roundtable on sustainable palm oil - tÜv rheinland · 1.9 description of company history,...

Roundtable on Sustainable Palm Oil Public Summary Report

Report no.: RA1-82450214010

Re Certification assessment against the

RSPO Principles & Criteria Generic Standard 2014 Wilmar International Limited

PT Perkebunan Milano Pinang Awan Palm Oil Mill

North Sumatera, Indonesia

Date of assessment: July 29 to August 03, 2015

Report prepared by:

Carol Ng (RSPO Lead Auditor)

Certification decision by:

Abdul Qohar (Director of TUV Rheinland Indonesia)

Certification Body: PT TUV Rheinland Indonesia

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

Jakarta 12950,Indonesia Tel: +62 21 57944579 Fax: +62 21 57944575

www.tuv.com/id

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT ............. .......................................... 3

1.1 National Interpretation Used .................................................................................................................. 3 1.2 Type and Scope of Assessment ............................................................................................................ 3 1.3 Location and Maps ................................................................................................................................. 3 1.4 Description of Supply Base .................................................................................................................... 4 1.5 Dates of Plantings and Replanting Cycles ............................................................................................. 6 1.6 Other Achievements and Certifications Held ......................................................................................... 6 1.7 Area of Plantation (Total, Planted and Mature) ..................................................................................... 6 1.8 Organisational Information / Contact Person ......................................................................................... 7 1.9 Description of Company History, Socio-economy & Environment ........................................................ 8 1.10 Time Bound Plan for Other Management Units ................................................................................... 8 1.11 Compliance to Rules for Partial Certification ..................................................................................... 10 1.12 Plan for certification of associated smallholders ............................................................................... 11 1.13 Approximate Tonnages Certified ....................................................................................................... 11 1.14 Recommendation for Certification ..................................................................................................... 11 1.15 Date of Certificate Issued and Scope of Certificate ........................................................................... 11

2.0 ASSESSMENT PROCESS .................................................................................. 12

2.1 Certification Body ................................................................................................................................. 12 2.2 Qualifications of Lead Assessor and Assessment Team .................................................................... 12 2.3 Assessment Methodology .................................................................................................................... 13 2.4 Stakeholder Consultation and Stakeholders Contacted ...................................................................... 14 2.5 Date of Next Surveillance Visit ............................................................................................................. 15

3.0 ASSESSMENT FINDINGS ................................................................................... 16

3.1 Summary of Findings ........................................................................................................................... 16 3.2. Status of Previously Identified Non-conformities ................................................................................ 44 3.3. Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions........................ 45 3.3 Noteworthy Positive Components ........................................................................................................ 47 3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues..................................................... 48 3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client .................................... 52

APPENDICES ............................................................................................................ 53

Appendix 1: Details of Certificate ............................................................................................................... 54 Appendix 2: Certification Audit Plan ........................................................................................................... 54 Appendix 3: List of Abbreviations ............................................................................................................... 62 Appendix 4: List of Stakeholders Interviewed and Contacted ................................................................... 64 Appendix 5: Observations and Opportunities for Improvement ................................................................. 65

RSPO Certification Assessment Report

- PT Perkebunan Milano, Pinang Awan Palm Oil Mill –

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QMF: RSPO-007a-13(Rev.0)

1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against RSPO Generic Princi-ples & Criteria 2013. The operations of Pinang Awan mill were also assessed against Module E of the RSPO Supply Chain Certification Systems (SCCS) document (November 2014).

1.2 Type and Scope of Assessment

The recertification assessment was carried out on one mill and 3 estates under under PT Perkebunan Milano owned by Willmar International. The scope of the Supply Chain Certification System assessment covers the implementation of the Mass Balance supply chain model of Pinang Awam mill. This is not a multi-site certifica-tion.

1.3 Location and Maps

Table 1. GPS Locations PT Perkebunan Milano’s mill and estates

Name of mill / es-tate

Location GPS locations

Latitude Longtitude Pinang Awan Mill Pinang Damai Village, Torgamba

Sub-district, Labuhan Batu District 1°50’34.175” 100°12’11.296”

Sungai (Sei) Daun Estate

Pengarungan Village, Torgamba Sub-district, South Labuhan Batu District

1°52”25.93” 100°14”02.29”

Batang Saponggol Estate

Batang Saponggol Village, Kampung Rakyat Sub-District, South Labuhan Batu District

1°58”17.61” 100°13”20.34”

Merbau Estate Milano Village, Merbau Sub-district, North Labuhan Batu District

2°13”28.58” 99°52”06.43”



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Location of PT Perkebunan Milano estates and Pinang Awan Palm Oil Mill.

1.4 Description of Supply Base Pinang Awan mill is one of the palm oil mills owned by Wilmar International in North Sumatera. Pinang Awan Mill was established in 1996 with a production capacity of 60 tons/hours. The company was initially a National Investment Company, but changed status to a Multinational Investment Company upon approval from the Indonesian Capital Investment Coordination Board (‘Badan Koordinasi Penanaman Modal’ - BKPM) in their BKPM decision letter no. 749/I/PMDN/1994 and BKPM decision letter no. 06/V/PMA/2002. Currently Pinang Awan Mill is receiving approximately 40-42% of its supplies of fresh fruit bunches (FFB) from 3 company-owned estates (Sei Daun Estate, Batang Saponggol Estate and Merbau Estate) and the remaining 58-60% from independent smallholders, and the mill has no scheme smallholder.

Merbau Estate

Batang Saponggol

estate

Pinang Awan Mill

Sei Daun estate



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Table 2: FFB Supply Information for Pinang Awan Palm Oil Mill, Period January 2014 to June 2015.

FFB Contributors

FFB supplied from January to December 2014

FFB supplied from

January to May 2015

Tonnes % Tonnes %

1. Company owned es-tates :

Sei Daun Estate 63,199.22 23.47 23,886.60 24.18

Batang Saponggol Estate 45,476.86 16.89 17,511.26 17.73

Merbau Estate 19.73 0.01 - 0.00

Sub Total 108,695.81 40.36 41,397.86 41.91

2. Independant outgrow-ers*:

160,617.94 59.64 57,373.73 58.09

TOTAL 269,313.75 100.00 98,771.59 100.00

Note : *)Supply received from 70 FFB out growers in y ear 2014 and 47 FFB supplier in year 2015

Table 3: CPO and PK production from Pinang Awan Palm Oil Mill in year 2014

Amount (MT)

CPO PK

Certified tonnages claimed in previous certifi-cate

69,951 15,898

Certified tonnages sold* - -

Certified tonnages purchased* - -

Actual Production for year 2014 54,235 14,640

Projected total output for year 2015 28,292 6,430

Actual OER and KER for year 2014 OER: 20.63 KER: 5.44

Project OER & KER for year 2015* OER: 20.5 KER: 5.5

* The mill does not sell any products as RSPO certified, as confirmed from check of eTrace sales records of the company from the traceability office of Wilmar. Certified products are sold only through ISCC.

** As per mill budget 2015



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1.5 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings are as per the table below. Table 4: Age and year of plantings of company estat e supplying to Pinang Awan Palm Oil Mill

Age & Year of Plant-ings

Oil palm planted area at each estate(ha)

Sei Daun*** Batang Saponggol*

Merbau**

0 – 5 yrs (2010 – 2014) 0.00 0.00 50.72 5-10 yrs (2004 – 2009) 510.46 51.87 0.00 10-15yrs (1999 – 2003) 360.21 1,117.39 651.65 15-20yrs (1994 – 1998) 761.96 0.00 51.91 20-25yrs (1989 – 1993) 306.62 284.97 39.96 25-30yrs (1983 - 1988) 492.49 192.02 126.18

TOTAL 2,431.74 1,646.25 920.42

1.6 Other Achievements and Certifications Held Table 5: Details of other certifications or awards h eld by PT Perkebunan Milano

Name of mill / estate

Certification Standard / Award achieved

Certification Body / Awarder

Date Achieved

Pinang Awan Mill ISO 9001 & ISO 14001 TUV Rheinland Year 2008

Sei Daun Estate ISO 9001 & ISO 14001 TUV Rheinland Year 2008


ISO 9001 & ISO 14001 TUV Rheinland Year 2008

Merbau Estate ISO 9001 & ISO 14001 TUV Rheinland Year 2008

PT Perkebunan Mi-lano

Winner for ‘Top Bipartite Association’

Labuhan Batu District Govern-ment

Year 2007

PT Perkebunan Mi-lano

Class A Plantation Award North Sumatera Plantation Body

Year 2007

1.7 Area of Plantation (Total, Planted and Mature)

Table 6: Oil Palm Planted Area Summary, FFB Producti on and Average yield/ha for PT Perkebunan Mi-lano.

Estate Name Total area (ha)

Oil Palm Planted Ar-ea (ha)

HCV/Potential HCV ar-eas (ha)

Other purposes (Road,housing, nursery etc) (ha)

Sei Daun Estate 2,568.37 2,431.74 136.63


1,749.43 1,646.25 35.68 67.5

Merbau Estate 974.77 920.42 18.12* 54.35

TOTAL

Note : * include in planted area



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1.8 Organisational Information / Contact Person

Contacts details of the company are as follows:

1. CERTIFICATIONS DETAILS Name of RSPO Member Wilmar International Liomited

RSPO Membership Number 2-0017-05-000-00. Name of Certification Unit Pinang Awan Palm Oil Mill

Name of Certification Body PT TUV Rheinland Indonesia

Name of Lead Auditor Carol Ng

Certificate number 824 502 14010

Start date certificate (dd/mm/yy) 25/09/15

End date certificate (dd/mm/yy) 24/09/16

Assessment Type Renewal Certification

Date of Audit (dd/mm/yy) July 29 to August 03, 2015

Start date License (dd/mm/yy) 25/09/15

End date License (dd/mm/yy) 24/09/16

2. MILL'S DETAILS Name of Mill(s) Pinang Awan Palm Oil Mill Address Pinang Damai Village, Torgamba District, Labuhan Batu District

City / Town Labuhan Batu

State North Sumatera

Country Indonesia

Mill GPS Location Latitude 1º50’34.175” and Longitude 100º12’11.296”

Contact Person Simon Siburate

Tel (+62)- 61- 4145777 and 41027777

Email Simon Siburat <[email protected]>

Mill Capacity (mt/hr) 60 mt/hr

Program level / Supply Chain Model (IP/MB) Mass Balance(MB)



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1.9 Description of Company History, Socio-economy & Env ironment

Table 7: General Information on Estates under PT Pe rkebunan Milano

Description Sei Daun Batang Saponggol Merbau Location of local government admin office

South Labuhan Batu District

South Labuhan Batu District

North Labuhan Batu District

Location of plantation administration office Labuhan Batu Labuhan Batu Labuhan Batu

Stakeholders located at north boundary of estate PT Asam Jawa Bom Baroh Village Community Housing

Stakeholders located at east boundary of estate PT Asam Jawa PT Supra Matra Abadi

Plantation Community Plantation

Stakeholders located at south boundary of estate Disun Estate Konsesi Village and PT

Asam Jawa Community Plantation

Stakeholders located at west boundary of estate Lintang Estate

Lalang Village, Sei Kukuh and Banten

Village PTP Nusantara III

Total Area 2493.19 Ha 1749.43 Ha 974.77 Ha Land Condition Dry Wet & Dry Dry

Soil type Yellow Podsolic Grey hydromorphic Yellow Podsolic

Yellow Podsolic & Hydromorphic

Hydrology Watershed Barumun Watershed Sampuran Watershed Climate type (according to Köppen climate classi-fication)

Type A Type A Type A

Slope (%) 0-15 0-8 0-24

1.10 Time Bound Plan for Other Management Units This time bound plan has been revised on year 2015 and the reason for this is because land use right problem and social issue. The audit team is satisfied that the company conforms to the RSPO requirements for partial certification as laid out in Clause 4.2.4 of the RSPO Certification Systems document. Table 8: Time Bound Plan of Wilmar International Li mited

Name of Holding Location

Time bound plan

for certification

OIL PALM ESTATES

PT Perkebunan Milano North Sumatra 2009

PT Mustika Sembuluh Central Kalimantan 2009

PT Tania Selatan (BT & BB) South Sumatra 2010

PT Daya Labuhan Indah North Sumatra 2010

PT Milano (CDE) North Sumatra 2010

PT AMP Plantation West Sumatra 2010

PT Primatama Muliajaya West Sumatra 2010

PT Murini Sam Sam Riau 2010

PT Karunia Kencana Permaisejati Central Kalimantan 2010



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PT Bumi Sawit Kencana Central Kalimantan 2010

PT Mentaya Sawit Mas Central Kalimantan 2010

PT Kerry Sawit Indonesia Central Kalimantan 2010

PT Sinarsiak Dianpermai Riau. 2011

PT Sarana Titian Permata Central Kalimantan 2011

PT Buluh Canang Plantations West Kalimantan 2011

PT Citra Riau Sarana Riau 2012

PT Gersindo Minang Plantations West Sumatra 2012

PT Permata Hijau Pasaman West Sumatra 2012


PT Pratama Prosentindo West Kalimantan 2012

PT Putra Indotropical West Kalimantan 2012

PT ANI (Landak) West Kalimantan 2012

PT Asiatic Persada Jambi 2013

PT Agro Palindo Sakti South Sumatra 2013

PT Musi Banyuasin Indah South Sumatra 2013

PT Agroindo Indah Persada Jambi 2013

PT Agro Palindo Sakti West Kalimantan 2013

PT Daya Landak Plantation West Kalimantan 2013

PT Indoresins Putra Mandiri West Kalimantan 2013

OIL PALM MILLS

PT Milano (Pinang Awan) North Sumatra 2009

PT Tania Selatan South Sumatra 2009

PT Mustika Sembuluh Central Kalimantan 2009

PT Daya Labuhan Indah North Sumatra 2010

PT AMP Plantation West Sumatra 2010

PT Murini Sam Sam Riau 2010

PT Bumi Sawit Kencana Central Kalimantan 2010

PT Kerry Sawit Indonesia Central Kalimantan 2010

PT Sinarsiak Dianpermai Riau 2011

PT Kencana Sawit Indonesia West Sumatra. 2011

PT Buluh Canang Plantations South Sumatra 2011

PT Agro Nusa Investama (Sambas)

West Kalimantan 2011

PT Sarana Titian Permata Central Kalimantan 2011

PT Citra Riau Sarana (ML) Riau 2012

PT Gersindo Minang Plantations West Sumatra 2012




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PT Agro Nusa Investama (Landak)

West Kalimantan 2012

PT Asiatic Persada South Sumatra 2013

PT Musi Banyuasin Indah South Sumatra 2013

PT Agro Indah Persada II Jambi 2013

PT Mentaya Sawit Mas Central Kalimantan 2013

PT Agro Palindo Sakti West Kalimantan 2013

1.11 Compliance to Rules for Partial Certification

Compliance of the uncertified management units of Wilmar International Limited against the rules for partial certi-fication according to RSPO Certification System clause 4.2.4 was assessed by document checking submitted by the company, stakeholder information and verification information from website. A summary of findings is as stated below.

Partial Certification Requirements Audit Findings

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

2-0017-05-000-00.

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

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

At the audit time, the auditor team verify the progress of company’s time bound plan as seen on the table above.

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

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

(f) Land conflicts, if any, are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Set-tlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6.

Based on resuts of self assessment from auditee and evidences submitted to the certification body (for es-tates which has not been certified above) year 2015 several land conflict were identified in several Wilmar plantation Unit, such as in West Sumatera, Central Ka-limantan, and Riau. Conflict resolution plan has been established and under monitoring by RSPO Executive board. The record of negotaion progress are kept maintained by legal department and central of Bina Mi-tra Wilmar International.

(g) Labour disputes, if any, are being re-solved through a mutually agreed process, in

Based on resuts of self assessment from auditee and evidences submitted to the certification body (for es-



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accordance with RSPO criterion 6.3. tates which has not been certified above) year 2014 that no labour disputes which have been raised. There was labour conflict in Tania Selatan in year 2013, and has been solved. Based on results of self assessment from audi-tee and evidences submitted to the certifica-tion body (for estates which has not been certified above) year 2015 that no labour disputes which have been raised.

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

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

1.12 Plan for certification of associated smallhold ers In year 2015, Pinang Awan mill has 68 independent outgrowers that supplied FFB to their mill. All independent outgrowers have no permanent contract with Pinang Awan mill, and free trade market is now applied for all independent outgrowers that supplied for Pinang Awan mill.

1.13 Approximate Tonnages Certified

The approximate tonnages certified, based projection production in 2015 for company owned estates only are as follows:

Crude Palm Oil (CPO) : 28,292 tonnes Palm Kernel (PK) : 6,430 tonnes

1.14 Recommendation for Certification The audit team has confirmed through the audit process that Pinang Awan Mill has established and maintains an effective system to ensure compliance with the RSPO P&C Generic Standard 2014 and RSPO Supply Chain Certification System requirements (dated November 2014). It is also confirmed that the company’s an-nual volume of CPO and PK sold for the period of year 2014 has not exceeded the certified annual tonnages as claimed in the organization’s RSPO certificate no 824 502 14010. TUV Rheinland recommends that PT Perkebunan Milano (mill & estate) be continuing approved for certifica-tion of compliance to the RSPO P & C and Supply Chain Certification System requirements.

1.15 Date of Certificate Issued and Scope of Certifica te

The scope of the certificate covers production of palm oil from PT Perkebunan Milano Pinang Awan Mill and its supply base, which includes Sei Daun Estate, Batang Saponggol Estate and Merbau Estate. The date of certif-icate issued is valid from 25 September 2015 until 24 September 2020.. Further details of the certificate are as per Appendix 1.



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2.0 ASSESSMENT PROCESS

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

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

Carol Ng Lead Auditor

Education: B.Sc. Biotechnology & B.Sc. Environmental Management - Monash University. Trainings attended: RSPO Malaysian National In-terpretation Requirements and Certification – SIRIM; Implementation of RSPO Principles & Criteria - QA Plus; RSPO Stepwise Support Pro-gramme; 2nd Biodiversity Seminar – RSPO; Certification Body Biodiversity Forum & Workshop – RSPO; Environmental Quality Act 1974 (DOE) and ISO9001:2008 QMS Conversion Requirements (TÜV Rheinland).

Working experience: Experience in implementing sustainable practices in Sime Darby plantations to comply with RSPO requirements, performing RSPO internal audits and implementing sustainability projects. Prepared training materials and conducted several RSPO requirements trainings and workshops to plantation management teams (2008).

Suriadi Ali

Auditor Education : Diploma Applied Analitycal Chemistry. North Sumatra Universi-ty, Medan and Bachelor of Chemical Engineering, University of Jaya Baya, Jakarta. Trainings attended: ISO 9000:2000 Series Auditor / Lead Auditor Training - PE International (Jakarta), IEMA Advanced EMS Auditor (IEMA / EARA ISO 14001) Auditor / Lead Auditor Training Course - PE International (Ja-karta), OHSAS 18001 Lead Auditor Training Course - PE International (Ja-karta). ISPO lead auditor training. National Examination Board of Occupa-tional Safety and Health (International General Certification (IGC) 1,2 and 3 TUV Nord (Dubai). National Examination Board of Occupational Safety and Health (International Technical Certification (ITC) for Oil and Gas Industries. RRC (Dubai). Indonesian Engineer Association (PII) (Jakarta), Occupation-al Health and Safety Specialist for lifting equipments. Indonesia Man Power and Transmigration Department (Jakarta). Working experience: Experienced in Quality Control from 1992-2004. Coordinator for Safety Quality and EnvironmentManagement System since 2002 – present. Auditor for Environmental Management System since 2002 – present. Auditor for OHSAS 18001 since 2012 - present. Conduct-ed over 10 Quality Management System audits Environmental Manage-ment System audits and OHSAS

Yasir Muda Hasibuan

Auditor Education: Bachelor of Agriculture, Al Azhar University in Medan, North Sumatera Training attended : Aeareness Training form QMS (Medan), ISO 9000:2000 for Lead Auditor (Medan), Interpretation of ISO 9001:2008 (Medan), IRCA 14001:2004 and OHSAS 18001:2007 (Jakarta). Working Experience :Head of Agronomics in PT Anugerah Langkat Makmur (2010 to 2013), Engineer and Lead Auditor for ISO 9001 for PT TUV Rheinland Indonesia (since 2006), Assistant Division in PT Mandu



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Palma Lestari (1999 to 2000), and Mandor I (Main controller of process) in PT Socfin Indonesia, Aceh (1996 to 1998).

M. Nurul Anwar

Auditor Education : Bachelor of Agriculture, Bogor Agricultural Institute Trainings attended : Indonesian Sustainable Palm Oil (ISPO) Auditor Training, Sustainable Forest Management (Bogor, 2013). Working Experience : Trainer for community development and entrepre-neurship projects and motivator for micro business entrepreneurship pro-gram since 1999, experience as expert of micro business development (1995-2006), team leader of community development program (2006-2012), program manager of corporate social rensponsibility in PT Aneka Tambang (2012) and PT Timah (2013), ISPO Auditor since 2014, SFM Auditor since 2013, Agriculture Expert for ANDAL and AMDAL since 2008.

2.3 Assessment Methodology The certification assessment was conducted betwen July 29 to August 05, 2015 as per the assessment pro-gram below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia’s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rhein-land assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com-promising the integrity of the assessment in anyway. All 3 estates and 1 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the cer-tification body 30 days after the closing meeting. Verification of closure of major non-conformances was con-ducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next suriveillance audit. The certification assessment agenda is as explained below. Main Assessment Agenda.

Date Location/ Main sites Main activities

Day 1, July 29, Pinang Awan Palm Oil Mill

Stakeholder Consultation Meeting, Opening Meeting Verification previous audit findings Verification of document relate of : - Incoming FFB verification (security post, loading

ramp) - Interview with mill workers (boiler supervisor) - Good Agricultural Practices - Field visit to land application site for mill effluent - Waste management (hazardous waste store, palm oil

mill effluent treatment ponds, mill license for tempo-rary hazardous waste storage, license for land appli-cation, land application records)

- Pollution prevention control - Water management - OSH system (fire simulation records, medical check

reports for year 2014 and 2015) - Warehouse (mill compound, chemical store) - Environmental (Environmental Management and

Monitoring Program (UPL/UKL) and implementation reports, environmental objectives, targets and im-provement plan, greenhouse gas calculation sheet,



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renewable energy efficiency analysis document) - Training (boiler operator training certificates and li-

censes) - Consultation with local community supplier of Pinang

Awan Village - SCCS

Day 2, July 30, 2015

Sei Daun Estate Document Review Legal Requirements (OSH & Envi-ronment), OSH, Training, SOP’s of Legal requirements register & implementation ,Field operations (spraying,

harvesting, manuring) ,Worker interviews , visit of Sei Daun Estate Chemical stores,Workshops,HIRARC,OSH Committee & safety records, Accident records,Training & PPE issuance. Good Agriculture practice activities, Procedure and work instructions, Environmental identifi-cation aspect and impacts On-site visit: Sungai Daun Estate harvesting and chem-ist spraying on block E6 SAP57 Division 2. Interviews: Head of Sei Daun Estate, agronomist per-sonal and Manager estate

Day 4, August 01, 2015

Merbau Estate Document Review: Legal Requirements (OSH & Envi-ronment), OSH, Training, SOP’s of Legal requirements register & implementation ,Field operations (spraying, harvesting, manuring) ,Worker interviews , visit of Sei Daun Estate Chemical stores,Workshops,HIRARC,OSH Committee & safety records, Accident records,Training & PPE issuance, Good Agriculture practice activities, Pro-cedure and work instructions, Environmental identifica-tion aspect and impacts On-site visit: Merbau estate division I Blok 058 and blok 079 , workers maintenance tbm Manual. Interviews: Head of Estate Merbau, Assistant, and Man-dors

Day 5, August 02, 2015

Batang Saponggol Es-tate

Document Review: Legal Requirements (OSH & Envi-ronment), OSH, Training, SOP’s of Legal requirements register & implementation ,Field operations (spraying, harvesting, manuring) ,Worker interviews , visit of Sei Daun Estate Chemical stores,Workshops,HIRARC,OSH Committee & safety records, Accident records,Training & PPE issuance. Good Agriculture practice activities, Pro-cedure and work instructions, records of plan and reali-zation programs On-site visit: Batang Saponggol division III Blok 57 worker of chemis, blok 43 harvesting Interviews: Estate Manager, assistant , mandor and some workers.

2.4 Stakeholder Consultation and Stakeholders Contact ed The stakeholder consultation involved both external and internal stakeholders. External stakeholders were noti-fied to make comments on the certification assessment by placing an invitation to comment on the RSPO web-site. Stakeholders included those immediately linked with the operation of the company such employees, out-growers, the local government, NGO’s, trade and labour unions and local communities. Stakeholder consultation took place in the form of meetings and interviews. Meetings with stakeholders were held to seek their views on the performance of the company with respect to the sustainability practices outlined in the RSPO Principles & Criteria, and to comment on aspects where improvements could be made. Meetings



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with local communities were held at their respective premises within and near the company’s area. A stake-holder consultation meeting was also held on Pinang Awan Village Office on July 29, 2015 Letters inviting in-dividual stakeholders to the stakeholder consultation meeting were prepared and sent to the individual stake-holders, while electronic mail and telephone calls were made to arrange the meetings. In all the interviews and meeting, the objectives of the RSPO and the purpose of the assessment was clarified at the outset followed by an evaluation of the relationship between the stakeholders and the company before discussion proceeded to obtain the stakeholders feedback on the company’s compliance to different aspects of the RSPO Principles & Criteria. Although several stakeholders were not familiar with RSPO but they agreed with its objective and expressed their willingness to collaborate in the promotion of sustainable palm oil in North Sumatera province. In all interviews and meeting, the assessment team did not restrict discussion of both the positive and negative aspects of operations conducted by PT Perkebunan Milano estates and mill. The stakeholder consultation meeting held with stakeholders during the audit was extensive and productive, with an attendance of more than 25 attendees]. This was followed by site inspections, including visits to the lo-cal communities, interviews with land claimants and contractors, and inspections of worker amenities and infra-structure. All stakeholder issues raised were recorded and forwarded to the management for their written re-ponse, and this is summarized in Section 3.4.The list of stakeholders that attended the stakeholder consultation meeting and stakeholders interviewed during the assessment is included as Appendix 4.

2.5 Date of Next Surveillance Visit The next surveillance visit is planned for July 2016.



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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings The following is a summary of findings during recertification audit for the criteria listed in the RSPO Principles & Criteria Generic Standard year 2014 and RSPO SCCS year 2014. This audit generate 2 Nonconformities Major and 1 Nonconformities Minor against RSPO Principles & Criteria Indonesian National Interpretation year 2008 and 1 non conformity against RSPO SCCS. RSPO P & C

Criterion 1.1: Growers and millers provide adequate information to relevant stakeholders on envi-ronmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision makin g.

Findings: The company has list of stakeholders for each estate and mill. Stakeholders listed include surrounding government offices (at provincial, district, sub-district and village level), community leaders, other palm oil companies, police stations, universities and school, NGO’s (national, local level), contractors, suppliers, smallholders, social organisations, workers and community members. The lists are updated periodically and are available at each estate and mill. The list will be updated at least once a year. The type of information which are available to public are (but not limited) as stated on management decree letter No. 001/MLN-EXT/VI/2015: • Company profile • Land titles/user rights • Area statement and Mill production capacity • CSR documents • Occupational health and safety plans • Plans and impact assessments relating to environmental and social impacts. • HCV documentation • Pollution prevention and reduction plans • Details of complaints and grievances • Negotiation procedures • Continual improvement plans • Public summary of certification assessment report; • Human Rights Policy • Wilmar Sustainability policy • Planning for company’s improvement. The company has dedicated personnel who are responsible for providing and updating information as well as a documented procedure defining these roles and responsibilities, as follows: • Licensing, Regulations and Legal Compliance (Partnership Development Department) •Public Relation (Partnership Development Department) •Collaboration with stakeholders (Partnership Development Department and Community Development Or-ganizer) •Security (Partnership Development Department) •Environmental management (EHS officer/ estate and mill managers) •Community Development/Corporate Social Responsibility (Corporate Social Responsibility representa-tives/EHS/Manager estate and mill). The information were disseminated to 14 stakeholders on June 19, 2015 such as; Pulo Bargot head of vil-lage; Merbau head of regent; Management PT Smart as neighbor; estate community. The mill maintains records of all requested made by stakeholders in a logbook (handwritten), including in-formation on the date when request was received, party making the request, details of request, letter num-ber, the responsible person, response from the mill and date of completion. As seen from the logbook, the mill had received 44 requests since start of year 2015, all of which were request for assistance. There were no requests for information or complaints made. The company has standard operation procedure for handling request of information and its response i.e. Procedure PRO-GEN-002. The company has dedicated personnel who are responsible for providing and updating information as well as a documented procedure defining these roles and responsibilities, as follows:

• Licensing, Regulations and Legal Complience (Partnership Development Departement) •Public Relation (Partnership Development Departement)



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•Collaboration with stakeholders (Partnership Development Departement and Community Development Organizer) •Security (Partnership Development Departement) •Environmental management (EHS officer/ estate and mill managers) •Community Development/Corporate Social Responsibility (Corporate Social Responsibility representa-tives/EHS/Manager estate and mill). As stated on the procedure the time frame for response to request of information at least 14 working days. The procedure states that information requested and responses will be maintained for 3 years for adminis-trative requests, 1 year for quality and environment related requests, and 5 years for request made by company personnel. There were no requests for information or complaints made for recent one year, as seen from the logbook, the mill had received 44 requests since start of year 2015, all of which were request for assistance and donation only. Evidence of responses made were sighted in the form of response letters and payment receipts made to the relevant party, e.g

1) Letter dated 4 April 2015 in response to request made by Koni Kec. Torgamba made on 31 March 2015 requesting donation for their Koni Cup Tournament. Donation receipt of Rp200,000 dated 21 April 20145 was sighted

2) Letter dated 30 March 2015 in response to request made The Raden Center (an NGO) made on 27 March 2015 requesting donation to establish an office and facilities. Donation receipt of Rp100,000 dated 8 April 2015 was sighted

3) Letter dated 26 April 2015 in response to request made by BUSER Newspaper made on 30 March 2015 requesting to subscribe to their newspaper as assistance. Receipt of Rp100,000 dated 30 April 2015 was sighted.

Compliance status: Full Compliance

Criterion 1.2: Management documents are publicly ava ilable, except where this is prevented by commercial confidentiality or where disclosure of i nformation would result in negative environmen-tal or social outcomes.

Findings: The company already share their documents such as legal, environmental, social to stakeholders such as: a. Man Power Report cover letter no. 560/0021/TK/2014; b. UKL/UPL report with cover letter no. 004/HRR-MLN/Ext/I/2014; c. Plantation Report 2014 with cover letter No. 013/BM-Mentan/Ext-VI/2014. As men-tioned in Procedure PRO-GEN-002, the Sustainability department will be control the documents as men-tion on the table below, information about list of publicly available document has been uploaded also on the company’s website with information as we mentions on the Cr.1.1.1 above. Management documents such as environmental management document, HCV management document and SIA management document has been setting up as well as its monitoring plan. The report are stored on sustainability and EHS officer and publicly available Compliance status: Fully Compliance

Criterion 1.3: Growers and millers commit to ethical conduct in all business operations and transac-tions.

Findings: PT . Milano already has a code of conduct that contains the code of integrity and commitment to ethical be-havior in the whole conduct of operations and transactions. The code of conduct has been documented and disseminated on 6 June 2015 in the parking lot of CPO to the various levels of employees. Code of Conduct consists of three principles : 1. To avoid conflict of interest. 2. To avoid misuse and / or abuse of position 3. To Ensure confidentiality of information and to Prevent misuse of information gained through the Company’s operations, either to personal gain or for any purpose other than that intended by the Company .



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Information code of conduct has been written in the Bahasa Indonesia language and not in pairs on board the information easy to read. Compliance status: Full Compliance

Criterion 2.1: There is compliance with all applicab le local, national and ratified international laws and regulations.

Findings: The company has list of legal requirement as documented on PRO-GEN-031 and Form for Law and Regu-lation List Register, rev 5, dated 15 April 2015. The SOP PRO-GEN-031 and Form for Law and Regulation List Register, rev 5, dated 15 April 2015 it is contain for each specific related available activities in the Pinang Awan Mill, Sei Daun and Batang Saponggol Estates. There are evidences of compliance to regulation requirements and sighted from some licenses for Estate and Mill which were found to be still valid, as follows :

- License for temporary storage of hazardous wastes for PT Perkebunan Milano - Pinang Awan mill dated 29 October 2010 until 29 October 2015. Maximum permitted storage time if amount of haz-ardous wastes produced is less than 50kg per day is 180 days.

- Recommendation for Collection of Hazardous waste for PT Shali Riau Lestari as seen in letter from the Environmental Ministry dated 8 May 2014 and stated the recommendation was valid for 5 years. The letter included permission to collect various types of hazardous wastes including those produced by the estate.

- Land application License No. 503/424/BPPTPM/2013 for PT Perkebunan Milano - Pinang Awan Palm Oil Mill dated 27 December 2013 and valid until 27 December 2016, for mill capacity of 60 tonnes per hours.

- License for Temporary Storage of Hazardous Wastes for Sei Daun estate dated 30 December 2010 valid until 30 December 2015. Maximum permitted storage time if amount of hazardous wastes produced is less than 50kg per day is 180 days.

The SOP PRO-GEN-031 covers all applicable requirements, The SOP states that the identification and evaluation is to be carried out 4 (four) times a year and conducted by the each section, and estate and will be compiled by Legal officer and supported by the Head of Operations / field and other departments within the company organisation. Most estate maintains and updates their list of all applicable legal requirements relating to environmental, occupational safety and health, the company plantations, and employment as well as records of internal compliance checks to legal requirement. During the audit, there was sufficient evidence to show that the mill and estates have taken efforts to com-ply with all applicable legal requirements. For example, checks of legal documents showed that the mill and estates have all their legal documents required to conduct their operations. PT Perkebunan Milano’s estates and Pinang Awan Mill has a procedure to ensure compliance with rele-vant legal requirements i.e. SOP PRO-GEN-031 . As per this procedure, each division or department head is responsible to identify all legal requirements pertaining to their department, prepare a legal requirement register and ensure compliance to all legal requirements. Checks to ensure accuracy of updated laws is to be done at least once a year, while an evaluation on compliance to legal and other requirements shall be carried out at least twice a year. • Law / Regulation List Register, rev 5, dated 15 April 2015 and Procedure Pemenuhan Persyara-tan / Kewajiban (compliance) terhadap hokum dan perundang – undangan “ PRO-BM.GEN.003”, proce-dure identifikasi dan evealusi aspek hukum dan peraturan perundang – undangan yang berlaku “PRO-BM.GEN.004”. The SOP states that the identification and evaluation is to be carried out two times a year and conducted by the each section, estate and will be compiled by Legal officer and supported by the Head of Operations / field and other departments within the company organisation. Most estate maintains and updates their list of all applicable legal requirements relating to company regulations, environmental as well as records of internal compliance checks to legal requirements. Some evidences of compliance with relevant legal requirements as seen on latest legal requirements register i.e. "Compliances of law and reg-ulation list " for First Semester of year 2015 in Pinang Awan Mill and Estates; Sei Daun Estate, Merbau Estate and Batang Saponggol Estate. Evidence of efforts made to comply with changes in the regulations was checked through the latest legal register updated on March 2015. The company provides a mechanism for evaluation of implementation and compliance to applicable legal requirements in a standard operation procedure i.e. PRO-GEN-031 and Form for Law and Regulation List Register, rev 5, dated 15 April 2015. There are also procedures which define the mechanism of evaluation of compliance to regulations related to the company's plantation, legislation related to the environment, leg-



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islation relating to labour, and regulations related to health and safety. The SOP states that the identifica-tion and evaluation is to be carried out 2 (two) times a year and conducted by the each section, and estate and will be compiled by Legal officer and supported by the Head of Operations / field and other depart-ments within the company organisation. Compliance status: Full Compliance

Criterion 2.2: The right to use the land can be demo nstrated, and is not legitimately contested by local communities with demonstrable rights.

Findings: PT. Milano has had the legality of land either for Mill and estate as follows: a. Pinang Awan Mill HGB No. 1281 / HGB / 22:12 / 95 on the ground for Mill area of 19.09 hectares for a

period of 20 years stipulated in the Special situations Image Map No. 33/12 / IV / 1995 dated October 24, 1995 which is located in the village of Aek Batu, District Pinang city, Labuhan Batu district. HGB endorsed by the Head Office of the National Land Agency of North Sumatra Province. HGB is valid for 20 years berlalku since February 14, 1996 until February 13, 2016

b. Batang Saponggol Estate has permission HGU through BPN Decision No. 83 / HGU / BPN / 95 date December 13, 1995. Based on the Land Book is mentioned with the permission of the concession pe-riod of 25 years and will expire on 11 April 2021. The concession is approved by the Decree of the BPN area of 1749.43 ha

c. Sei Daun Estate has had a BPN Decree No. 15 / HGU / BPN RI / 2013 date February 15, 2013 on the Granting of Extension of Time period of the concession on behalf of PT. Milano plantations on land in South Labuhan Batu regency, North Sumatra province, A period of 25 years commencing December 31, 2013, covering an area of 2568.37 ha. This is extension HGU from the previous HGU i.e. 2. HGU year 1988, with State Minister’s Decree No. 8/HGU/DA/88 for 2500 Ha, valid until 31 December 2013. There is a bit different total HGU area between new HGU and the old one. The new HGU is 2568.37 ha while the old HGU only 2500. According to explanation from BPN officer during consultation pub-lic, the discrepancy caused by different accuracy of measurement tools, in fact, there is no new plant-ed area in Sei Daun estate, all planted area still same with the former condition.

d. Merbau Estate has had a BPN Decree No. 20 / HGU / BPN RI / 1996 DATE May 31, 1996, on behalf of PT. Milano plantations on land in South Labuhan Batu regency, North Sumatra province. Under the Land Book is mentioned with permission HGU period of 25 years and will expire in August 2021. The concession is approved by the Decree of the BPN area of 974.77 ha

Since the last year (2014 - 2015) there are no conflicts over land in Pinang awan Mill, Batang Saponggol Estate, Sei Daun Estate and Merbau Estate. Community relations with the company PT . Milano well established and communication with the compa-nies represented by the village government. Mill and the Estate boundary clearly identified and described in the field. Conditions legal limits defended look like stone boundary between the region with the communities . Conditions boundary markers are well maintained as it looks on the boundary markers maintenance report in January and March 2015 . From field inspections, it was confirmed that boundary stones are maintained to identify estate land bound-aries. There are 10 boundary stones located in Merbau estate made in concrete located arou nd the estate are, and the estate office has GIS locations for each boundary concrete. For Sei Daun estate, there are 8 concrete boundary stones demarcating the estate area. All boundary stones are well maintained and clear-ly visible. In addition the company made the trenches as a border between the estate land and publicly owned land or other existing company land around the company's estates. The trench has a width of 2 me-ters and is 1 meter deep. Since the last year (2014 - 2015) there are no conflicts over land in Pinang Awan Mill, Batang Saponggol Estate, Sei Daun Estate and Merbau Estate. There is no Associated Smallholders in PT Perkebunan Milano; the company is no required to establish Associated Smallholders according to the regulation. The company has undergone several cases of land conflicts with surrounding communities, but these dis-putes were resolved through a conflict resolution process that was acceptable to all parties. For example, there was a previously a case of illegal occupation of PT Pekebunan Milano’s land area of 497.5 Ha by 556 persons from surrounding communities within the year 1998 to 2008. After unsuccessful discussions with these community members to resolve the land dispute, the case was brought to the local supreme court of the Labuhan Batu District on October 30th, 2002. The court ruled that land area belonged to the



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company as the area is under the company’s HGU, and so it was ruled that the community should vacate that land area. The management of PT Perkebunan Milano also decided to compensate the people with Rp 2,000,000/Ha and hire 40 of the community members as workers, and this decision was supported the court. While most of the community people accepted the court’s decision, one member did not accept the decision and made a petition to the court to review their decision. The court did not accept his petition, and ultimately the person accepted the court’s decision. The company has records of all decision letters from the court relating to this dispute, as proof of their efforts made to resolve this dispute. There is currently no land conflict at present within any of the company’s HGU area. The company has not acquired any land belonging to the surrounding local communities because there is no customary land within the Labuhan Batu district where 3 estates and mill are located, therefore the company has no need for a land acquisition resolution with free, prior and informed consent as this is not applicable to the com-pany. From the Social Impact assessment, it was determined that 85% of the local communities are not in-digenous to the area. They are mostly from Java Islands and from other parts of North Sumatra. The only local ethnic race that forms 15% of the population there are from Mandailing tribe. This understanding was further ascertained through the public consultation process. The company has a documented procedure on conflict resolution and compensation, document no. PRO-BM.GEN-007, applied since 01 July 2009, which contains a flowchart on the company’s conflict resolution mechanism, as well as a sample form for recording complaints, suggestions or requests for information or assistance received from local communities. Each estate has socialized the results of their social impacts assessment as well as the company’s conflict resolution mechanism to the surrounding villages and main-tained records and evidence that these socialization activities were conducted (eg. Attendance records, newspaper reports, etc.). During each socialization meeting, discussions were held with the local communi-ties to ensure the mechanism was understood and accepted by the local communities. There is no conflict in PT Perkebunan Milano area. The company has cooperation local military district to protect companies’ asset. Compliance status: Full Compliance

Criterion 2.3: Use of land for oil palm does not dimi nish the legal rights, or customary rights, of oth-er users, without their free, prior and informed co nsent.

Findings: There is no evidence that the company has carried out their operations in a manner that diminished the Legal or customary rights of other users especially the local community’s surronding the company’s area. The company has conducted an assessment together with a social consulting company to identify all exist-ing traditional and or customary rights of other users within all the company’s area, and some existing tradi-tional rights of local communities were identified at Merbau Estate, Batang Saponggol Estate and Sei Daun Estate, such as grazing, fishing, gathering and sale of mushrooms and vegetables, access to roads, and maintainance of graveyards. All these are activities allowed under agreed conditions between the company and the local communities. There is no specific FPIC procedure, however company has a documented procedure on conflict resolution and compensation, document no. PRO-BM.GEN-007, applied since 01 Ju-ly 2009, which contains a flowchart on the company’s conflict resolution mechanism. There is a map showing plantation area that accessible by local community activities, the map has been agreed by both parties. The company’s area that accessible by local community are: Block D8 to 12 with total 164.88 ha for Sei Kuru Village and Lalang Village. Block D 1,2,3 and E 1,2,3 with total area 294.62 Ha for Kampung Tempel Village Blok A3,B3, C3 dan 4; E 4,5, D 6,4,5 with area 505,78 ha for Banten village. The company has documented meeting minutes of an event conducted by the company on since year 2009 at Merbau Estate in order to socialize the results of the company’s social impacts assessment as well as discuss the traditional rights of the land users. During this meeting, maps of appropriate scale showing the traditional rights of the land users were developed with the participation of the invited local communi-ties. Socialization regarding the company’s recognition of existing traditional and or customary rights was also performed at Sei Daun estate and at Batang Saponggol Estate. Among the traditional activities recognized by the company include maintenance of graveyards of the local communities, cattle grazing and husbandry, and mushroom collection. For example, the company has a list of permitted grazing locations within the area of Batang Saponggol estate at blocks D6, E6, E5, E4, C3, C4, A3, B5, covering a total area of 505.78 ha for 494 cows owned by 60 villagers. This list was developed upon agreement between the company and the cattle owners, and documented agreements are available.



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The estate management also has a list of fishing locations located at blocks D14, D13, E15 covering 99.91 ha in total, and a list of mushroom gathering locations at blocks A3, B5, C1, C3, D4, E4 covering 173.11 Ha in total. Maps showing locations of traditional rights areas in all of the company’s estates are available at each estate and offices of related villages. Similar traditional activities and negotiated agreements on usage of land were also developed at Merbau estate, whereas for Sei Daun estate no such agreements were developed with the local communities because the scale of such traditional activities within this estate is small and insignificant as not grazing is carried out at Sei Daun estate. As such the company permits other traditional activities within their area of Sei Daun estate. The maps of appropriate scale showing information about traditional rights of the land users were devel-oped with the participation of the invited local communities has been available on the field and in front of head of village office such as on Banten Sei Kuru Village and Lalang Village. Socialization regarding the company’s recognition of existing traditional and or customary rights was also perfomed at Sei Daun estate, at Batang Saponggol Estate and Batang Saponggol. Head of village from respective villages assigned as community representative for each negotiation pro-cess accompanied by communities leader, this is confirmed by the communities during onsite interview and stakeholder consultation. Compliance status: Full Compliance

Criterion 3.1: There is an implemented management pl an that aims to achieve long-term economic and financial viability.

Findings: The company has established projection periods management plan is valid from 2015 until 2020, for Estate and Mill, Management plan is valid from 2015 until 2020.. The company’s budget included expenses for corporate social responsibility (CSR) and environmental activities, but there were no details on the CSR and Environmental Management activities that would be conducted by the company within 1 cycles period. Management plan including budget for all area stated considering planting years, non-planted areas, i.e. HCV, conservation areas, fragile soils, enclaves. Crop projection = Fresh Fruit Bunches (FFB) yield trends , Mill extraction rates = Oil Extraction Rate (OER) trends for year 2015 to 2020 , Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; Forecast prices for next 3 years considering trend of FFB and Oil price within last 5 years. Every year the company make yearly budget according to long term business plan, the actual result will be used for long term business annual review. To ensure financial viability in the certain time at least 5 year period, the company provides a mechanism for evaluation from management plant every month from every estate, mill and every user of budgets, evaluation management plant related realization program and budget i.e. Report of Merbau Estate on June 2015, Projected versus actual crop report on June 2015 etc. PT Perkebunan Milano has developed a 5 year replanting program from year 2014 to 2019. The replanting program will begin in 2014 and 2015 at Merbau estate for a total of 75 ha blocks 58 . Replanting for other locations will begin after the yield of FFB per hectare at these locations is less than 20 tons, i.e. replanting will be planned after the planted palms at these areas are 30 years old (which is the length of a replanting cycle at the company). Compliance status: Full Compliance

Criterion 4.1: Operating procedures are appropriatel y documented and consistently implemented and monitored.

Findings: PT Perkebunan Milano’s estates are provided with work instructions for all estate activities including land clearing, mature and non-mature planting management, manuring, transportation, pest management, soil conservation, hazardous chemical use, etc. Evidence has been found as to the implementation of the work instructions, e.g. sighted onsite at Sei Daun and Batang Saponggol Estates, where horseshoe method or terracing and adequate ground cover at sloped planted areas are implemented. They are done based on the company’s Work Instruction for Land Preparation and Management of Plantings, Sloped Land and Lowland Areas (Work Instruction No. IK-AGR-14). Census records are maintained as per the company’s Work Instruction No. IK- AGR-17 for Oil Palm Pest Management. At Sei Daun Estate, a map of plant rou-



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tine maintenance program has been sighted in the FM. AGR-18, which was prepared in accordance with the company’s Work Instruction No. IK- AGR-03 for Maintenance of mature palm oil plant. The mill also has documented SOPs available for the mill processes. Batang Saponggol and Sei Daun Estate carries out operation checks through internal audits at least once a year by Internal Monitoring Division. The last internal audit report is dated 23,24 February 2015 and veri-fication of NCR’s raised were completely closed on 26 March 2015. The 2015 internal audit covered as-sessment of estate FFB production and productivity, fertiliser application, payment of premium for harvest-ing foreman, inventory records, chemical distribution, finance, etc. All estates maintain operational results records. For example, Batang saponggol Estate whose planting ac-tivity monthly report for January, February, March 2015 was sighted. The report covers actual FFB trans-ported, FFB production, actual fertiliser application, chemical use record, pest census record, etc Evidence has been found as to the implementation of the work instructions, e.g. sighted onsite at Sei Daun and Batang Saponggol Estates, where horseshoe method or terracing and adequate ground cover at sloped planted areas are implemented. They are done based on the company’s Work Instruction for Land Preparation and Management of Plantings, Sloped Land and Lowland Areas (Work Instruction No. IK-AGR-14). Census records are maintained as per the company’s Work Instruction No. IK- AGR-17 for Oil Palm Pest Management. At Sei Daun Estate, a map of plant routine maintenance program has been sight-ed in the FM. AGR-18, which was prepared in accordance with the company’s Work Instruction No. IK- AGR-03 for Maintenance of mature palm oil plant. The mill also has documented SOPs available for the mill processes. All estate and mill has records of internal audit done on 20 to 24 February 2015 and verification of NCR’s raised were completely closed on 26 March 2015. covering aspects of RSPO, ISO 9001 and ISO 14001, specialized findings for RSPO has 49 findings and 52 observations. The internal audit report includes cor-rections and corrective actions taken, completion, person-in-charge and verification of completion it can show in form internal audit FRM –GEN-005 and form report non conformities FRM-GEN-007 Rev.03. The internal audit covered assessment of productivity, budget all estate and mill, fertiliser application, payment of premium for harvesting foreman, inventory records, chemical distribution, finance, compliance law and regulation, etc. The auditor found during field assessment, there is no mechanism for checking the implementation of SOP Purchase of FFB, SOP No. 001 / TBS / IV / 2014 section D for out-grower and out-grower agent that sup-plies FFB to Milano Ramp and Pinang Awan Palm Oil Mill. This is raised as non-conformity as seen on NCR No. 2014- 01 of 04. Batang Saponggol, Merbau and Sei Daun Estate carry out operation checks through internal audits at least once a year by Internal Monitoring Division. The last internal audit report is dated 23,24 February 2015 and verification of NCR’s raised were completely closed on 26 March 2015. The 2015 internal audit covered assessment of estate FFB production and productivity, fertiliser application, payment of premium for har-vesting foreman, inventory records, chemical distribution, finance, etc. All estates maintain operational results records. For example, Batang Saponggol Estate whose planting activity monthly report for January, February, and March 2015 was sighted. The report covers actual FFB transported, FFB production, actual fertiliser application, chemical use record, pest census record, etc. Currently Pinang Awan Mill is receiving approximately 35% of its supplies of fresh fruit bunches (FFB) from 3 company-owned estates (Sei Daun Estate, Batang Saponggol Estate and Merbau Estate) and the re-maining 65% from independent smallholders, and the mill has no smallholder schemes. FFB supplies from smallholders are either supplied directly to the mill by smallholder located nearby the mill, or through FFB collectors (middlemen or FFB agents). PT Perkebunan Milano has an FFB transit ramp located at the Rantauparapat region to collect FFB supplies from smallholders that are located too far from Pinang Awan Mill. The third party types supply FFB to Pinang Awan mill are categorized as follow:

1. Direct Supply to Pinang Awan Mill - Independent out grower direct supply to Pinang Awan Mill - Independent out grower supply FFB trader (agent) then FFB agent to Pinang Awan mill 2. Direct Supply to Ramp Rantauparapat then to Pinang Awan Mill

- Independent out grower direct supply to Ramp Rantau Parapat - Independent out grower supply FFB trader (agent) then FFB agent to Ramp Rantau Parapat be-fore to Pinang Awan mill. There is SOP for FFB traceability i.e. 001/TBS/IV/2014 issued on June 2014. Both Pinang Awan mill and Ramp Rantau Parapat has list of FFB suppliers i.e. for period January to July 23, 2015 there are 32 suppliers listed on the list of supplier both Independent out grower and FFB Agent. To prevent collection of FFB from illegal or untraceable fruit sources, the company has established a verifi-cation mechanism to ensure that all incoming FFB can be legally verified and traced to its source not form



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illegal activities, protected forest, including riparian river. The company has a policy of purchasing only FFB of which the source can be verified. All verified supplier has formal agreement for FFB supplied. However there is no evidence that company has mechanism to ensure incoming FFB has been comply with defined standard operation procedure and agreement i.e. FFB not from Illegal activities, protected forest and riparian river. This is raised as non-conformity during recerti-fication, as recorded on NCR No. 2014-02 of 04. Pinang Awan Mill has own SOP for purchase of FFB from outside parties, namely SOP No. 001 / TBS / IV / 2014 issued on June 2014. However, the SOP has not been applied to the suppliers agent who supply the FFB to Milano Rantauparapat Ramp. Compliance status: Non Compliance See NCR No. 2014- 01 of 04

Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to, a lev el that ensures optimal and sustained yield.

Findings: The company has a standard operation procedure in managing soil fertility as determined on “ SOP-EST.004”. All estates are consistently to implemented the procedure, as seen on the records Some fertilizing recommendation year 2015 such as : 1. Sei Daun estate : 5.75-8.75 kg/pokok (NPK Super round 1 : 2.50-2.75 kg/palm or 849,444 tonnes,

kiesrite : 0.75 kg/palm or 8,456 tonnes (block 75 in division1 and block 107 in division 2), borate : 0.12 kg/palm or 3,027 tonnes, urea : 1.00-1.25 kg/palm or 372,823 tonnes, MoP : 1.50-1.75 kg/palm or 554,845 tonnes, NPK Super round 2 : 2.5-2.75 kg/palm atau 607,545 tonnes, RP : 0.75 kg/palm or 10,724 tonnes);

2. Batang Saponggol estate : 5.00-9.25 kg/pokok (NPK Super round 1 : 2.50-2.75 kg/palm or 579,672 tonnes, kiesrite : 0.75 kg/palm or 25,053 tonnes, borate : 0.12 kg/palm or 5,982 tonnes, urea : 1.00-1.25 kg/palm or 259,106 tonnes, MoP : 1.50-1.75 kg/palm or 366,441 tonnes, NPK Super round 2 : 2.5-2.75 kg/palm or 223,600 tonnes, RP : 0.75 kg/palm or 19,832 tonnes);

3. Merbau estate : 5.00-9.62 kg/pokok (NPK Super round 1 : 2.50-2.75 kg/palm or 301,385 tonnes, kiesrite : 0.75 kg/palm or 24,555 tonnes, borate : 0.12 kg/palm atau 3,754 tonnes, urea : 1.00-1.25 kg/palm or 133,937 tonnes, MoP : 1.50-2.00 kg/palm or 203,429 tonnes, NPK Super round 2 : 2.5-2.75 kg/palm or 272,310 tonnes, RP : 0.75 kg/palm or 12,714 tonnes).

4. Application of EFB (organic fertilizer) : 200 – 270 EFB/ plant/year for TBM and 275 EFB /plant/year TM. For Merbau estate not application of EFB because the location far from mill.

The company has conducted leaf, soil and visual analysis every year to make sure for fertilizer recom-mendation. The last for leaf sample and visual analysis was conducted on April 2014 including all estate and last soil sample on November 2014, the results of leaf & visual analysis was presented on foliar anal-ysis report No.Ref.29/Daun/V/2014/Milano rev.01. dated on August , 2014, The result were kept main-tained on estate office for fertilizing recommendation year 2015 at all estate and all division. While the re-sults of soil sample analysis report No.Ref.20/Tanah/XII/2014/Milano, detailed soil analysis was conducted for all estate in PT Perkebunan Milano by Poram Agricultural Soil Surveys Sdn. Bhd. Effort to maintain and increase soil fertility in PT Perkebunan Milano is the use of fertilizer (anorganic), land application of POME and the use of Empty Fruit Bunch (EFB). Records of the use of anorganic fertilizer was available such as recapitulation of the use fertilizer, schedule of manuring each block include infor-mation of type of fertilizer, doses per tree, periods of implementation, then implementation of Leguminous Cover Crop type Mucuna Bracteata (LCC) program special for new planting and TBM has been estab-lished in procedure SOP-EST-002. Compliance status:

Criterion 4.3: Practices minimise and control erosio n and degradation of soils.

Findings: The types of different soils at each estate have been mapped on a soil map for each estate, and the com-pany also has topographic maps of each estate. The maps has georeferenced with sacle !: 50,000. From these maps, no fragile soil were identified throughout PT Perkebunan Milano, and this was supported by results of a soil analysis that was done for PT Perkebunan MIlano in 2008. From this study it was found



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that that that main soil types in the three estates of PT Perkebunan Milano are: - Quaternary alluvium (sand, silt, clay) and quaternary alluvium (peat) at Batang Saponggol Estate - Neogene sedimentary-rock, quaternary alluvium (sand, silt, clay) and quaternary alluvium (peat) at Sei Daun and Merbau Estates Quaternary alluvium soil is a combination of sandy clay and fine sand that is quite resistant to erosion due to rainfall, as such, there is little chance of development of fragile soils in these estates Most of PT Perkebunan Milano estate land areas are flat (0-15% slope), with only a few undulating areas (12-24% slope) located at Merbau estate covering an area of approximately 210.4 ha. This is because all three locations are located at the east coast of Sumatera which tend to be flat in topography. For the re-planting area year 2014 with undulating condition are Merbau estate, it was confirmed during site visits that these areas were planted with leguminous cover crops and replanting waste to prevent soil erosion. De-tails on the distribution of soil types for each estate are available in a Land Evaluation Document for each estate. Since there is little sloped areas within the company’s area, the company has no management strategy for plantings on slopes. Each estate has a scheduled road maintenance program, which is carried out depending on road condi-tion. The company also prepares records and reports of actual road maintenance works carried out in 2014 and 2015. From site visits, it was observed that the estate roads were reasonably well maintained, howev-er, maintenance of sporadic areas of roads requires improvement as these areas are prone to become wet and muddy during rainy reason, resulting in increased erosion. The company does not have a water management programme for management of peat soils as no deep peat areas are located in any of the estate, only small areas of shallow muck soil. 98% of the estate areas consist of dry agricultural land, and only less than 2% of the area was identified as freshwater swamp are-as, as found at Batang Saponggol Estate and Sei Daun Esatate The company does not have a water management programme for management of peat soils as no deep peat areas are located in any of the Merbau estate, only small areas of shallow muck soil. 98% of the es-tate areas consist of dry agricultural land, and only less than 2% of the area was identified as freshwater swamp areas, as found at Batang Saponggol Estate and Sei Daun Esatate. The company has no management strategy in place for other fragile and problem soils as there are no fragile or problem soils identified within all estate areas, therefore this requirement is not applicable. Compliance status: Full Compliance

Criterion 4.4: Practices maintain the quality and av ailability of surface and ground water.

Findings: The mill has a documented water management plan for 2015, which includes a schedule for measures to reduce water usage. Actual implementation of planned activities is also monitored and recorded by the mill. Merbau, Sei Daun and Batang Saponggol estates have all developed a documented water management plan for year 2015 which includes performing regular maintenance of watergates, regular desilting of drains (main, collection, boundary and field drains) and digging of pits to collect excess water. A schedule to carry out these activities once a month was also developed and details of activities carried out are recorded. Ba-tang Saponggol estate also has a documented schedule for carrying out desilting of drains only in specific months. This is not consistent with their water management plan, which states that desilting of drains will be carried out every month. The estate also records which months drain desilting was actually carried out, and records show that desilting activities were not carried out according to the schedule. This was raised as an observation. Based on monthly production report (MR 10C) that the mill has water usage data/information each monthly for year 2015 (until June ), divided into process water usage per tonnes FFB, boiler water usage per tonnes FFB and domestic water usage per tonnes FFB. Source of water usage in mill are surface water and In year 2015 that total water usage are 176,597.10 m3 (1.6 m3/tonnes FFB) such as processing are 15,042 m3 (0.14 m3/tonnes FFB), boiler are 85,565 m3 (0.77 m3/tonnes FFB) and domestic are 75,991 m3 (0.69 m3/tonnes FFB). Whereas, total water usage year 2013 are 425,171 m3 (1.54 m3/tonnes FFB) such as processing are 60,221 m3 (0.22 m3/tonnes FFB), boiler are 202,937 m3 (0.73 m3/tonnes FFB) and do-mestic are 162,013 m3 (0.59 m3/tonnes FFB). The company has been program water management plan for year 2015 regarding information quality, availability of surface ground water and use of water, based on data of rainfall at around HGU PT Perkebunan Milano average 198.33 mm per years.



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Hydrology maps of the estates show that there are no big rivers or permanent watercourses flowing through Sei Daun Estate, and water does not accumulate within the estate area. In Batang Saponggol es-tate, there is a small network of streams that flow to Barumun River, but these streams only exist during raining season, so there are no permanent streams at this estate. In Merbau estate, there are two small rivers, i.e. Pare River and Sampuran / Alang Branch River, both of which are no more than 5 meters in width. To protect the water flow and prevent erosion, the management of PT Perkebunan Milano designat-ed riparian buffer zones 10 meter width on both side of the river, where palm trees are marked with yellow paint to mark the buffer zones where chemical application is not permitted. The company has also planted vetiver grass that can accelerate coverage of the open ground and prevent and prevent erosion. All estate established plans to maintained riparian river in good condition until replanting. The mill maintains records of water usage per tonne FFB. The trends of water usage are compared against their monthly target of 1.8 tonnes of water used per tonne of FFB, and the rec The mill conducts sampling of effluent BOD5 (outlet pond no.5) with tests conducted externally (Sucofindo laboratory). The mill con-ducts sampling of effluent BOD5 (outlet pond no.5) with tests conducted externally (Sucofindo laboratory). Sample results show (period of April 2013 to June 2014) that effluent BOD5 for land application is below 5,000 pm as required in the mill’s land application permit. Based on monthly production report (MR 10C) that the mill has water usage data/information each monthly for year 2015 (until June ), divided into process water usage per tonnes FFB, boiler water usage per tonnes FFB and domestic water usage per tonnes FFB. Source of water usage in mill are surface water and In year 2015 that total water usage are 176,597.10 m3 (1.6 m3/tonnes FFB) such as processing are 15,042 m3 (0.14 m3/tonnes FFB), boiler are 85,565 m3 (0.77 m3/tonnes FFB) and domestic are 75,991 m3 (0.69 m3/tonnes FFB). Whereas, total water usage year 2013 are 425,171 m3 (1.54 m3/tonnes FFB) such as processing are 60,221 m3 (0.22 m3/tonnes FFB), boiler are 202,937 m3 (0.73 m3/tonnes FFB) and do-mestic are 162,013 m3 (0.59 m3/tonnes FFB). The company has been program water management plan for year 2015 regarding information quality, availability of surface ground water and use of water, based on data of rainfall at around HGU PT Perkebunan Milano average 198.33 mm per years. Compliance status: Full Compliance

Criterion 4.5: Pests, diseases, weeds and invasive i ntroduced species are effectively managed us-ing appropriate Integrated Pest Management (IPM) te chniques.

Findings: All estates have an SOP for detection, census and management of pests and diseases. These SOPs cover methods for detection, census and management of bagworms and nettle caterpillars, rhinoceros beetles, rats, termites and plant diseases using biological and chemical methods. All estates have also developed an IPM program for detection and census for pests and plant diseases in 2014 and also records when the plan is implemented. In addition, all estates have implemented a plan to carry out extensive plantings of the beneficial plant, Tturnera subulatalunata (these plants attract predators which feed on the larvae of net-tle caterpillar and bagworm pests), from July to December 2014, and these were corroborated by on-site observations. For Batang Saponggol estate, it was observed that actual plantings were carried out before the planned month for plantings, and this was noted as a positive observation. Merbau estate and Batang Saponggol estates have also established barn owl boxes in the field as shelter for barn owls used as bio-logical control of rats. All estates monitor the extent of their IPM implementation and training, however, some observations were noted. The estates maintain records of census results for nettle caterpillars, bagworms, rats and plant dis-eases. However, records for Batang Saponggol estate show that census activities were not conducted ac-cording to the schedules documented as part of their IPM program and according to management; this was due to low infestation of pests. This was raised as an observation. Census results for all estates shows that level of attacks by these pests are quite low, as such, no chemicals to reduce pest infestation has been issued and this was corroborated through checks of pesticide issuance records at the store. Merbau estate has a record on socialization of their revised SOP for IPM implementation conducted on 2 Nov 09 for 7 treatment mandores and 2 field assistants. Sei Daun estate also has a record of training on pest census techniques conducted on 16 February 2015 for 13 participants consisting of 8 field assistants, 4 treatment mandores and 1 supervisor. However there is no record of socialization of the SOP on IPM im-plementation that was revised on July 2009, and according to management, this revision was informed to the workers but not documented. This was raised as an observation. Batang Saponggol estate also has a record of IPM training conducted for 22 workers on 10 Oct 14.



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From checks of chemical issuance records, there has been no issuance of chemicals for IPM implementa-tion (cypermethrin, klerat, etc) due to low infestation of pests at all estates, so no pesticide toxiticy unit analysis is necessary. Compliance status:

Criterion 4.6: Agrochemicals are used in a way that d oes 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 t hat are categorised as World Health Organisa-tion Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is docum ented.

Findings: This is evidenced by:

- Recommendation Letter No.: 1214/IV-DTK/2015, date March 31, 2015, concerning of Pesticides Usage, from District Labor Office of South Labuhan Batu District Government, for Batang Saponggol Estate;

Recommendation Letter No.: 560/66/DSTKT - 4/2015, date February 16, 2015, concerning Recommenda-tion for Storage/Usage of Pesticides, from District Social, Labor, and Transmigration Office of South Labuhan Batu District Government, for Sei Daun Estate. Type of registered and permitted are Pelita 480 AS; Sida Up 490 SL; decis 2,5 gr/Ltr; Anvil 50 SC/Daconil 75 WP; NOBB; Perokum RMB; Ratgone; VK-Plus; Flo-Tek; and Ethrel gea The company has policy about pesticide application program, at Sei Daun Estate, there is the records of pesticide used such as:

1. Report of chemical usage for March 2015, Division I: Sida, Up 480SL : 10 cc/ha (applied for 267,65 ha of areal); Division II: Sida Up: 0,010 ltr/ha (applied for 319,8 ha of areal); Division III: Gilposate: 3,7 cc/ha (applied for 269,10 ha of areal)

2. Toxicity recapitulation of Herbicide, Sida Up 490 SI, at Division VI: � January 2015: applied areal 248,2 ha; used around 101,6 liter; active ingridient 36,881

gram/liter; Dose per ha: 149 gram/liter; LD 50 Oral Rate: 5,6 Mg/ha and LD 50 Human: 392 gram/person

Daily issuance of chemicals is recorded in Goods Issuance Notes which includes the blocks where chemi-cals are applied, hectares, amount of chemicals applied and calculated dosage. The estate also maintains monthly summary records of areas or blocks sprayed including number of palms per stand and total amount of each type of pesticide applied per month for circle spraying, path spraying and selective spot spraying, which is extracted by the estate’s SAP system with data taken from the Goods Issuance Notes. Batang Saponggol Estate, recapitulation of pesticides usage year of 2014 as below:

1. Herbicide, Glyfosat 480 AS amount 736,18 liter and Ally 20 WDG 16,21 liter 2. Insecticide, Deci 2.5 EC 41,91 liter 3. Herbicide (Gempur 480 AS; Sida Up 490 SL; Garlon 480 EC dan Ally 20 WDG) 4. Insecticide (Decis 2.5 EC; Marshall 5G; Orthene; Matador) 5. Fungicide (Bayleton 250 EC; Anvil 50 EC; No BB; Dithane M45; BBerosal 50 WP) 6. Rodenticide (Klerat RMB; Ratgone; Petrokum; Brodifakum) 7. Document LD 50; Chemical Usage year 2014, including data of month, applied area (ha), amount

of chemical used (liter), amount active ingridient/ha, LD 50 Rat (gram), LD BB 65 Kg (gram) and remark. Conclusion, there is no toxid material (chemicals). The chemical consist of Sida Up and Ally 20 DWG

Merbau Estate 1. Chemical Consumption Reduction Program – Reducing Use of Chemicals in 2014 of consumption

in 2013- Merbau Estate. Recapitulation of Pesticide use in the palm oil cultivation Fourth Quarter IV 2014, such as: Herbicide, Basmilang 480 SL: 499,75 liter dan Sida Up 490 SL : 815,62 liter; In-secticide, Decis 2.5 EC: 78,60 liter

2. Recapitulation of herbicide toxicity calculation; Sida Up (Glifosat 363 grm/liter) --> LD 50 Per peo-ple Oral (BW = 70 kgs) grams per people 350,00 result during 2014 No Toxic Available (per divi-sion data)

Records show that chemicals used in all estates during the year 2014 are legally registered chemicals, and includes Gramoxone with the active ingredient paraquat, Glisat with the active ingredient glyphosate iso-



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propylamine, and Trendy with its active ingredient Metsulfuron Methyl. The company maintains monthly da-ta on pesticide use trends of the chemicals listed under WHO Type IA, IB, or listed under the Stockholm and Rotterdam Conventions. From pesticide usage data, it was found that Sei Daun estate uses more compared to Merbau estate as more of its area consists of immature plantings which are more prone to pests. As such, more pesticides are used at Sei Daun estate, such as Ratgon for rats with the active ingre-dient Brodifacoum, a termite reagent with the active ingredient Phyronit, Chymbus with the active ingredi-ent Cypermethrin for oryctes rhinoceros. Sei Daun estate has developed a plan to reduce their usage of Gramoxone to 0.3 litres/ha since 2010, and still consistent until now. Checks of gramoxone issuance records at Batang Saponggol showed that very little of this chemical is used at this estate. The organization has been demonstrated that all pesticides handled, used and/or applied by persons who have completed the necessary training. Some document were reviewed, i.e:

- Training Need Identification to improved human resources, year 2015 at Sei Daun Estate. The re-sults, i.e: Training of Handling and Usage of Hazardous Materials. It was attend by 1 person of warehouse personnel, 6 (six) persons of maintenance foreman (Mandor), and 20 maintenance employees who related to hazardous substance.

- Letter of Batang Saponggol Estate Manager on March 18, 2015, concerning Training of Chemical Usage. The letter said that; request of training for all pesticides / chemical-applying worker (ac-cording to Decree of ministry of labor: 187/Men/1999.

Socialization of hazardous material usage, and training of fertilizing / Maintenance Palm Oil Mill, date March 11, 2014 at Merbau Estate. Sei Daun estate, Merbau estate and the mill have their own licenses for hazardous waste collection which are confirmed to be valid at explained under CR2.1 above, while Batang Saponggol estate sends their hazardous wastes for collection to Sei Daun estate. Sei Daun estate maintains records of amount of haz-ardous wastes received from Batang Saponggol estates, as seen from sample receipt records for 7 July 2014 and 29 April 2014. Sei Daun estate maintains records of incoming hazardous wastes in Control Form for Incoming and Outgoing Hazardous Wastes and Inventories of Hazardous Wastes. Hazardous wastes are collected by licensed contractors PT Shali Riau Lestari, where most recent collection was on 11 July 2014 and prior to that was 18 January 2014. It was found that the inventories for all hazardous wastes at Sei Daun estate has been updated from Octo-ber to December 2014 up until time of collection by the contractor. For example, last inventory update for oil filters was 174 pieces on 30 December 2014 but amount collected by the contractor as stated in mani-fest dated 11December 2014 was 348 pieces. Inventory records at the mill hazardous waste stores were found to be consistent with the hazardous waste collection summary note prepared by the mill and final collection amount stated in the manifests. PT Perkebunan Milano has no planning for pesticide application aerially, the requirement is not applicable. Letter of Batang Saponggol Estate Manager on March 18, 2015, concerning Training of Chemical Usage. The letter said that; request of training for all pesticides / chemical-applying worker (according to Decree of ministry of labor: 187/Men/1999. Socialization of hazardous material usage, and training of fertilizing / Maintenance Palm Oil Mill, date March 11, 2014 at Merbau Estate. Pinang Awan Mill & Estate, Sei Daun and Batang Saponggol Estate, there is a chemical-spraying activities and it were observes the workers were well understand what their job and responsibilities related their job risks and complete personal protective equipment were found wear during the workers perform the job in-cluding how they were dispose the chemical container used. There is evidence that the organization has perform specific annual medical surveillance for pesticide op-erators, for example:

- There is Report of Measurent/Examination Report Working Environmental dan Medical Check PT Milano Year of 2014, Document No.: 26/DHU/BK3-MDN/XII/2014, issued by Kemenakertrans Sekretariat Balai Keselamatan dan Kesehatan Kerja Medan; The medical check up was include:

1. Audiometry 2. Spirometer 3. Cholinesterase (consist of 14 women worker) 4. Pb on Blood

Batang Saponggol estate manager issued letter no. MLN-SC/PKES/2015 dated March 18, 2015 regarding medical checkup for all subcontractor, especially for sprayer as recorded as sub-contractor worker and work as chemist worker at Batang Saponggol estate. From interviews of female sprayers at Batang Saponggol estate, they said that they undergo medical checkups once every 3 months and this includes blood and urine test and checks for headaches or skin



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itchiness. Sprayers interviewed at all estates also mentioned that they receive free supply of milk from the management once a week. The milk serves to neutralize the effects of pesticide poisoning and it is re-quired by law in Indonesia to provide milk to workers handling pesticides. Based on the medical check-up result, show that all personnel still normal except for two (SP) chemist sprayer and need a further medical doctor advice and need to perform on (SP) as her Cholinesterase was exceed from the normal value. (Merbau Estate) and for (SP) need to check her blood cholinesterase as she already assign as sprayer for one-year duration duty (Batang Sapongol Estate). This was raised as observation. There is evidence that the organization has defined a mechanism to ensure that all chemical-applying worker not consist of pregnant women and not pregnant nor breastfeed their babies, even for the compa-ny’s sub-contracted workers. There is applied mechanism to ensure that all sub-contractor worker is obey to company’s policy. An example is a Work Order Letter No.: 18/MLN-SDE/EXT/2014, date December 31, 2014 to certain sub-contractor. Based on the letter, the third party should be do not employ pregnant wom-en and not pregnant nor breastfeed their babies, menstruating women, and employ children. Compliance status: Full Compliance

Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented.

Findings: All estates have documented occupational safety and health (OSH) policy. Example for this fact is Merbau and Sei Daun Estate OSH policy dated 2 March 2015; and Batang Saponggol Estate’s OSH policy dated 2 March 2015, which is signed by the executive director of PT. Perkebunan Milano. The OSH policy includes documented objectives and targets, i.e. comply with the company’s OSH procedures, committed to wearing of Personal Protective Equipment (PPE) at work sites, and manage potential work risks at the site. Pinang Awan Mill has identified and documented Occupational Health and Safety (OHS) risks for all mill activities, although this was documented under its 6 January 2015 environmental aspects and impacts reg-ister. Designated PPE storage in Pinang Awan Mill Laboratory need to be located as the lab crew was dif-ficult to find the available PPE that must be worn during their activities in there, also Shower/Eye wash sta-tion need to be relocated as its not easy to used when the emergency situation occurs also a minim safety warning signs were found during plant tour activities in the Pinang Awan Palm oil mill as some of the cer-tain places such as stairs in the sortation area and safety accessory such as Rotary lamp, back alarm and the mirrors for 2 available wheel loaders was not found and need to be replaces. This was raised as an observation Also in Pinang Awan Mill an Inconsistent in the work permit system implementation was found as the weld-ing process work in the mill doesn’t have a permit and the work process was nearly finished. This was also raised as an observation Batang Saponggol, Sei Daun Estate and Merbau Estate has Hazard Identification, Risk Assessment and Risk Control document for 2015, dated 6 January 2015 for all estate activities including spraying, manur-ing, harvesting, workshop activities, generator, truck transportation, chemical and material storage, and waste handling. But however in Sei Dan Estate Fire extinguishers checking activities, Required PPE for certain places such as Chemical storage and Temporary waste storage and PIC to the related places need training refreshment as they don’t aware to using the PPE when entering this area during the audit. This was raised as an observation. Chemical storekeeper in Batang Saponggol Estate is provided with helmets, boots and goggles but look not much aware to the visitor that need to wear the PPE while entering his area as it was alreay arranged in procedure No. PRO-GEN-016 Rev0 2009 related to Personal Protective Equipment. Contract field-maintenance workers are required to wear boots and provide by company. Female contract spray-ing/manual maintenance workers interviewed in Merbau Estate are provided with Personal Protective Equipment (PPE) by the company, including masks, gloves, and plastic aprons. The sprayers are provided with appropriate cloth gloves for spraying activity. While they wash their PPE at washing facilities at the di-vision office and they store their PPE in the estate store. At Merbau Estate, spraying workers are also providing with rubber gloves, goggles; masks and plastic aprons by the company. PPE wash in washing room and storage facilities are provided for the sprayers. As sighted from Batang Saponggol Estate documents, Head of Social, Manpower and Cooperation Office of North Labuhan Batu District by virtue of Decree No KEP.16/P2K3/TK/2015 dated 18 March 2015 have approved the organisational team of Estate OSH structure. As for Pinang Awan Mill, the Head of Social, Manpower and Cooperation Office of North Labuhan Batu District through Decree No



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KEP.10/P2K3/TK/2015 dated 12 January 2015 have approved its organisational structure team of OSH, Regular reporting system to the related responsible locar government also were sighted as they were ob-served report qurterly which consist of the OHS team activities such as safety patrol, inspection, regular meeting and emergency drill, summary of accident report using Frequecy Rate and Severity Rate calcula-tion record activities were reported. The company has an emergency response procedure documented under Standard Operating Procedure No. PRO-GEN-013 Rev 05 dated 15 April 2015, including identification of potential emergency situations (fire, accidents, flood, explosion, and chemical leakage) and a flowchart for Handling Fire Emergencies. Pinang Awan Mill has records of emergency response training and simulation on 22 May 2015 for over 50 workers, as well as land burning simulation on 22 May 2015 for 35 estate division staffs. It was confirmed through interviews with three harvesters that they had attended the emergency response training. Notes of the training results are maintained, including the steps of the accident & emergency response procedure. Records of other OSH training, i.e. for first aid and management of hazardous waste, are available as de-scribed under CR4.8. Fire emergency training for Batang Saponggol Estate was conducted on 4 February 2015 for 46 staffs. Training on emergency response procedure for fire was conducted in March 2015 for 31 workers at Sei Daun Estate. During site visits, field executor (supervisor) in Sei Daun, Merbau and Batang Saponggol Estates were found having brought first aid kits to the field, and those are located at other locations such as estate of-fice, workshops, chemical storehouse, etc. It was observed that the first aid kit at Division 1 of Sei Daun of-fice a complete pack of first aid kit. However, at Merbau Estate Division 3, harvester and manurer foreman also have a first aid kit. All estates provide National Employee Social Security (Jamsostek) to permanent employees, as sighted from sampled payslips of 3 harvesters of Merbau Estate, as verified with interview. According to the com-pany’s Work Instruction for Jamsostek Participants and Fees, the amount paid by the company for Jam-sostek contribution is 3 % of the employees' basic salary, while another 2% payment is made through regu-lar deduction of their basic salary. It has been verified paid correctly. As for contract workers, Sei Daun Es-tate deducts the amount required for their insurance against payment to the respective contractors, and pays this insurance amount directly to the relevant authority to ensure that all contract workers are covered with insurance. Compliance status:

Criterion 4.8: All staff, workers, smallholders and c ontractors are appropriately trained.

Findings: As sighted in the memorandum of Human Resources Manager No.MLN/MO/27/2015 related on the training program for estate employees in Sei Daun Estate. The training program consist of Chemical handling train-ing, Integrated pest management and early warning system, Electrical overhead power line harvesting ac-tivities and HCV training were well filed including their signed attendance list, training materials and com-pleted with the training evaluation. Pinang Awan Mill has also documented 2015 training plan, including training plan for OSH hazard and risk identification, workplace safety inspections, first aid training, hazard-ous waste management, and emergency response training. The estate and Mill have documented worker identification that requires training. For example in January to June 2015, Sei Daun Estate has also identi-fied the training need for Harvesting training for harvester total 60 harvester and maintained training partic-ipant record. Merbau, Sei Daun and Batang Saponggol Estate and Pinang Awan Mill and estate training programme in 2015 has also been observed, including harvesting, fire emergency and pest management trainings. Compliance status: Full Compliance

Criterion 5.1: Aspects of plantation and mill managem ent, including replanting, that have environmen-tal impacts are identified, and plans to mitigate t he negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.



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Findings: The mill has their UKL and UPL documents which was last revised on Sept 08 and approved by the Head of Labuhan Batu Regional Body for Management of Environmental Impacts on 24 October 2008. This doc-ument includes details of the mill's activities pertaining to oil palm processing and production, and CDM project, and also analysis results for air quality, NOx, SOx, particulate, carbon monoxide, land water quali-ty, biological components and so on. All estates have their UKL and UPL document which was last revised on October 2008 and approved by the Head of Labuhan Batu Regional Body for Management of Environ-mental Impacts on 24 November 2008. The UKL and UPL document includes details on the estate activi-ties, usage of natural resources, climate, air and water quality, geography and other environmental as-pects, social aspects, potential environmental impacts, and monitoring. The mill and all estates have also conducted their Identification of Environmental and Occupational Safety Aspects and Impacts dated 13 January 2015 for the mill, 16 January 2015 for Merbau estate and Sei Daun estate, and 14 January 2015 for Batang Saponggol estate. The document covers environmental and safety aspects and impacts for estate work activities (eg. manual treatment, mechanical treatment, harvesting and tree maintenance), office activities, housing, management of hazardous wastes and domestic wastes, us-age of natural resources, warehouse operations, transport and so on. For year 2015 until audit no replanted areas for all Estate and Division, the program replanting at 2006 for several block not productive at Batang Saponggol, Sei Daun and Merbau Estate. And if any program re-planting carried the company has been established procedure “SOP-EST-027 Rev.0” to ensure that re-planting does not negative impacts to environments. (The replanting or land clearing was carried out through felling and chipping of the old palms The mill and all estates prepare a report every 6 months based on their UKL and UPL documents as re-quired by legal requirements includes reports on air quality, emissions from electrical generator, groundwa-ter and soil quality, and noise. In Sei Daun, Merbau and Batang Saponggol Estate, such report includes result of analysis of the same parameters, as well as of odour levels, and amount of hazardous waste pro-duced. This is reported semi-annually, while some parameters to be reported annually have been sighted in the estate’s December 2014 report, e.g. analysis of employment opportunities, local community percep-tion and CSR activities. The analysis results indicate no excess towards legally permitted standards. The last report was prepared on December 2014 and includes monitoring and analysis results for ambient air and noise, water quality, and evaluation of results as they were sighted on report number 191/FUR/UA/01/2015 for air ambient test result in Batang Saponggol estate, 5175/K/AB/12/2014 dated 7 December 2014 for Clean Water test result from ground water sample point, No. B3700/B/ABA/12/2014 for Plankton Benthos test result from surface water sample. The analysis results for mill air and water quality show no exceedance of environmental parameters to legal standards. From the reports, it was found that all environmental quality parameters measured were within the legal standards. The report has already been distributed to the related government department which concern to this UKL and UPL as required by law and regulation. Compliance status: Full Compliance

Criterion 5.2: The status of rare, threatened or end angered species (ERTs) and high conservation value habitats, if any, that exist in the plantatio n or that could be affected by plantation or mill m an-agement, shall be identified and their conservation taken into account in management plans and operations.

Findings: During recertification audit, there are not revision of identification HCV report that was made by external AKSENTA (member of HCVNI) and PT Perkebunan Milano has existing HCV management and monitoring plan, company still focus to protect of wet land area in Batangsaponggol estate, installment of sign board in block D15, monitoring of bera-bera trees, inventory of fauna has carried out on March 2014, planting of conservation trees, maintenance of condition cemetery areas, re-inventory of total and their cemetery. Pa-trol program not only focused on monitoring company's assets and illegal activities now but also to monitor identified HCV areas and ensure no wildlife hunting is carried out. PT Perkebunan Milano has carried out socialization of HCV to worker dated on July 11, 2014, however the auditor did not see all input from workers during socialization has been used to update HCV condition in PT Perkebunan Milano, this is po-tential for company improvement for their HCV considering to current condition . All identified HCV 6 areas still exist and are well maintained such as grave complex in Merbau estate, and boundaries of these areas



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have also been maintained and visible marked. The company has taken actions to protect identified HCV areas or identified potential HCV areas, yellow paint as marking for boundaries of HCV areas are visible and well maintained eg, in Riparian river at block 35, 37 and 41 in Merbau estate. Sign boards regarding no hunting activities were sight and well maintained still visible in all Milano estates and strategic locations such main roads. Hunting is strictly prohibited in HCV area as well as taking of fauna from the plantation and adjacent land. Posters and signs warning of the presence of protected species. The poster contains in-formation about all protected species within PT Perkebunan Milano areas, and restrictions on hunting ac-tivities. All identified HCV area has been indicated on the HCV map, the map is sufficient and clear. Dedi-cated officer for HCV in PT Perkebunan Milano no change since year 2011. The company define policy to protect RTE species as stated on Wilmar Sustainibility policy. There is a program to regularly educate the workforce about the status of the RTE species as well as pro-gram to protect RTE species through inspections activities as mentioned on SOP-GEN-013 rev. 02 sec-tion 4.3.3 The training program will be started on September 2015. The company will issuing punishment to all workforce working for the company is found to capture, harm, collect or kill these species. Monitoring HCV year 2015 has been established as monitoring record was sight on HCV Monitoring record year 2015 for Batang Saponggol estate and Merbau estate Compliance status: Fuly Comply

Criterion 5.3: Waste is reduced, recycled, re-used a nd disposed of in an environmentally and socially responsible manner

Findings: The mill and all estates have identified all potential sources of wastes and pollution in their Environmental and Safety Aspects and Impacts Identification document prepared in updated year 2014. All estates have a Standard Operating Procedure available for management of domestic wastes generated from housing & offices, plastic wastes as well as for hazardous wastes. Sei Daun estate, Merbau estate and the mill have their own licenses for hazardous waste collection which are confirmed to be valid at explained under CR2.1 above, while Batang Saponggol estate sends their hazardous wastes for collection to Sei Daun estate. Sei Daun estate maintains records of amount of haz-ardous wastes received from Batang Saponggol estates, as seen from sample receipt records for 7 July 2014 and 29 April 2014. Sei Daun estate maintains records of incoming hazardous wastes in Control Form for Incoming and Outgoing Hazardous Wastes and Inventories of Hazardous Wastes. Hazardous wastes are collected by licensed contractors PT Shali Riau Lestari, where most recent collection was on 11 July 2014 and prior to that was 18 January 2014. However, it was found that the inventories for all hazardous wastes at Sei Daun estate has been updated from July 2015 to June 2015 up until time of collection by the contractor. For example, last inventory up-date for oil filters was 174 pieces on 30 April 2014 but amount collected by the contractor as stated in man-ifest dated 11 July 2014 was 348 pieces. These were noted as observations. Inventory records at the mill hazardous waste stores were found to be consistent with the hazardous waste collection summary note prepared by the mill and final collection amount stated in the manifests. It was found at the clinic of Merbau estate that medical wastes are collected and sent to the PTPNIII Aek Nabara hospital for incineration at least once every 180 days, which is in accordance with the estate’s li-cense for storage of hazardous wastes. Records of medical wastes sent to the hospital were sighted for 4 June 2014 (3.5kg of medical wastes sent) and 17 January 2014 (6.9kg sent). All estates and mill have documented SOP defining procedures for management of hazardous waste col-lection, segregation & disposal control. Merbau estate and Batang Saponggol estate maintains monthly records of amounts of clinical wastes produced. Clinical wastes are sent each month to local hospital for incineration and records of amounts of clinical wastes sent and incinerated are maintained. All estates temporarily store and send other hazardous wastes to the mill for disposal, which has a valid license for storage of hazardous wastes. All hazardous wastes collected are not stored more than 3 months, whether at the estate or the mill. Records of when hazardous wastes are sent to the mill are also maintained. The mill stores hazardous wastes in accordance to legal requirements. However, manifest records of hazard-ous wastes sold to the hazardous wastes collector do not contain sufficient information to track amount of wastes collected, For example, on a manifest prepared on 12 Nov 2014, the specific types of hazardous wastes collected and their amounts, and vehicle identification number of collector were not recorded. Pinang Awan mill maintains inventories of amounts of hazardous wastes produced such as oil containers, oil filters, and petrol containers; however, there are no inventory records of certain types of hazardous



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wastes, eg. Chemical containers (Nalco bekas) and paint tin cans although these are listed as wastes sold to the hazardous wastes collector. Merbau and Sei Daun estate monitors and maintains records of amounts of hazardous wastes produced. However, Batang Saponggol estate does not maintain records of each type of hazardous wastes received and stored at their hazardous waste store prior to sending to the mill. At the audit time there is no evidence domestic waste disposed off using open fire. At housing areas of Merbau estate, waste collection bins for different types of wastes have been prepared. Domestic wastes are separated into plastic, glass and organic wastes, which then disposed into separate landfills in the es-tate area. The landfills are constructed far from housing or river areas. There are signboards at housing ar-eas prohibiting burning of wastes and it as confirmed from interviews with workers that waste burning is prohibited. Compliance status: Full Compliance

Criterion 5.4: Efficiency of energy use and use of r enewable energy is maximized.

Findings: Batang Saponggol estate has an analysis document of usage of petrol & diesel from year 2011 to 2015 for estate vehicles and equipment, including the truck/dump truck, carpool vehicles, school buses, excavators, tractors, genset, water pump, grader and compacter. The total annual diesel usage was 44,544 tonnes in year 2011, 48,778 tonnes in year 2012 , 46,287 tonnes in year 2013 and 45,160 tonnes in year 2014 Pinang Awan mill maintains records of energy use and efficiency analysis for year 2015 (up until June) and 2014. The efficiency analysis was prepared using monthly data on FFB processed, CPO produced, fibre and shell produced, turbine energy usage and amount of shell and fibre used for the turbine, including cal-orie values for shell and fibre and renewable energy usage. It was calculated for January to June 2015 that renewable energy usage from shell and fibre per month ranged from 534 to 735 kcal/tonne FFB per month and 2,643 to 3.741.5 kcal/tonne CPO per month. Compliance status: Full Compliance

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.

Findings: The company has implemented a Zero Burning Policy for Land Preparation. The company also does not permit the use of fire to burn waste materials including garden wastes and packaging materials at the housing areas. Wastes are segregated at source into organic, inorganic, and hazardous (chemical) waste. Even though from on-site visits, it was found that there were some inconsistencies in housing waste dis-posal methods for certain houses, however most workers and their families are aware of the company’s waste disposal system and that they cannot burn their waste. The company has installed a fire alarm system at the mill, workshop and other main buildings, as well as conducted training on fire fighting and fire drills. Fire extinguishers are the mills and estate offices are also available and records of maintenance are available. For Merbau estate, about 107 hectares of land were replanted in year 2014 and year 2015, and it was confirmed from field visits that the replanted areas were already in the existing area of PT Perkebunan Mi-lano and there was no evidence of burning of the areas prior to replanting. The land clearing was carried out through felling and chipping of the old palms. For Batang Saponggol estate and Sei Daun estate, there have been no replanted areas for several years. There is evidence of regular fire simulations and trainings carried out for the emergency response team, e.g. as seen from training records at Batang Saponggol estate where the most recent training was carried out on 22 May 2015 which included training on emergency response procedures and usage of fire extin-guishers for 37 participants from Batang Saponggol, Sei Daun and Merbau estate, including estate assis-tant managers, field mandores, security personnel, genset operator, mechanics, field officers and field con-trollers. Photographic evidence and attendance lists for the training was sighted. Batang Saponggol estate was found to have a filled mobile water tank for fire-fighting and fire extinguishers available at the work-shop.



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At Pinang Awan mill, last fire simulation was done on 23 May 2015 with photographic evidence and sum-mary of the results of the simulation done by the mill’s emergency response team. Compliance status: Full Compliance

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

Findings: There is identified activities generating pollution and emission, according to assessment result on January 6, 2015 as recorded on (FRM-GEN-D16) Identification Environmental Aspect and Hazard for Safety and Health; Impact/risk for Environmental and Safety/Health. The list of activities generate pollution and emission in PT Perkebunan Milano and Pinang Awan mill i.e.; Effluent pond Operational land application Operational Engine Bio Operational Blower Suply Methane, Etc. There is identification source of GHG emission as recorded on document FRM-GEN-068 dated April 5, 2014, identified source for Pinang Awan Mill i.e:

- Boiler Emission - Genset Emission - Bio gas genset emission - Methane gas emission - Transportation.

Company has planning to reduce and mitigate GHG emission, e.g. . preventive maintenance, reforestration EFB application for cover crop and fuel such as explain above. The planning objective and target has bee defined, basically the company target is maintain all pollution and emission under government and other requirement target. Is there a system in place to monitor emission of pollutants including greenhouse gases from estate (plan-tation) and mill operations? The company using independent third party to monitor all identified pollution and emission as required by EISA document, i.e. Bina Laboratorium North Sumatera province. There is regular monitoring records such as: - Air emission ambient certificate no. 845-6/U/BINA/V/2015 - Genset air emission quality, boiler with certificate no. 845-13/U/BINA/V/2015 dated 27 April s/d 2 Mei 2015, the result is has fulfil government regulation. - Result of test vibration result by Independent laboratorium following standard SNI 19-7117.2-2005 the result is has fulfil government regulation. no. 13/Men/X/2011 Company conduct regular monitoring, following approved document RPL and RFP by government, be-tween six monthly and or one year. The company a monitoring system in place for greenhouse gas (GHG) emissions, which are calculated us-ing the RSPO endorsed Palm GHG tool. As seen from the company’s Palm GHG Summatry report dated 18 June 2015, the total emissions calculated were 1.62 tCO2e/t product for both CPO and PK, with no emissions for palm kernel oil (PKO) and palm kernel expeller (PKE). Total field emissions was calculated to be 22103.21 tCO2e from own crop and 81,915.15 tCO2e from out growers, while total mill emissions was determined to be 7691.90 tCO2e. The field emission sources included fertilizer transport, N2O from fertiliz-ers, fuel consumption and peat oxidation, with no emissions for land conversion as the company has not carried out any land conversion. While for the mill, the main emission sources include palm oil mill effluent (POME) and fuel consumption, with no emissions for grid electricity utilization. The company has no palm kernel crusher and therefore has no emissions from this source Compliance status: Full Compliance Criterion 6.1: Aspects of plantation and mill managem ent including replanting that have social im-pacts are identified in a participatory way, and pl ans to mitigate the negative impacts and promote the positive ones are made, implemented and monitor ed, to demonstrate continuous improvement.



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Findings: PT. Milano has had a Social Impact Assessment analyzes a document prepared in 2009 by the Aksenta Institution. The SIA document are cover all of the potential impact factors, including: Access and use rights, Economic livelihoods (eg paid employment) and working conditions, Subsistence activities, Cultural and re-ligious values, Health and education facilities, Other community values, the resulting from changes such as improved transport / communication or arrival of substantial migrant labor force. Affected communities have been involved in the assessment document SIA. The village is affected Mill are Asam Jawa Village, Aek Batu Village, Batang Saponggol village, Bunut Village, Sei Daun Village, Pulo Bargot Village, Merbau Vilage, and Pinang Damai Village. There is a plan to avoid or mitigate negative impacts, but not entirely refers to the estimated negative im-pact that has been stated in the EIA(AMDAL) and involve affected communities in preparing the plan. PT. Milano has had a community empowerment program that has to accommodate the participation of the community through the aspiration to define community development activities, examples: • proposal of Voley Ball Tournament with assistance worth Rp. 200.000, - • construction of drains at the Bunut Village, District Torgamba, South Labuhan Batu in March 2015. • Construction of the mosque fence At Takwa with the aid of Rp. 500.000, • Plan the procurement of school bus Hyno MDBL 5.8 130 PS at 2015 • Commemorate Isro’ Mikroj of the Prophet Muhammad at Pulo Bargot village in June 2015, amounting to Rp. 150,000, Available, document record has to according to the SIA; outline the plan on mitigation, implementation and monitoring. PT. Milano had plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts been developed Action plans are reviewed every year, and reassembled for the coming year based on the results of that evaluation. the review has been done with the participation of the affected parties. Related to the cooperation scheme with no sharecropper farmer on PT. Milano (Sei Daun estate, Merbau estate and Batang Saponggol estate) Assistance to community activities are not optimal, for example, PT Milano does not have a work schedule facilitation and mentoring curriculum structured to target groups. Implementation of Community development program has been recorded by monthly report and annual re-port. CSR program in productive economic activity is still less than the CSR in the field of infrastructure. For ex-ample at Batang Saponggol Estate in 2014 only has one productive economic program that is a support 500 head day od duck (DOD) to 5 village. With a success rate of only 37.2%. Likewise, with the help of seed catfish in Pinang Awan Mill. Need to increase productive economic activity but must be selective and really needed by the community. Assistance to community activities are not optimal, for example, PT Milano does not have a work schedule facilitation and mentoring curriculum structured to target groups. Compliance status: Full Compliance

Criterion 6.2: There are open and transparent method s for communication and consultation be-tween growers and/or millers, local communities and other affected or interested parties.

Findings: PT Milano has a Standard Operating Procedure (SOP) related consultation and communication procedures are as follows: SOP Communication, Participation and Communication, Document No. Pro- Gen-011, Re-vision 02, dated 23 September 2013 applies. The SOP are explained: • on stakeholders to provide information, questions, dissatisfaction related to industrial relations, de-scription of potential problems and others. • unit leader agencies coordinate communication and consultation to answer / provide the infor-mation required by stakeholders, including a meeting to find a solution if the requested information goes a solution. The SOP aims to receive and provide information and feedback to the stakeholders by using good lan-guage, easy to understand and be understood. There are management personnel responsible for the delivery of information and feedback to stakeholders



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namely Mill Head that will be replaced when unable team Public Speaker contained in any Estate (Batang Saponggol, Sei Daun and Merbau) and Pinang Awan Mill. PT. Milano key stakeholder’s are: Outgrower, Village Government, Sub Distric government, Distric Gover-ment, NGO, local community, and farmers. Compliance status: Full Compliance Criterion 6.3: There is a mutually agreed and docume nted system for dealing with complaints and grievances, which is implemented and accepted by al l parties. Findi PT. Milano has had a policy of "Whistle Blowing Policy" that are specifically related to the settlement of disputes affected communities, which guarantees confidentiality (anonymity) rapporteur or whistleblower cases. In addition to company policy, PT Milano also has a Standard Operating Procedure (SOP) which regulates the submission of complaints, transparency of information and settlement of the conflict, namely:

a. SOP handlers Relations and Community Development Effort (No. Document PRO-BM.GEN-002 dated 1 July 2009) there is an explanation that the company will facilitate if complainants request-ed confidentiality of his identity, without prejudice to the essence and the company's response to the complaint.

b. SOP Management Relations and Community Development Effort No.Pro-BM.Gen.002 revision 01 on 1 July 2009, which serves as a technical guide application of the principle transparanasi in im-plementing the delivery of information, complaint, proposal / assistance between the company and external parties for the public interest so sure every request and delivery of the above can respond as effectively as possible .:

c. SOP Land Dispute Resolution No. SOP-Permit Land & Ops-007, the effective date is October 15, 2008. SOP describes the steps to resolve, namely:

• identification of the problem / root of the problem, • analysis of the problem (using the law of cause and effect), • set a plan to do the proper treatment quickly, and directed • continuous evaluation and monitoring ngs:

Since 2014 up to now does not conflict with public land tenure, there is the public interest to pasture cattle have been accommodated by the company to give permission grazing on certain land. The number of cows around 200 and the number of owners of 37 households. Compliance status: Full Compliance Criterion 6.4: Any negotiations concerning compensati on for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through t heir own representative institutions. Findings: PT. Milano has had a Standard Operation Procedure (SOP) related to the identification of the legal rights of the community, namely SOP Land Acquisition and Land Permit No. Ops -005 dated October 15, 2008, which aims to ensure that decisions, steps or actions in the process of acquiring land for the benefit of in-dustrial oil palm plantations is done properly, appropriately and in accordance with prevailing regulations and meet the principles and criteria of the RSPO, HCVF, and FPIC particularly for land-related interests of the community and communal land. Procedures related to the calculation or the calculation of fair compensation (in money terms) has been carried out based on the prevailing custom in the community. For productive land will be taken into ac-count the number and age of the existing productive plants. Acquisition procedure of land owned by Pinang Awan Mill, Batang Saponggol Estate, Sei Daun estate, and Merbau estate has accounted for differences in legal proof of ownership and communal ownership and their heirs. Additional compensation in the form of an opportunity to work as permanent employees or casual laborers in the housekeeping (cleaning service) and maintenance of the plants in the garden with a standard salary in accordance with the MSE (minimum wage counties).



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Based on the report UKL / UPL second half of 2014: Merbau Estate 206 local employment (95%) of the 218 workforce, Batang Saponggol estate 273 local employment (83%) of the 329 workforce, and Sei Daun Estate 443 local workers (83%) of the 540 workers. There is no documentation of land acquisition , as Mill and oil palm plantations take over from IBRA in 2001. These documents are not included in the process of take over. Compliance Status: Fully Compliance

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

Findings: Based on the search document, has provided documentation of salaries of all employees of both perma-nent and non-permanent employees. Salary document contains information the employee's name, job title, years of Non permanent employees arrangement by the company with contractual bases. Salary Slip examples that have been verified by a team of auditors on behalf Ainun Siregar with the level of attendance 17 working days wages Rp. 1.3702 million, - or Rp. 80.600, - / day (25 working days = Rp. 2.015.000)service, the amount of the basic salary, allowances and salary deductions. Temporary workers in this case were casual laborers get right salary in accordance with the Minimum Wages District by decree of the Governor of North Sumatra No. 188.44 / 82 / KPTS / 2015 dated February 5, 2015 , on Minimum Wage sectoral for oil palm plantation sector ( KLUI 12 232 ) :

- South Labuhan Batu Distric Rp . 2.015 million per month . - North Labuhan Batu Distric Rp 1.967 million per month

Based on the North Sumatra Governor Decree No. 188.44 / 82 / KPTS / 2015 dated February 5, 2015, on Sectoral Minimum Wage for oil palm plantation sector (KLUI: 12 232):

a. South Labuhan Batu Distric Rp. 2.015.000 per month. b. North Labuhan Batu Distric Rp 1.967.000 per month

Documents regulating the rights of labor, direct employment contract detailing payments and conditions of employment set out in the Agreement which was approved by the Decree of the Head of the Department of Labor and Transmigration North Sumatra Province No. 12-6 / DTK-TR / 2014 on Registration of Collective Labor Agreement PT. Plantation Milano, January 13 2014.Masa valid January 8, 2014 s / d & January 2016 Regulations written in Indonesian company that is understood by all stakeholders. There is a business in early childhood and kindergarten Merbau Estate on behalf of Fatma has worked about 5 years still honoree has not appointed as a permanent employee. Efforts to monitor and improve workers' access to adequate food is given in the form of allowances:

a. THR allowances b. Natura / Rice: workers 15 kg, the wife of 9 kg, 7.5 kg child (maximum 3 children) c. Premium production and over time d. Health benefits (BPJS Health and Labor).

Facilities on PT Milano: a. Pinang Awan Mill :

- Housing: house 131 employees - Medical / Clinic: 1 unit clinic, 1 midwife, doctor visits every week - Education: Daycare, ECD - Sports: football field, volley ball - Entertainment: gathering once a year, - Clean water from the water from the water treatment company.

b. Batang Saponggol Estate :

- Housing: 147 home employees - Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks. - Education: early childhood and kindergarten - Religious: Mosque 3 units, 1 unit of the Church - Education: Daycare, early childhood and kindergarten, school buses 2 units - Sports: football field, 2 units volley ball, badminton 2 units - Entertainment: gathering once a year, a single organ / choir



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- Clean water from the company with the wellbore c. Marbau Estate:

- Housing: 125 home employees - Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks

and one unit ambulance. - Education: early childhood and kindergarten - Religious: Mosque 2 unit - Education: Daycare, early childhood and kindergarten - Sports: football field, volley ball, - Entertainment: Music “gambus” - Clean water.

d. Sei Daun Estate : - Housing: 242 home employees - Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks

and one unit ambulance. - Education: Daycare, early childhood and kindergarten - Sports: football field, volley ball, badminton - Clean water. - Entertainment: gathering once a year, a single organ / choir - Clean water from the company with the wellbore

Efforts to monitor and improve workers' access to adequate food is given in the form of allowances: a. THR allowances b. Natura / Rice: workers 15 kg, the wife of 9 kg, 7.5 kg child (maximum 3 children) c. Premium production and over time d. health benefits (BPJS Health and Labor) Compliance status: Full Compliance Criterion 6.6: The employer respects the right of al l 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 f acilitates parallel means of independent and free association and bargaining for all such personnel. Findings: Available; PT. Milano has a Corporate Policy on Employment and Employee Protection Policy which states that the Company provides recognition of freedom of association are attached to the walls of the office and the Bahasa language that is understood by employees. Implementation is employees have bipartite cooperation institution that has been registered by the Social Service Manpower South Labuhan Batu District Number: KEP.560 / 14 / DSTKT / 2015, for Pinang Awan Mill, Batang Saponggol Estate, April 30, 2015, the Sei Daun estate dated 18th March, 2015 and Merbau Estate May 7th Mei 2015. Available; documented minutes of meetings between the company and main trade unions or workers representatives Pinang Awan Mill: Data available the minutes of the formation of LKS Bipartie with the company PT. Milano, One such docu-ment is the minutes: Minutes of bipartite negotiations on Thursday, May 28, 2015, discussion material on the Cooperation Agreement, which was attended by representatives of the company and union representa-tives Batang Saponggol Estate: Data available the minutes of the formation of LKS Bipartite with the company PT. Milano,are : Dissemina-tion of LKS Bipartite, Definition, Purpose and Functions LKS Bipartite, Review Use of Personal Protective Equipment as a necessity at work, and Work Tool Substitution longer than 1 month (replacement Egrek) Sei Daun Estate: Data available the minutes of the formation of EMC with the company PT. Milano are : Definition, Purpose and Functions LKS Bipartite, Review Use of Personal Protective Equipment as a necessity at work, re-placement work on the feast day of Eid al-Fitr, THR and employees Loans



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Merbau Estate: Data available the minutes of the formation of LS Bipartite with the company PT. Milano are : replacement work on the feast day of Eid al-Fitr, THR and employees Loans, Production and transport during of Eid and Duty Shift Eid Compliance status: Full Compliance

Criterion 6.7: Children are not employed or exploited .

Finding: PT. Milano has had and implement regulatory requirements minimum age limit that is acceptable as an

employee. The rules contained in the policy on child labor , namely : - The age limit allowable hiring at least 18 years old or married and the maximum limit is 50 years . - Working hours are 7 hours per day with daalm working day 6 days a week - Holiday following the provisions of national holiday Compliance status:

Criterion 6.8: Any form of discrimination based on ra ce, caste, national origin, religion, disability, gender, sexual orientation, union membership, polit ical affiliation, or age, is prohibited.

Findings: PT. Milano has had a Policy Regarding Respect for Human Rights that includes: 1. Rights of Workers:

- Freedom of association - There is no forced labor - no child labor - decent working conditions

2. Rights and Indigenous Communities Around - Respect for the rights of land ownership - A commitment to carry out the process of Free, Prior and Informed Consent (FPIC) with local

communities before opening a business unit - Commitment to the application of openness, communication, fairness and equity positions in each

handler conflict towards achieving a joint solution Implementation of policies implemented at the latest PT Milano December 31, 2014 Based on interviews with workers in mind that workers and groups including local communities, women, and migrant workers there is no discrimination in recruitment. Recruitment is open to anyone who has the ability, given appropriate salary Minimum Wages District, granting medical benefits applicable to all employees. Men and women have the same opportunities in the process of recruitment, payroll, and benefits. Menstru-al leave and childbirth / breastfeeding women are given to employees regardless of their race or religion race. Recruitment, promotion conducted by expertise, educational background suitability for certain positions as well as their employee performance assessment each year. As an example:

- Applicants vehicle drivers are required to have driver's license in accordance with the provisions, - Applicants medical personnel must have the required medical education and work experience are

determined. Compliance status: Full Compliance



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Criterion 6.9: There is no harassment or abuse in th e work place, and reproductive rights are pro-tected.

Findings: PT. Milano already has the Employment Policy and Employee Protection Policy that explicitly prohibits all forms of sexual harassment. Based on interviews with workers in mind that this policy is understood by all workers, and they understand that severe sanctions are dismissal. Until now this aduit conducted in 2015 there were no cases of sexual harassment and other complaints of women workers. There are organiza-tions Gender Committee, which facilitates both female worker complaints related to employment and sexu-al harassment. The Committee has had a program of socialization and consulting work related to sexual harassment. Gender Committee has not had the Decree of the Board of Directors to carry out their duties. But operationally has carried out activities which socialization. The socialization material:

• Addressing domestic violence • The role of women in the family • Increased income families • Employment policies governing the reproductive rights of workers are clearly stipulated in the

Company at: • Article 52 about menstruation leave: Employees who feel pain during menstruation is not required

to work on the first and second days of menstruation. • Article 51 on maternity leave / breastfeeding: • To Employees pregnant women given the right break 1.5 (one setenqah) months prior to the time,

according to calculations doctor will give birth and 1.5 (one half) months after delivery or abortion. • The days of rest give birth because abortion should be based certificate obstetrician or midwife

who cared for him, • Rest childbirth can be extended if the doctor or midwife who cared deems it necessary that the

employees concerned women still have to rest and apply the provisions of the Wages For PainThe importance of education for children avoid drugs.

The company has been contained in the Regulations governing the article laments that article 61 on the settlement of complaints, which contains: 1. Any complaints or complaints of a employees attempted first be discussed and resolved by direct su-

pervisor. 2. If the measures in paragraph 1 (a) can not be resolved, then with the knowledge of his superiors, the

employee concerned may submit a complaint or a complaint to his superiors higher verbal / written. 3. If the step paragraph 2 can not be resolved, the employee can complain to the organization's employ-

ees to resolve together with the Personnel department. 4. In the event that settlement deliberation referred to in paragraph (3) is not reached, the employer and

the worker / laborer resolve industrial disputes through industrial relations dispute settlement proce-dure regulated by law.

Compliance status: Full Compliance

Criterion 6.10: Growers and mills deal fairly and tr ansparently with smallholders and other local businesses.

Findings: Pricing of fresh fruit bunches (FFB) is performed by a commission formed by members of the Provincial level is a outgrowers, Mill and Plantation Office. Price is valid for one month decided to come and publi-cized through mass media such as “Analisa” and “Medan Bisnis” newspapers that can be accessed by the entire community. The Company provides pricing information based on the results of TBS at the provincial level. Pricing TBS is not the authority of the palm oil companies, but the collective decision of the commission of the Provin-cial level. It was sight at Rantauparapat FFB Ramp, current and past for FFB price information was displayed. Valid price for ongoing month since beginning of month until end of month has been displayed. Furthermore



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trading department will inform daily price through as seen for supplier with cellular no. 081265664433 on July 21 to 26, 2015. Trading HO information from the Logistics Unit to process the data from HO based on local HPP. TBS sub-sequently informed to the Operations Supervisor and forwarded to the supplier via short messages. Both Pinang Awan mill and their FFB supplier has signed FFB procurement agreement. As stated on the agreement section 3, FFB price will follow CPO price. However there is no clear mechanism to calculate FFB price from current CPO price. The agreement not explains Information on the trading price based on the price of CPO's HO, composition-based pricing: production cost, transportation costs, costs of loading and unloading cost and the estimated yield. The auditor clarified to suppliers (contract holder No. 001/MLN-RAMP/TBS/01/2015; No. 002/MLN-RAMP/TBS/01/2015), they did not aware about price calcula-tion as mention verbally by the FFB procurement department Pinang Awan mill. This raise as non-conformity. Pinang Awan mill and their supplier has signed FFB procurement agreement, all parties have understood without agreement the mill will not receive FFB. The agreement has been explain term and condition for FFB purchased, including Wilmar’s policy regarding the legality of FFB sources. However from the inter-viewed result the supplier has no well understanding about Wilmar policy for FFB tarcebility and legality of FFB source. This is a room for Pinang Awan mill to improve supplier understanding about Wilmar’s sus-tainibility policy. FFB agreed payment has been paid on time by PT Milano through office units in Rantau Prapat. This is confirmed by FFB suppliers at the audit time during interviewed. Compliance status: Non Compliance See NCR No. 2 of 04 See NCR No. 03 of 4

Criterion 6.11: Growers and millers contribute to lo cal sustainable development wherever appropriate.

Findings: Contribution to local development have been conducted by PT . Milano via CD or CSR program . CSR pro-gram PT. Milano include : - Help Rural Community Economic Improvement , - Development and Education Quality Improvement, - Development Religious Life, - Social Health Culture & Sport, and - Contruction of rural infrastructure around PT . Milano. Community Development program realization in from January – June 2015 is as follows : Sei Daun Estate Rp . 141. 000.000 , - Batang Saponggol Estate Rp . 58.000.000 - Merbau Estate Rp . 39.367.000 , - Based on industrial relations at PT . Milano there are no out grower schemes . There is no smallholder scheme in Pinang Awan mill and its supply based. The requirement is not applica-ble for the company. Compliance status: Full Compliance Criteria 6.12. No forms of forced or trafficked labour are used. Findings: Based on employment data on PT Milano all workers have a clear identity and not an illegal power (trafficked) or forced. Workers may at any time refuse to work if they are not in accordance with the existing manpower regulations. There is no forms of forced or trafficked labour in all PT Perkebunan Milano estates and Pinang Awan Mill. The requirement is not relevant and not applicable.



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Based on employment data on PT Milano all workers have a clear identity and not an illegal power (trafficked) or forced. Workers may at any time refuse to work if they are not in accordance with the existing manpower regulations. Based on data from the employment relationship there is no contract of employment relationship. Additionally PT Milano also provide employment injury benefit in the form of reimbursement of all costs in-curred as a result of workplace accidents Compliance status: Full Compliance

Criterion 6.13. Growers and millers respect human ri ghts.

Findings: PT . Milano through Employment Policy and Labor Protection Policy explicitly states that the company re-spects human rights contained in the articles of the Company Regulations. Implementation of human rights is given in the form of salary in accordance with government regulations, there is no discrimination in recruitment, as well as providing benefits to improve the welfare of employees Compliance status: Full Compliance

Principle 7. Principle 7: Responsible Development of New Plantings

Findings: PT Perkebunan Milano has not commenced any new oil palm development since the establishment of the RSPO Principles and Criteria. Therefore, Principle 7 is considered “Not Applicable”. Compliance status: Not Applicable

Criterion 8.1: Growers and millers regularly monitor and review their activities and develop and im-plement action plans that allow demonstrable contin uous improvement in key operations.

Findings: The estates and mill have a monitoring action plan and implementation report based on their Environmen-tal Management and Monitoring plan (UPL/UKL), and regular evaluations of plantation and mill operations. For example, Batang Saponggol estate and the mill prepares a report of their implementation of the UPL/UKL once every 6 months as required by the environmental department, which covers aspects re-quired to be monitored in the UPL/UKL. For the estate, this includes ambient air quality, groundwater quali-ty, waste collection, water biota sampling and analysis, road damage, social economic aspects such as hir-ing of workers and FFB and EFB transport (which can impact water and air quality), as well as impacts to community health due to fertilizer application, and FFB and EFB transport. While for the mill, the imple-mentation report includes results ambient air quality, boiler emission quality, palm oil mill effluent quality, soil quality of land application area, noise levels, and scheduled waste production records. In addition, Batang Saponggol estate has a documented Environmental Improvement Plan for year 2015, which covers activities to reduce electricity usage (target usage 26,000 kwh/month for electricity supply from the State Electricity Company (‘Perusahaan Listrik Negara’ or PLN) and 3,000 liters/month for the genset), domestic waste separation, and HCV management and monitoring. The program is updated monthly to indicate status of activities carried out and the estate also has a form for monitoring of achieve-ment of objectives and targets. The estates has program to reduce pesticide usage especially to eliminate the usage of paraquate and other restricted agrochemical material as stated on the internal memo since year 201o the implementation of the planning has been explain on CR 4.6. above.. The mill also has an additional documented list of Environmental Objectives and Targets for year 2015, in-cluding progress of implementation. The list includes activities for improving environment management by reducing usage of fossil fuels to 0.79%/tonnes FFB, maintain water usage at 0.184 m3/tonnes FFB, and prevention of pollution resulting from spillage of mill effluent to the field through regular pond cleaning dis-tribution for land application, installation of underflow pipes from pond 4 to pond 5 and regular housekeep-



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ing. The mill must continue to ensure these activities are implemented as it was observed in the field that the effluent ponds were near overflowing levels after only one day of rain. Compliance status: Full Compliance

• RSPO SCCS Pinang Awan Palm Oil Mill is producing crude palm oil (CPO) and palm kernel (PK), the the audit time has not register their transaction in the RSPO E-Trace System, because company currently sell their product without claiming it as certified sustainable palm oil (CSPO) or certified sustainable palm kernel (CSPK), all CPO produced from Pinang Awan Mill are sold as International Sustainability Carbon Certification (ISCC) certified claimed product, as company already certified according to ISCC requirement in Year 2011 . However according to explanation from mill manager, the company will follow all requirements from RSPO to support implementation of sustainability requirements. The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements : 1.0. Pinang Awan Palm Oil Mill implement Modul E for Mass Balance System, all FFB from Sei daun es-

tate, Batang Saponggol estate and Merbau estate. 2.0. Estimated annual tonnage of the followings are available:FFB received from each certified source (sub

management unit)

FFB Contributors

FFB supplied from January to December 2014

FFB supplied from January to May 2015

Tonnes % Tonnes %

3. Company owned estates :

Sei Daun Estate 63,199.22 23.47 23,886.60 24.18

Batang Saponggol Estate 45,476.86 16.89 17,511.26 17.73

Merbau Estate 19.73 0.01 - 0.00

Sub Total 108,695.81 40.36 41,397.86 41.91

4. Independant out-growers*:

160,617.94 59.64 57,373.73 58.09

TOTAL 269,313.75 100.00 98,771.59 100.00

Note : *)Supply received from 70 FFB out growers in year 2014 and 47 FFB supplier in year 2015 3.0. Registration with IT trading platform PT Perkebunan Milano has register to RSPO IT system with li-

cence number RSPO_PO1000000560. Pinang Awan Palm Oil Mill has already selling PK RSPO certi-fied, but no evidence the transactions has conducted in the RSPO E-Trace. This is raised as noncon-formity, NCR No. SCCS 2015-04 of 04.

Compliance Status: Non Compliance See NCR No. SCCS 2015-04 of 04 4.0. Standard operation procedures or work instruction covering all elements of supply chain model is

available: The company has list of procedures for implementation of SCCS as seen on Master list document (FRM-GEN-019) , the company establish procedure for receiving order of certified product both in sales depar-tement and mill, there is clear explanation about how to issued Main Delivery document and partial de-livery. The company has policy regarding SCCS model will used for CSPO production process, according to decree letter no. 001/MLN/SK/V/2012 regarding company decison for Supply chain model i.e. Mass Balance signed by Unit Head Pinang Awan Mill. The mill have documented procedures for receiving and processing certified and non-certified FFBs i.e. SOP-MILL-001 rev. 04 May 08 Incoming FFB procedure, 2011; SOP-Mill 002 FFB Sortation: SOP-MILL-001 for Weigh bridge Mill, and A set of SOP FFB processing since receiving until product dispact SOP-Mill-003 to SOP-Mill-044 and procedure for Mass Balance calculation as stated on SOP-MIL-047 (include of mass balance format for palm kernel).



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No changes on company’s mechanism for control and maintenance of the data and document used in production process, as stated on SOP PRO-GEN-002 dated May 07, 2012 all records related to CSPO & CSPK Product Company will be maintained for 10 years. The mill has records balance for all receipts of RSPO certified FFB and delivery CPO & PK on daily ba-sis. The material balance includes information about incoming FFB from company’s estate and outgrow-er, FFB process, CPO & PK production including OER & KER. Since year 2014 Pinang Awan Mill has ben selling certified PK to PT Wilmar Bioenergy Plintung Riau, all volumes of palm kernel that are deliv-ered are deducted from the material accounting system according to actual daily conversion rate. The material balance can show deliver product sales from a positive stock. The mill will indicate product name and supply chain model in Weigh Bridge Document, including infor-mation about RSPO certiicate number as stated on SOP-Mill-039 which is explain about how to put sup-ply chain model used in trade documents such Main Delivery Order, Weigh Bridge Slip, Delivery Order. All certified CPO will be transferred to PT Wilmar Bioenergy Plintung Riau for ISCC claimed. There is no outsourced process in Pinang Awal Mill. The mill’s product CPO and palm kernel are internal-ly processed in company’s location. The mill has been assigning person, i.e. mill manager that having overall responsibility for and authority over the implementation of SCCS requirements and compliance with all applicable requirements. The mill manager is expected to be able to demonstrate awareness of the facilities procedures for the implemen-tation of SCCS standard. Respective staff has good knowledgeable and competent in implementing the supply chain procedures in Pinang Awan mill, as proved during interview with weight bridge staff, FFB ramp etc. There is training evidence for SCCS awareness for Mill staff manager level such as attendence list FRM-HRD-020; training was conducted on May 08, 2012. All relevant staff was trained on May 10, 2015 at-tended by 15 operators. Evidence of training: Minutes meeting SCCS workshop for employees working with Critical control Point such as Photographs of training session dated May 10, 2015. There are no change for personal in SCCS team and no claim of implementation plan sometime soon so Pinang Awan mill not conducting training.

5.0. Records of actual oil and kernel extraction rates (OER and KER) are maintained. Records of produc-tion and sales of CSPO and CSPK are available as seen on the tabe below:

Amount (MT)

CPO PK Certified tonnages claimed in previous

certificate 69,951 15,898

Certified tonnages sold* - -

Certified tonnages purchased* - -

Actual Production for year 2014 54,235 14,640

Projected total output for year 2015 28,292 6,430

Actual OER and KER for year 2014 OER: 20.63 KER: 5.44

Project OER & KER for year 2015* OER: 20.5 KER: 5.5

* The mill does not sell any products as RSPO certified, as confirmed from check of eTrace sales records of the company from the traceability office of Wilmar. Certified products are sold only through ISCC.

** As per mill budget 2015



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3.2. Status of Previously Identified Non-conformitie s During 4th surveillance assessment, a total of 4 nonconfomance were identified against RSPO P&C these consisted 2 major non-conformities and 1 minor non-conformities and 1 nonconformities against RSPO SCCS. The company has taken the necessary corrective action to close these non-conformances as observed during recertification audit. A summary of all identified non-conformances, verification corrective actions taken and auditor conclusions is as below:

• RSPO P&C

Criterion 2.1 (Major indicator 1). Evidence of comp liance with relevant legal requirements.

NCR P&C No.2014-01 of 03 1) The company has SOP-HRD-004 regarding engagement of permanent workers dated 1 January 2014,

which states that all temporary workers will be evaluated after 3 months with further 3 months evaluation if they do not meet the criteria to become permanent worker. This is not in accordance with regulation Kep Men Naker no. 100 year 2004, which states that for workers working 21 days or more for 3 consecutive months or more, the worker shall have their status upgraded to permanent worker. It was found some workers at Merbau and Batang Saponggol estate that have been engaged as temporary workers for over 21 days for more than 3 months but are still temporary workers. Some are temporary worker status even af-ter 4 years working for the company

2) It was found that an accident occurred to an harvester on 2 June 2014 resulting in medical leave of 12 days, but no accident report was prepared using accident report form 3 KK2 A to be submitted to the Head of the Manpower Department within 2 x 24 hours, which is against the requirement of Manpower Ministry Regulation of the Indonesian Republic no. Per.03/MEN/1998 regarding Accident Reporting and Investiga-tion

Verification evidence of Correction & Corrective actio n Merbau estate has provided appointment program for candidate of permanent employment period of year 2014 in phase 1 & 2 division (harvester) and transport division. PT Perkebunan Milano will be appointed permanent employment on August 2014 amount 12 employements. Moreover, there are Head of HRR decree letter amount of 12 persons regarding permanent employment decree. Batang Saponggol estate has provided ap-pointment program for candidate of permanent employment period of year 2014 too in division 1 & 2 (harvester) and transport division. PT Perkebunan Milano will be appointed permanent employment on August to October 2014 amount 26 employements. Moreover, there are Head of HRR decree letter amount of 8 persons regarding permanent employment decree.

PT Perkebunan Milano has provided delivery note to BPJS Ketenagakerjaan in Kisaran by expedisi company and accident report of phase I (form K.K.2) on behalf worker as harvester which accident date on 2 June 2014 and accident date on 20 May 2014.

Auditor Conclusions : Closed

Criterion 3.1 (Major indicator 1). A documented work ing plan of the company for a minimum of 3 years period.

NCR P&C No.2014-02 of 03

There is changes information or data base but projection document of PT Perkebunan Milano has not update with existing condition like hectare replating plan, hectare of planted, volume of FFB process, volume of CPO & PK production, cost activity and profit/loss. Verification evidence of Correction & Corrective actio n:

The company has provided revision of management plan period of 2014-2019 where it document include of update information such as hectare statement as same hectare replating plan, hectare of planted, volume of FFB process, volume of CPO & PK production, cost activity and profit/loss.




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Criterion 4.1 (Minor indicator 2). Standard Operati ng Procedures (SOPs) for mills, from reception of FFB to dispatch of Crude Palm Oil and Palm Kernel Oil

NCR P&C No.2014-03 of 03 It was found at Batang Saponggol estate, two workers working since January 2014 but no evaluation of compe-tence done after 3 months. This is not in accordance with SOP-HRD-004 regarding Hiring of Permanent Work-ers which states that evaluation of temporary workers shall be carried out every 3 months

Verification evidence of Correction & Corrective actio n: It was verified all 12 workers has been promoted become permanent workers in Merbau and Batang saponggol estate. There is no more temporary wokers for harvesting activities ana d sprayer. There is a planning in 2015 for promotion temporary workers become permanent in Merbau estate for new workers in plantation mainte-nance activities.


• RSPO SCCS

NCR SCCS No.2014- 01 of 01 In table of mass balance year 2014, there are transactions of CPO dispatch with sustainability claim however according to verification result stated on delivery order document, the transaction is not for RSPO certified claimed but other certification scheme transaction i.e. ISCC. Verification evidence Correction & Corrective action: The company has provided revised CPO & PK mass balance table where was added new column of “ Sustain-ability RSPO” Auditor Conclusions: Closed

3.3. Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions

A total of 3 nonconformances were identified during the main certification assessment. These consisted of 2 major non-conformities and 1 minor non-conformities. For the major non-conformances, the company has tak-en the necessary corrective action to close these non-conformances within 60 days of completion of the as-sessment, and this was verified by the audit team through documentation review submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

RSPO P & C

Criterion 4.1. (Minor indicator 2): A mechanism to check consistent implementation o f proce-dures shall be in place.

Non-conformance No.2015-01 of 03 (Minor non-conform ity): Findings: There is no mechanism for checking the implementation of SOP Purchase of FFB, SOP No. 001 / TBS / IV / 2014 section D for out-grower and out-grower agent that supplies FFB to Milano Ramp and Pinang Awan Palm Oil Mill Correction: 1. To review and revise SOP Purchase of FFB No. 001 / TBS / IV / 2014 as according to the actual conditions. And implement the SOP to conduct direct surveys, socialized, understood and agreed upon



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by the available suppliers. 2. Socialize SOP and formats that have been reviewed and revised to the clerk of Survey Corrective Action: 1. To ensure again that SOP Purchase of FFB is in conformity with the actual current conditions as well as the related form complete and inform the SOP requirements and to ensure of all SOP content is understood and agreed by the supplier. 2. To Ensure again all SOP has been completely socialized to the relevant officers and ensured an effective socialization has been done. Auditor Conclusions: Evidence of immediate action ta ken was accepted. Effectiveness of im-plementation to verified at next audit.

Criterion 4.1. (Major indicator 4): The mill shall r ecord the origins of all third-party sourced Fresh Fruit Bunches (FFB).

Non-conformance No.2015-02 of 03 (Major non-conform ity): 1. List of out-grower and Out-grower Agent in Rantauparapat ramp only to the period 23 July 2015. 2. In the list there are 4 out-growers agent are listed, but information regarding the list of their FFB suppli-ers for the out-grower Agent are not available. 2. PT Perkebunan Milano has own SOP for purchase of FFB from outside parties, namely SOP No. 001 / TBS / IV / 2014 issued on June 2014. However, the SOP has not been applied to the suppliers agent who supply the FFB to Milano Rantauparapat Ramp Correction: 1. To complete the list of out-grower agents and individual agents for the period 24 July to December 31, 2015. 2. To complete all supplier data throughout the agency with the data suppliers and document in a better way. Corrective Actions Taken: 1. Ensure supplier data is always updated even if there is no change. 2. Ensure all data suppliers agents equipped with the updated data of all suppliers, and improving of document storage systems. 3. To ensure all of the SOP requirements of No.001 / TBS / IV / 2014 are met and understood and agreed by the supplier. Date of completion: August 15, 2015 Auditor Conclusions: Closed. Verification result: 1. The company provide sample of List of out-grower and Out-grower Agent including FFB suppliers for

the out-grower Agent e.g. for Agent ASR and TKM and SYO. 2. Company provide evidence i.e. records of socialization SOP SOP No. 001 / TBS / IV / 2014 issued

on June 2014, it was conducted on August 12 & 14, 2015 as proved by list of participant and photo-graph.

Criterion 6.10. (Major indicator 2): Evidence shall be available t hat growers/millers have ex-plained FFB pricing, and pricing mechanisms for FFB a nd inputs/services shall be documented (where these are under the control of the mill or p lantation). Non-conformance No.2015-03 of 03 (Major non-conform ity): Findings: The FFB pricing mechanism has not been defined in the SOP to purchase FFB from outside parties, namely SOP No. 001 / TBS / IV / 2014 as well as in the purchase agreement that has been signed by FFB suppliers and Milano Ramp. Correction:



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To revise SOP No. 001 / TBS / IV / 2014 and the contract of purchase and sale by added FFB quality parameters on the determintaion of the purchase price from suppliers. To socialised the SOP to available suppliers and Suppliers are agreed to sign the purchase contract. Corrective Actions Taken: To ensure the SOP No. 001 / TBS / IV / 2014 and The Purchase and Sale Contract are covers all the requirements and parameters that affect the FFB purchase price and to ensure SOP is socialized to available suppliers. Date of completion: August 15, 2015 Auditor Conclusions: Closed Verification result: The company provide revised SOP No. 001 / TBS / IV / 2014 that has been included FFB pricing mechanism from outside parties. The company aslso provide evidence that the agreement between Pinang Awan Mill and teir FFB supplier has been revised to include the mechanism of FFB pricing e.g. agreement no. 036/MLN-RAMP/TBS/08/.

RSPO SCCS

Ref. 5.7.1: Supply chain actors who: • are supply chain actors between the mill and fina l refinery; • take legal ownership and physically handle RSPO Cer tified Sustainable oil palm products; and • are part of the supply chain of RSPO Certified Sust ainable oil palm products must register their transaction in the RSPO IT platf orm at the time of physical shipment as re-quired by the rules set by RSPO. Non-conformance 2015-01 of 01 Major non-conformity): Findings: Pinang Awan Palm Oil Mill has already selling PK RSPO certified, but no evidence the transactions has conducted in the RSPO E-Trace Correction: To complete the E Trace transaction data for the PK sales of RSPO Certified Palm Oil Mill Milano Pinang Awan. Corrective Actions Taken: To streamline the communication and coordination between the PIC who responsible for the E-Trace transaction in Jakarta HO with PIC in the unit so that the all of information and documents of the E-Trace transaction can be known by the Operational Unit. Date of completion: August 15, 2015 Auditor Conclusions: Closed Verification result: The company provide evidence regarding E Trace transaction data for selling PK RSPO certified to PT Wilmar Nabati Indonesia, e,g, Transaction ID TR-c6c8ea4a-e655 : Transaction Status Announced Creation Date 07/31/2015 Last Updated 07/31/2015 Last Updated By Joshua Lim

3.3 Noteworthy Positive Components

No. Clause Comment



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1 5.6 Pinang Awan mill is still implementing a CDM project for methane capture which now in-cludes biogas capture for conversion to renewable energy to reused at the mill

2 - Good housekeeping observed at chemical stores for Pinang Awan mill and the estates.

3 - Good filing system and document management, such as retrieval of requested docu-ments was done in a timely manner.

3.4 Issues Raised by Stakeholders and Findings Perta ining to Issues A) Issues Raised during Stakeholder Consultation Meet ing

No. Issues Raised Management Response

1. Recruitment for casual labourers (BHL) should be prior-itized for local communities Labor recruitment information should go through the vil-lage leaders

The recruitment casual Labor still preferred to local communities around the estates as a percentage per June 2015 reached 90 %. Labor recruitment information will remain con-veyed and informed through daily labor re-quirements announcements which attached to the bulletin board in the office of the local vil-lage

2. Night lamp posts are needed at Titi Payung Village, Labuhan Village, dan Batang Seponggol Village.

The company will keep running CSR programs according to priorities and availability of the ex-isting budget

3. Need help to repair road (asphalt or concrete roads) at Batu Aek Village. Need help to repair roads at Pangarungan Village (as-phalt or concrete) Need road potholes to be filled at about 500 m (to-wards Hamlet V) Pulau Bargot Village. Please assist to pave the roads at Kota Pinang village

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and the program can be synergized with the South Labuhan Batu Re-gency Government The road repair and maintenance in question was carried out and sustained

4. Assistance is provided only to areas around the mill, there is a need to provide equal assistance to other vil-lages Need to build a permanent drainage around the mill so that the drains (trenches) are not damaged. The water channel is flowing into the River Barumun

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and the program can be synergized with the South Labuhan Batu Re-gency Government For the manufacture of permanent drainage around the POM mainly from Simpang Pos I to Residential Security guard G 2 were pro-grammed on fiscal year 2016

5. There needs to be more openness in how CSR aid is channeled to the villages

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and can be synergized with government programs and always publicly communicated.

6. It is hoped that the company will provide an Idul Fitri gift for the ‘duafa’ (poor) community at Perkebunan Te-luk Panji village.

The Company has realized the provision of Eid package for duafa (poor) community and will add the number of people who will receive.



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7. PT. Milano has provided many benefits, for example, providing employment so that employees of the com-pany can send their children to a school of higher edu-cation level. There needs to be better cooperation between the Family Welfare Program (PKK) and the government in order to improve morale of the ladies at PKK.

The company has had a granting scholarships policy to children of employees who excel In the future the company will further improve communications for increased Family Welfare Program (PKK) activity in Local Village Gov-ernment

8. Since they have an RSPO certificate, the company is expected to also improve the welfare of employees compared to before they achieved their RSPO certifi-cate (have an RSPO certification bonus) Please have more schools buses and improve the quality / amenities.

The Company will remain concerned about the employees welfare and their families despite the presence and absence of the RSPO since in principle the RSPO are liabilities for compa-nies that have become members The company has had a school bus and will further enhance the facilities and comfort.

9. Replacement work equipment is often too late, for ex-ample, when there is damaged harvesting equipment, it is not immediately replaced / no replacement available, but sometimes only replaced up to one week later. There needs to be basic education (primary school) for children of employees. There are two cottages (cottage Division 2 and at Gunung Raya) approximately 70 families who have not received the electricity from the national electricity pro-vider (PLN) (still using the company generators) Premium calculation should be updated to calculation in per bunch. The current premium payment is calcu-lated per kg FFB.

The company has been providing equipment and work tools provide a sufficient stock for the replacement of damaged work tools. The capacity of primary schools located around each estate can still accommodate children of employees. Procurement of State Electricity Company (PLN) Facility has been programmed / budget-ed on 2016 The company has had to use harvester premi-um calculation in Kgs unit so that accuracy is more valid

10. There is a need for scholarship program to enable stu-dents to obtain higher education levels.

Batang Saponggol village has not had a permanent vil-lage office, therefore PT. Milano is requested to assist in the construction of the village office.

The company’s assistance for community empower-ment and the enhancing of infra structure in the village of Batang Seponggol needs to be improved.

The company has had a granting scholarships policy to children of employees who excel The company has been providing villages of-fice facilities The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and can be synergized with government programs and always publicly communicated.

11. Employees who retire should be replaced by an em-ployees from the local communities.

After the company receives their RSPO certification, employees should also receive wages in US dollars.

The Company has performed the replacement of employees who have retired from the local community that could potentially Companies still follow the Republic of Indone-sia government regulations

12. Recruitment of workers from young people around South Labuhan Batu should take precedence.

The company has been recruiting the local la-bor from South Labuhanbatu



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Please enhance employee welfare and improve coor-dination with government.

The Company remains concerned about the employees welfare in accordance with the company's ability The company remains in coordination with the government

13. Please establish good communication with the com-munity and care for their good and positive interests

Please give attention to occupational safety.

Doing more road repairs and pave the roads.

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and can be synergized with government programs The Company will continue to establish a good communication and positive ways. Taking into account the company's Safety & Health work in the company The company has been doing road mainte-nance and repairs and for paving the road can be synergized with government programs

14. Please further improve labour relations and give priority to the young people of the surrounding villages, espe-cially in the district of Labusel.

The company has been recruiting the local la-bor from South Labuhanbatu

15. There is positive impact from the company in that they provide more job opportunities.

It is hoped that the company takes better care of the environment and habitats that surround the company.

Please provide business opportunities to assist entre-preneurs who can work with the company.

Companies continue to provide a positive im-pact to the community around The company taking into account to preserving the available environment and habitats The Company has prioritized local business-men to cooperate according to their ability

16. It is felt that the presence of the company has benefit-ted the community very much.

The company still strives to provide a positive impact on surrounding communities

17. Milano plantation and palm oil mill has provide a lot of help to the surrounding communities.

However, air pollution from is caused by vehicles enter-ing and leaving the company’s area.

The company is requested to hold a bazaar in welcom-ing the Eid in the near future.

The company should employ surveillance involving the military and the national police.

The company still strives to provide a positive impact on surrounding communities The Company has conducted sprinklers road during the dry season The Company has conducted bazaar activities in cooperation with South Labuhanbatu local government The Company has engaged military and police in terms of surveillance and security compa-nies



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18.

The company has created positive impacts with pro-grams that can help people in particular difficulty and the government in general, such as the Wilmar Educa-tion Partnership Program (WEPP). It is hoped that for the future, the community’s assistance for social and communities may continue and be increased further.

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and can be synergized with government programs

19. Good corporate performance and CSR activities being implemented by the company. The company has helped to reduce unemployment in the region of Pinang Damai Village and improve development of education.

We hope that the company will be more equal in the development and assistance of communities in the re-gion on the company and mill.

The mill must also play a role in improving the lives of smallholders in the region of the mill through an in-crease in the price of FFB, and in improving the welfare of employees.

The company will keep running CSR programs according to analysis by involving the commu-nity needs and priorities and the availability of the existing budget and can be synergized with government programs The company remains positive impact and evenly in coaching / attention to communities around the estate The companies still consider the FFB price the farmer according to market prices , and taking into account the employees welfare through salary increases above the average prevailing in minimum sectoral wage of district (UMSK) government of South Labuhanbatu

20. The company has good corporate performance, for ex-ample, the company has reduced unemployment within this community, the village roads are in good condition, and the price of crops of the farmers is higher due to the presence of the company and its mill.

It is hoped that employees are given adequate facili-ties, and the company helps to preserve the environ-ment.

We also hope the company continues to have more gathering to improve the relationship with the communi-ty.

The Company has reduced unemployment by accepting local manpower according to the needs and company standards The company remains taking care of the town-ship road sorounding Pinang Awan POM by landfill potholes with stones and leveling with greder machine. The company still strives to provide a positive impact on surrounding communities and pre-serve the environment The company still strives to provide a positive impact on surrounding communities and keep in good relationship both formal and non-formal

21. Perusahaan disarankan supaya dapat merealisasikan CSR kepada masyarakat dan dapat bekerjasama dengan pemerintah setempat.

One positive impact from the company was in the in-crease in hiring labour which helped to increase the in-come of local communities. One negative impact is the waste produced from the company which may cause pollution. The companies are requested to carry out CSR activi-ties among the community and to cooperate with local

Labor recruitment remains precedence to local communities around the estate/ POM Companies keep control of the waste quality level by analyzing samples of the waste to ex-ternal parties for measurable quality standard in accordance with the standards and create reports environmental monitoring and contol effort (UKL – UPL) and track LA permit accord-ing to standard so as not to pollute the envi-ronment and follow the rules of the govern-ment in accordance with the applicable legisla-



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authorities. tion, Companies continue to provide a positive im-pact to the community around the company will keep running CSR programs according to analysis by involving the community needs and priorities and the availability of the existing budget and can be synergized with govern-ment programs

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

It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content. Signed on behalf of PT Perkebunan Milano

Simon Siburat Group Sustainability Controller Date: 21 September 2015

Signed on behalf of PT TUV Rheinland Indonesia …………………………………………. Carol Ng. Lead Auditor Date: 21 September 2015



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APPENDICES



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Appendix 1: Details of Certificate



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Appendix 2: Certification Audit Plan

Date / Time

(1) Organizational Unit and Processes

Auditor / Abbrev.

Interviewee Procedure - EM/QM Element -

Standard Chapter

Sunday, 28 June 2015

10.05 -10.15 Travelling from Subang Jaya to Me-dan

CN MH5452 (Firefly)

08.55-11.20 Traveling from Jakarta to Medan SA, NA Garuda GA184

12.10 – 12.58 Travel by rail link from Kuala Namu airport to Medan train station

All auditors U17

15:37-21:19 Travel by train – Medan to Rantau Parapat

All auditors SRIBILAH UTAMA (U48)

21.19 on-wards

Travel by car to site All auditors

Monday, 29 June 2015: Stakeholder Consultation Meeti ng & Pinang Awan Mill P&C audit 08.00 - 9.00 Opening Meeting – Pinang Awan

Mill Presentation/ updates by mill and es-tates on company information Introduction of team members Finalization of audit plan

All auditor Top Management & Related Managers

9.00 - 09.30 Preparation for Stakeholder Consulta-tion Meeting

All auditors

09.30 -12.00 Stakeholder Consultation Meeting Pinang Awan Palm Oil Mill

All auditors

12.00 -14.00 Lunch break 14.00-17.30 Mill supply base & production

records • FFB reception records • CPO & PK production records • OER & KER Transparency, GHG Requirements & Continuous Improvement • Transparancy • Waste management • Energy Efficiency • GHG analysis and management • Sexual harassment & violence

policy implementation • Human rights policy • Verification of previous audit

findings

CN Mill manager/ assis-tants

RSPO

Principle 1

Criterion 1.1-1.2 Principle 5 : CR5.3, CR5.4, CR 5.6 Principle 6 : CR6.9, 6.13

14.00-17.30 OHS, Environmental, Issues • Legal compliance • Occupational Safety & Health • Training • AMDAL, UPL/UKL, RKL/RPL • Aspect Impact Analysis • Verification of previous audit

findings

SA Mill manager/ assis-tants

RSPO

Principle 2: Criterion 2.1 (OSH)

Principle 4: CR 4.7, 4.8

Principle 5: CR 5.1



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Date / Time


Auditor / Abbrev.


Standard Chapter

14.00-17.30 Management Plan, Best Practices, Environment

• Legal compliance • Management plan • SOPs & internal audit • Quality & availability of surface

and ground water • Land Application • Mill water usage • FFB pricing and payment • Continuous improvement • Verification of previous audit

findings

YM Mill manager/ assis-tants

RSPO

Principle 2: CR2.1 (Land titles, Environment)

Principle 3: CR 3.1

Principle 4: CR 4.1, 4.2, 4.4

Principle 6: CR6.10 Principle 8 : all

12.30-17.30 Social aspects – Workers, local communities, communication, CSR • Mill inspection • Workers/ Contractor interviews • Ethical conduct policy • Land conflict (if any) • Housing • Local communities • List of workers • Contracts • Working hour & overtime records,

pay slips • No forced labour • Human rights policy • Verification of previous audit

findings

NA Mill manager/ assis-tants

RSPO Principle 1: CR 1.3 Principle 2: CR2.2 – 2.3 Principle 6: CR 6.1-6.8 and 6.11 – 6.12

17.30 End of 1 st day audit

Tuesday, 30 June 2015: Pinang Awan Mill (Supply Chai n Certification Audit) & Sei Daun Estate (P&C Audit) 08.00-12.00 Supply Chain Certification Audit –

Pinang Awan Mill • Supply Chain Management

Manual, SOPs, & related records • eTrace Transaction records, if

any • SCC training records • Weighbridge slips

CN Mill manager/ assis-tants

Supply Chain Certification Standard 2014

Sei Daun Estate – P&C Audit

08.00-12.00 Legal compliance, financial, SOPS, best practices, environment

• Legal compliance • Business Management Plan & re-

planting programs • SOPs & Internal audit • Soil fertility & management

(sloped areas, marginal soils, peat areas, EFB application, etc)

YM Estate manager / as-sistants

RSPO Principle 2: CR2.1 Principle 3 (all) Principle 4: IN 4.1, 4.2, 4.3 Principle 5: CR 5.1, 5.3, 5.5 Principle 7 (if applicable): CR7.1, 7.2, 7.4, 7.7 Principle 8: all



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Date / Time


Auditor / Abbrev.


Standard Chapter

• Waste management • Zero burning policy

implementation for replanted or new planted areas (if applicable)

• AMDAL & RKL/RPL for all areas including new plantings (if applicable)

• Continuous Improvement 08.00-12.00 Legal Requirements (OSH & Envi-

ronment), OSH, Training, SOPs • Legal requirements register & im-

plementation • Field operations (spraying, har-

vesting, manuring) • Worker interviews • Chemical stores • Workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance

SA Estate manager / as-sistants/ workers

RSPO Principle 2: CR2.1 Principle 4: CR4.1, 4.6, 4.7, 4.8

08.00-12.00 Social aspects – Workers, local communities, communication, CSR • Legal compliance (social) • Land titles & land conflict (if any) • Workers/ Contractor interviews &

personnel records • Labour policies • Trade union representatives &

records • Housing • Local communities • Communication & consultation

procedures/ complaints • Contracts • Working hour & overtime records,

pay slips • SEIA of new planting areas (if

applicable) • FPIC of local communities at new

planting areas (if applicable)

NA Estate manager/ assistant manager/ local communities / workers

RSPO Principle 2: CR 2.1 (social), CR2.2, CR2.3 Principle 6: CR 6.1-6.8 and 6.11 – 6.12 Principle 7 (if applicable): CR7.1 (social), 7.5 & 7.6 Principle 8 (Social)

12.00-14.00 Break and Lunch All Auditor 14.00-17.30 Continue Supply Chain Certification

Audit Continue P&C audit from previous day

CN Supply Chain Certification Standard 2014 RSPO

Principle 1

Criterion 1.1-1.2 Principle 5: CR5.3, CR5.4, CR5.6 Principle 6: CR6.9

14.00-17.30 Continue same agenda of the morning

SA, NA Plantation/estate manager

End of 2 nd day audit



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Date / Time


Auditor / Abbrev.


Standard Chapter

Wednesday, 1 July 2015: Batang Saponggol Estate 08.00-12.00 Estate production data

• Area statements • FFB supply information • Replanting program • Smallholder/ outgrower

certification plan (if applicable) Transparency, best practices, Environment, GHG • List of publicly available docu-

ments • Ethical conduct policy • Water management plan • Integrated pest management • High Conservation Values • Energy efficiency monitoring and

records • GHG analysis and management • Sexual harassment & violence

policy implementation • Human rights policy • New plantings best practices (if

applicable) • Continuous improvement plan

CN Estate manager / as-sistants

RSPO Principle 1 (all) Principle 4 : CR 4.4, 4.5 Principle 5 : CR5.2, 5.4, 5.6 Principle 6: CR 6.9, 6.13 Principle 7 (if applicable): CR 7.3, 7.8 Principle 8 : all

08.00-12.00 Legal compliance, financial, SOPS, best practices, environment

• Legal compliance • Business Management Plan & re-







RSPO Principle 2: CR2.1 Principle 3 (all) Principle 4: IN 4.1, 4.2, 4.3 Principle 5: CR 5.1, 5.3, 5.5 Principle 7 (if applicable): CR7.1, 7.2, 7.4, 7.7

08.00-12.00 Legal Requirements (OSH & Envi-ronment), OSH, Training, SOPs • Legal requirements register & im-


vesting, manuring) • Worker interviews • Chemical stores • Workshops • HIRARC





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Date / Time


Auditor / Abbrev.


Standard Chapter

• OSH Committee & safety records • Accident records • Training & PPE issuance •







planting areas (if applicable)



12.00-14.00 Break and Lunch All Auditor 14.00-17.00 Continue the agenda of the morning All Auditor Plantation/estate

manager

End of 3 rd day audit

Thursday, 2 July 2015. Merbau Estate 08.00-12.00 Estate production data

• Area statements • FFB supply information • Replanting program • Smallholder/ outgrower

certification plan (if applicable) Transparency, best practices, Environment, GHG • List of publicly available docu-

ments • Ethical conduct policy • Water management plan • Integrated pest management • High Conservation Values • Energy efficiency monitoring and

records • GHG analysis and management • Sexual harassment & violence

policy implementation • Human rights policy

CN Estate manager / as-sistants

RSPO Principle 1 (all) Principle 4 : CR 4.4, 4.5 Principle 5 : CR5.2, 5.4, 5.6 Principle 6: CR 6.9, 6.13 Principle 7 (if applicable): CR 7.3, 7.8 Principle 8 : all



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Date / Time


Auditor / Abbrev.


Standard Chapter

• New plantings best practices (if applicable)

• Continuous improvement plan 08.00-12.00 Legal compliance, financial, SOPS,

best practices, environment • Legal compliance • Business Management Plan & re-







RSPO Principle 2: CR2.1 Principle 3 (all) Principle 4: IN 4.1, 4.2, 4.3 Principle 5: CR 5.1, 5.3, 5.5 Principle 7 (if applicable): CR7.1, 7.2, 7.4, 7.7

08.00-12.00 Legal Requirements (OSH & Envi-ronment), OSH, Training, SOPs • Legal requirements register & im-


vesting, manuring) • Worker interviews • Chemical stores • Workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance •













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Date / Time


Auditor / Abbrev.


Standard Chapter planting areas (if applicable)

12.00-14.00 Break and Lunch All Auditor 14.00-17.00 Continue the agenda of the morning All Auditor Plantation/estate

manager

End of 4 rd day audit

Friday, 3 July 2015 08.00-10.00 Preparation of findings All auditors 10.00-12.00 Closing meeting

Presentation of findings All auditors Top Management &

Related Managers

12.00 End of audit

12.00-13.00 Lunch break All auditors 13.00-15.00 Travelling from site to Rantau Prapat

train station by car All Auditors

15.30-21.12 Travel by train from Rantau Parapat to Medan &

All Auditors SRIBILAH UTAMA (U45)

21.12 on-wards

Stay overnight at hotel CN, SA, NA

Saturday, 4 July 2015

09.00-11.25 Travelling Medan to Jakarta SA, NA GA 183 09.30-11.30 Travelling Medan to Kuala Lumpur CN MH 861

Appendix 3: List of Abbreviations

AMDAL Analisis Dampak Lingkungan & Sosial

(Social & Environmental Impacts Assessment) BHL Buruh Harian Lepas (Temporary worker) BKPM Badan Koordinasi Penanaman Modal (Capital Investment Coordination Board) BOD Biological Oxygen Demand BPN Badan Pertanahan Nasional (National Land Agency) CDM Clean Development Mechanism COD Chemical Oxygen Demand CPO Crude Palm Oil Disnaker Dinas Tenaga Kerja (Labour Department) EIA Environmental Impact Assessment EMP ERTs

Employe Endangered, Rare & Threatened species

ESH Environmental Safety & Health EHS Environmental Health & Safety ETP Environmental Target Program FFB Fresh Fruit Bunches EFB Empty Fruit Bunches EMU Environmnetal Management Unit FORKASS GIS

Forum Komunikasi Masyarakat (Community Communication Forum) Global Information System

HCV High Conservation Value HRD Human Resources Department HGU Hak Guna Usaha (Land Use Rights) ISCC IPM

International Sustainibility and Carbob Certification Integrated Pest Management

IUP Ijin Usaha Perkebunan (Plantation Operation Permit) JHT Jaminan Hari Tua



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JKK JKM K3

Jaminan Kesehatan Keluarga Jaminan Kematian Keselamatan dan Kesehatan Kerja (Occupational Safety & Health)

Kadisbun Kepala Dinas Perkebunan (Head of Plantations Department) KepMen Naker Keputusan Menteri Tenaga Kerja (Workforce Minister’s Decree) KHT Karyawan Harian Tetap (Permanent Worker) LTA Lost Time Accident LRR Legal Requirements Register MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health PGA PK

Personel and General Affair Palm Kernel

PKO Palm Kernel Oil PKS Pabrik Kelapa Sawit ( Palm Oli Mill) PLN Perusahaan Listrik Negara (National Electricity Body) POME Palm Oil Mill Effluent PPE Personal Protective Equipment PUK Perkembangan Usaha Kecil (Small Enterprises Development) RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SCC SIA

Suply Chain Certification Social Impact Assessment

SKU SK-KBP

Satuan Kerja Unit (Daily permanent Worker) Serikat Pekerja-Kesatuan Buruh Perjuangan (Workers Union)

SOP Standard Operating Procedure SBSI Serikat Buruh Sejahtera Indonesia (Indonesian Labour Union) SPSI Serikat Pekerja Seluruh Indonesia (Indonesian Workers Union) SPTI Serikat Pekerja Transportasi Indonesia (Indonesian Transportation Workers Union) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UMP Upah Minimum Propinsi (Provincial Minimum Wage) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)



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Appendix 4: List of Stakeholders Interviewed and Co ntacted



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Appendix 5: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for Improvement Criteria 1 Minim safety warning signs were found during plant tour activities in the Pinang

Awan Palm oil mill as some of the certain places such as stairs in the sortation ar-ea.

.

4.7.2

2 Designated PPE storage in POM Laboratory need to be located as the lab crew 4.7.3



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was difficult to find the available PPE that must be worn during their activities in there, also Shower/Eye wash station need to be relocated as its not easy to used when the emergency situation occurs.

3 Inconsistent in the work permit system application, as it was found the welding

process work in the POM doesn’t have a permit and the work process was nearly finished.

4.7.3

4 A safety accessory such as Rotary lamp, back alarm and the mirrors for 2 avail-able wheel loaders was not found and need to be replaces.

4.7.3

5 Fire extinguishers checking activities, Required PPE for certain places such as Chemical storage and Temporary waste storage and PIC to the related places need a refreshment as they don’t aware to using the PPE when entering this area during the audit.

4.7.3

6 Further medical doctor advice and need to performs on Supriyati as her Cholin-esterase was exceed from the normal value. (Merbau Estate) and for Romauli Panjaitan need to check her blood cholinesterase as she already assign as sprayer for one-year duration duty (Batang Sapongol Estate).

4.7.3

7 Need some refreshment regarding PPE maintenance and storage procedure as they were found not safe and hygiene to use during the site visit in Batang Sapongol Estate

4.7.3

8 Sangat disarankan untuk menetapkan penanganan dan pengendalian hasil sen-sus hama dan penyakit yang telah dilakukan sehingga tindak lanjuti dari pekerjaan sensus / deteksi hama & penyakit tersebut jelas dan tuntas sesuai dengan tingkat serangan hama / penyakit yang ada.

4.1.1

9 Konsistensi terhadap standar operational procedure “persyataran panen SOP-EST-020 disarankan agar ditingkatkan terutama terhadap pengutipan berondo-lan, baik yang berada di TPH dan juga sekitar areal piringan / gawangan.

4.1.2

10 Kegiatan CSR di ekonomi produktif masih kurang dibandingkan dengan CSR di bidang infrastruktur..

Sebagai contoh Kebun Batang Saponggol pada tahun 2014 hanya memiliki 1 program ekonomi produktif yaitu bantuan 500 ekor DOD kepada 5 dusun. Dengan tingkat keberhasilan 37,2 %. Demikian juga dengan bantuan bibit lele di PKS Pinang Awan.

Perlu peningkatan kegiatan ekonomi produktif namun harus selektif dan benar-benar dibutuhkan masyarakat.

6.1.3

11 Kapasitas pelaku/pengelola CSR perlu ditingkatkan melalui pelatihan-pelatihan yang berkaitan dengan pengelolaan program CSR, pemberdayaan masyarakat, penyusunan program partisipatif, pendampingan dan lain lain.

Kegiatan pendampingan kepada masyarakat tidak optimal, sebagai contoh tidak memiliki jadwal kerja pendampingan dan kurikulum pendampingan yang ter-struktur kepada kelompok binaan.

6.1.4

12 Terdapat pegawai honorer yaitu guru PAUD/TK di Kebun Sei Daun, Marbau dan Batang Saponggol yang telah bekerja lebih dari 3 tahun namun belum diangkat sebagai karyawan tetap oleh perusahaan.

Peran pendidik untuk anak usia dini sangat penting dalam pertumbuhan dan

6.5.2



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upaya mencerdaskan generasi yang akan datang, sehingga para pengelola perlu mendapat perhatian baik dalam peningkatan kapasitas maupun status kepega-waiaanya.

13 Aspek dan dampak lingkungan yang ada di Ramp rantauparapat belum diidentifi-kasi, namun sebelum closing meeting Ramp rantau parapet sudah membuat dokumen tersebut.

5.3.1

14 Dokumen identifikasi resiko dan bahaya untuk aktivitas yang ada di ramp Rantau-parapat belum tersedia, namun sebelum closing meeting Ramp rantau parapet sudah membuat dokumen tersebut.

4.7.1

15 PT Perkebunan Milano sebaiknya melakukan revisi terhadap dokumen pengel-olaan HCV sesuai dengan tujuan HCV yang sudah teridentifikasi dengan mengacu pada input yang diperoleh dari hasil sosialisasi terhadap pekerja dan perubahan situasi di kebun yang ada saat ini.

5.2.1

16 PT Perkebunan Milano belum memiliki SOP terkait aplikasi rencekan batang ke-lapa sawit yang digunakan untuk aplikasi circle wedding di tanaman TBM, seperti yang terlihat di kebun Merbau blok 58 dan 72 tanaman replanting tahun 2014 dan 2015.

4.1.1

17 Pada saat audit dilakukan terlihat emisi gas buang dari cerobong PKS sangat tidak terkendali, baik dari opasitas nya dan juga dari arah buangan emisi

5.1

18 Perusahaan sebaiknya memiliki program pengendalian(patrol atau sweeping) ke Rumah Rumah pekerja untuk memastikan tidak ada pekerja yang memeliharan satwa yang memiliki status RTE

5.2.3