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PUBLIC SUMMARY REPORT

ANNUAL SURVEILLANCE ASSESSMENT (ASA2)

SIME DARBY PLANTATION Sdn Bhd Management Unit SOU25

Sandakan, Sabah, Malaysia

Report Author

Charlie Ross – Prepared July 2012 Tel: +61 417609026

BSi Group Singapore Pte Ltd (Co. Reg. 1995 02096-N) BSi Services Malaysia Sdn Bhd (Co.Reg. 804473 A) 3 Lim Teck Kim Road #10-02 B-08-01, Level 8, Block B, PJ8 Genting Centre No. 23, Jalan Barat , Seksyen 8 SINGAPORE 088934 46050 Petaling Jaya Tel +65 6270 0777 SELANGOR MALAYSIA Fax +65 6270 2777 Tel +03 79607801 (Hunting Line) Aryo Gustomo: [email protected] Fax +03 79605801 www.bsigroup.sg

http://www.bsigroup.sg/

ii

TABLE of CONTENTS Page No SUMMARY ................................................................................................................................................................... 1

ABBREVIATIONS USED ................................................................................................................................................. 1

1.0 SCOPE OF SURVEILLANCE ASSESSMENT ........................................................................................................ 1–6 1.1 Identity of Certification Unit ........................................................................................................................ 1 1.2 Production Volume ...................................................................................................................................... 1 1.3 Certification Details ...................................................................................................................................... 1 1.4 Description of Fruit Supply Base .................................................................................................................. 1 1.5 Progress against Time Bound Plan ............................................................................................................... 6

1.6 Progress of Associated Smallholders/Outgrowers towards RSPO Compliance ........................................... 6 1.7 Organisational Information/Contact Person ................................................................................................ 6

2.0 ASSESSMENT PROCESS...................................................................................................................................... 7 2.1 Assessment Team Members ........................................................................................................................ 7 2.2 Assessment Programme ............................................................................................................................... 7 2.3 Stakeholder Consultation ............................................................................................................................. 7

3.0 ASSESSMENT FINDINGS .............................................................................................................................. 7–16 3.1 Summary of Findings .................................................................................................................................... 7 3.2 Identified Nonconformities and Noteworthy Positive and Negative Observations (ASA2) ....................... 14 3.3 Status of Nonconformities (Major and Minor) Identified during Previous Assessments........................... 15 3.4 Issues Raised by Stakeholders .................................................................................................................... 16 4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ........................................ 17 4.1 Date of next Surveillance Visit.................................................................................................................... 17 4.2 Date of Closing Nonconformities (Major and Minor)................................................................................. 17 4.3 Sign-off of Surveillance Assessment Findings ............................................................................................ 17 LIST of TABLES

1 Mill GPS Location ..................................................................................................................................................... 1 2 Production Tonnages. .............................................................................................................................................. 1 3 FFB Production ........................................................................................................................................................ 6 4a Age Profile of SOU25 Palms ..................................................................................................................................... 6 4b SOU25 Estates and Areas Planted ........................................................................................................................... 6 5 Status of Nonconformities ..................................................................................................................................... 17 LIST of FIGURES

1 SOU25 Location Map ............................................................................................................................................... 2 2 Cadastral Map of SOU25 Division Locations............................................................................................................ 3 3 Segaliud Division Layout .......................................................................................................................................... 4 4 Mengaris and Pertama Divisions Layout ................................................................................................................. 5 5 BOD (mg/L) of Treated Mill Effluent May 2011 – March 2012 ................................................................................ 8 6 Average Annual FFB Yield (t/ha/yr) ......................................................................................................................... 9 7 Average Annual OER (%) .......................................................................................................................................... 9 8 Annual Mill Water Usage (t/t FFB) ........................................................................................................................ 10 9 LTA Index 2006 – 2012 .......................................................................................................................................... 11 10 Mill Energy Usage (kWhr/t FFB) .............................................................................................................................. 12 LIST of APPENDICES

A Supply Chain Assessment B Sime Darby Time Bound Plan C ASA2 Programme D List of Stakeholders Contacted E Evidence for Closing Nonconformity CR08

Public Summary Report – RSPO Annual Surveillance Assessment (ASA2) Page 1

Prepared by BSi Group Singapore Pte Ltd for Sime Darby Plantation Sdn Bhd (SOU25)

SUMMARY

BSi Group Singapore Pte Ltd (BSi) has conducted the Second Annual Surveillance Assessment (ASA2) of Sime Darby Plantation Sdn Bhd Management Unit SOU25 (SOU25) operations comprising Segaliud Mill, supply base, support services and infrastructure. BSi concludes that SOU25 operations comply with the requirements of RSPO Principles & Criteria: 2007; MY-NI Indicators and Guidance : 2010; and RSPO Supply Chain Certification Standard : November 2011 (Mass Balance Mechanism). BSi recommends the continuation of the approval of SOU25 as a producer of RSPO Certified Sustainable Palm Oil.

ABBREVIATIONS

BOD Biological Oxygen Demand CHRA Chemical Health Risk Assessment CPO Crude Palm Oil DOE Department of Environment DOSH Department of Occupational Safety & Health EFB Empty Fruit Bunch ERP Emergency Response Plan ESH Environment Safety and Health FFB Fresh Fruit Bunch HCV High Conservation Value HIRAC Hazard Identification Risk Assessment Control IPM Integrated Pest Management JCC Joint Consultative Committee LTA Lost Time Accident MPOA Malaysian Palm Oil Association MPOB Malaysian Palm Oil Board MSDS Material Safety Data Sheet MY-NI Malaysian National Interpretation OER Oil Extraction Rate OSH Occupational Safety & Health PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment R&D Research and Development SIA Social Impact Assessment SOP Standard Operating Procedure SPIEU Sabah Plantation Industry Employees Union TSS Total Suspended Solids

1.0 SCOPE OF SURVEILLANCE ASSESSMENT

1.1 Identity of Certification Unit

The SOU25 Segaliud Mill and Segaliud Estate are located at Sandakan, Sabah, Malaysia (Figure 1). Additional maps are included (Figures 2, 3 and 4) showing the Segaliud Estate boundary and layout of infrastructure. The Estate consists of 2 main adjoining Divisions (Segaliud and Mengaris) and the small outlying Pertama Division. The Segaliud and Mengaris Divisions are surrounded by other oil palm plantations and Pertama Division adjoins the Lungmanis Forest Reserve. The GPS location of the Mill is shown in Table 1.

Table 1: Mill GPS Location

MILL EASTING NORTHING

Segaliud

(40t/hr capacity) 117∙75° E 5∙72° N

1.2 Production Volume

The production tonnages for CPO and PK for the period from the start of the Certificate (20/05/2010) through to the 30 April 2012 and projected for the next twelve months are listed in Table 2.

Table 2: Production Tonnages

Segaliud Palm Oil Mill CPO PK

Estimate at Certification 22,091** 6,371**

Actual 20/05/10 – 19/05/11 18,152** 4,571**

Actual 01/05/11 – 30/04/12 20,778 * 16,336**

5,296 * 4,211**

Projected 01/05/12 – 30/04/13 21,586*

15,482** 5,569 * 3,760**

* Includes Outside Crop

** = Certified Production

1.3 Certification Details

Sime Darby RSPO Membership No: 035-04(O) BSi RSPO Certificate No: SPO 547123 Initial Certification Assessment: 06 – 08 April 2009 Date of Certification: 20/05/2010

1.4 Description of Fruit Supply Base

The supply base is Segaliud Estate that supplied 78∙9% of the FFB processed at the Mill in 2011/12. In addition FFB is purchased from KHY, an external supplier. The FFB production tonnages from the Company owned Estate and External Supplier for the period of the Initial Certificate 20 May 2010 to 19 May 2011, the 12 months prior to ASA2 and projected for the 2012/13 year are listed in Table 3. FFB production is projected to decrease in 2012/13 year due to replanting of approximately 500 ha of palms at Segaluid Estate. SOU25 plans to make up the shortfall with FFB from the outside supplier.



Figure 1: SOU25 Location Map



Figure 2: Cadastral Map of SOU25 Division Locations



Figure 3: Segaliud Division Layout



Figure 4: Mengaris and Pertama Divisions Layout



Table 3: FFB Production

Source Estimate at Initial

Certification

Actual 01/05/11 – 30/04/12

Projected 01/05/12 – 30/04/13

SOU25 Estate Segaliud

Sub-total

108,999 108,999

80,619 80,619

72,735 72,735

External Supplier* KYH

Sub-total 47,525 47,525

21,858 21,858

33,730 33,730

OVERALL TOTAL

156,524 102,477 106,465

* The FFB production from the External Supplier is excluded from the RSPO Certificate.

The Company owned Estate was developed to oil palm in 1982 and the palms are in their first cycle. The age profile of the palms is shown in Table 4a.

Table 4a: Age Profile of SOU25 Palms

AGE (years) % of PLANTED AREA

21 – 30 46·89

11 – 20 23·27

4 – 10 10·43

0 – 3 19·41

The areas planted are shown in Table 4b. The area planted ASA2 is less than at ASA1 due to 279 ha being declared “Riparian Buffer Zone” or “areas >25

o slope”

and these areas have been excluded from replanting.

Table 4b: SOU25 Estates and Areas Planted

Estate Mature (ha) Immature (ha) Total

Segaliud 3,472 836 4,308

Supply Chain

SOU25 uses the mass balance mechanism for the supply chain. All deliveries of FFB to the Mill are issued with a weighbridge docket that records the details of the supplier, truck registration number, driver’s name and the tonnage. The contractual arrangements for purchase of FFB from outside suppliers as well as the sales of CPO and PK are managed centrally from within Sime Darby Head Office. The weighbridge system is computerised and the FFB delivery and product despatch records are used as the basis for payment for deliveries and invoicing for shipments, respectively. The weighbridge operator simply enters the Supplier or the Buyer name and the computer automatically generates the documents for receipt (purchase of crop) or

despatch (sale of product). Inspection of documents confirmed that SOU25 maintains all of the documentation required for verification of implementation of the RSPO Supply Chain Certification Standard : November 2011, for Palm Oil Mill, Mass Balance Mechanism – Refer to Appendix A for details.

1.5 Progress against Time Bound Plan

Sime Darby Time Bound Plan (updated March 2012) is included as Appendix B. Sime Darby has achieved RSPO Certification for all 39 of the Management Units in Malaysia, and 12 of the 23 in Indonesia. Sime Darby has completed the Initial Certification Assessments for the remaining 11 Management Units in Indonesia and the assessment reports are pending review by the RSPO. Upon certification of the remaining 11 Management Units, Sime Darby will have achieved the Time Bound Plan.

BSi has continued involvement with assessments of 14 of the Sime Darby Management Units during the 2011/12 period. During this time, Sime Darby has kept BSi informed of issues and claims made against it, as indicated in Appendix B. At the time of preparation of this Report, BSi is not aware of:

(1) any unresolved significant land disputes; (2) any replacement of primary forest or loss of

HCVs; (3) any labour disputes that are not being resolved

through an agreed process; (4) any evidence of noncompliance with any law

at any of the landholdings.

BSi considers that Sime Darby meets the RSPO requirements for Partial Certification.

1.6 Progress of Associated Smallholders/ Outgrowers towards RSPO Compliance

SOU25 purchases crop from an FFB Supplier who sources FFB from small plantations. Interview of the FFB supplier indicated he had only a basic understanding of RSPO and the production therefore has been excluded from the SOU25 Certificate.

1.7 Organisational Information / Contact Person

Sime Darby Plantation Sdn Bhd Management Unit SOU25 WDT No 250 Sandakan Sabah 90009 MALAYSIA Contact Person: Mr Ghazali Bin Said Manager Segaliud Palm Oil Mill Phone: +(6089) 247197 Fax: +(6089) 565625



2.0 ASSESSMENT PROCESS

2.1 Assessment Team Members

Charlie Ross – Lead Assessor RSPO B.App.Sc. M.Sc (Env.Studies) Topics assessed: Legal, Environment, Agricultural

Practices, Social, Sustainability

Iman Nawireja – Assessor RSPO B.Ag.Sc. M.Sc. (Comm) Topics assessed: Legal, Environment, Agricultural

Practices, Social, Sustainability

Robyn Ross – Social Assessor RSPO Topics assessed: Legal, Social, Women and Families,

Sustainability

Junecel Maloloy – Facilitator (Women and Families)

2.2 Assessment Programme

The ASA2 was carried out 21 – 22 May 2012. The Assessment Programme is included as Appendix C.

The Programme included assessments of the Mill and Segaliud Estate against all of the RSPO P&C and applicable indicators, and Supply Chain Standard : 2011 for Mass Balance mechanism.

The Nonconformities that were assigned and the Observations that were identified during previous assessments were followed up to check the effectiveness of corrective actions – refer Section 3.3 Page 15.

The methodology for collection of objective evidence included physical site inspections, observation of tasks and processes, interviews of staff, workers and their families and external stakeholders, review of documentation and monitoring data. Checklists and questionnaires were used to guide the collection of information.

This report is structured to provide a summary for each Principle, together with details for selected indicators. The assessment was based on random samples and therefore nonconformities may exist that have not been identified.

Mr Aryo Gustomo, BSi RSPO Scheme Manager, has reviewed this report for conformance with BSi Procedures and the RSPO Certification System requirements.

2.3 Stakeholder Consultation

Internal and external stakeholders were consulted to obtain their views on SOU25 environmental and social performance and any issues of concern that they may have. External stakeholders were interviewed at their premises where practical or they were invited to the Mill or the Estate. Internal stakeholders were interviewed in groups in the workplace or at their housing. Company

officers were not present at any of the meetings. A list of stakeholders contacted is included at Appendix D.

3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings

During this ASA2 Nonconformities were assigned against Major Compliance Indicator 2.1.1 and Minor Compliance Indicator 6.1.3 (CR08 and CR09). Eight (8) Observations/Opportunities for improvement were identified – refer Section 3.2 Page 14 for details. SOU25 prepared a Corrective Action Plan for addressing the identified Nonconformities, which BSi reviewed and accepted. Refer Section 3.2 Page 14 for details of Nonconformities and Corrective Actions. Review of the Nonconformities assigned during previous Assessments (CR01 to CR05) found the corrective actions were being effectively and consistently implemented and the nonconformities remain closed. In addition, the Nonconformities that were assigned to Minor Compliance Indicators 5.3.2 and 6.5.3 (CR06 and CR07) and the four (4) Observations/Opportunities for Improvement identified during ASA1 were followed up to check the effectiveness of corrective actions. Refer Section 3.3 Page 15 for details.

BSi recommends continuation of Certification for SOU25 as a producer of RSPO Certified Sustainable Palm Oil.

PRINCIPLE 1: Commitment to Transparency

SOU25 has kept the policies, procedures and management plans up to date for provision of information to the public on request. SOU25 received only several requests for information from MPOB and Government that were handled locally and in a timely manner. Criterion 1.1: Oil palm growers and Millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making.

Requests are received by the Mill and Estate verbally as well as in writing. For example, the Mill received a request from MPOB on 02 May 2012 to provide information in Oil Losses and Recovery Systems, which was responded to on 07 May 2012. Criterion 1.2: Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

The Mill and Estate hold up to date copies of each of the management documents that are required by the RSPO to be publicly available. The Estate is on government leasehold land and copies of the leases are held on site.



PRINCIPLE 2: Compliance with Applicable Laws and Regulations

Legal compliance was assessed by review of internal audit reports, documents and monitoring data. SOU25 has maintained the systems for documentation, checking and assessment of legal compliance with applicable laws and regulations. Inspection of records confirmed that the Mill and the Estate have maintained legal compliance with statutory requirements, such as the Factories and Machinery Act 1967, the OSH Act 1994, the Environmental Quality (Clean Air Regulation) 1978. The exception was the exceedance of the license limit of 50 mg/L for treated mill effluent applied to the palms in furrows and a Major Nonconformity was assigned. The boundaries of the Estate are well defined by boundary stones that have been maintained so they are clearly visible. Interview of local community representatives did not identify any land tenure issues. Criterion 2.1 – There is compliance with all applicable local, national and ratified international laws and regulations.

Mill Boiler Emissions testing was carried out twice yearly, with the most recent by Chemsain Konsultant Sdn Bhd on 19 December 2011, and the report indicated dust emission from Boiler #1 exceeded the Environmental Quality (Clean air) Regulations, 1978. The mill arranged for re-testing which was carried out on 09 February 2012 and confirmed dust emission was within the limits. The Mill has prepared an Action Plan for improving operational control of emissions by better control of fuel and combustion. The Mill Smoke Density Meter was operational and calibrated by STS Instruments 10 February 2012.

POME is treated to achieve an internal target of BOD



PRINCIPLE 3: Commitment to Long Term Economic and Financial Viability

SOU25 has continued to operate the management system for monitoring and reporting of performance against production targets. Reports were available showing the details of production and costs. SOU25 has continued its commitment to sustainability by funding improvements at the Mill and Estates, including housing.

The replanting programme provides an example of the company commitment to reinvestment for improvement of performance. Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability.

The Mill and Estate have an annual budget and management plans that include targets to improve efficiency of production and cost control so that financial viability is maintained. The Estate has a Replanting Programme that is projected for ten years, and was revised April 2008. The FFB Yields (Figure 6) have been decreasing since 2006/07 due to the replanting programme and were negatively affected by a very wet season in 2010/11. The relatively low yields were explained to be related to the hilly terrain and the poor standard of planting on terraces and close density of planting, which makes crop evacuation difficult. These issues are being addressed during the progressive replanting of the Estate.

Figure 6: Average Annual FFB Yield (t/ha/yr) 2006 – 2012

The Mill OER (Figure 7) has decreased due to poor FFB quality, loss of fruitlets that have not been delivered to the mill and the long harvesting rounds.

Figure 7: Average Annual OER (%) 2006 – 2012

PRINCIPLE 4: Use of Appropriate Best Practices by Growers and Millers

SOU25 has maintained the management systems for monitoring and control of best practice implementation at its Mill and Estate. This includes a programme of regular internal audits by the Mill Advisor, the Plantation Inspector and Agronomists for assessing performance and improving production.

The Estate has maintained the marking of riparian buffer zones for reinstatement during the replanting programme. The Estate made progress with the expansion of beneficial plants along roadsides for the IPM programme. The storage, handling and application of chemicals were well controlled and the company has maintained pesticide storage and disposal of used chemical containers in accordance with regulatory requirements.

SOU25 has increased the level of training and awareness for workers and a positive outcome is the reduction of the LTA Rate at the Estate, which was maintained at a relatively low level for the year to date. Criterion 4.1: Operating procedures are appropriately documented and consistently implemented and monitored.

The Mill and Estate have continued to use the Sime Darby reference manuals and SOPs for guidance and for training purposes. Inspection of Mill work-stations confirmed operators have filled in shift log sheets accurately for recording operating parameters. The Assistant Mill Engineer reviews shift log sheets daily. The Mill Advisor carries out inspections at least twice yearly and records are held on file of the March 2012 Visit Report and the Mill Manager’s response to issues raised by the Mill Advisor.

The Estate Assistant Managers monitor implementation of field practices through daily inspections. The Plantation Advisor visits the Estate at least twice yearly, with the most recent visit 16-19 January 2012, and carries out inspections of field conditions and assessment of implementation of work practices. Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield.

Sime Darby Agronomy Section of R&D Department carries out annual inspection of the palms and leaf sampling to monitor nutrient status, with the most recent sampling in December 2011 for development of the 2012 fertiliser programme. The information from the foliar sampling and palm inspections is used to make annual recommendations for fertiliser applications. Criterion 4.3: Practices minimise and control erosion and degradation of soils.

Field inspection showed groundcover vegetation was well established at recently replanted areas in Segaliud Division. Vegetation was well established on terraces



where Nephrolepis spp is the dominant species on the inter-slope.

Observation 01 – At Field 2003 Block 6, there were minor areas of over-spraying of Nephrolepis spp on the edge of the palm inter-row, which resulted in areas of bare soil – refer Section 3.2 Page 15.

The Estate carries out road maintenance throughout the year using its own grader, compactor and back-hoe for repairing and maintaining road surfaces. Despite recent wet conditions, all of the roads were accessible during the inspection. Criterion 4.4: Practices maintain the quality and availability of surface and groundwater

The Estate has demarcated the buffer zones that will be reinstated during future replanting. Inspection showed that the buffer zones were consistent with the Sabah requirement of 20 m width on both sides of streams and had been implemented at Fields 2011 A & B. The buffer zones have been marked on a map and the Estate has ceased applying herbicide to palm circles within the areas that will become future buffer zones.

The water quality has been sampled at the Sungai Segaliud inflow to, and outflow from, the Estate. Review of the results showed Class I water quality (DOE Water Quality Index Classes) at the inflow and Class II at the outflow due to increased TSS. Sampling carried out during high streamflow conditions following heavy rain in April 2012 showed elevated TSS and Class II water quality at both the inflow and outflow from the Estate.

The Mill installed water meters in January 2010 for measurement of water consumption at the Mill and housing separately. Records showed Mill water usage has doubled (Figure 8) to more than 3·0 t/t FFB in 2011 because of the under-utilisation of the mill which has received less than 50% of the budgeted crop. The mill is frequently shut down and the additional cleaning has resulted in increased water consumption. Observation 02 – The occurrence of a leaking tank tap and pressure water pump at the Estate workshop indicated awareness of water conservation needs improving – refer Section 3.2 Page 15.

Figure 8: Annual Mill Water Usage (t/t FFB) 2006-2012 Inspection of the Mill drains found the drains and sediment traps had been cleaned consistently, as indicated by the records on log sheets. The segregation, treatment and disposal of high BOD Mill wastes

continued to be well managed. Water conservation is an important issue and each of the new houses has been fitted with roof guttering and tanks for collecting rainwater. Criterion 4.5: Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate integrated Pest Management (IPM) techniques.

The Estate has continued to expand the establishment of beneficial plants along roadsides for control of Nettle Caterpillar and Bagworm. The monthly census of pests has been maintained and to date there has been no outbreak of leaf eating insects and it has not been necessary to apply chemicals for control. Rat damage has occurred due to the long harvest rounds and it was necessary to use rat baits in 2012. The Estate continues to use Barn Owls although occupancy rates are low (



The Mill and Estate communicate information on health and safety to staff and workers during morning musters and shift briefings. The ESH Management Plans are revised each year to update the calendar of meetings, workplace inspections and training. Inspection of workplaces at the Mill and Estate indicated safe work practices were being implemented.

The Estate and Mill HIRAC were reviewed for example at the Estate on 01 January 2012 for each of the tasks at all work stations.

The Safety Training Matrices for the Mill and Estate were updated in June 2011 and the schedule of training prepared for the 2011/12 year.

The Estate arranged training for sprayers on safe work practices, such as the correct use of PPE (03 April 2012), maintenance of spray equipment (09 May 2012) and spraying technique for spot spraying (30 January 2012). Field inspection of spraying during the assessment showed the operators were working safely and understood the precautions when handling pesticides, such as during refilling knapsacks.

The Mill and Estate issue appropriate PPE to workers and observation of tasks showed that PPE was being worn correctly.

Observation 04 – At Pertama Division, safety awareness could be improved by posting appropriate signage at the water treatment plant, genset and pesticide mixing area and ensuring an adequate supply of appropriate PPE is always available – refer Section 3.2 Page 15.

The Health Assistant is the designated ESH Coordinator for both the Estate and the Mill. The Mill and Estate hold Safety Committee Meetings quarterly, and the recent Safety Committee Meeting for the Estate was held in February 2012 and attended by 19 persons.

The Estate and Mill ERPs were revised 04 October 2010. The Mill has an emergency shut-down procedure for the boiler that was displayed at the boiler work station.

First Aid refresher training was carried out by the Hospital Assistant in April 2011.

First Aid kits are available at work stations in the Mill and are provided to mandores for fieldwork in the Estate.

SOU25 investigates all accidents and reports these to Sime Darby Head Office and to DOSH. Considerable progress has been made in improvement of safety over the past 5 years. The LTA Indices (number of Lost Time Accidents per 200,000 hours worked) for the Mill and Estate have reduced since 2006/07, although an accident at the Mill in August 2011 adversely affected the trend (Figure 9).

Malaysian workers are covered by Social Security Organisation (SOCSO) Insurance. Foreign workers are covered by RHB Insurance Berhad under Master Policy D08WFWC8606982KL current to 30 June 2012.

Figure 9: LTA Index 2006-2012 Criterion 4.8: All staff, workers, smallholders and contractors are appropriately trained.

The Mill and Estate have annual Training Plans and keep records of training for individual staff and workers. The Training Plans include a Matrix of training needs that shows SOP training/skills for each task.

PRINCIPLE 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity

The Mill and Estate reviewed and updated the Environmental Improvement Plans for the 2011/12 year. The Estate Improvement Plan included expansion of beneficial plants in the IPM Programme and rapid establishment of groundcover vegetation at replanting areas for minimising soil erosion. The priority improvements for the Mill continue to be the reduction of water usage and diesel fuel for electricity generation. Field inspection and review of documents indicated that progress was being made with the Improvement Plan implementation.

The Mill and Estates continued to provide consistent control of scheduled waste storage and disposal. The Mill improved the storage and containment of excess fibre and nut-shell to prevent it from entering the adjacent monsoon drain. The company’s zero burn policy has been consistently applied at replanting areas, although improvement of awareness of the policy is required at Pertama division. . Criterion 5.1: Aspects of plantation and Mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

The Mill and Estate have reviewed the Aspects and Impacts Register, with the most recent February 2011, based on a risk assessment process. The Register considers each of the operations and potential impacts.

The Mill and Estate have revised Environmental Improvement / Pollution Prevention Plans for the 2012 calendar year. For example, the Estate plans to construct a new pesticide mixing area for improved control of chemicals.



Criterion 5.2: The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or Mill management, shall be identified and their conservation taken into account in management plans and operations.

A Sime Darby Ecologist has carried out an assessment of the Lungmanis Forest Reserve that is located south-west of Segaliud Estate and has a common border with Pertama Division. Inspections during the assessment of the Forest Reserve border with the Pertama Division did not find any signs of disturbance of the vegetation. Interviews of residents and observations at housing did not identify any evidence of the taking of fauna from the forest.

The Estate Biodiversity Action Plan includes the continuation of the programme for awareness to workers of the prohibition of hunting and the taking of fauna. The company has maintained signage warning of the protection of fauna. Interviews of workers confirmed their understanding of the rules for the protection of fauna. Observation 05 – Three spotted dove (Streptopelia chinensis) that were likely to have been captured in the field were kept in a cage at Pertama division, which indicates inadequate awareness of the policy that prohibits hunting or taking of fauna – refer Section 3.2 Page 15. Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner.

The Mill and the Estate have maintained a high level of control over the storage and disposal of scheduled wastes. The Mill and Estate have a contract with a DOE licensed scheduled waste recycler. Records are kept of consignment notes, for example, used lead acid batteries collected 09 February 2012, Vehicle No SAA841C. Used pesticide containers are recycled to MS Smart. Medical Wastes are disposed to a licenced contractor (Faber Medi-Serve Sdn Bhd), with the most recent collection of waste on 09 March 2012. The Mill and Estate have maintained records of the inventory of stored scheduled waste materials.

Non-recyclable wastes are disposed in a small landfill which was appropriately located and appeared well maintained. Observation 06 – Rubbish Bins are located at the Mill and Estate houses. However, inspection found that rubbish is being discarded directly beside the bins at the adjacent palms (Also an issue at Pertama Division). This indicates more awareness training is needed – refer Section 3.2 Page 15. Criterion 5.4: Efficiency of energy use and use of renewable energy is maximised.

The Mill reports renewable and non-renewable energy use monthly to Top Management and the annual average is shown in Figure 10. There has been an increase in usage of both forms of energy over the past 5 years, although this is affected by the reduction in Mill throughput of FFB during the past two years.

Figure 10: Mill Energy Usage (kWhr/t FFB) 2006-2011

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

Inspection of the replanted area at Field 2011 A & B confirmed the consistent implementation of the zero burning policy. The old palms were felled, chipped and windrowed as mulch in the palm inter-row. Inspection showed no evidence of fire being used for waste disposal at the workshops or offices. Observation 07 – One incident of fire being used for disposal of garden waste was observed at the Mill housing area and one at Pertama Division, despite signs displaying “No Burning”. This indicates more awareness training is needed – refer Section 3.2 Page 15. Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

The Mill Pollution Prevention Plan has focused on the improvement of areas for storage of fibre and ash for containment of leachate. The reduction of water usage also is a priority at the Mill that in turn will reduce the quantity of wastewater requiring disposal. The Estate has improved the control of hydrocarbons at the workshop.

PRINCIPLE 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers

SOU25 has reviewed and updated the Social Action Plan for the Estate and the Mill. The largest improvement for the workers is the construction of new housing to replace the houses built in the 1980s. At the time of the ASA2 visit, new housing was being constructed at Segaliud, Mengaris and Pertama Divisions, with some units completed and occupied. The local community has relatively good infrastructure and government and commercial services are available.

The JCC continued to operate with approximately quarterly meetings at the Mill and Estate. Interviews of workers and their families indicated they are treated fairly and there were no issues related to discrimination.

Female staff and workers participated in the Gender Committee, which provided them the opportunity to



raise any issues of common concern related to gender and families.

The company has a good relationship with FFB suppliers and contractors who indicated that dealings with the company were fair and transparent. Criterion 6.1: Aspects of plantation and Mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

The Estates revised the social action plan using information from a meeting with internal and external stakeholders, but the Mill had not updated the action plan and a minor nonconformity was assigned to the indicator.

CR09 – A Nonconformity was assigned because the Mill Social Action Plan had not been updated since ASA1. The Estate Plan had been updated for 2011/12 but did not appear to include information from consultation of stakeholders – refer Section 3.2 Page 15. Criterion 6.2: There are open and transparent methods for communication and consultation between growers and/or Millers, local communities and other affected or interested parties.

SOU25 maintained the informal system of system for receiving and responding to communications from internal and external stakeholders. Interviews of stakeholders confirmed they had a good relationship with the Mill and Estates staff . Criterion 6.3: There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

Discussions with stakeholders and inspection of records indicated there were no outstanding complaints or grievances that required addressing through the formal system. SOU25 has kept detailed records of issues raised by stakeholders. Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

A land dispute was raised in 2006 and the resolution process has been documented in accordance with the Sime Darby Land Management Policy. There has been no other land issue raised since that time. Criterion 6.5: Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Pay and conditions are documented in the SPIEU Agreement. Similar to ASA1, interview of Mill and Estate male and female staff and workers confirmed they understand terms and conditions of employment and receive entitlements. Observation 08 – During the interview Mill process workers stated that their contracts are in English, which they do not understand – refer Section 3.2 Page 15.

Construction of new housing is being carried out concurrently at each of the three Divisions. SOU25 continues to make progress with construction of replacement houses, for example, 8 houses for workers are nearing completion. Residents of the new houses at the Mill linesite stated they were very appreciative to have beautiful new homes to live in.

Similar to ASA1, workers and their dependants are provided with free medical treatment at the Company clinic. Electricity is supplied to Mill and Estate housing at cost RM5 per employee per month. Water is supplied to Mill and Estate houses at no cost. The new Humana School building consisting of four class rooms and a teacher/computer room is now operating for 125 students with three teachers in attendance. The company has provided each class room with desks and chairs sufficient for all students. Criterion 6.6: The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

Interview of workers confirmed they are allowed to join a union if they so wished, but they stated they are not members of a union. A Joint Consultative Committee has operated at the Mill and the Estate since 2008 and most of the JCC representatives are members of the ESH Committee. Enquiry with the SPIEU confirmed that it had not yet formed a Branch at the Mill and Estate. The SPIEU further indicated that it was not aware of any issues at the Mill and Estate. Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions.

The minimum working age is 18 under the Employment Act. Similar to ASA1, inspection of records confirmed that at time of hire, age is checked by examination of ID Card for Malaysian workers and Passport of Foreign workers. During the ASA2 visit, children were not observed at any workplace at the Mill or Estate. Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

Similar to ASA1 findings, interview of staff and workers and inspection of a sample of payroll records confirmed



that there was no discrimination between workers on the basis of ethnicity, religion or gender. Criterion 6.9: A Policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Similar to ASA1, interview of Female Staff and Workers confirmed their awareness of the Social Policy for prevention of sexual harassment and violence. A Gender Committee is operating and interview of female workers confirmed their awareness of the Committee and who their respective representatives were. Interviewees also stated that to date no issue had arisen that necessitated action through the Grievance Procedure. They advised that they used the meetings as a venue to arrange activities, such as cooking and sport days. Criterion 6.10: Growers and Mills deal fairly and transparently with smallholders and other local businesses.

Interviews of an FFB supplier and contractors confirmed that they considered the SOU25 management dealt fairly with them. Contractors confirmed that they understood the content of their contracts and that payments are made within 30 days of invoicing. Criterion 6.11: Growers and Millers contribute to local sustainable development wherever appropriate.

SOU25 is located in a relatively remote area and there are only two communities nearby. The company makes donations to local communities and schools and places of worship when requested, which are considered appropriate for the location.

Principle 7: Responsible Development of New Plantings

SOU25 has not carried out any new oil palm developments since November 2005 and there are no plans for expansion of plantings. Principle 7 is not applicable to this Assessment.

PRINCIPLE 8: Commitment to Continuous Improvement in Key Areas of Activity

SOU25 has continued to make progress with improvements to environmental and social performance. In addition to focus on production efficiencies, the company has worked on the environmental protection measures for reinstatement of riparian buffer zones and other issues such as the control of wastes. The company has continued to maintain a good relationship with internal and external stakeholders. A major improvement for workers is the construction of the new Humana school and new housing concurrently at each of the three Divisions.

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

SOU25 has not used any Class 1 pesticides and has not used paraquat since it was phased out more than 5 years ago. The Mill and Estate Environmental Improvement Plans were reviewed and updated. The Mill focus is on water and energy conservation, while the Estate priorities are aimed at expanding the plantings of beneficial plants and prevention of soil erosion at replanting areas.

The recycling of palm by-products, such as EFB, fibre, nut shell and POME continues to be carried out consistently. However, greater attention is required to achieve consistently low BOD of treated effluent. Scheduled wastes are well controlled.

The Mill improvement plan includes reducing energy losses and water usage. The Estate has made considerable progress in improving groundcover vegetation for reducing soil erosion and discharge of sediment to streams and is focusing on the replanting areas.

A new Humana School has been constructed and is now operational with the main social improvements now being the construction of new houses at each of the Divisions.

3.2 Identified Nonconformities and Noteworthy Positive and Negative Observations (ASA2)

Nonconformities were assigned to Major Compliance Indicator 2.1.1 and Minor Compliance Indicator 6.1.3. Eight (8) Observations/Opportunities for Improvement were identified

SOU25 has prepared a Corrective Action Plan for addressing the identified Nonconformities, which BSi has reviewed and accepted. CR08: 2.1.1 Evidence of compliance with legal requirements

A Nonconformity was assigned to this Major Compliance Indicator because the BOD of treated mill effluent exceeded the Environment Permit condition relating to the limit of 50mg/L during 2012.

SOU25 has prepared a Corrective Action Plan for addressing the identified nonconformity that involves the following:

Sime Darby Engineering Department reviewed the effluent treatment system operation; Desludging of Effluent Pond #2 and Pond #3 expected completion 15 August 2012; Installing a “Flyte Mixer” for improving the aeration of the aerobic pond, expected completion 30 August 2012; Upgrading the “Mempol” membrane polishing system by installing an additional 24 units of membrane cylinders and to run the existing Mempol system at optimum condition and throughput, expected completion 30 September 2012. In addition, SOU25 advised the treated effluent monitoring results for BOD



in May (61 mg/L) and June (28 mg/L), which was significant improvement and confirmation the existing effluent treatment system is capable of achieving the compliance limit of 50 mg/L (refer Appendix E).

BSi Assessors considered the corrective actions for improving the Effluent System Performance and the laboratory results for May and June 2012 satisfactory and appropriate and the Nonconformity was closed 18 July 2012.

CR09: 6.1.3 A timetable with responsibilities for mitigation and monitoring is reviewed and updated as necessary.

A Nonconformity was assigned to this Minor Compliance Indicator because the Mill Social Action Plan had not been updated since ASA1.

Corrective Actions:

The Social Action Plan will be updated based on consultation of stakeholders during recent stakeholders meeting.

BSi Assessors considered the corrective actions satisfactory and appropriate and progress toward resolution of the issue will be followed up during the next Annual Surveillance Assessment (ASA3).

Observations/Opportunities for Improvement (ASA2)

The assessment team identified eight (8) Observations/ Opportunities for Improvement. The progress with these will be checked during the next Surveillance Assessment (ASA3).

01 (4.3.2) At Field 2003 Block 6, there were minor areas of over-spraying of Nephrolepis spp on the edge of the palm inter-row which resulted in areas of bare soil.

02 (4.4.7) The occurrence of a leaking tank tap and

pressure water pump at the Estate workshop indicated awareness of water conservation needs improving.

03 (4.6.3) The control of empty pesticide containers at

Pertama Division could be improved by maintaining records of the numbers transferred to the Mengaris Division scheduled waste store.

04 (4.7.1) At Pertama Division, safety awareness could

be improved by posting appropriate signage at the water treatment plant, genset and pesticide mixing area and ensuring an adequate supply of appropriate PPE is always available.

05 (5.2.3) Three spotted dove (Streptopelia chinensis)

that were likely to have been captured in the field, were kept in a cage at Pertama division, which indicates inadequate awareness of the policy that prohibits hunting or taking of fauna.

06 (5.3.2) Rubbish Bins are located at the Mill and the Estate houses. However, inspection found that rubbish is being discarded directly beside the bins at the adjacent palms (Also an issue at Pertama Division). This indicates more awareness training is needed.

07 (5.5.3) One incident of fire being used for disposal of

garden waste was observed at the Mill housing area and one at Pertama Division, despite signs displaying “No Burning”. This indicates more awareness training is needed.

08 (6.5.2) During the interview Mill process workers stated that their contracts are in English, which they do not understand.

Noteworthy Positive Components

The Estate has achieved a low LTA Rate during the past 2 years, which demonstrates a very strong commitment to employee health and safety.

Groundcover vegetation has been established quickly following replanting in order to reduce soil erosion.

The new Humana School is now operational

Progress with construction of new housing

continues at the Mill, Segaliud, Mengaris and Pertama Divisions with some houses now completed and occupied.

3.3 Status of Nonconformities (Major and Minor) Previously Identified during Previous Assessments

The Nonconformities that were identified and “closed” during previous assessments (CR01 to CR05) were followed up to check and confirm the implementation of corrective actions had been maintained and all Nonconformities remain closed. CR06: 5.3.2 Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution.

A Nonconformity was assigned to this Minor Compliance Indicator during ASA1 as there was inadequate segregation of wastes at Pertama Division with workshop waste disposed with domestic refuse in the landfill. ASA2 Findings: Inspection showed the landfill had recently been closed and a new pit excavated. Inspection of the Main Division landfill showed appropriate separation of wastes.

The Nonconformity was closed 22 May 2012 CR07: 6.5.3 Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in accordance with Workers’



Minimum Standard of Housing and Amenities Act 1990 (Act446) or above, where no such public facilities are available or accessible (not applicable to smallholders).

A Nonconformity was assigned to this Minor Compliance Indicator during ASA1 because there are inadequate facilities for the Humana School, which is presently being operated from the Teacher’s house. ASA2 Findings: The Humana School of three class rooms is now operating with 3 School Teachers and 125 students.

The Nonconformity was closed 22 May 2012

Observations/Opportunities for Improvement Identified during ASA1

01 (4.6.3) There was inadequate marking of used pesticide containers being utilised for transporting spraymix.

ASA2 Findings: The empty pesticide containers were clearly marked using “stick-on” labels. 02 (5.3.2) Fibre and Nut-shell that were excess to Mill

requirements were stockpiled in an open area and there was a risk of material being washed into the adjacent Monsoon Drain.

ASA2 Findings: The Mill had concreted the area for temporary storage of fibre and nut shell and directed the drainage from the area into the sump for transfer to the effluent treatment ponds. 03 (6.1.1) Inspection to the SIA indicated that the

internal stakeholders’ view was not sought during the SIA update consultation process.

ASA2 Findings: Both internal and external stakeholders were consulted. 04 (6.2.3) The List of Stakeholders had been updated

but it appeared incomplete as it did not include some stakeholders who attended public consultation session.

ASA2 Findings: List of Stakeholders was updated for 2011/12 year and included Contractors, Suppliers, Local Communities, and other Interested Parties, such as Government Departments, Schools, Hospitals.

3.4 Issues Raised by Stakeholders

The issues raised by stakeholders during ASA1 were followed up during this ASA2 and found to have been actioned appropriately by the company.

Issues Raised During ASA2

The majority of stakeholders had positive comments about SOU25. For the situations where stakeholders raised issues, the company’s response is stated below. Mill staff (laboratory) stated the Mill had no Crèche because there were not enough children. She thought it discriminatory that she had to pay for her child to be

cared for whilst she worked, but Estate Staff and Workers had access to a Crèche for their children at no cost. Company Response: Manager will discuss and seek approval from the Zone Head to subsidise child care for those eligible.

The BSi Audit Team considered the SOU25 response to the issue raised to be appropriate. The issue will be followed up during ASA3 to check on progress and satisfactory resolution. Local and Foreign school children (Mill) travel by bus to school with local children travelling for free but children attending the Humana School have to pay RM25 per head per month. Company Response: Mill Manager will discuss with the Estate Manager to reach a suitable and equitable solution.

The BSi Audit Team considered the SOU25 response to the issue raised to be appropriate. The issue will be followed up during ASA3 to check on progress and satisfactory resolution. Mill workers stated that the bus transporting children to school does not have the seating capacity for the number of children travelling. Company Response: Management has contracted a second bus and will discuss further with the contract transporter to increase capacity.

The BSi Audit Team considered the SOU25 response to the issue raised to be appropriate. The issue will be followed up during ASA3 to check on progress and satisfactory resolution. There is no public transport and families with young children find it difficult to travel to an “outside” clinic for immunisation and ante and post natal care. Company Response: Mill Manager with discuss with the Estate Manager to reach a suitable and equitable solution. On the Hospital Assistants next visit to the Mill linesite she will meet with residents and advise them that transport is available for group travel to the Government Clinic.

The BSi Audit Team considered the SOU25 response to the issue raised to be appropriate. The issue will be followed up during ASA3 to check on progress and satisfactory resolution. The Humana School Teachers stated that it would be beneficial for the school to have a projector as a teaching aid for lessons. Company Response: Company will consider loaning a projector in the short-term, and will request budget for purchase of a projector.

The BSi Audit Team considered the SOU25 response to the issue raised to be appropriate. The issue will be followed up during ASA3 to check on progress and satisfactory resolution.



4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next Surveillance Assessment (ASA3) will be scheduled within twelve months of RSPO approval of continuation of Certification.

4.2 Date of Closing Nonconformities (Major and Minor)

Table 5: Status of Nonconformities

CAR CLASS ISSUED STATUS

CR01

2.2.4 Minor 08/04/2009

Closed 04/05/2011

CR02

4.3.2 Minor 08/04/2009

Closed 04/05/2011

CR03

4.4.5 Minor 08/04/2009

Closed 04/05/2011

CR04

4.4.6 Minor 08/04/2009

Closed 04/05/2011

CR05

2.1.1 Major 04/05/2011

Closed

29/06/2011

CR06

5.3.2 Minor 04/05/2011

Closed

22/05/2012

CR07

6.5.3 Minor 04/05/2011

Closed

22/05/2012

CR08

2.1.1 Major 22/05/2012

Closed

18/07/2012

CR09

6.1.3 Minor 22/05/2012 “Open”

4.3 Sign-off of Surveillance Assessment Findings

Please sign below to acknowledge receipt of the assessment visit described in this report and confirm the acceptance of the assessment report contents including assessment findings.

Signed for on behalf of Sime Darby Plantation Sdn Bhd (SOU25)

Signed for on behalf of BSi Group Singapore Pte Ltd

........................................................ Mr Charlie Ross Lead Auditor

Date: 30/07/2012

Appendix “A”

Supply Chain Assessment

APPENDIX A – SUPPLY CHAIN ASSESSMENT REPORT – SOU25 – MASS BALANCE SEGALIUD OIL MILL

Certified Mill Production – 01 May 2011 – 30 April 2012

MILL CAPACITY CPO PK

Segaliud 40 t/hr 16,335 4,311

Sales of Certified Mill Products – 01 May 2011 – 30 April 2012

MILL CPO PK

Segaliud NIL NIL

Certified FFB Received Monthly - 01 May 2011 – 30 April 2012

Month Segaliud

Estate

May ‘11 6,026.55

June 7,462.35

July 7,866.31

August 8,422.28

Sept 9,144.78

Oct 8,476.59

Nov 7,205.39

Dec 5,972.48

Jan ‘12 5,873.03

Feb 4,696.09

March 5,283.01

April 4,190.40

TOTAL FFB/Month

80,619

Certified Company Details Sime Darby Plantation Sdn Bhd Contact Person: Mr Ghazali Bin Said Management Unit SOU25 Manager Segaliud Palm Oil Mill WDT No 250 Phone: +(6089) 247197 Sandakan Sabah 90009 Fax: +(6089) 565625 MALAYSIA Email: [email protected] RSPO Membership No: 035-04(O)

mailto:%[email protected]

RSPO Supply Chain Certification System for Sime Darby Plantation (SDP)

No Business Unit RSPO SCCS

Certification Y/N

Trading Option Certification

Body Date of Certification

1 Unimills B.V., Netherlands

Yes SG, MB Control Union (CUC)

Interim self assessment in Mac 2009. Certified by CUC on 28 June 2011

3 SD Biodiesel, Malaysia

Yes SG, MB SIRIM

Interim self assessment in Mac 2010. Certified by SIRIM on 25 March 2011

4 SD Jomalina, Malaysia

Yes SG, MB SIRIM Certified on 10 March 2011

5 SD Kempas, Malaysia

Yes MB SIRIM Certified on 19 Aug 2011

6 SD Austral, Malaysia

In Progress MB SIRIM Awaiting Certification by CB. Main Assessment carried out in Feb 2012.

7 NURI Edible Oil Refinery, Malaysia

In Progress MB SIRIM Awaiting Certification by CB. Main Assessment carried out in Jan 2012.

8 NURI Edible Oil Kernel Crushing Plant, Malaysia

In Progress SG, MB SIRIM Awaiting Certification by CB. Main Assessment carried out in Jan 2012.

Certification Body Details

BSi Group Singapore Pte Ltd Contact Person: Mr Aryo Gustomo (Co. Reg. 1995 02096-N) BSi RSPO Scheme Manager 3 Lim Teck Kim Road #10-02 Phone: +65 6270 0777 Genting Centre Fax: +65 6270 2777 SINGAPORE 088934 Email: [email protected]

Summary

Supply Chain assessment was made at Segaliud Mill that is owned and operated by Sime Darby. The assessment included site visits to Segaliud Oil Mill and Segaliud Estate, review of records and interviews of staff. SOU25 consigned the Certified CPO to two (2) buyers. SOU25 consigned the Certified PK to three (3) buyers. The assessor concluded SOU25 has implemented an appropriate management system for controlling the purchase of certified FFB, processing of same and sales of certified CPO and PK. SOU25 maintains adequate records for confirming compliance with the RSPO supply Chain requirements and staff were able to demonstrate an appropriate knowledge of the requirements.

Conclusion

The SOU25 management system and records meet the requirements of the RSPO supply chain requirements, November 2011 for the Mass Balance mechanism.

mailto:[email protected]

Certificate Details

Background to the Report

(a) Report authors Assessor Mr Charlie Ross, BSi RSPO Lead Auditor CB Management Representative Mr Aryo Gustomo, BSi RSPO Scheme Manager

(b) Previous assessments Not Applicable

(c) On-Site Visits Visit Itinerary

Monday 21 May 2012 – Segaliud Mill – Opening Meeting held at Mill Meeting Room; Weighbridge Station; examined weighbridge records; daily records of FFB deliveries, CPO and PK production; CPO Bulk Tank and PK Silo records; shipments of CPO and PK. Closing Meeting Tuesday 22 May.

People consulted: Ghazali Bin Said (Mill Manager); Mohd Isa Hasim (Assistant Engineer); Weighbridge Operator.

Scope

The scope of the assessment covered the Segaliud Palm Oil Mill and the supply base of Sime Darby owned Segaliud Estate. The Supply Chain mechanism used is Mass Balance. The SOU25 operations were assessed against the RSPO Supply Chain Standard : November 2011 requirements for Oil Mills and Mass Balance Mechanism.

Description of Operation’s Management System

SOU25 uses the mass balance mechanism for the supply chain. All consignments of FFB despatched from the Estate to the Mill are accompanied by a Consignment Note with a unique consecutive number and includes details of: Field Number Harvested; block Number; No of Bunches; Date Harvested; Estimated Tonnage; Vehicle Registration Number; Driver’s Name and Bin Number.

All deliveries of FFB received at the Mill are issued with a Weighbridge Docket that records the Name of the supplier, Truck Registration No, Driver’s Name and the Tonnage. The weighbridge system is computerised and delivery records are used as the basis for payment for FFB deliveries. A sample of weighbridge dockets was checked at the Mill against the summaries of FFB deliveries from Segaliud Estate and the Outside Supplier. This confirmed the details of the source and quantity of FFB were recorded accurately and could be verified by tracking. The source of the FFB can be traced back to the Estate and the oil palm block from which it was harvested.

The Mill summarises and reports daily to Sime Darby Head Office: the quantity of FFB received from the Estate; the tonnage of FFB processed; the tonnages of CPO and PK produced; shipment tonnages; and the quantities of materials held in storage. The Mill and Estate also report the above quantities monthly to Sime Darby Head Office.

Checks of records confirmed the RSPO Certified CPO and PK produced by Segaliud Mill during the preceding 12 months (01 May 2011 – 30 April 2012) was sold to two (2) CPO buyers and three (3) PK buyers, respectively. Inspection of documents confirmed that SOU25 maintains all of the documentation required for supply chain verification (RSPO Supply Chain Standard November 2011).

Certified Volume Purchased and Claimed

The following certified FFB material was received from SOU25 Estate during the 01 May 2011 – 30 April 2012 year and processed at Segaliud Mill: 80,619 t/FFB

Main Report Details

1. Documented procedures 1.1 The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements

specified in these requirements. This shall include at minimum the following: a) Complete and up to date procedures covering the implementation of all the elements in these requirements.

Complies – Procedures are current and include all elements of the Supply Chain for controlling the receipt, sale and dispatch of palm products. For example, SPMS: 2012 Draft/ Appendix 15 - Standard Operating Procedure for Traceability and RSPO Supply Chain Certification System.

b) The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard. Complies – The Mill Manager has responsibility for the Supply Chain aspects of FFB receipts, processing and shipping of palm products. Interview confirmed their knowledge of the RSPO Supply Chain requirements for the respective areas of the operations.

1.2 The facility shall have documented procedures for receiving and processing certified and non-certified FFB. Complies – the Mills Weighbridge SOP covers the receiving of FFB and recording details of the Supplier and Transporter. All deliveries of FFB are subject to verification of documentation and quality checks. For example,

MQMS/V1:2008/Level 3/Standard Operating Procedure/Station No. 1/Reception Station/1.3.1:Weighbridge MQMS/V1:2008/Level 3/Standard Operating Procedure/Section V:Introduction/Crop Quality Standards.

2. Purchasing and goods in 2.1 The facility shall verify and document the volumes of certified and non-certified FFBs received. Complies – the Mill

records tonnages received at the weighbridge and these are reported daily to Head Office. 2.2 The facility shall inform the CB immediately if there is a projected overproduction. Complies – the company has a

mechanism for advising the CB of production variations, which are monitored internally.

3 Record keeping 3.1 The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of

these requirements. Complies – Inspection of records at the Mill confirmed these were updated daily. 3.2 Retention times for all records and reports shall be at least five (5) years. Complies – Records are archived and stored for

> 5 years. 3.3 a) The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and

palm kernel meal on a three-monthly basis. Complies – these are updated monthly and reported to Head Office. b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system

according to conversion ratios stated by RSPO. Complies c) The facility can only deliver Mass Balance sales from a positive stock. However, a facility is allowed to sell short.

Complies – The company sales of certified products did not exceed the Certified CPO or PK volumes during the 2011/12 year.

3.4 The following trade names should be used and specified in relevant documents, e.g. purchase and sales contracts, e.g. *product name*/MB or Mass Balance. The supply chain model used should be clearly indicated. Complies – The company uses the prefix MB on the Product Code.

3.5 In cases where a mill outsources activities to an independent palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement. Complies – The company has signed contracts with the Kernel Crushing Mills.

4. Sales and good out 4.1 The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following

information: a) The name and address of the buyer; b) The date on which the invoice was issued; c) A description of the product, including the applicable supply chain model (Segregated or Mass Balance) d) The quantity of the products delivered; e) Reference to related transport documentation. Complies – all of these items (a-e) are included in the company’s invoices to buyers

5 Training 5.1 The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain

Certification Systems. Complies – The company maintains records of training. Interviews of Mill Staff confirmed knowledge of the Supply Chain requirements.

6 Claims 6.1 The facility shall only make claims regarding the use of or support of RSPO certified oil palm products that are in

compliance with the RSPO Rules for Communications and Claims. Complies – To the best of the Assessor’s knowledge, the company has not made claims outside of the RSPO rules for Communications and Claims.

Appendix “B”

Sime Darby Time Bound Plan

RSPO PUBLIC SUMMARY REPORT – RSPO Annual Surveillance Assessment (ASA2) SIME DARBY TIME BOUND PLAN


RSPO Certification Timebound Plan for Sime Darby Plantation (SDP)

Financial year (July – June) Targeted Achieved

June 2008 5 SOUs Sime Darby Plantation has had all its SOUs (Malaysian & Indonesian) completing the RSPO Main Assessment.

2008/2009 20 SOUs ( from Malaysia and Indonesia)



As of March 2012, RSPO Certification status in Sime Darby Plantation are as follow: I. CSPO: To date (as of 1

st March 2012) 51 SOUs have been certified with RSPO (39 Malaysian SOUs and 12 Indonesian SOUs).

II. RSPO Certified volume as of 1st March 2012: 1,830,674 mt of CPO production claimed & 434,063 mt of kernel production claimed.

Status Malaysia Indonesia Total Remarks

Certified 39 12 51 • All SOUs in Malaysia have been certified.

RSPO EB Review 0 11 11 • Pending review by RSPO EB.

Assessed/Audited 0 0 0

Total SOUs 39 23 62

There were several claims made by NGOs against Sime Darby Plantation operations, and SDP has responded to their claims respectively as the media releases and updates as follow: i) Sime Darby's Response to New York Times Article (Jan 2012)

http://www.simedarbyplantation.com/Sime_Darby's_Response_to_New_York_Times_Article_.aspx ii) False and Inaccurate Reports on Liberian Operations (Feb 2012)

http://www.simedarbyplantation.com/False_and_Inaccurate_Reports_on_Liberian_Operations.aspx iii) Sime Darby Plantation's Response To Oxfam's Press Release (Oct 2011)

http://www.simedarbyplantation.com/Sime_Darby_Plantation's_Response_To_Oxfam's_Press_Release.aspx iv) Complaints by Forest Peoples Programme on New Planting Procedure, Liberia (Oct 2011 – Feb 2012)

Further to a bilateral discussion with the complainants held at site on 17th Dec 2011, the local communities have written a withdrawal letter to RSPO, for SDPL to proceed with any work in Stage III Gbarpulo areas, an official notification from RSPO is sent to complete the said NPP. Sime Darby is progressing with the Stage III new plantings including land development covering 20,000 ha in Gbarpolu County, Rep of Liberia.

http://www.simedarbyplantation.com/Sime_Darby's_Response_to_New_York_Times_Article_.aspxhttp://www.simedarbyplantation.com/False_and_Inaccurate_Reports_on_Liberian_Operations.aspxhttp://www.simedarbyplantation.com/Sime_Darby_Plantation's_Response_To_Oxfam's_Press_Release.aspx

Appendix “C”

ASA2 Programme

PUBLIC SUMMARY REPORT – RSPO Annual Surveillance Assessment (ASA2) ASSESSMENT PROGRAMME


ASA2 Programme – 21–22 May 2012

TEAM: CR: Charlie Ross; RR: Robyn Ross; IN: Iman Nawireja; JM: Junecel Maloloy

DATE TIME ACTIVITY CR RR JM IN

Monday 21 May 2011 SOU25 MILL

AM

Opening Meeting Mill Documentation including Supply Chain, Weighbridge Interview Male Mill Workers Interview Contractors/External Stakeholders Interview FFB Trader Contact Government Departments, SPIEU, NGOs, etc Interview Female Office Staff/Workers Review Pay Documentation

√ √

√

√ √

√

√ √

√

√ √ √ √

PM

Inspect Mill, Effluent Ponds, Workshop, Stores Visit Clinic Interview Staff Inspect Housing Interview Residents Visit Local Communities Closing Briefing

√ √ √

√ √

√

Tuesday 22 May 2011 SOU25 SEGALIUD ESTATE

AM

Opening Briefing Inspect Estate including Land Application and Buffer Zones Inspect Stores, Workshop, Landfill Interview Female Field Workers Interview Female Office Staff/Workers Review Pay Documentation Interview Male Workers Interview Contractors/External Stakeholders Visit any Local Communities Visit Pertama Housing

√ √ √

√

√ √ √

√

√ √ √

√

√ √ √ √

PM

Documentation Prepare Visit Report & Closing Presentation Closing Meeting

√ √ √

√

Appendix “D”

List of Stakeholders Contacted

PUBLIC SUMMARY REPORT – RSPO Annual Surveillance Assessment (ASA2) STAKEHOLDERS CONTACTED


LIST OF STAKEHOLDERS CONTACTED

Internal Stakeholders

7 Female Mill Staff/Workers 4 Male Mill Workers (Local) 3 Male Mill Workers (Foreign) 10 Residents/Workers Mill Housing 5 Female Pesticide Operators 6 Female Estate Office Staff/Workers 3 Harvesters Pertama Division Medical Assistant SOU25

External Stakeholders

2 FFB Suppliers General Supplier Road Maintenance Contractor Replanting Contractor KYH FFB Trader

Government Departments

Department of Labour Land and Survey Department

NGOs and others

SPIEU Borneo Child Aid Society (Humana) PACOS Trust, Sabah (Partners of Community Organisations) Humana School

Local Communities

Kampung Segaliud Residents

Appendix “E”

Evidence for Closing Nonconformity CR08

Engineering Report on Segaliud Effluent Treatment Pond System performance

Additional information provided by SOU25 on Effluent treatment upgrade: Question:- 1) Installation and Commissioning date for both Vacuum Aerator & Mempol System 2) BOD measurement result for final effluent (May & June 2012) Answer:- Refer to our plans to achieve BOD of POME meeting the target

Laboratory report for the test results of the final effluent for May 2012

Laboratory report for the test results of the final effluent for June 2012

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Documents