2010 – Present, she is working with PT. TUV NORD INDONESIA as Food Inspector/Marketing in Food Division, QMS Certification Personnel.

- January 2010 – July 2010, she worked as Food Safety and Hygiene Assistant Manager at PT. Carrefour Indonesia (Head Office) with responsible for arranging monthly audit schedule for stores, monitoring store’s audit by third party and checking the audit’s report, conducting hygiene training for store’s fresh division managers, sales managers, team leaders and associates, updating audit checklist in accordance with new governance policy and assisting in monitoring monthly lab analysis result for Carrefour’s private label products.

- October 2009 – January 2010, she worked at PT. Bureau Veritas Indonesia with responsible for monitoring hygiene implementation in fresh product preparation in store, checking product quality in store and reporting audit result

-

RSPO Training

- RSPO-endorsed RSPO Supply Chain Certification System Training Course; David Ogg & Partners. Jakarta. April 2012.

- Roundtable on Sustainable Palm Oil Lead Auditor Training Course. Stepwise Support Programme. Kuala Lumpur, Jakarta. September 19-23, 2011.

Other Training

- Quality Management Systems Auditor/Lead Auditor Training Course With LIVE AUDIT and Accelerated Learning Method IRCA (UK) Registered A17399Neville Clarke. Jakarta August 2011.. Food Safety Management System: ISO 22000:2005 Series Professional Auditor/Lead Auditor. Neville Clarke. Jakarta. May 2011.

‐ Communication Skill Training, IRCA Certified Training Course. CDC-ITB & PT. Unilever, Tbk. 2005.

Experience related to RSPO

Having experiences in assessment RSPO to date (as per June 2012, ) 1. RSPO Supply Chain Auditor for Main Audit of Dr. Oetker Foods Industry, Oerlinghosen-Germany,

November 7-11, 2011 (5 days) 2. RSPO PNC Lead Auditor for Pre Audit of Perkebunan Nusantara VI Mill and Estates, Jambi -Indonesia,

November 20112012 (10 days) 3. RSPO PNC Lead Auditor for Pre Audit of SMM Thailand, Feb 8-9, 2012 (2 days) 4. RSPO PNC Auditor for Pre Audit of Perkebunan Nusantara !V Mill and Estates, North Sumatera -

Indonesia, Feb. 20- 24, and May 28-31, 2012 (10 days) 5. RSPO PNC Auditor for Surveillance Audit of PT Sahabat Mewah Sejahtera Mill and Estates, Belitung

Island -Indonesia, July, 2012 (6 days)

2. Technical Expert : Supijatno (SY)

3. Technical Expert : Ujang Shehabuddin (US)

Qualification


Lecturer in Departement of Resources Economics and Environment, Faculty of Economics and Management, Bogor Agricultural University

Working Experience

Evaluation of PNPM Green Program in South Sulawesi, North Sulawesi, North Sumatera and Bengkulu Province, World Bank – LPM Equator, 2012

Agricultural Economic and Social expert for RSPO Audit at PTPN IV North Sumatera, PT ANJ Belitung, PT Aek Tarum Sampoerna Agro South Sumatera, RSPO Audit at PT Inti Indosawit Subur, Jambi, 2011-2012

Agricultural Economic and Social expert for Monitoring and Evaluation of SRI Paddy Farm Models in Five Province with Ministry of Agriculture and Bogor Agricultural University, 2011

Agricultural Economic and Social expert for National Board of Climate Change Assessment with PT. Sucofindo,

Qualification


- Doctoral degree in agriculture environment from Bogor Agriculture Institute (IPB).

Working Experience

Verivication of burned PT. Nabatindo Windu Lestari estate Central Kalimantan. Cooperation between Departement of Agronomy and Hortikulture IPB with PT. Asuransi Takaful Umum, 2012

Development of Minapolitan Regency Tojo Una-una Central Sulawesi Province. Cooperation between P4W LPPM IPB with Fishery and Sea Agency of Tojo Una-una Regency

Third Surveilence of PT. Pohon Emas Lestari Plasma, Nunukan Regency, East Kalimantan Province. PT. Primakelola, 2012

Due Deligent of palm oil estate PT Delima Makmur, Singkil

Regency Aceh Nangroe Darusalam province . PT. Sucofindo. 2012

Due Deligent of palm oil estate PT Muting Hijau Permai Merauke. URS International, 2008

Preliminary study of palm oil estate establishment PT. Dendymarker Indah Lestari Musi Rawas Regency , South Sumatera Province. PT Primakelola. 2011

Establishment of estate development plan in Musi Rawas Regency. Cooperation P4W LPPM IPB with Musi Rawas Regency Government, 2010

Studi on land suitability for palm oil estate establishment PT. Daya Agro Lestari Musi Rawas Regency, South Sumatera Province. Cooperation between LPPM IPB with PT. Daya Agro Lestari. 2010

Pre Feasibility study on PT. Palmina palm oil estate in Banjar Regency, South Kalimantan. PT. Prima Kelola, 2009

Post Audit on palm oil estates of PT. Asian Agri Cooperation between IPB with PT. Asian AgrI. 2008

Feasibility study on rubber HTI and palm oil estate establishment in East Kutai Regency, East Kalimantan Province. PT. Prima Kelola. 2008

Preliminary study on establishment palm oil PT. Grand Mitra Utama dan PT. Grand Mitra Bakti, Sintang Regency, West Kalimantan Province. Cooperation between PT. Prima Kelola and ZTE, 2008

Appraisal of palm oil estate PT. Tahtulindo Agroyaman, PT. Aditarwan, PT. Duta Inti Palma Perkasa Sarolangun regency Jambi and PT. Ekajaya Multi Perkasa, PT. Arta Prigel, Musi

Rawas regency South Sumatera Selatan. PT. Prima Kelola. 2008

Study of PT. Agroraya Gematrans Land potential for palm oil plantation establishment in Keritang, Indragiri Hilir regency Riau province PT. Prima Kelola, 2007

PT. Era Mitra Agro Lestari and PT. Jambi Agro Wijaya palm oil plantation appraisal , Sarolangun regency, Jambi province PT. Prima Kelola. 2007

Appraisal of PT. Solegna Group palm oil plantation, Lahat regency, South Sumatera province. PT. Prima Kelola. 2007

2011

Agricultural Economic and Social expert for Mapping of Climate Change Vulnerability in North Sumatera Province with National Board of Climate Change and PT. Sucofindo, 2010

Agricultural Economic and Social expert for Problem Identification and Solution of Cocoa Estate Development in North Luwu District, South Sulawesi Province Ministry of National Education- Bogor Agricultural University

RSPO REQUIREMENT ASSESSOR QUALIFICATIONS COMPLIANCE

Fluent in local languages and English. Local language is Indonesia

All asessor Fluent in Indonesia language and English Y

Field working experience in the palm oil sector, or a demonstrable equivalent.

AM, KB Having experience in RSPO P&C Certification audit as well as RSPO Supply chain audit as a trainee.

Y

Good agricultural practices(GAP), integrated pest management (IPM), pesticide and fertilizer use.

SY Y

Health and Safety assessment on the farm and in processing facilities. (For example OHSAS 18001 or occupational. Health and safety assurance system).

AM Having experience in audit OHSAS 18001 Y

Workers welfare issues and social assessment experience. (For example with SA8000 or related social or ethical accountability codes).

US Having experience as agricultural social and economic expert in various assessment

Y

Environmental and ecological assessmenting. (For example experience with organic agriculture, ISO 14001 or environmental management systems).

SY

AM

Having experience for auditing of technical and environmental aspect of palm oil plantation

More than 15 years for preparing the environmental impact assessment and ISO 14001. Preparing ISO 14001 for estates, contractors, power plant, etc. Having experience in lots of Environmental Impact Assessment Project while working in one of environmental consultancy company in 2008

Y

Economic issues AM Having experience in feasibility study of several projects with The World Bank, UNDP, UNIDO

Y

2.4 Certification Body

PT. TÜV NORD Indonesia is a subsidiary of the German TÜV NORD Group. Our company is a

market leader in Indonesia for inspection, testing and certification services. Through more than

800 clients, we offer not just a high added value service but also the trust and confidence

embedded in our issued certificates / reports. We satisfy not only our direct customers but also

other stakeholders, like regulators and interested society including NGOs, through our

competent auditors, inspectors and analysts. In this assessment, PT. TÜV NORD Indonesia

was collaborated with TUV NORD Thailand.

Under its HQ in Germany, PT. TUV NORD Indonesia is a member of International

Accreditation Forum (IAF) and accredited by DAR–Germany, and locally accredited by the

Indonesian Accreditation Committee (KAN). Services provided by the Strategic Business Unit

Systems Certifications are: Food Safety Management System ISO 22000, GMP, HACCP,

Information Security Management System ISO 27001, Social Accountability SA 8000, Medical

Device Directive MDD ISO 13485, Occupational Health and Safety OHSAS 18001, Product

Certification: GS-Marking, CE-Marking, SNI Marking, Inspection for ISPS Code, Clean

Development Mechanism (CDM) Validation & Verification, British Retail Consortium, BRC

Issue 5.

2.5 Outline of How Stakeholder Consultation Was Managed

2.5.1 Summary As part of document review, auditor team has reviewed list of local stakeholders provided by PTPN IV. Based on list of stakeholder and the stakeholder’s minute of meeting, auditor team asked company to organize the stakeholder consultation meeting, which was scheduled on September 27, 2012 (see

Table 2-1 Audit Schedule).

All stakeholders were sent a letter which included the agenda of the meeting. They were

invited to make any comments on several issues related to them, such as:

• Information about RSPO to the public and stakeholders

• Company approach to community development.

• Environmental protection.

• Biodiversity conservation.

• Opportunities for employment.

• Provision of housing, sanitation, amenities and educational support.

• Participation in decision making.

• If there any complaints and grievance, land conflict

• Any other issue, both positive and negative that relevance to the assessment.

3 Assessment Findings

3.1 Summary of the Findings by Criteria

Objective evidences were obtained separately for each of the indicators for mills and estates in

the certification assessment. The information was comprehensively asked from 1 mill and 5

estates. The results for each indicator from the different operational areas were aggregated to

assess to assess the overall conformances of the company’s operations to each criterion. A

statement is made for each indicator on the finding. A detailed description of the Non-

Conformities is given in Section 3.2.

The following is a summary of the findings for compliance with the RSPO Principles & Criteria

for Indonesia (INA-NI)

Table 3-1 Summary of Findings by Criteria

FINDINGS/COMMENTS COMPLIANCE

Criterion 1.1 (C.1.1) Provide adequate information to other stakeholders on environmental social and legal issues relevant with RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision-making

SMM still maintained the implementation of procedure for conducting sufficient communication with stakeholders through SOP Penanganan Komunikasi Stakeholder, PRS-SDV-006 rev. 01 dated June 2011. The system requests to all head of mills and head of estate to communicate with local communities and stakeholders as insufficient evident is found. Copies of requests for information are held on hard copy files at general affair department under control of external relationships manager

Records of information requests and requests updated 2012. Sampel of record was observed, such as Surat Kepolisian Negara Republic Indonesia Resort East Belitung, dated on 19/01/2012 no B/28/I/2012/Polsek Dendang, regarding request on fertilizer usage. The letter was properly responded through a letter number No 04/SMM-GA/2012. All information requested by stakeholders is recorded in Stakeholders Request Log Book. The log book is kept well in suitable room. Retention time of records concerning with local community and stakeholders for 5 (five) years. The assessor checked the files and confirmed that SMM has responded appropriately to requests for information in accordance with external communication procedure.

Monitoring of responses given need to be improved. For the time being, responses were kept in several foldders according to their category which was not mentioned in the records as well as the responding date, thus records cannot be accessed easily.

Yes

Criterion 1.2 (C.1.2)


Management documents are publicly available, except where these are prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes

SMM has a system to maintain and monitor applicable law and regulation, and measure its compliance, which are publicly available, except for any related confidential commercial information and sensitive documents. The documents are: - Environmental and social impact assessment (AMDAL,UKL-UPL,AMDAS), - Environmental Management And Monitoring Reports (Laporan Pemantauan RKL/RPL) - Land Use Title (Hak Guna Usaha/HGU) - Plantation Operation Permit (Izin Usaha Perkebunan). - HCV identification (Identifikasi HCV) - License to use water (underground water use permit), - The Health and Safety Manual and Program. - Current and past FFB prices During ASA-2, the auditor checked the all documents above and reported in relevant principle and criteria below. Those documents are available for public. environmental impact and social impact, which documented in AMDAL that was approved by local environmental agency of Belitung. RKL/RPL documentations and also HGU are available to public. All estates have been identified for total of land use occupied by SMM that well informed and displayed on HGU board.

Environmental monitoring reports are submitted every six‐month to Government. Assessor

confirmed the availability of July – December 2011 and January-June 2012 report.

Yes

Criterion 2.1 (C.2.1) There is compliance with all applicable local, national and ratified international laws and regulations

SMM still maintained procedure PRS-SCL-001, rev 01/2010 dated on 01/03/2010 used to review any updates related to laws and regulations in every 6 months. The updating of regulation is the responsibility of Legal manager and team to monitor the consistency. Assessor inspected and checked records of legal compliance achievement in format DOC-CLS-001 rev 02 dated 3 Jan 2012.

So far, there more than fifty laws and regulations on plnatation, environmental, safety, dan labour identified and related to the SMM activities in mill and estate, and SMM showed its effort to comply to the laws and regulations. But it was found that operational lisence certificate for Mr. Hamnan and Mr. Budiman who operate a forklift, both are expired, while for Mr. Rudi Hartono who operate a bechoe loader (BL03) do not have operational lisence certificate by the time of this assessment was carried. No monitoring system to ensure the validity of operational lisence certificate of worker. For this reason, auditor issued non conformity (NC#1). SMM has made correction and corrective action as well, and auditor confirmed the NC has been closed (See NC#1 sheet)

NC#1

Criterion 2.2 (C.2.2) The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights

SMM and estates have full the right to use the land for palm oil estate. SMM has license or land permit from the governmental concern such as Tanda Daftar Perusahaan, Daftar Ijin Lokasi, Sertifikat HGU, Ijin Usaha Perkebunan, (Company Registration Location Permit, Certificate of HGU, and Plantation Permit ). Auditor cheked the validity all of them, and found the compliance to the government regulation. The Company Registration No: 02.12.1.01.04115 dated January 28, 2008 and valid until February 3, 2013. The Plantation Permit No. 525.26/9541/2007) dated, 2 Nov 2007. The Location Permit No: 460.1466/IL/X/1995, dated 9 Oct 1995. HGU no 1 Jangkang = 4,032 Ha, HGU no 1 Nyuruk = 6,955.2 Ha, HGU no 1 Renggiang = 4,886.08, HGU no 2 Nyuruk 403.63 Ha, Total area HGU 16,276.87 Ha.

Scattered boundary stones were encountered along the legal boundaries of all the estates. Most of them were observed to be properly maintained. List and photograph of boundary stones were available and they appeared properly maintained. The legal status of boundary stones was approved by Badan Pertanahan Nasional (National Land Body). Monitoring and maintenance of legal boundaries were instructed through Internal Memo from General Manager of Estate dated 1 November 2011 and the exercise was conducted in November 2011 by Field Assistant.

Yes

Criterion 2.3 (C.2.3) Use of land for oil palm does not diminish the legal rights or customary rights of other users, without their free, prior and informed consent.


As far as could be ascertained, there is no customary right of other users because all area of land has hold by the facility.

Yes

Criterion 3.1 (C.3.1) There is an implemented management plan that aims to achieve long term economic and financial viability

The company is committed to economic and financial sustainability of the palm oil business. An annual plan is outlined in the five years financial projections, the annual management plan, and annual budget plan for 2010 -2014. Annual budget plan include production forecast, operating cost production cost. For mill budget includes FFB received and processed, CPO and PKO production details, crop yield projections and income. Replanting program was available and projected for 5 years, 2013-2017, and reviewed on yearly basis.

Yes

Criterion 4.1 (C.4.1) Operating Procedures are appropriately documented and consistently implemented and monitored

SMM and estates have established relevant procedures and work instruction based on good agriculture best practices for their mill and estates, and documented in procedure SMM-Est-001 up 19 for estates and SMM-Mill-001 up to 16 for mill. The procedures and work instruction used in the mill and all estates, are including weed protection and elimination, fertilizer use, integrated pest management, replanting,harvesting, management the disease and insects,fertilizer use, cutting the young palm tree,new planting, ground cover planting, soil and leaf sample for analysis, use of empty FFB, plan to reduce the use of chemical, daily work of chemical usage, etc. SMM and estates have been certified for ISO14001, Safety and Health Management System, and ICCS. These procedures and work instructions are incorporated in the RSPO management system

During the assessment, the auditor review of availability of procedures and its implementation Updated procedures are developed at the SMM office and then will be sent to the Section Head of each estates whenever there are changes made. The procedures and work instructions are consistently implemented. Records of operation activities based on the relevant procedures and work instructions are kept properly. The performance of mill is monitored on a shift basis and recorded daily. A monthly report is produced by each estate for management meeting that will be held at SMM office to review the monthly implementation and any changes that may affect to the implementation of each estate

Yes

Criterion 4.2 (C.4.2) Practices to maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield

SMM has developed SOP to maintain soil fertility and water quality as stated in SPO-041/00/1-8/07, Analisa Tanah dan Daun, Soil and Leaf Analysis. Record of regular soil and leaf analysis was available, conducted by PT. Sarana Inti Pratama (SIP) every year. Records for soil, leaf, and visual periodic analysis and fertilizer dosage for every block are available is based on those analysis records. The last record for soil analysis dated March 25, 2012. Result of analysis was followed up by the proper dosage of fertilizer recommendation and recorded in Laporan Pemupukan, LM-89, Fertilizing Report, which available in each estates (Afdeling)

To maintain soil fertility the company also used palm by-products such as POME and EFB. These nutrient- containing mill wastes are applied in the fields to improve the soil organic matter content and to substitute or supplement inorganic fertilizer inputs. POME was used for land application. Land Application Permit based on East Belitung Regent Decree no. 347 year 2010 about Permit of Waste Water Land Application to SMM. Based on land application permit given to PT. SMM, the maximum amount of BOD5 applied is 2500 mg/L. Water analysis result shown that BOD5 was averagely 720 mg/L. This is conforming to the standard.

Record for EFB application with dosage of 40 ton/ha is available. EFB application is only done in several blocks in several afdeling. There’s no EFB application this year. Aside from EP application, the blocks with slope more than 25% are made as terraces and legume crops are grown (Mucuna bracteata).

Yes

Criterion 4.3 (C.4.3) Practices to minimize and control erosion and degradation of soils

SMM committed to control and minimize soil degradation. There is Agricultural Circular letter No. 31/VPO-ANJA/0609 for Marginal Land. The letter covers how to handle several types of soil which is grouped into marginal land category such as sandy soil, laterite soil, peat soil, etc.. Map of marginal land is available, map of soil for Balok Estate updated 2012 by GIS Team, Guruh Rindanata. Map illustrate the position of marginal land is available and the type of soil is mineral soil. In general, the land is categorized as flat (0-3% slope) so that no activities relating to conservation land.


Road maintenance (grading, compacting and cambering) is another method to minimize the erosion and soil degradation. The estates have established their road maintenance plan according to the condition of road in each estate. Map of road in the estate is used to make the road maintenance plan and identify which road either main or sub-road need to be improved. In new planting, there is legume cover crop to maintain to improve the condition of both physical and chemical soil, Criterion 4.4 (C.4.4) Practices to maintain the quality and availability of surface and ground water

SMM management has facilitated provision of water in storage tanks that is provided to mill and estatse and employee’s housing complex. The water for industrial use is supplied from some of the rivers e.g.: Sungai Belas, and Sungai Balok, and for household/domestic use is from water sources (HCV 4).

The SMM management policy is to remain and maintain the water sources as HCV 4; protect the existing riparian strip as stated in their procedure for riparian strip; a 50 m wide buffer zone has been maintained along Sungai Belas, the main river that drains the estates. Also along the buffer zone area that using the herbicide is identified including monitoring along riparian buffer zone to ensure such area is safe from the erosion.

SMM has established Water Management Plan for all estates, which include procedures to monitor water quality and quantity; and has instlalled water monitoring facility (flow meter) to ensure proper monitoring and recording. Reports of water quality (laboratory test) based on procedure (SOP-EHS-011) in accordance with related regulation Clean Water Standard of Permenkes RI No:416/MENKES/PER/IX/1990, the last report dated on May 2011. Recording is done every month (for example in January 2012, the water used between 1.78~2.28 m3/ton FFB

Source water from the reservoir of Aek Sebelas river. Water taken from the reservoir and pumped into the water treatment plant and distributed to the factory and emplacement. The analysis is applied to the BOD for every month in the garden pond inlet, pond outlet, upstream, downstream, monitoring wells (6 months) and LA (2011, 116-953) (in 2012, BOD 260-680 mg / l )

Yes

Criterion 4.5 (C.4.5) Pests, diseases, weeds and invasively-introduced species are effectively managed using appropriate Integrated Pest Management (IPM) Techniques SMM has identified and consistently documented an IPM Program on “Conservation Report and Activity”. Monitoring record of Integrated Pest Management (IPM) year 2012 for Balok Estate is available. The most of pests attacking the leaves of estate are insects and rats that eat the palm fruits. Estate Manager assigned a pest engineer (from head office quality assurance, SMM group) to monitor regularly the spreading of pest at each estate e.g.: Ladang Jaya estate by one of methods such as early warning census. The IPM techniques and natural control confirmed to all estates to be inspected. Monitoring on consumption of quantity herbicides is recorded in each of the estates and displayed by the estate manager. At the time of the pesticides used in 2012 was Ebor Bait (Warfarin 0.05%) average dose 0.0954 kg / ha. (0.0048 g ba / ba ha or 0.00065 g / ton FFB) There are programs and recording control pests are carried out regularly. The program includes census rat, owl census, installation of owl house (gupon) and planting beneficial plants. There are SOP, such as SOP-OPR-027 dated Mar 1, 2005, Rat’s control using Barn Owl (Pengendalian Tikus dengan Burung Hantu), and its implementation was recorded in Book of Barn Owl Monthly Census (Buku Sensus Burung Hantu) Training IPM on Thursday 29th and Friday 30th, March 2012 by, for field assistant, IPM maintenance supervisor and maintenance worker by Corporate Agronomist, Mr. Marlon Sitanggang. SMM also applies beneficial plants to reduce the use of chemical while handling pest, such as Turnera subulata (bunga pukul delapan), Antigonon leptopus (air mata pengantin), and Cassia cobanersis. SMM has implemented to control population of rats by Tyto alba (burung hantu).

Yes

Criterion 4.6 (C.4.6) Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorized as World Health Organization Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

SMM still maintain procedure Pengelolaan Limbah Agro Kimia dan Kemasan Pestisida, Agrochemical Waste Management Procedure. Usage of agrochemicals was recorded in Data Penggunaan Bahan Kimia Beserta Dosis Pemakaian per Ha per ton TBS. This procedure as implementation to the decree of Agriculture Ministry, No. 1/2007 regarding Bahan Aktif Pestisida Yang Dilarang Dan Pestisida Terbatas (Prohibited active ingredients in pesticides and Restricted

Yes


Pestcides), Head of Sustainable Department has issued memorandum No.: 053/GM/YZ/Int/V-2011 on Penggunaan Pestisida Berbahan Aktif yang di Larang (Usage of Pesticides with Prohibited Active Ingredient). In this regulation, the applicators shall be well trained and have llicense to apply these pesticides, and use adequate PPE which provided by company. Personal safety equipments or PPE covered mask, rubber glove, and rubber boot are provided to workers who have responsible for spraying of chemicals. The worker who has responsible to spray must be implemented according to provided PPE.

SMM has issued Internal Memo regarding the health of woman who work with agrochemicals, Perlindungan terhadap Hak Reproduksi Karyawan Perempuan (Reproductive Right for Women Employee) and implementation of this memo was recorded as Pemeriksaan dan Pemantauan Wanita Hamil Dan Menyusui Bagi Karyawan Spraying (Measurement and Monitoring for Pregnant and breast feeding women). The auditors interview the agrochemical sprayers to find out whether they have any skin related disorders or rashes, breathing difficulties or nail abnormality which are classical symptoms of toxic reactions, and found there was no abnormal situation on this. Based on the results of interviewing found that no one of woman workers who still pregnant and breast feeding woman

There is procedure established for agrochemical use with a list of approval agrochemicals and their dosage, application by trained personnel. The dosage of each agrochemical product above mentioned are; 300-500 cc/60-80 liter of water, 300-500 cc/60-80 liter of water and 3-7.5 gram/60-80 liter of water for application of Roundup, Gramoxone and Goldline respectively. These agrochemicals are stored in the secured storage with always lock. Only responsible person is designed to hold the key to open the chemical storage. MSDS of each agrochemical are posted in the shelves to store each agrochemical products and posted in front of the chemical storage with easy readable. Moreover, all workers who deal with the agrochemical have been trained on MSDS and how to apply chemical properly by qualified person who has many year experience on chemical application of the estate. The latest training on agrochemical application and MSDS was done on 29 June 2010.

SMM Management states its policy for handling PPE while using agro-chemicals in SOP – Guide to the Safe Use of Pesticides. This contains toxicity, storage safety precautions, solution preparation and application, pesticide waste disposal, first aid, protective clothes and list of pesticides allowed by the regulations. A notable improvement in agrochemicals usage that paraquat was no longer used in 2012 Auditor confirmed that agrochemical used in accordance with relevant SOP, stored in secured area and empty containers were disposed in B3 (hazardous and toxic material) waste warehouse area before removed by licensed contractor. All the records are well maintained. There is regular medical checkup and regular training for workers who apply with agrochemicals

Criterion 4.7 (C.4.7) An occupational health and safety plan is documented, effectively communicated and implemented.

The SMM management still maintain a safety, health and environment policy, documented in Manual SMK3 (Health and Safety Work Management System) no dok MNL-EHS-001 rev 00 tgl 01 maret 2011and it is comprehensively implemented. Induction policy is to be the responsibility of safety engineer (SM-P2K3). The policy is available at the mills and the estates; and communicated to all subcontractors. A safety engineer on a daily basis does monitor and inspect all facilities of mill operation relating to emergency conditions. The management has appo in ted Mr . Joni Nopiansyah as an EHS officer for mill and all estates. He is assisted by each supervisor of mill and estates to ensure the health and safety programmes was identified and records of regular meetings to discuss health, safety and welfare issues has been kept. Records of mill facilities and its operation are kept properly, identified and retrievable in the safety engineer’s room. If there is an accident in the mills caused by the workers, violating a working procedure or other instructions, investigation of the accident is to be conducted and distributed to mill manager as of the agenda in safety meeting.

To ensure that the worker are in good condition, there is regular health examination conducted by by internal medical team, chaired by dr. Erwin Asmana and the mechanism is documented in Prosedur Pemeriksaan Kesehatan PRS-EHS-001 rev 01 dated on 01.03.2011. dr. Aswin Asmana received his training certificate of Hiperkes and Safety Work (no. 18.896/DH-I/08) for company’s doctor as per Ministry Decree No. Per. 01/MEN/1976 on March 2008 and valid for 5 years since then. Method used to examined the health of workers have to be improved to have more objective result. e.g..: to examine hearing capability the medical team only do a physical check without using a proper examiner tool (audiometer) and the result can be very subjective.

There is a documented hazard identification and risk assessment control (HIRAC) procedure, SMK3-EHS-001 rev 03 dated 1 Mar 2011. Based on Hazard HIRAC, it was identified that a potensial risk in harvesting process is eye irritation. But no enough personnel protective equipment (PPE) such as goggles available, while in the SOP it was stated that for harvester shall use hand gloves and goggles. Records of occupational health and safety training are available.

Yes


Criterion 4.8 (C.4.8) All staff, workers, smallholders and contractors are appropriately trained.

SMM still maintain the procedure to improve the competency of its worker,as well as for its subcontractor. The procedure mentioned the training mechanism for its staff, worker, subcontractor, and out grower. Training programme is formulated on yearly basis. Mill manager and Estate managers identify training need annually for technical skill improvement as well as on safety. There are several training programs for workers, i.e spraying practices, Integrated Pest Management, Occupational Health and Safety, toxic and hazardous substances, toxic and hazardous waste management, and fire prevention and control. Some contractors and small holders are trained for safety training, including induction of emergency procedure and use of PPE, as well as the information about FFB price.

Interviews with staffs and workers of mill and plantations showed that they are aware of the risk of their job. It was confirmed that the training was effective and the competence of worker was enough to support their job. Interviews with external FFB smallholders showed that they knew what is personnel protection equipment (PPE) and its purpose, and about the FFB price regulation. All training records during 2010 and 2011, including attendance lists, photographs, and training material were available and maintained properly. However, the records, which were randomly checked for three (3) new employed harvesters within division I at the late of 2011, were not available. It can not be proven that for new employee, they are given the appropriate training. For this reason, auditor issued non conformity (NC#2).

SMM has made correction and corrective action as well, and auditor confirmed the NC has been closed (See NC#2 sheet)

NC#2

Criterion 5.1 (C.5.1) Environment aspects of estate and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

SMM has performed first Environmental Impact Assessment (AMDAL/RKL-RPL) based on Deree of Agricultural Ministry No.SK/Mentan. 014/ ANDAL/RKL-RPL/BA/V/95 dated 3 Mei 1995.

The AMDAL information classified the activities into negative and positive impact. The listed negative impacts consisted of : 1) provision of non forest areas, 2) land clearing, and 3) procurement of infrastructure; while the positive impacts include: 1) Procurement of infrastructure, 2) Cover crop planting, 3) Planting of main crops, 4) maintenance of Immature and Mature crops, 5) Labour vacancy and 6) Increased of community wages .

Auditor team reviewed the last RKL/RPL updated on Quarter 1, 2, and 3 of 2011. The assessment covered one mill and estates of ANJA Binanga in three estates, East, five estates. The document was regularly submitted to Badan Pengendali Dampak Lingkungan Daerah/BAPEDALDA or Local Environmental Impact Assessment Agency of Belitung Timur Regency every semester (6 months).The RKL-RPL include review on Land Application and the company has the permit for Land Application.

Yes

Criterion 5.2 (C.5.2) The status of rare, threatened or endangered species and High Conservation Value habitats, if any, that exist in the estate or that could be affected by estate or mill management, shall be identified and their conservation taken into account in management plans and operations.

The SMM management has prepared and developed all information as well for flora and fauna which are comprehensively identified in “Executive Summary of High Conservation Value Report 2009”. The HCV’s areas are recognized with HCV’s 1.3, 4.1, 4.2, and 6, which most of HCV’s are available in the whole of the estates. The HCV’s area at the field is well identified with sufficient signboards, for example : HCV area 1.3 and 6 with total area 92.35 ha to preserve cemetery of K.A. Yakub (Cakraningrat I), the first King of Balok (1618-1661) and Syech Abdul Jabar Samsudin, a Moslem saint (Wali) which considered as the first person who taught Islam in Belitung. SMM has established SOP to manage and monitor HCV as stated in

Prosedur Pengelolaan dan Pemantauan Nilai Konservasi TInggi (NKT, No PRS – SDV – 003 Rev 1 tgl 1 Sept 2009. Sign board and posters to inform or warn people not to hunt or kill the protected species, and monitoring the existances of each HCV are available.

Yes

Criterion 5.3 (C.5.3) Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner


SMM has identified all waste streams and the waste management plan appropriately. Office waste and household waste were segregated, recycled where possible with rest to the landfill. Fibre was used as fuel for furnace and EFB for fertilizer as mentioned in Section 4.2. Palm oil mill effluent (POME) was used for land application as fertilizer supplement. POME from mill was pounded and digested an-aerobically. The treated effluent with reduced BOD was then applied to the land in flat beds. The BOD level from ponds were monitored monthly and reported in the RKL-RPL Report. To avoid spillage on the soil, there was secondary containment and oil traps in fuel/oil storage. Air pollution from the activities boiler and generator was controlled by routine maintenance, and the air quality from the emission stack was monitored every six month. Hazardous wastes in the estates and mill are well recorded. The wastes include pesticide containers, batteries, and waste oil and used oil filters. There was procedure to manage waste. This procedure was communicated to waste officer at all SMM estates and mill. Copy of permit/licence of waste collector were available both at SMM mill and plantations. Toxic and hazardous waste was collected at centralised hazardous warehouse and PT Bearing Grease Jaya collected the wastes regularly. PT Bearing Grease Jaya has a licensed as collector for toxic and hazardous waste based on Decree Letter No 138/2011, from Ministry of Environment (MoE), valid until May 2012. There was hazardous transporter licence from Transportation Department valid from 22.10.2009 until 22.10.2014 and hazardous central warehouse has also licence from MoE No. 377A/2009 valid from 9.7.2009 until 2014. The monitoring of waste water quality, and emissions complied to applicable regulation and reported in RKL-RPL report every six month and submitted to the Environmental Agency of Belitung Timur District, Bangka Belitung Province.

Yes

Criterion 5.4 (C.5.4) Efficiency of energy use and use of renewable energy is maximized.

SMM and estates have planned to use of renewable energy in which it continually strives to improve energy efficiency and use more renewable energy. He successful of SMM wastewater treatment for energy generation is the good example to show the use of renewable energy. Pressed fiber of empty FFB and palm kernel shell will be used to fire in the boiler to generate steam for electricity generation. SMM and estates committed to reduce the use of fossil fuel by managing the operation and transportation in order to utilize the fossil fuel efficiency. From the record of energy used in all sites either SMM or estates for year 2011, its efficiency of electricity use was 208,908 kWH. The use of oil or fossil fuel was 145,082 liters for all purposes i.e. FFB transport vehicles and any transportation. Comparison the use of energy in 2012 (January-May), it revealed that the electricity was used at 92,856 kWH and oil or fossil fuel was used at 74,646 liters. Moreover, there is possible to use fossil fuel for generator but it will be used as a backup to generate electricity when the main turbine at mill and public electricity for all estates is shut down.

Yes

Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

All estates have a zero burning policy. For the replanting purpose, the estates will use the way to cut the matured palm oil tree where their age is higher 25 years. This implementation has been used since the starting of this company. The remaining of cut of stems and leaves will be used for soil fertility purpose for the next cycle. Moreover, it was indeed found no evidence of burning during the assessment.

Yes

Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

The prevention of pollution is a part of the SMM Management Policies on health & safety; and environment. Monitoring and measurement on emission parameters are planned and implemented in accordance with emission regulation. On 12 monthly basis, the emission of boiler and vehicle for transportation of FFB are tested by external independent laboratory. Results of emissions are reported to environment manager to ensure that necessary actions are taken. The result of emission monitoring and management is also reported to the local Environment Agency (Bapedalda) as part of RKL-RPL (Environment Management and Monitoring) Semester Report. SMM has program to reduce GHG emission as a project of Austindo Aufwind New Energy (AANE), is a joint venture established by PT ANJ Agri (Indonesia) and Aufwind New Energy GmbH (Germany). Main process of the Biogas Plant is to collect the gas emission resulted from the anaerobic decomposition of Palm Oil liquid waste processing and increase the efficiency of anaerobic treatment process so that it produces gas more stable and optimal. In natural conditions this methane gas is emitted from wastewater treatment processes using open ponds. The final product of this facility is Biogas (+ 60% mixture of methane (CH4), + 35% carbon dioxide (CO2) and other gas mixture). Simple hydrocarbon methane is a flammable gas which is also listed as Greenhouse Gas (GHG) within the framework of Clean Development

Yes


Mechanism (CDM) of the UNFCCC (United Nations Framework Convention for Climate Change)

Economic benefits of the Biogas Plant are : � Methane capture this process will significantly reduce Greenhouse Gas emissions (GHG) that

allows the Company has obtained the Certified Emission Reduction (CER) in the CDM process. From this facility, the estimated annual CER potential of more than 30 000 tCO2e (tonnes of CO2 equivalent) with an economic value between 13-17 USD per tonne of CER.

� Biogas is a combustible mixture with a calorific value + 6 kwh per cubic meter. With the utilization of using Gas Engine Generator can produce approximately 2 kWh per cubic meter of Biogas. Technically Biogas generated from the facility in PT SMM has the potential to generate power between 700 kW to 1.3 MW. In accordance with the regulations of Renewable Energy power plant under 10 MW, the price of electricity sales shall get the incentives as part of the government's commitment towards the development and use of renewable energy.

Two of the existing waste pond will be modified with the construction process for Biogas Plant. Geomembrane and double membrane air pressured cover will be installed to capture methane generated at the same time as the gas storage dome, and fermentation will be optimized with the agitation system. Biogas plant operation is monitored by a data recording system, and instrumentation to provide optimization of the process. Trained personnel will operate the Biogas Plant with direct supervision from Aufwind New Energy GmbH Biogas Plant which will ensure the optimal running conditions as designed.

Criterion 6.1 Aspects of estate and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

SMM and estates have established the social impact assessment report integrated in the Environmental Impact Assessment (AMDAL/RKL-RPL) issued by Bangka Belitung Province No.188.44/504/Bapedalda / 2002 on Environmental Feasibility Activities Oil Palm and Rubber and Palm Oil Factory for PT SMM, dated December 13, 2002. There was not many information about social impact assessment for estates and mill in this assessment. The social impact assessment noted the positive impacts on activities related to labour vacancy and increase in community wages. The data on social and economic analysis and impacts were collected through questionnaire surveys. However there is no regular monitoring and management of social impact so far. For this reason, auditor issued the non conformity report (NC#4). SMM has made correction and corrective action as well, and auditor confirmed the NC has been closed (See NC#3 sheet).

There were records of Corporate Social Responsibility (CSR) activities for year 2011. The program covered such as training on best practices for palm oil to farmer and smallholder, contribution given to community, such as road repair, school contribution. Social impact of company was discussed during stakeholder meeting on October 13, 2011, and matters of concerned were discussed in detail in section 3.3 of this report.

NC#3

Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties

SMM and estates have an effective communication and consultation procedure, Procedure of Internal and External Communication, PRS-SDV-017 dated October 1, 2011, prepared by Sustainable Department and approved by General Manager. The procedure covers the scope, purpose of the procedure, internal and external communication method, documentation and follow-up action.

Based on the consultation procedure, the public consultation meeting is done at least yearly. First on May 25, 2012 in Balok Estate, followed on June 1, 2012 in Jangkang Estate, and the latest on June 8, 2012 in Air Ruak Estate. Based on the attendance list records for each estate, the invited stakeholders only elite figures from villages surrounding the estate, whereas regent, sub-regency chief, and NGO were not invited. Records of minute’s meetings were available. Indeed, the topic was only concerned to the local communities surround the estate, thus one session meeting with more general topic has to be conducted and all stakeholders within the list have to be involved.

Stakeholder’s list which updated on June 2012 is available. The list cover as follow: contact person’s name and contact number. SMM has 80 stakeholders in total, with 68 stakeholders within East Belitung District and 12 stakeholders within Bangka Belitung Province. Records of community’s aspiration and responses, such as a proposal letter, a declaration letter, a minute of meeting, payment slip, were available. External Affair Manager, Mr. Hendri Tjen, has been appointed as a person who responsible for consulting and communicating with local communities.

Yes


Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

SMM and estates have a procedure of handling complaints, grievance and dispute, Procedure of Handling Complaint and Grievances No. 022/HR&GA/Perbedaan Pendapat/06-09, dated June 1, 2009 signed by Director of Corporate Service. The policy was covered purpose of the policy, definition, record’s handling procedure, report, etc. The procedure to deal with the disputes (if any) indicated that in case of disputes is not resolved by two parties, the court will be used to find the solution. For the receiving external complaints and grievances, complaints box is used to receive the complaints and grievances. Currently, there are no complaints from either stakeholder or their employee so far. To ensure that the stakeholder and employee have the right to give the complaints and grievances, the procedures have been communicated to all stakeholders at each mill and estate. It was noted that the responses from stakeholders have been positive. Based on the public consultation meeting at Jangkang estate office dated on July 4, 2012 auditor found that there were no evidence of disputes and complaints raised by stakeholder and communities.

Yes

Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stake-holders to express their views through their own representative institutions.

In this certification assessment, the audit team studied the whole compensation mechanism, and found its satisfactory and no legal action having been taken by any party. The compensation mechanism indicated in Company’s policy of Land Compensation No.021/HR & GP/CP/Pembebasan Lahan/06-09, dated June 1, 2009, which was signed by Managing Director has been communicated to stakeholders through the public consultation meeting. Details of compensation settlement and records of land compensation was available and signed by both parties on march 2, 2005 and all of the compensation was paid on March 4, 2005.. Currently, all of lands and estates are owned by SMM. During public consultation meeting as well as interviewing with local communities, it confirmed that there is no current claim on any land.

Yes

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Wage payment is the common term that the company needs to follow as it is compulsory required by Bangka Belitung Governor’s Decree No. 188.44/1135/TK.T/ 2011. This decree is about determination of minimum wages for Sub Province sector within Bangka Belitung Island Province year 2012 which is 1,397,500 IDR per month. The company implement this regulation through General Manager Internal Memorandum No : 001/GM/r f/01-2012, about the worker’s wage and rice allowance year 2012 dated January 1, 2012, and the wage is 1,397,500 IDR per month.

Auditor assessed the list of workers, complete with the wage amount, date of birth, date of joining SMM, basic salary, fringe benefit or premi, additional, overtime, allowance, gross, deduction, nett), dan signature, payment slip, detailed with all allowance and deduction is available. The receipt of payment was gave to all workers on the payment day.

Each worker has their contract works, based on Decree of Working Agreement (so called Surat Keputusan Penetapan Perjanjian Kerja Bersama) oleh Kepala Dinas Sosial, Tenaga Kerja dan Transmigrasi Kab. Belitung Timur No. 188.4/055/SK.PKB/DSTKT/VI/2011 about registration of Perjanjian Kerja Bersama PT Sahabat Mewah dan Makmur (SMM), dated November 17, 2011 which was signed by SMM and Labour Union (PUK FSP Kep Migas dan Umum PT SMM), and approved by The Officer of Worker Affair. A labor policy such as non discriminatory practices and forces labor either full time employee or contractors are socialized in agreement with those people. Worker and contractor are required by the terms of their contract/agreement to have their fair compensation.

All employees even contractor have been provided with the suitable housing, water supplies, medical care and welfares by the company. Worker housing receive piped potable water which is tested regularly to ensure that it safe for human use. The facility provided the huge water jar to store the rainfall for being used as drinking water. It is also tested regularly to ensure it is always safe for human consumption. All workers housing are also provided with free electricity.

Yes

Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

SMM and all estates have offered the right to freedom in establishment labor union. Right to freedom of association or unions of the worker has announced through announcement letter ….

Yes


signed by Managing Director, who is top management, on 22 February 2012. Currently, workers in all sites didn’t either establish the labor union or join the labor association during the period of assessment. However, there was the election the leader of worker among the worker in each estate. Elected worker will be act like a village headman. For the issuing any concerns to the estate manager, all worker have the right to raise their concerns equally. The last meeting was done on 23 February 2012 between management representatives, representatives of worker, women representative and security officer have joint that meeting and discussed in relevant topics.

Criterion 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programs. Children are not exposed to hazardous working conditions.

SMM still kept and maintained a policy on child labor which was signed by the Managing Director of all sites on 22 February 2012. The policy was based on the Decree of Working Agreement (Surat Keputusan Penetapan Perjanjian Kerja Bersama) by Head of Social, Labor and Transmigration Sub-province East Belitung No. 188.4/055/SK.PKB/DSTKT/VI/2011 about registration of Perjanjian Kerja Bersama PT Sahabat Mewah dan Makmur (SMM), dated November 17, 2011. This working agreement was duly signed by both parties, SMM and Labor Union (PUK FSP Kep Migas dan Umum PT SMM), approved by Head of Worker Affair. No worker under 18 years of age is allowed. Review of recruitment requirement shown that minimum age of 18 was required which was proved with submitting birth of certificate, identity card, or other such as driving license along with job application. Records of personal data of all employee indicated date of birth and date attendance for working are reviewed and confirmed that no worker under 18 years old were employed.

Yes

Criterion 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

SMM and estates have a policy publicly published on 27 July 2012 about an equal opportunity employer with promotion mainly based on merit, documented in Decree of Working Agreement (Penetapan Perjanjian Kerja Bersama) No. 188.4/055/SK.PKB/DSTKT/VI/2011 dated November 17, 2011. This policy was socialized to either worker or contractor. The personal department located in SMM has responsible to identify and recommend candidates for promotion.

Job vacancies are posted on notice boards of SMM and estates when new face employee is needed and documented in Procedure of Employee Recruitment/Appointment/Promotion/Demotion (SOP Pedoman Penerimaan/ Pegangkatan/Promosi/Demosi Karyawan) No. 013/HR & GA/CP/07-2007). It was observed that the details of job vacancies posted in the notice boards indicated only position that is looking for, basic qualification either education background and working experience. There were no any words to lead for discrimination posted in the notice board such as gender, religion and nationality. It was also observed that some position hold both by female and male in the mill and estates such as assistant estate manager, environmental officer and sprayer for example. However, all estate managers are male.

Yes

Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

SMM and all estates have a policy on prevention of sexual harassment displayed at various locations in mill and estates. Policy on sexual harassment was in Internal memorandum of General Manager No. 043/GM/rf/06-2009 about Guest List Book And Procedure Of Handling Of Sexual Harassment And Violence dated June 23, 2009. was well informed to all workers, management levels and communicated to stakeholders. Record of this meeting was kept and retrievable in the appropriate place. There is a gender committee to prevent sexual harassment which established through the General Manager’s letter No. 001/SK/GM/06-2009 date 23.06.2009. The committee has regular meeting between its member. There was training of the sexual harassment prevention o n May 10, 11 and 31, 2012 and records of the training was kept and maintained. Based on the result of interview women employees, it confirmed that that they understood the policy and knew the grievance mechanism for complaints such as go to any members of gender committee

The company has commitment on the protection of reproductive rights through the Internal Memorandum from General Manager No. 041/GM/srs/06-2009, dated June 19, 2009. Female employees are entitled to pregnant and childbirth leave of 3 months for each instance and also allowed to breastfeed for up to 6 months at least 30 minutes everyday. Records of maternal leave and menstruation leave are available.

Yes


Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.

SMM keep maintained an fair, legal and transparent agreements with its suppliers/subcontractors and independent farmers. Even though there are no purchase contracts to bind the smallholders they will be informed by the mill on the daily FFB price through phone and the daily price of FFB will be posted at the mill gate. A list of FFB smallholders is kept and updated for the purpose of informing the daily FFB price. The smallholders are free to decide where to sell their FFB. The price of FFB is determined by the purchasing department of SMM, based on to the procedure FFB price calculation.

Yes

Criterion 6.11 Grower and mills contribute to local sustainable development wherever appropriate.

The SMM management has strong commitment to contribute to community development and documented in Policy of Corporate Social Responsibility which covers Business Ethique Realization Human Resource Policy, Fair Practice, Occupational Health and Safety, Environmental Policy, is available, dated December 1, 2009 and signed by Mr. Philip Liu as General Manager. Working program for CSR Activity on 2012 was released on January 3, 2012. The activities planned were varied, such as socialization of shareholders program for the locals, aids for local teachers, free medical treatment for the locals, making a well for locals, etc. For the activities planned during January until June 2012 were mostly realized as per schedule with some ignorable delays, except for making a well program which was planned on May 2012, have not been realized yet, thus has to be rescheduled.

Example of contribution of SMM :

1. Tax of surface water usage

2. Land & Building tax

3. CSR program report such as roadworking, lending a heavy equipment, health aid, etc.)

This record is kept in appropriate room under controlled General Affairs Department.

Yes

Criterion7.0 No new planting planned on any estate included in the scope of this assessment.

Principle 7 is not applicable to this assessment.

Criterion 8.1 Growers and mills regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

SMM management has committed in order to continuous improvement throughout RSPO principles and criteria. Concerning prevention of emission (release of carbon emission to environment generated from palm estate and methane capture by CDM program), the environmental impact assessment was adopted to ensure vehicles and operating boiler emissions for uncontrolled parameters were detected. Reduced consumption of dangerous agrochemicals (paraquat) was inspected and confirmed in accordance with top management‘s of SMM policy. The used agrochemical jars or containers have been handled and stored in proper chemicals warehouse. Record of reducing consumed paraquat (gramoxone) inspected for year 2007 (0.16 litre/ha), 2008 (0.13 litre/ha), and 2009 (0.01029 liter/ha) and no longer used in 2010, 2011, and 2012.

Yes

3.2 Identified Non Conformances

This section gives an over view of new or revised non-conformities raised during this assessment and of action taken to close out non-conformities rose during the previous assessments.

3.2.1 Detail of Non Conformity Non Conformity Report – SMM-01

Pre-Audit Surveillance Audit No. 2 Re-Audit ID No. : Certification Audit Re-certification Audit Extension Audit Date : July 2 – 7, 2012

Company : PT. SAHABAT MEWAH MAKMUR (SMM) Mgt. Rep. : Mr. Purnawan Lead Auditor : ANITA MASDUKI S.(AM) Auditor(s) : KARLINA BONE (KB) Standard(s) : RSPO P&C INA-NIWG ver. May 2008 Date of issued : July 05, 2012 Discussed with : Legal and OHS Team Location : JANGKANG MILL (JKM) RSPO – Criterion: 2.1. Major 1

There is compliance with all applicable local, national and ratified international laws and regulations. Evidence of compliance with relevant legal requirements

Description of Finding/Objective Evident:

Operational lisence certificate for Mr. Hamnan and Mr. Budiman who operate a forklift, both are expired, while for Mr. Rudi Hartono who operate a bechoe loader (BL03) do not have operational lisence certificate by the time of this assessment was carried. No monitoring system to ensure the validity of operational lisence certificate of worker. Classification Major Minor

Purnawan

Anita Masduki

(Management Representative) (Lead Auditor) Correction of nonconformity (by company): To stop working on specific instrument needed for license for those who do not have the license or the license is expired

Purnawan

(Mng. Rep.)

Cause of nonconformity (by company):

No monitoring on license validity yet for all instrumentation needed license

Corrective action planned (by company):

Purnawan

To monitor license validity for all instrumentation needed license. The list of license are attached.

(Mng. Rep.) Follow-Up and Closure of Nonconformance :

Non-Conformity Result of corrective action implemented by the organization will be verified in ____________________________audit.

Corrective action verified and accepted Effective

Implementation verified by submitted documents Not Effective

Implementation verified in a re-audit

Lead Auditor or Auditor, Date

Lead Auditor or Auditor, Date

Non Conformity Report – SMM-01 Non Conformity Report – SMM - 02

Pre-Audit Surveillance Audit No. 3 Re-Audit ID No. : Certification Audit Re-certification Audit Extension Audit Date : July 2 – 7, 2012

Company : PT. SAHABAT MEWAH MAKMUR Mgt. Rep. : Mr. Purnawan Lead Auditor : ANITA MASDUKI S. Auditor(s) : KARLINA BONE Standard(s) : RSPO P&C INA-NIWG ver. May 2008 Date of issued : July 05, 2012 Discussed with : Estate Assistant Managers Location : JANGKANG ESTATE RSPO – Criterion : 4.8 Major 2

Records of training for each employee are kept.


The records, which were randomly checked for three (3) new employed harvesters within division I at the late of 2011, were not available.

Classification Major Minor

Purnawan

(Management Representative) (Lead Auditor) Correction of nonconformity (by company): Date of correction : 24th July 2012

Purnawan

To conduct training for the employees who have not get training

(Mng. Rep.)

Cause of nonconformity (by company): No monitoring on employee’s training need

Corrective action planned (by company): Deadline for implementation : 24th july 2012

Purnawan To perform training need assessment to all relevant employees. The training need assessment is attached.






Lead Auditor or Auditor, Date Lead Auditor or Auditor, Date

Non Conformity Report – SMM – 03 Pre-Audit Surveillance Audit No. 3 Re-Audit ID No. : Certification Audit Re-certification Audit Extension Audit Date : July 2 – 7, 2012

Company : PT. SAHABAT MEWAH MAKMUR Mgt. Rep. : Mr. Purnawan Lead Auditor : ANITA MASDUKI S. Auditor(s) : KARLINA BONE Standard(s) : RSPO P&C INA-NIWG ver. May 2008 Date of issued : July 05, 2012 Discussed with : Estate Assistant Managers Location : JANGKANG ESTATE RSPO – Criterion : 6.1 Minor 1

Regular monitoring and management of social impact, with the participation of local communities.


The social impact assessment was performed as integrated part with environmental impact assessment. However there is no regular monitoring and management of social impact so far.

Classification Major Minor

Purnawan

(Management Representative) (Lead Auditor) Correction of nonconformity (by company): Date of correction : 24th July 2012

Purnawan

To perform monitoring and management of social impact .

(Mng. Rep.) Cause of nonconformity (by company): No regular monitoring on social impact assessment report

Corrective action planned (by company): Deadline for implementation : 24th july 2012

Purnawan

To conduct monitoring on social impact assessment report yearly, lately on September ~ October.






Lead Auditor or Auditor, Date Lead Auditor or Auditor, Date

3.2.2 Resume of Audit Results

Indonesian National Interpretation of RSPO Principles and Criteria

P&C 1.1 1.2 2.1 2.2 2.3 3.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 5.1 5.2 5.3 5.4 5.5 5.6 6.1 6.2 6.3 6.4 6.5 6.7 6.8 6.9 6.10 6.11 7 8.1

Status 1 1 3 1 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 NA 1

#NC 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 - 0NOTE: Audited: “1” Conforming; “2” Minor Non-Conformity; “3” Major Non-Conformity; “NA” not

applicable, “#NC” : Number of Non-Conformities found

AUDIT OUTCOME

2 Non-Conformities MAJOR During this audit,

1 Non-Conformities MINOR

3.3 Issues raised during public consultation with stakeholders Public consultation was conducted during surveillance audit , on July 3, 2012 at General Manager Office (GMO), Jangkang Mill. The attendances are vary from Environmental Office, head of villages, NGOs, people’s representative, labor union, and company’s gender community. Result of the meeting are summarized below. Participants of stakeholder meetings stated that the existence of oil palm plantation under SMM has provided benefits to society. The benefit such as provision of employment, both directly related to maintenance activities and the cultivation of oil palm. Indirectly through partnership such as procurement of equipment, workmanship maintenance of facilities (roads, bridges, building / office). The information on RSPO needs to be socialized more intensively through media such as information boards around the plantation offices. Socialization and communication can be done through meetings or activities such as public anniversaries, religious holidays, or visiting to community. People also asked for educational assistance, especially for renovation of school building, improve public facilities such as schools, clinics, village offices (kantor desa), and others in coordination with local government.

3.4 Noteworthy positive components The RSPO management has more advantage consideration to Green House Gases (GHG) for CDM Program. The CDM is currently being prepared to replace consumption of biogas fuel (methane capture) which is to run a generator to generate electricity. There is also Biomass Gasification renewable energy initiative without CDM. PT Austindo Aufwind New Energy (AANE) is a joint venture established by PT ANJ Agri (Indonesia) and Aufwind New Energy GmbH (Germany). This company is engaged in the development and operational of Biogas Plant from Palm Oil wastewater treatment plant. One of the project of this company located on the island of Belitung, namely at the location of PT Sahabat Mewah dan Makmur (PT SMM) which is a subsidiary of PT. ANJ Agri, located in the Desa Jangkang, Kec. Dendang , Belitung Timur, Bangka Belitung. Paraquat has no longer been used since 2010.

4. Certified Organization’s Acknowledgement of Internal Responsibility 4.1 Date of next surveillance audit PT TUVNORD Indonesia will perform 3rd annual surveillance assessment to the SPO management of SMM in 12 months.

4.2 Date of closing non-conformities

Auditor closed non-conformities in October 20, 2012

4.3 Sign-off surveillance assessment findings

Please sign on the annual surveillance assessment and confirm the acceptance of the assessment report contents including assessment findings. The company VP2 Reg ANJA and General Manager sign for the annual surveillance assessment report.

Signed for and on behalf of

PT. Sahabat Mewah dan Makmur

Belitung, October 2012

VP2 Reg ANJA General Manager

Phillip Liu Sukrisdianto

Signed for and on behalf of

PT. TÜV NORD Indonesia – System Certification Management

(Lead Auditor)


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APPENDIX A List of Abbreviations

BOD Biological Oxygen Demand OSHAS Occupational Safety and Health Assessment Scheme

CPO Crude Palm Oil P&C Principle and Criteria

CSR Corporate Social Responsibility PK Palm Kernel

EFB Empty Fruit Bunch PKB Perjanjian Kerja Bersama (Collective Agreement)

EMS Environmental Management System POME Palm Oil Mill Effluent

FFB Fresh Fruit Bunch PPE Personal Protective Equipment

GPS Global Positioning System R&D Research and Development

HCV High Conservation Value RSPO Roundtable on Sustainable Palm Oil

HCVF High Conservation Value Forest RSPO NI Roundtable on Sustainable Palm Oil National Interpretation

IPM Integrated Pest Management SIA Social Impact Assessment

MSDS Material Safety Data Sheet SOP Standard Operating Procedure

NC Non Conformity


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APPENDIX B Mass Balance Supply Chain for Mills

STANDARD SOP/Policy/Others Records/Evidence

E.1.Documented Procedure

a) Complete and up to date procedures covering the implementation of all the elements in these requirements.

√ There is a set of SOP developed to ensure the implementation of supply chain mechanism at mill, from receiving FFB, processing, storage, and despatch CPO, i.e :

- P-SMM-KBN-PRS-03 Transportation of FFB - P-SMM-PKS-PRS-01 Weighing and recrding of FFB, CPO, and PK - P-SMM-PKS-LAB-01 : Processing of

CPO - P-SMM-RO-MKT-01 : Domestic Sales - P-SMM-RO-MKT-02: Export Sales

Form Surat Pengantar Buah Sawit (FM-SMM-KBN-PRD-020005) Form Hasil Penimbangan (FM-SMM-PKS-PRS-010201) Form Laporan Penerimaan TBS (FM-SMM-PKS-PRS-010203) Form Laporan Produksi Harian (FM-SMM-PKS-LAB-010002) Form Laporan Hasil Pengiriman CPO & PK (FM-SMM-PKS-PRS-010204) Form Rekapitulasi Mass Balance (FM-SMM-PKS-PRS-140001)

.1.1

b) The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard.

√ RSPO coordinator is in charge and have the authority to monitor the implementation of supply chain procedure, including the recording of incoming and outgoing of sustainable and non-sustainable oil.

There is a letter of Apointment from President Director to RSPO coordinator and its job desciption as well.

Job Description for RSPO Coordinator), and Job Decription for Mill Manager)

1.2 The facility shall have documented procedures for receiving and processing certified and non-certified FFBs.

√ All recording of incoming and outgoing certified and non-certified FFB are documented in the Mill Daily Report (Laporan Harian Pabrik). The weighbridge ticket for transporting FFBs to the mills has indicated status of FFBs to identify and differentiate between non-sustainable and sustainable FFBs.

Implementation of the mechanism shall be checked and verified in the surveilance audit

Sampel of Daily and Monthly Production Report, April-June 2012 are available

E.2 Purchasing and goods in

2.1 The facility shall verify and document the volumes of certified and non-certified FFBs received.

√ All documents and records of volumes of certified and non-certified FFBs received will be recorded in the Daily Production Report (Laporan Harian Pabrik)

RSPO procedure will be followed up accordingly upon certification. This will be

Sample of Daily and Monthly Production Report, April-June 2012 are available


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checked during surveillance audit

2.2 The facility shall inform the CB immediately if there is a projected overproduction.

√ This is not applicable as there is no overproduction of the mill

E.3 Record keeping

3.1 The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of these requirements.

√

3.2 Retention times for all records and reports shall be at least five (5) years.

√

Upon certification, all records will be maintained accordingly.

There will be a daily, monthly and 3 monthly basis report to monitor the incoming and outgoing oil based on the mass balance requirements. There was procedure to maintain records in PRS – SMM – 001 and PRS – SMM – 002, rev.00, dated September 01, 2009 regarding Document and Record Control, and Rev 01, December 17,2011

There was Master Lits of Record, dated December 17,2011 that figure out all relevant RSPO records, including for mass balance supply chain

a) The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and palm kernel meal on a three-monthly basis.

√ a) There was mechanismon how to

calculate mass balance of FFB purchased as well as the CPO and PK to be despatch through the table Dayly Production Report. Standard operating procedure was in progress to be developed.

In the form Daily Production Report, and Monthly Production Report, it has been separate calculation between certified and non certified FFB puchased

The record of implementation of the mass balance calculation shall be checked and verfied in the next surveilance audit.

b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO.

√ NA NA

3.3

c) The facility can only deliver Mass Balance sales from a positive stock. However, a facility is allowed to sell short.

√ This statement will be elaborated in the procedure of mass balance calculation

The evidence of this will be checked and verified in the nex surveilance audit.

3.4 The following trade names should be used and specified in relevant documents, e.g. purchase

√ This statement will be elaborated in the procedure of mass balance calculation

The evidence of this will be checked and verified in the nex surveilance audit.

E.4 Sales and good out

4.1 The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following information: a) The name and address of the

√ There was standar operating procedure/ SOP, SMM-F&A-SOP-06, CPO and Palm Kernel Sales. In this SOP, it was confirmed that all sales invoices issued for RSPO certified products to be despatced include the

There was no records available since the mass balance supply chain mechanisme not implemented yet. However, the SOP was completed with format of


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buyer; b) The date on which the invoice was issued; c) A description of the product, including the applicable supply chain model (Segregated) d) The quantity of the products delivered; e) Reference to related transport documentation.

information of: - The name and address of the buyer; - The date on which the invoice was issued - Description of the product, including the

applicable supply chain model (IP/SG/MB) - The quantity of the products delivered - Reference to related transport documentation.

invoice that include all requirements mentioned in the procedure.

E.5 Training

5.1 The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain Certification Systems.

√ There was training policy issued by SMM’ management No.010/SMM/HR&GA/ Training/09-2009 dated Apri 10,2009

There was training records on mass balance calculation to related staffs, and the training program was available. The implementation of supply chain mechanism was available.

E.6 Claims

6.1 The facility shall only make claims regarding the use of or support of RSPO certified palm oil that are in compliance with the RSPO Rules for Communication and Claims.

√ The procedure will be followed up accordingly upon certification. This will be checked during surveillance audit.

Not available yet

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