rspo audit report · 2014. 11. 2. · batu lintang pom is owned by kuala lumpur kepong berhad and...

RSPO Principles & Criteria Main Assessment Report

Report Number CU827591

RSPOPC-SUM-REPORT.F01 JULY2013 Page 1 of 36

Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100, Klang, Selangor. Malaysia.

Tel: +603-3377 1600 / 1700

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT

MAIN ASSESSMENT

Kuala Lumpur Kepong Berhad

BATU LINTANG POM 2013

Report prepared by: Simon Selvaraj (Lead Assessor)

Certification decision by: Hari Naveen Christopher (Certifier)

Certifying Office

Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa,

Off Jalan Sg Bertih, Teluk Gadong, 41100 Klang, Selangor, Malaysia [email protected]

Tel: +603-3377 1600 / 1700

Control Union Certifications Control Union Certifications is a member of the Control Union World Group - an international

inspection and certification body. CUC performs assessments and certification in many agricultural

based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic

Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP.

CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic program (according to the EU regulation 2092/91) and GLOBALGAP program. When requested a copy of the accreditation certificate can be

obtained from CUC.

RSPO Membership Number 8-0025-06-000-00

RSPO Approval Date 12/01/2006

Affiliate Membership http://www.rspo.org/en/member/339

mailto:[email protected]://www.rspo.org/en/member/339





Tel: +603-3377 1600 / 1700

Table of Contents

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT .............................................................. 4

1.1 COMPANY AND CONTACT DETAILS ...................................................................................................... 4 1.2 RSPO MEMBERSHIP & CERTIFICATION DETAILS .................................................................................... 4 1.3 MAIN / SURVEILLANCE ASSESSMENT DETAILS ....................................................................................... 4 1.4 ASSESSMENT TYPE ............................................................................................................................ 4 1.5 LOCATION OF THE PALM OIL MILL ....................................................................................................... 4 1.6 PALM OIL MILL OUTPUT AND APPROXIMATE TONNAGES CERTIFIED ........................................................... 4 1.7 GENERAL DESCRIPTION OF SUPPLY BASE .............................................................................................. 5

1.7.1 Location of the Supply Base ............................................................................................... 5 1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year ............... 5 Percentage of Planted Oil Palm by different Age Ranges ............................................................... 5 1.7.3 Calculation of the Number of Production Units (N) to Sample for the Mill ..................... 5

1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ............. 5 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ........................................................... 5

PART 2: PARTIAL CERTIFICATION ........................................................................................................ 6

2.1 MANAGEMENT STRUCTURE ............................................................................................................... 6 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ................................................................................... 6 2.3 SUMMARY OF THE TIME BOUND PLAN ................................................................................................. 6 2.4 UN-CERTIFIED UNITS OR HOLDINGS .................................................................................................... 7 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ..................................................................... 10

PART 3: AUDIT PROCESS.................................................................................................................... 11

3.1 ABOUT THE CERTIFICATION BODY ..................................................................................................... 11 3.2 AUDIT TEAM ................................................................................................................................. 11

3.2.1 Qualifications of the Lead Auditor ......................................................................................... 11 3.2.2 Qualifications of the Assessment Team ................................................................................. 12

3.3 AUDIT METHODOLOGY.................................................................................................................... 13 3.3.1 General Overview ............................................................................................................ 13 3.3.2 Assessment agenda for this Audit ................................................................................... 14

PART 4 ASSESSMENT FINDINGS ........................................................................................................ 17

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ............................................. 17 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA .................................................................... 17

Principle 1: Commitment to Transparency ..................................................................................... 17 Principle 2: Compliance with Applicable Laws and Regulations .................................................... 18 Principle 3: Commitment to Long-Term Economic and Financial Viability ..................................... 21 Principle 4: Use of Appropriate Best Practices by Growers and Millers ......................................... 21 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ........................................................................................................................................................ 25 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ........................................................................................................................ 26 Principle 7: Responsible Development of New Plantings ................................................................ 28 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ............................. 28

4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ......... 28 4.4.1 Non-Conformities Identified during this Audit ...................................................................... 29

4.5 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ......................................... 31

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ................................................................................... 33

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ..................................................................................... 33 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...................................................................................... 33 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ............................. 33





Tel: +603-3377 1600 / 1700

5.4 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ................... 33

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ........... 33

6.1 DATE OF NEXT ASA ........................................................................................................................ 34 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...................................................................................... 34 6.3 SIGNING BY THE CLIENT ................................................................................................................... 34 6.4 SIGNING BY THE LEAD AUDITOR ........................................................................................................ 34 6.5 SIGNING BY THE CERTIFIER ............................................................................................................... 34

PART 7: APPENDICIES ........................................................................................................................ 34

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT .......................................................................... 35 APPENDIX 2: LIST OF ABBREVIATIONS ........................................................................................................... 35





Tel: +603-3377 1600 / 1700

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details

Company name: Kuala Lumpur Kepong Berhad

Business address: Wisma Taiko, 1, Jalan S. P. Seenivasagam, 30000 Ipoh, Perak.

Parent Company: Kuala Lumpur Kepong Berhad

Contact person: Mr Sin Chuan Eng

Office telephone: +6052417844

Fax: +6052535018

e-mail: [email protected]

Other Certifications Held: RSPO SCCS, ISCC

1.2 RSPO Membership & Certification Details

RSPO Membership Number: 1-0014-04-000-00

Registered Client Name: Kuala Lumpur Kepong Berhad

Certificate Number: C827591CU-RSPO-01.2013

Start Date Of Certificate: 26th September 2013

End Date Of Certificate: 25th September 2018

Date Of Original Certification: 26th September 2013

Scope: Certification of the Palm Oil Mill and Supply Bases

Type Of Certification: Single site

Duration Of Certificate: 5 Years from date of certification

1.3 Main / Surveillance Assessment Details

Dates Of This Audit: 18th March to 22nd March 2013

Audit Number: Main Assessment (1)

1.4 Assessment Type

This is a RSPO Principles &Criteria Compliance assessment of the palm oil mill and its respective supply bases as listed in this report below.

1.5 Location of the Palm Oil Mill

Name Palm Oil Mill

Mill Capacity

Location GPS Reference

(POM) MT/Hour Address Longitude Latitude

KLK Batu Lintang POM

25 09800 Serdang, Kedah N 5.193591 E 100.62843

1.6 Palm Oil Mill Output and Approximate Tonnages Certified

Figures below are from:

Only from certified supply bases (Y/N). YES

Combining certified with uncertified supply bases (Y/N). NO

If the Mill is receiving FFB from uncertified supply bases outside the audit scope, such uncertified sources is highlighted under the following sections as seen applicable:

a. PART 1, Section 1.7 – General Description of Supply Base, b. PART 2: Partial Certification, Section 2.4 – Uncertified Units or Holdings, c. PART 5: RSPO Supply Chain Certification of this report

Projected Production from the last 12 Months (MT)

Actual Production for this Audit Year 2011/2012 (MT)

Projected 12 Months (MT) Forecast Certified in this Report

FFB CPO PK FFB CPO PK FFB CPO PK

NA NA NA NA NA NA 115,635 30,007 7,257

mailto:[email protected]





Tel: +603-3377 1600 / 1700

1.7 General Description of Supply Base

Batu Lintang POM is owned by Kuala Lumpur Kepong Berhad and has 4 supply bases named Batu Lintang Estate, Subur Estate, Pelam Estate, and Buntar Estate. With effect 2013 onwards, Buntar Estate will be merged with Batu Lintang Estate. Details of each supply base are listed below.

1.7.1 Location of the Supply Base

OPP Oil Palm

Plantation Location GPS reference Area Summary (Ha)

Name Address Longitude Latitude Total Mature

OPP 1 Batu Lintang Estate

09800 Serdang, Kedah N5.204542 E 100.62907 1,809 1,743

OPP 2 Subur Estate Bt. 23 Batu Kurau, 34520 Taiping, Perak

N5.047778 E100.79527 1,290 1,261

OPP 3 Pelam Estate 09020 Malau Baling, Kedah

N 5.514208 E100.73515 2,960 2,341

OPP 4 Buntar Estate 09800 Serdang, Kedah N 5.168326 E 100.60 900 817

TOTAL 6,959 6,162

1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year

OPP Oil Palm Plantation Estimated FFB/Year (MT) Planting Years Cycle (Years)

OPP 1 Batu Lintang Estate * 38,208 25

OPP 2 Pelam Estate 56,061 25

OPP 3 Subur Estate 21,366 25

OPP 4 Buntar Esate * - -

TOTAL 115,635

*Buntar estate will be combined with Batu lintang estate from 2013

Percentage of Planted Oil Palm by different Age Ranges

CU Code

Planting Years by 5 year Ranges

Pre 1990 1991 – 1995 1996-2000 2001 – 2005 2006 -2010 2011-2015 Total (%)

OPP 1 9 9 39 11 25 7 100

OPP 2 3.55 11.28 38 20.84 10.4 15.93 100

OPP 3 10.3 9.04 20.78 13.17 26.57 20.14 100

OPP 4 - - - - - - -

1.7.3 Calculation of the Number of Production Units (N) to Sample for the Mill

N = 0.8√Y, where “Y” is the number of units, with the result always to be rounded “up” to the next whole integer. Where only a sample of the supply base is assessed, units not previously assessed, or assessed earlier in the certification program, are to be preferred over those more recently assessed

For the Mill, how many units make up the production base?

Owned estates (Y) N = 0.8√Y Smallholders (Z) N = 0.8√Z

3 3 0 3

1.8 Progress of associated Smallholders or Out-growers, if applicable to this assessment

Progress of associated Smallholders or Out-growers towards Compliance with relevant Standards - should be in accordance to the 3 year implementation plan, if applicable to this assessment

Not applicable as there is no smallholders crops received.

1.9 Location Map for this Certification Unit (See Appendix 1)





Tel: +603-3377 1600 / 1700

PART 2: PARTIAL CERTIFICATION

The rules for partial certification allow organizations that have a majority holding in and / or management control of more than one autonomous company growing oil palm to certify individual management units and / or subsidiary companies subject to certain rules.

2.1 Management Structure

Section Criteria Yes/No If “Yes” If “No”

2.1.1 Is the certified operation (POM and supply base as detailed above) a stand-alone operation and there are no other plantations or mills owned by the same company?

No Section 2 is N/A

Go to 2.1.2

2.1.2 Is the certified operation part of a simple structure of operations owned by one company?

Yes Go to 2.1.5 Go to 2.1.3

2.1.3 Are there statements of the ultimate controlling shareholders and directors in the managing agency company/companies:

a. Explaining the legal relationship and the management arrangements with the subsidiary companies and / or with any operating groups?

N/A Go to 2.1.4

Go to 2.2.1

2.1.4 b. A statement of commitment to complying with the spirit of the RSPO for all companies and subsidiaries involved with the growing of oil palm and for the production of palm oil?

Yes Go to 2.4 Go to 2.2.2

2.1.5 Is there a time bound plan in place for all subsidiaries, estates and palm oil mills?

Yes Go to 2.3 2.2.3

2.1.6 Is the parent company or one of its majority owned and / or managed subsidiaries a member of RSPO.

Yes

2.2 Non-compliance Identified with 2.1 Above

Section Non-compliance findings NC raised Category

2.2.1 There is no explanation as to the company’s structure and therefore it Is not possible to conduct an effective audit against the rules for partial certification.

- Major

2.2.2 There is no statement of commitment to complying with the spirit of the RSPO for all companies within the company structure.

- Major

2.2.3 There is no time bound plan in place for the certification for all subsidiaries, estates and mills.

- Major

2.2.4 No applicable membership of the RSPO. - Major

2.3 Summary of the Time Bound Plan

Section Requirement Findings and any action required

2.3.1 Does the plan include all subsidiaries, estates and mills?

All subsidiaries, estates and mill are included

2.3.2 Is the time bound plan challenging? Age of

plantations. Location. Mill

development. Infrastructure. Compliance

A revision has taken place since there was an isolated lapse in implementation of the plan which a NC was raised during Lahad Datu region assessment. Therefore, the plan was reviewed to fit to their initial goal and there are some new inclusions to be certified. Revised time bound plan as attached below.





Tel: +603-3377 1600 / 1700

with applicable law.

2.3.3 Have there been any changes since the last audit? Are they justified?

The time bound plan has been thoroughly reviewed by the company and the areas of the estates that have rubber, are highlighted with (*) on below time bound plan. There are 4 units has been pushed for certification for the next following year which the year is highlighted in red.


2.3.4 If there have been changes, what circumstances have occurred?

Due to the isolated lapses in the implementation the company made the adjustment to realized the targeted achievement

2.3.5 Have there been any stakeholder comments?

No comments received regarding other units as of this audit period. However, comments received for this unit which undergone main assessment has been captured at table 3.4

2.3.6 Have there been any newly acquired subsidiaries?

In Dec 2012, KLK signed a joint- ventured agreement with Collingwood Plantation. KLK holds 51% and is the majority shareholder. This new subsidiary has leased approximately 40,000Ha’s in Papua New Guinea. No land development has taken since the venture and any future land developments will only occur after executing the NPP notification. At present, KLK is in the process of carrying out all the necessary HCV and SEIA assessments which is set to take place between Q2 to Q4, 2013. Progress and status updates will be reviewed and reported in subsequent annual surveillance assessments.

2.3.7 Have there been any isolated lapses in the implementation of the plan?

This delay causes the isolated lapses in the implementation for the targeted year of 2012 which had led to raise a Minor NC in previous assessment conducted at Lahad Datu Region.

2.3.8 Has there been any systematic failure to proceed with the implementation of the plan?

With the revised time bound plan, the actual implementation effectiveness will be reviewed within the next surveillance assessment of any unit.

2.3.9 General statement as to progress made since the last audit?

The company is now on target to have all their properties audited and / or certified by the end of 2015.

2.4 Un-Certified Units or Holdings

NOTE: Companies may demonstrate compliance by clear evidence of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills)


2.4.1 Did the company conduct an internal audit? If so, has a positive assurance statement been produced?

Positive assurance statement provided are still same as of year 2011, which does not include the new mill found in the revised time bound plan. Furthermore, insufficient records to demonstrate that the internal audit has took place for all its subsidiaries. This is raised as minor non-compliance.

2.4.2 No replacement after dates defined in NIs Criterion 7.3 of:

Primary forest.

Any area identified

The company has conducted HCV assessment by Jump Consulting in January – February 2012 for all subsidiaries where the assessment report confirms that there was no replacement of primary forest or containing HCV. The new mills and newly acquired land are still under consultant preliminary report.





Tel: +603-3377 1600 / 1700

as containing High Conservation Values (HCVs).

Any area required to maintain or enhance HCVs in accordance with RSPO criterion 7.3.

2.4.3 Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure.

No new planting reported for existing units. However, the newly acquired lands will adhere to the NPP procedures when it is ready. PT Anugerah Surya Mandiri which was acquired last year is planned for NPP in near future.

2.4.4 Any Land conflicts are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6.

SIA conducted reported that there are land conflicts at some of the uncertified units and the company is handling through FPIC and grievance procedures. PT Karya Makmur Abadi – 2000Ha and PT Riau – 2,554Ha under dispute.

2.4.5 Any Labor disputes are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3.

None noted.no stakeholder comments or complaints received

2.4.6 Any Legal non-compliance is being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

None noted. No stakeholder comments or complaints received.

TIME BOUND PLAN FORECAST FOR RSPO CERTIFICATION OF ALL PALM OIL MILLS & SUPPLY BASES

Palm Oil Mill Country Supply Bases (estates,

plantations, associations) Targeted RSPO

Certification Year Current Certification

Status as per this Audit

Berau 1 POM Berau, Kaltim, Indonesia

Kebun Malindomas Perkebunan Kebun Hutan Hijau Mas Kebun Jabontara Ekakarsa

By 2014 Pending

Steelindo Wahana Perkasa POM

Belitung, Indonesia

Kebun Steelindo Wahana Perkasa

By 2013 Pending

Parit Sembada POM

Belitung, Indonesia

Kebun Parit Sembada Kebun Alam Karya Sejahtera

By 2014 Pending

Mandau POM Riau, Sumatera, Indonesia

Kebun Mandau Oct 2012 Certified

Nilo 1 POM Riau, Sumatera, Indonesia

Kebun Nilo Timur By 2013 Pending





Tel: +603-3377 1600 / 1700

NIlo 2 POM Riau, Sumatera, Indonesia

Kebun Nilo Barat By 2013 Pending

Tapung Kanan POM

Riau, Sumatera, Indonesia

Kebun Sekarbumi Alamlestari

By 2013

Audited on 17/12-21/12/2012 and waiting for certification process

Gohor Lama POM

Langkat, Sumatera Utara, Indonesia

Kebun Basilam Kebun Gohor Lama

By 2014 Pending

Padang Brahrang POM

Langkat, Sumatera Utara, Indonesia

Kebun Padang Brahrang Kebun Bukit Lawang Kebun Tanjung Keliling

By 2014 Pending

Batu Lintang POM

Serdang, Kedah, Malaysia

Pelam Estate Batu Lintang Estate Subur Estate Buntar Estate

By 2013 Audited on Q1, 2013 and waiting for certification process

Kekayaan POM Paloh, Johor, Malaysia

Landak Estate Kekayaan Estate Voules Estate Sg Penggeli Estate New Pogoh Estate Fraser Estate Paloh Estate Sg Bekok Estate Ban Heng Estate See Sun Estate

Oct 2011 Certified

Paloh POM Paloh, Johor, Malaysia

100% independent smallholders, not to be included in the scope of the certification

N/A N/A

Jeram Padang POM

Bahau, Negeri Sembilan, Malaysia

Ayer Hitam Estate Batang Jelai Estate Jeram Padang Estate Kombok Estate Ulu Pedas Estate Sg Pertanian Estate Sg Kawang Estate Renjok Estate Tuan Estate

Sept 2012 Certified

Tanjung Malim POM

Tanjung Malim, Perak, Malaysia

Changkat Asa Estate Kerling Estate Sg Gapi Estate

By 2013 Audited on 21/1-23/1/2013 and waiting for certification process

Tuan Mee POM Sungai Buloh, Selangor, Malaysia

Tuan Mee Estate By 2012

Audited on 22/10-25/10/2012 and waiting for certification process

Kuala Pertang POM

Kuala Krai, Kelantan, Malaysia

Kerilla Estate Pasir Gajah Estate Sg Sokor Estate

By 2013 Pending

Changkat Chermin POM

Manjung. Perak,

Lekir Estate Changkat Chermin Estate

By 2012 Audited on 26/11-30/11/2012 and





Tel: +603-3377 1600 / 1700

Malaysia Raja Hitam Estate Glenealy Estate Serapoh Estate Kuala Kangsar Estate Allagar Estate

waiting for certification process

Mill 1 POM Tawau, Sabah, Malaysia

100% independent smallholders, not to be included in the scope of the certification

N/A N/A

Mill 2 POM Tawau, Sabah, Malaysia

Pang Burong Estate Sri Kunak Estate Tundong Estate Ringlet Estate

March 2009 Certified

Pinang POM Tawau, Sabah, Malaysia

Jatika Estate Sigalong Estate Pangeran Estate Pinang Estate

March 2009 Certified

Lungmanis POM Lahad Datu, Sabah, Malaysia

Tungku Estate Bukit Tabin Estate Lungmanis Estate

July 2010 Certified

Rimmer POM Lahad Datu, Sabah, Malaysia

Rimmer Estate Sg. Sibalukan

July 2010 Certified

Bornion POM Kinabatangan, Sabah, Malaysia

Bornion Estate Segar Usaha Estate

July 2010 Certified

2.5 Summary of the findings for Partial Certification

The audit team assessed compliance with the above requirements during this audit. Failure to address any non-compliance identified may lead to certification suspension.

Overall findings are satisfactory; however, there are still room for improvement especially on internal audit procedures for all uncertified subsidiaries and new acquisition to ensure the requirements are met. Concerning the potential overlook of the implementation of the internal audit procedure, a minor non-compliance is raised. There are 6 estates currently sending the crops to the outside mill where these estates have not been included in the time bound plan. There will be a new POM in Berau, Kalimantan Timur as of the company’s plan on expansion of milling capacity and 2 new POMs in Medan and Sampit respectively under construction which will eventually added in the time bound plan when it is ready for commissioning. The company has also made decision to include Paloh Mill into certification by year 2015 and Mill 1 which consists of 100% of independent smallholders will be shut down within 3 years from now to adhere to the rules of partial certification. The land conflicts are well documented and details are available and cited. More investigation will be carried out during next surveillance audit to monitor the progress. For final conclusion, please refer to table 3.1.





Tel: +603-3377 1600 / 1700

PART 3: AUDIT PROCESS

3.1 About the Certification Body

Control Union Certifications is a member of the Control Union World Group – an international inspection and certification body. CUC performs Audits and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP. CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CUC.

3.2 Audit Team

Lead auditor: Simon Selvaraj

Team member 1: Haerrudin

Team member 2: Viknesvaran

Team member 3: Mahaswaran

Team member 4: Mohd Rizal Kassim

3.2.1 Qualifications of the Lead Auditor

Requirement Qualifications

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

Post graduate qualification in agriculture with more than 5 years working experience in plantation.

At least 5 years professional experience in area of work relevant to the assessment (e.g., palm oil management; agriculture/forestry; ecology; social science);

More than 5 years working experience in plantation. Involved in RSPO auditing since November 2010. Fully trained in similar agriculture certification programmes such as RSPO SCCS, Global Gap, ISCC and GMP.

Training in the practical application of the RSPO criteria, and RSPO certification systems;

Involved in RSPO assessment since November 2010. Member of CUC RSPO audit team. Involved in audits conducted in Malaysia and Indonesia

Successfully completion of an ISO 9000:19011 lead auditors course;

Completed ISO 9001:2008 lead auditor course in July 2011. Successfully completed RSPO Lead Auditor Course

Training in the practical application of RSPO certification systems.

Post graduate qualification in agriculture with more than 5 years working experience in plantation

A supervised period of training in practical auditing against the RSPO criteria or similar sustainability standards, with a minimum of 15 days audit experience and at least 3 audits at different organizations.

Post graduate qualification in agriculture with more than 5 years working experience in plantation

RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in 2011

Signed code of conduct. Signed with CUC

General knowledge of:

RSPO P&C standards. Sound knowledge of the P&Cs, Nis and Local Interpretations.

CUC organizational structure. Sound understanding and has prepared training documents for others

CUC quality systems. Sound understanding and has prepared training documents for others

Lead auditor role. ISO 9001. Prepared an ISO 19011 training course and conducts internal training on auditing techniques

Report writing. Extensive experience in report writing

Stakeholder consultation. The process and need for this is fully understood.





Tel: +603-3377 1600 / 1700

Certification decision process. Fully understand

RSPO SCCS program manual. Fully understand

CUC filing systems. Fully understand

Correct use of RSPO trademarks. Fully understand

History and objectives of RSPO. Fully understand

CV available. CV is available

Completion of CUC RSPO lead auditor training. Complete Lead Auditor training

3.2.2 Qualifications of the Assessment Team RSPO Requirement Team Member Name Qualifications

Fluent in main local languages and English.

Haerrudin Fluent in English and Bahasa

Mohd Rizal Fluent in English and Bahasa

Mahaswaran Fluent in English and Bahasa

Viknesvaran Fluent in English and Bahasa

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

Haerrudin Professional forester and oil palm plantation since 1995. Experience in RSPO, 4C, Global Gap, FSC, UTZ certified, and Organic farming auditing.

Mohd Rizal 5 year in Manufacturing company, training in handling chemical

Viknesvaran 8 years of experience in the palm oil industry

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

Haerrudin Professional forester and oil palm plantation since 1995. Experience in RSPO, 4C, Global Gap, FSC, UTZ certified, and Organic farming auditing.

Mahaswaran Experience in OHSAS 1800 EMS, Auditing

Mohd Rizal 5 year experience as safety officer in manufacturing company Malaysia


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

Haerruddin Professional forester and oil palm plantation since 1995. Experience in audit RSPO, 4C, Global Gap, FSC, UTZ certified, and Organic farming auditing

Mahaswaran Master in Business administration have experience auditing of social issues


Mohd Rizal 5 year experience as safety officer in manufacturing company Malaysia

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

Haerrudin Professional forester and oil palm plantation since 1995. Experience in audit RSPO, 4C, Global Gap, FSC, UTZ certified, and Organic farming auditing

Mahaswaran Master in Business administration with experience auditing social issues. Has experience in OHSAS 1800 AND EMS 14000






Tel: +603-3377 1600 / 1700

Mohd Rizal 5 Year experience in manufacturing firm

Economic issues. Mahaswaran Master in Business administration with experience auditing social issues. Has experience in OHSAS 1800 AND EMS 14000

Haerruddin Professional forester and oil palm plantation since 1995. Experience in audit RSPO, 4C, Global Gap, FSC, UTZ certified, and Organic farming auditing


Mohd Rizal 5 Year experience in manufacturing firm

3.3 Audit Methodology

3.3.1 General Overview

The Audit was carried out in conformity with the procedures as laid down in the CUC Procedure Manual and the RSPO Program Manual for the auditors and Certifier. During the Audit the qualified CUC auditors used the RSPO standard as endorsed for the country in which the audit took place and recorded their findings. Workers and local communities were interviewed and evidence sought to confirm on-going compliance to include:

Chemical stores. Storage. MSDS leaflets. Herbicide mixing areas. PPE. Ventilation. Security.

Field inspections. Herbicide application programs. Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.

Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness.

Re-planting sites. Zero burn.

HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation.

Riparian zones. Width. Current and future management. Non maintenance regimes.

Water management. Water courses. Water monitoring.

Road maintenance. Run off.

Social amenities. Social Impact Audits.

Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures.

Workshops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management.

Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal.

Documentation review. Palm Oil Mill audits include:

Mill and workshop inspections. Documentation. Worker interviews.

Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage.

OSH. Training. Management structure. First aiders.

Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of RSPO P&C’s applicable.

Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.

Compliance against the RSPO SCCS certification scheme. Verification: Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarized above.





Tel: +603-3377 1600 / 1700

3.3.2 Assessment agenda for this Audit

Date Location Main activities

18/03/2013 Batu Lintang Club House (All auditors)

08.30 Opening meeting Chaired by the audit team leader

Introduction by team leader

Presentation by respective managers

Presentation of Palm Oil Mill source of FFB by respective managers

Batu Lintang POM 9.00 am-5.00pm (All auditors)

Supply Chain Certification Assessment of the POM (RSPO SCCS) Mill inspection

Workshops

Stores

POM application Document review





Tel: +603-3377 1600 / 1700

19/03/2013 Batu lintang Estate 8.00am-5.00pm (Mahas,Haerrudin,Rizal)

Buntar Estate 8.00am-5.00pm (Simon,Viknes)


Field inspections. Herbicide application programmers. Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.


New planting sites. Zero burn.





Social amenities. Social Impact Assessments.




Document inspection and assessment.


Field inspections. Herbicide application programmers. Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.












8.00-5.00pm (Selvanathan)

Stakeholder interview

Pelam Estate (Rizal,Mahas) 8.00am-1.00pm


Field inspections. Herbicide application programmers.





Tel: +603-3377 1600 / 1700

Subur Estate 8.00am-5.00pm (Simon & Vilnes)

Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.












21/03/2013 Batu lintang Club House (8.00-10.00am) 10.00am-1.00pm

Preparation for closing meeting Additional field visits and meetings with managers as necessary Closing meeting Chaired by the audit team leader

Welcome and introduction by the team leader

Presentation of findings by the audit team

Questions and answers

Final summary by team leader End of assessment

Number of assessors participating: 4 Number of days spent for the assessment on site: 5 Total number of person days used for the assessment on site: 20





Tel: +603-3377 1600 / 1700

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification

The mill and supply base are as per the above table 1.5 and 1.7.1 and the Scheme smallholders visited was assessed at field, office, facilities, store and document review carried out in accordance to the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estate and mill. Interviews with Estate Managers, Mill Manager, and Scheme leaders, committee and members of workers union took place in both formal and informal environments and worker interviews were conducted in all estates and in the mill. Subsequent to the stakeholders’ interview, the surrounding communities were visited so as to capture more feedback from the stakeholders. A night audit on social aspects was carried out by the social expert and the lead auditor to gather more information from the workers as more family members are around to give comments and positive comments were received. There were no complaints received during the field assessment and during interview with the external stakeholders. Up to the time of writing this report, there were neither feedbacks nor comments received from the other external stakeholders and community leaders. Under partial certification rules, it is found that all its subsidiaries have been certified and further clarification is specified in table 2 onwards. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance. See table 5.

It is therefore the recommendation of the lead assessor that:

To award the certificate of compliance. Signed:

Name: Simon Selvaraj Date: 30th April 2013

4.2 Summary of the findings by Principles and Criteria

Over the 5 year period of the life of the certificate, there will be 4 annual surveillance audits

Identified Non-Conformities and noteworthy Positive and Negative Observations.

The RSPO require that this report contains findings by each principle and some example criteria. Please see table below.

Principles and Criteria’s

Summary Findings

Principle 1: Commitment to Transparency

Criterion by Audit

Summary

Company has demonstrated their commitment to transparency and this is evident through its stakeholder engagement and willingness to share documents to the public.

MA 1.1 The company has a system that allows the stakeholder to participate effectively to share their view on issues raised and the decision made through stakeholder meeting. The meeting has been set up every year. Company have a procedure to receive and responding to the request by provided the Complaint Form for every request. Sample of complaint form were maintain on stakeholders files and will retention for 5 years. Records for information requests and its responses are contained in the ‘Stakeholder Logbook’ form which is filed in the file ‘SOP 1 Stakeholder Engagement’. The ‘Stakeholder





Tel: +603-3377 1600 / 1700

Logbook’ form contains the details for engagement, proposed action and action that have been taken with evidence. A stakeholder meeting was also held on 8 March 2013 to discuss matters pertaining to EIA, SIA and Pollution Prevention Plan. The minutes of this meeting was recorded and filed in the ‘SOP 1 Stakeholder Engagement’ file. The policy for handling requests is contained in ‘Stakeholders Engagement’ under Standard Operating Procedure on Sustainability and is found in the file ‘SSC03 RSPO – SOPS’.

MA 1.2 List of legal correspondences and permits are available. The permits classified by each operation with number of the permit and beginning date together with expiry if applicable. All the issues raised by the stakeholders during the main assessment have been addressed and interview with these stakeholders confirmed that actions have been taken. The list of documents that can be made available publicly available is listed in the file ‘SOP 9 Control of Documents and Process’. The list of documents that should be kept confidential and those that can be made publicly available is clearly distinguished. All the operation unit have own land title and available upon stakeholder request. Safety and health plan is established using the safety and health policy and this was sighted in the file ‘KLK Group Policy – Occupational Safety and Health Guidelines OSH 150 (G)’ The safety and health manual is contained in the file ‘KLK Group Policy – Occupational Safety and Health Manual OSH 150 (M) and it is applying for all the KLK estate and mill. The policy has been socialized during the morning muster activity and during safety meetings. In addition, the policy has been posted on designated notice boards, open to anyone to read and employees can seek clarity from management on any aspect if not clear. The negative environmental and social impacts have been identified and its mitigating measures identified. This is contained in the files ‘SOP 10 Environment Impact Assessment’ and ‘SOP13 Social Impact The mill and estate have identified their wastes and plans have been made to minimize or reduce wastes. Evidence of this is found in the file ‘SOP 10 -Environmental Impact Assessment’. The boiler ash is stated as being dumped at the dumpsite but during the site visit to the mill, it was found that it is being also used to repair effluent ponds bunds and roads. This needs to be reflected in the records. The procedure for handling complaints and grievances is contained in ‘Stakeholders Engagement’ under Standard Operating Procedure on Sustainability and is found in the file ‘SSC03 RSPO – SOPS’. Records of complaints and grievances are contained in the ‘Stakeholder Logbook’ form which is filed in the file ‘SOP 1 Stakeholder Engagement’. The ‘Stakeholder Logbook’ form contains the details for engagement, proposed action and action that have been taken with evidence. Detail of the continuous improvement plans and targets for the mill is found in file ‘SOP 16 – Continuous Improvement Plan

Principle 2: Compliance with Applicable Laws and Regulations

Criterion by Audit

Summary

The company has complied with local, national, and international regulations regarding the plantation operation in Malaysia. There are complete set of relevant national law and regulation available at all sites audited with the master copy available at HQ which are systematically documented and addressed. Relevant legislation includes regulations governing land tenure and land-use rights including customary rights, labour, chemical use, wildlife laws, pollution, environmental management programs are well practice.





Tel: +603-3377 1600 / 1700

There is no legal or customary rights of other users been found. Land title available that own by Kuala Lumpur Kepong Berhad [KLK]. Detailed documentation of the communication to reach a negotiated settlement is evidenced. The land occupied by the estates and mill are owned by KLK group and since the land possession, there was no land dispute, negotiation nor conflict registered. Necessary segregations and identification been addressed to differentiate of the use of PPE, chemicals and pesticides. One minor non-conformity was raised with regards to the process conversion of the land title from rubber to oil palm.

MA 2.1 The mill has a Law Books Register which includes The Document name, The Regulatory Authority / Summary of the law, The Requirements and Remarks. There are a series of SOPS that include legal requirements for example: SOP 15 gives delegates responsibilities to individuals. SOP 16 covers Permits, licenses and Reports. SOP17 covers contracts. SOP 18 for complaints and Grievance procedure. A list of all applicable licences is prepared to show expiry dates for all licences covering all mill operations. The licences are all valid and copies are included in the file. Work permits for foreign workers are checked and verified. The estates have Law book register for all the requirements for local, national and regional laws and regulations. These are listed together with law name Regulatory authority / summary, requirements and remark. The KLK Head Office will update the Executive in Charge of all operating centres through circulars and meetings. Managers are required to track changes in the law on line at least once a year. List of laws available and recognized as below :

OSHA and regulations 1994 (Act 514)

Factories and Machinery Act with regulations (Act 139)

Pesticides Act and Regulations (Act 149)

Poison Act and Regulations 1952 (Act 366)

Kementerian Perdagangan.

Malaysia Palm Oil Board (MPOB)

Road Transport Act 1987 (Act 333)

Employees Social Security Act and Regulations (Act 4)

Food Act and Regulations (Act 281)

Industrial Relations Act and Regulations (Act 177)

Trade Union Act and Regulations

Employees Provident Fund Act 1991

Human Rights Commission of Malaysian Act.

Wetlands and climate Change 1999

The UN Convention on Biological Diversity

Stockholm Convention On Persistent Organic Pollutants (2001)

Rotterdam Convention on Prior and Informed Consent Procedure for

certain hazardous chemicals.

International Labour Organisation Convention 98(1949)

Aboriginal Peoples Act 1954 (Act 134)





Tel: +603-3377 1600 / 1700

Arms Act 1960

Children and young person (employment) act 1966

Commercial vehicles(Licensing Board Act 1987)

Electricity Supply Act 1990

Employment Act 1955

Immigration Act 1959/63

Internal Security Act 1960

Irrigation Areas Act 1953

Land and Conservation Act 1960

National Forestry Act 1984

CSDS

Guidelines for first aid in the workplace

Occupational Safety and Health ( packaging, control of industrial

major accidents hazards, employers safety and health general policy,

committee, OSH officer and exposure of chemicals Hazardous to

Health

Factories and Machinery 1986

Environment Quality Act 1974

Estate Hospital Assistants (Registration) act 1965

Act 645 National Heritage Act 2005

Act 302 Petroleum (Safety Measures) Act 1984)

Act 344 Police Act 1967

Anti-Corruption Act 1997

Act 246 Private employment Agencies Act 1981

Act 76 Protection of Wild Life Act 1972

Act 208 Sewerage Services Act 1993

Act 133 Street, Drainage and Building Act 1974

Wages Councils Act 1974

Waters Act 1920

Workers minimum Standards of Housing and Amenities Act 1990

Workmen’s Compensation Act 1952.

Pesticides Act 1974

Occupational Safety and Health Act 1994

Factories and Machinery Act

Environmental Quality Act

Destructions of Disease Bearing Insects Act

Employment Act 1955

Aboriginal Act 1954

National Forestry Act 1984

Internal Security Act 1960

Arms Act 1960

Employment Provident Fund Act

Drainage Works Act 1954.

Workers minimum Standards of Housing and Amenities Act 1990

MA 2.2 All land titles remain unchanged and the boundary stones are well maintained & visible from distance and it records the GPS reference as well.





Tel: +603-3377 1600 / 1700

Mill is located on Lot 2076 with 8.1634 hectare All the land title is under Kuala Lumpur Kepong Berhad named and approved

by Land Department, Kedah , Malaysia. Boundaries stone legal demarcated by

visual sight and documented in the office included proper map.

However, the land title in Batu Lintang that is under conversion for the

term rubber to palm oil was noted in the process of the conversion with the

land department. However there is no concrete justification from the land

department that this is under process. A minor non-conformity was raised.

MA 2.3 Maps of appropriate scale are clearly available to demonstrate the land used or user rights and no land disputes were noted during this audit.

Principle 3: Commitment to Long-Term Economic and Financial Viability

Criterion by Audit Summary

The company is committed to the long term economic and financial viability. This is evident through the budgets and 2 year financial projections as well as the annual replanting programme for the next 5 years

MA 3.1 The annual budget for Batu Lintang Palm Oil Mill is available in the booklet ‘Batu Lintang Palm Oil Mill Estimates 2012/2013’. The annual budget details the OER and KER of the mill, its revenue and expenditures and breakdown of costs. The 2 years financial projection for the mill for financial year 2013/2014 and 2014/2015 is available in the file ‘SSC10 OER and Budget Projection’. The annual budget for the estates for 2012/2013 is contained in the booklet ‘2012/2013 Estimates’. Details of financial expenditures and cost of production is available. Crop projection for the next 10 years until 2022 is also available in the same document. All estates have the Annual Replanting Programme for the next 5 years until 2017 and this was sighted in the file ‘SOP 4 – Soil Erosion & Fertility and Road Maintenance’.

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

Criterion by Audit

Summary

The company overall implemented best practices in their operation. Variation of SOP’s is maintained and be the guidelines to all operations. Monitoring of fertilizer and agrochemical is based on soil and tissue sampling as well for water management is keep maintained with buffer zone and water analysis is carried out periodically. Safety and health is compulsory implemented in all operations but during the assessment found its still need an improvement (Observation) and all this best practices is effective by workers was provided with proper training programme. However, 5 minor non-conformities were raised for the following: 1) The absence of road maintenance for hilly areas 2) Absence of census for pests for the implementation of IPM 3) Poor condition of some of the chemical stores 4) Usage of PPE was not evident among workers 5) Lack of awareness on RSPO as a result of lack of training for workers.

MA 4.1 The company has a set of generic SOPs for the estates and mill. The monitoring of the practices are recorded on a daily and monthly basis, the record of training shown that the company has carried out training sufficiently and efforts of implement Good Agricultural Practices done through appropriate use of fertilizer and pesticide mill Procedures is documented in Guidelines procedures 1st edition 2002 which covering procedures from receiving FFB till despatch CPO for estate Procedures documented in the “Group Policy – Agriculture Oil Palm” are covering all stages in plantation operational as follows: seedlings, field preparation, Fertilizing, Pest and disease, Social and water conservation, riparian zones, replanting, Road and drains, Road Maintenance and transport FFB to the mil. For instance, SOP no. 13 is used to help with matters pertaining to riparian





Tel: +603-3377 1600 / 1700

zone management. Monitoring is carried out for all the best practices and SOP’s to ensure the practicality. It is reported monthly basis in “Monthly Progress Report”, covering nursery practices, replanting with zero burn, Upkeep mature and immature area, fertilizing, spraying, maintenance, FFB production, fuel consumption, FFB Incoming, CPO produced, OER, KER, FFB Quality, Despatch CPO, PK, process performance each station, equipment and vehicles maintenance The retention period for records of monitoring is for a minimum of 12 months.

MA 4.2 The monitoring of fertilizer record seen that it was match with the recommendation according soil and tissue analysis., the company was analysed soil and tissue sampling regularly to update of fertilizer recommendation. Research Centre(Applied agriculture Sdn bhd, has conducted annual sampling of soil and leaf analysis. Recommendation for fertilizer recommendation for 2013, i.e. AN (2 kg/palm) MOP (1.75 – 2.00 kg/palm), Fertbor (0.20 kg/palm), KS (1.75 kg/palm).All the fertilizer activity is recorded in manuring book. In the manuring book all the information is available date of applying, hectarages, type of fertilizer, amount of applied, labour cost, cycle of application, i.e dated 29 January 2013. KLK group has practice zero burning policy, during field observations and interviews confirmed no burning for replanting. Chipping. EFB application is carried out in accordance with the recommendations of the Agricultural Research Department. EFB is used as mulching

MA 4.3 A procedure for prevent erosion in “Soil erosion and fertility and road maintenance” no. 4.0, dated 01 April 2014. the company has implemented procedure with planting leguminous crop (Mucuna bracteata), placed pruned fronds in matured area properly and across the slope, construct adequate silt pit, under passes and humps for undulating terrain and terrace areas as well as construct terrace for slopes more than 15 degrees However, there were workers in some estates that voiced their grievances

over the condition of the road in areas with steep hills which are in poor

condition. Road maintenance in these areas seems to be lacking and this

poses a safety threat to the workers on motorbike who need to access the

road on a daily basis. This was sighted during visits to the field. A Minor

non-conformity was raised.

MA 4.4 All estates have identified watercourses and the appropriate width of buffer zone is established, the water analysis in catchment pond (water treatment) and effluent pond was analysed by third party with result of analysis is normal level, however, the POME residues leave the estate does not capture the final point and no maps available. Rainfall is monitored by monthly and water usage in mill was recorded daily basis and reported every month. There is a generic water management plan covering water source, construction of reservoir, protection of water courses and monitoring of water quality and usage. All estates have identified watercourses and the appropriate width of buffer zone is established (in accordance to guidelines by the Drainage and Irrigation Department) and the non-maintenance Programme is then implemented i.e. no fertilizer applications and spraying of agrochemicals within riparian zones).Map is update since June 2012. Water analysis has carried out quarterly for mill and estate. Analysis was carried out by Organo (Asia)Sdn Bhd. The results show that the quality of water is in accordance with the requirements of Department of environment.

MA 4.5 IPM system according the procedure of Pest and Disease in GP/Agric/OP4 last updated 1 July 2006, Use of biological control, chemical control, manual





Tel: +603-3377 1600 / 1700

control. Census. Identification. Treatment, evaluation and record keeping. Throughout all estates the use of beneficial plants, Antigonon spp and turnera subulata are very evident however It was found that have applied pesticides to prevent attack of pests. However there was no evidence to show that monitoring and census of major pests were conducted. A minor non conformity was raised. Records of using pesticide are available during the assessment and keep maintained. Information at the log book of using pesticide field/block, hectarages, cost and material used. i.e. record of pesticides on 16 November 2012 applied Enforce 50 SW (ingredients: Methamidophos) 4 liters in block 95E covering 3 ha (1.30 liter/ha)

MA 4.6 The procedure of agrochemical use is as per Agrochemical procedure No. SOP. 3.1, dated 01 July 2010 in the local languages, List of agrichemical used is based on circular from Malaysia Palm oil association and found that only officially registered that complying to Pesticide act 1974 is used. All the pesticides used have record with Product name, chemical name, type of Class, control measure, Registered number, name of active ingredients, and the MSDS also maintained. A chemical register is maintained with chemical registration card and CHRA is conducted for evaluate the risk of every chemical. Chemical storage area was inspected and found to be in compliance with requirements. Well ventilated. Locked. MSDS leaflets. First aid kits. Warning notices, PPE and emergency showers. Used chemical containers are triple rinsed and pierced. It is disposed through authorized waste collector licensed by government authority to collect (G. Planter), the last delivery document sighted was dated on 20 August 2011 where empty container pesticides, oil used, spray equipment’s, etc to G-Planter, however, the mixing pesticides area is unlock/ unsecure. There was also some fertilizer stores were found to be in poor condition. Spillages were sighted in areas surrounding the stores and there was no proper plan to contain the spillages. A minor non-conformity was raised. The Hazard chemical was explained to the workers during the training and MSDS leaflets are available in all stores, Medical check-ups conducted every year to all workers who is handling chemical, i.e. sprayers (Satia A/P Saminthan), Manuring (Vani A/P Permalu) and who is handling chemical (Gunaselan A/L Rengaya) Women sprayers interviewed are aware of this policy and risks of spraying while pregnant and breastfeeding. They are also aware of the process in informing Management of their pregnancy. Management confirms the pregnancy via medical check-up. This covered in the SOP. Alternative jobs (lighter work) are given to pregnant and lactating women. This was also confirmed during worker interviews. No paraquat used since 1 July 2011 (According the circular letter dated 25 february 2011), Paraquat replace by Glyphosate. The company applied the IPM technique to help reduction of all chemical usage. e.g. plant beneficial plant as mentioned above. No use of Pesticides 1A and 1B as register in “Chemical Hazardous to Health”. The list covering pesticides, such as Ally (a.i. Metsulfuron Methyl), Ken-Amine (Dimethyl Amonium), Glyphosate (a.i. Isopropylamina salt), Furadan 3G (a.i. Carbufuron 3%), etc. Agrochemicals are selected based on the use and for specific target pest The list of pesticides updated 15 October 2012. Records are updated regularly and verified during document audit. The details include ha, quantity, field and workers involved, i.e. on 12 February 2013.applied 22.5 litre for 13 ha in Block 99B





Tel: +603-3377 1600 / 1700

MA 4.7 An occupational safety and health policy is established by Group Policy OSH dated 10 January 2005.Required detailed contents have been reviewed in documents and records as well as assessed in the field. Risk Assessment has been carried out on 20 January 2011 for all stages in processing lines. Implementation of safety and health plan is mill manager and estate manager. Safety and Health Programme sighted for Year 2012, Ex: Fire Drill, WTP Safety Training. OSH for mill and estate procedures documented in “KLK Group Policy – Occupational Health and Safety”, The field visit confirmed that it is implemented. Review of Hazard and Identification Risk Assessment has been carried out on 04 and 05 February 2013. Training program is available in place and monitored the implementation and documented in S and H Policy, Objective, Program and management Review Hazard Identification and Risk Assessment was carried out on 20 January 2011 for all stages in processing lines by internal management. Action plan to mitigate is describe clearly, i.e. training, PPE, warning signs. To identified risk of chemical CHRA has been conducted on April 2011. Employees exposed to high noise levels, such as those working in the mill, are monitored and will be sent for audiometric test yearly. Comprehensive training record available for 2012, such as: Safety and RSPO for harvester on 17 January 2013 was attended by 21 workers. Manuring training on 19 December 2012, attended by 5 workers. Spraying training on 9 and 15 October 2012, attended by 13 sprayer team. Safety for harvester on 2 September 2012 attended by 30 harvesters. RSPO training for harvester on 1 July 2012, attended by 25 harvesters. Fire drill training 21 June 2012, attended by 21 workers. PPEs are provided free of charge to all workers. However, during mill and estate inspection visits, it was observed that many workers were not wearing the PPE required of them. Managers have stated that despite giving all the workers the necessary PPE that needs to be used and training them with regards to the importance of wearing PPE, the workers still do not wear the required PPE. Finding a solution to the non-usage of PPE in isolation will not overcome this problem. There has to be different method identified to ensure lasting behavioural change toward safety and health among the workers. A minor non-conformity was raised. The safety Committee meeting is conducted quarterly. The last OSH meeting was conducted on 22 January 2013 and was attended by 24 representatives. The record of minutes of meeting was sighted and available, titled OSH no. 02. The issues captured covers PPE, fire drill, cleaning, accident report and training for first aid kit. First aiders also available at work site and verified. The major accident is recorded in form “JKPP 6 – Laporan Mengenai Kemalangan/Kejadian Berbahaya” and minor accident in the internal accident report. There is no any major accident is noted in 2012 and 4 minor accident was noted in 2012 ,Where the company has taken action and conduct review to prevent the accident is repeated, i.e. Mr. Alpian’s accident report on 29 October 2012, action taken was seen clearly. All workers are covered by insurance and SOCSO.

MA 4.8 Training record for workers is documented and training plan and the progress is reviewed every year. The training programme is related to the risk assessment and matrix review, comprehensive programmes and training





Tel: +603-3377 1600 / 1700

records. Training records include a full list of attendees, photographs and signatures of the attendees However, awareness of RSPO need to reach all levels of staff and workers. Many employees were not aware of available procedures such as request and responses as well as complaints and grievances procedures. Constant and consistent training with regards to the use of PPE needs to be given to the workers. A minor non-conformity was raised.

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

Criterion by Audit

Summary

The company has conducted an environmental impact assessment, HCV assessment, proper waste management, implemented zero-burn policy and has a pollution prevention plan. The inventory of schedule waste was not available in some estates and as such 1 minor non-comformity was raised.

MA 5.1 Environmental impact assessment has been conducted on 15 September 2012 and it details the following: 1) The process of conducting the assessment 2) Impact of major activities/operations 3) Risk level 4) Mitigating measures 5) Timeline for mitigation of impacts 6) Person-in-charge for monitoring of impacts. The details of the above are found in the document “Environmental Impact Assessment (EIA) and Pollution Prevention Plan”, dated 01 September 2012. The EIA will be reviewed annually. EIA has been done consultation with external and internal stakeholders.

MA 5.2 The company has conducted an internal HCV assessment and the results of the assessment concluded that only riparian zones existed in riverine areas within the estate boundaries. The riparian zones in the estate are clearly identified through the erection of signboards. The appropriate buffer zones on each side of the river are maintained in accordance with the relevant environmental regulations. There were no Rare, Threatened and Endangered (RTE) species found in any of the estates. This was also verified through consultation with the local community surrounding the estate. As such, no specific management and monitoring plans are required due to the absence of HCV areas.

MA 5.3 Waste management plan is available to identified type of waste from the mill Identification of waste is on the waste management plan in the program 2013. Complete document is available for the schedule waste. Monitoring of amount of schedule waste is available that will send to Department of Environment The company has document of list of waste generated with source of pollutant no. 12.0, dated 1 March 2013., The company has segregated of office and household waste and rest to the landfill, scheduled waste is managed, monitored and sent to licensed and authorised waste disposal company. The list document of waste generated with source of pollutant is available. Waste is identified and mitigation measure is available, all the identified waste are managed, monitored and sent to licensed and authorized waste disposal company (Tex Cycle Sdn, Bhd). Records of delivery or collection by these collectors are kept by the operating units. Delivery made on 12 October 2012 was checked and verified POME is applied as land application. BOD is average on 400 BOD limit of BOD for land application is around 5000 ppm. Shell and fibre used for boiler. EFB is





Tel: +603-3377 1600 / 1700

continuously applied to the field. POME goes for land application and within the allowed BOD limit. Plastic, used oil, empty pesticides containers and metal to the recycle company, other domestic waste to landfill. There was no available evidence detailing the Scheduled Waste Inventory

(Schedule 5) and Scheduled Waste collection in some of the division. As

such a minor NC was raised.

MA 5.4 The mill use renewable energy such as fibre and shell for turbine and recorded daily basis and summarized the report by monthly. The record of 2012 noted that around 15 KWh/MT FFB processed for turbine, Monitoring of fossil fuel is recorded daily and monthly. The fossil fuel use for the genset and transported FFB in mill. Record f Diesel consumption for Genset in 2012 5,872 litre/month.

MA 5.5 All the estates assessed have applied the zero burning policy for its respective replanting programs. There were no evidences of open burning to clear the land for replanting and this was verified during the field visit.

MA 5.6 The assessment of polluting activities has been conducted and this is incorporated in the EIA. It covers: 1) The environmental aspects and impact of an activity or operation 2) The severity of the impact - normal, abnormal or emergency 3) Measures taken to mitigate the risks and impacts The monitoring and mitigation plan for all negative impacts are available and this is based on the requirements of the Department of Environment of Malaysia.

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

Criterion by Audit

Summary

There were 2 minor non-conformities raised with regards to the lack of evidence of the process of conducting the social impact assessment and the inadequacy of the basic amenities for the workers quarters as well as the poor quality of the water for consumption by the workers. Apart from that the company has complied with the requirements of Principle 6.

MA 6.1 Social impact assessment was carried out to identify the social impacts of estate and mill operations towards the stakeholders which include workers and also the local community. This was done through stakeholder consultation and participation from all stakeholders. However, the documented social impact assessment was not supported with adequate evidence of the process of conducting the assessment. The list of stakeholder interviewed was not available and there was no clear indication as to how the conclusions of the impacts were reached. As such a minor non-conformity was raised.

MA 6.2 Communication and Consultation procedures are a part of the Stakeholder

Engagement Procedure [SOP-1.0] and this was sighted at all estate and mill





Tel: +603-3377 1600 / 1700

offices. The weekly site meeting is the main platform for internal

communication besides the display of memos on notice boards.

Communication and consultation process is also communicated through

training programmes and the records with attendance lists were sighted. For

external communication the management takes the effort to reach out to the

community neighbouring the estate during stakeholder meetings. List of

stakeholder is also complete up to date for both mill and estate.

MA 6.3 All complaints, grievances, consultations and negotiations are documented in a log book. Details of the nature of the complaints and its resolution are clearly spelt out. The respective Mill and estate managers are responsible for the handling of all consultation and negotiation with stakeholders.

MA 6.4 Procedure of handling land compensation is available and this is part of the Stakeholder Engagement Procedure (SOP 1.0). There were no negotiations concerning land disputes and compensation for loss of legal or customary rights to the land for all the estates and mill assessed.

MA 6.5 Workers salary is clearly documented under check roll pay slips. As a sample, the pay slip for Mr. Selvadas Rajamony [0341B] – G9033475 dated 02/01/2013 was sighted. The gross pay is RM 2043.55 and after deduction it was RM 2193.55. Workers are given pay slip and it is signed by them as acknowledgement. There is a permit to carry out deduction. All terms and conditions of contract, whether Malaysian or foreign workers are recorded. Contracts of employments are evident and interview with workers confirm that they understand what is in the contract. There is no collective agreement because there is no workers union although local workers are free to form their own union. Foreign workers are not allowed to form workers union as per Immigration Department’s terms for hiring foreign workers. The basic amenities for the housing line site were found to be inadequate. The housing condition itself is not up to the living standard as stipulated in the Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446). Drainages were found to be clogged up. There were also houses that were without window panes. High levels of Total Coliform and E. Coli were found in the drinking water from some of the estates rendering it unsafe for consumption by the estate employees. There has been no action taken to overcome this issue as yet. As such a minor non-conformity was raised.

MA 6.6 The statement on freedom of association by the company clearly mentions “the right of freedom association of employees”. This statement is publicly displayed in office and at the line-site. However, the key word of “the rights to collective bargaining” is not evident. Unions meetings are held with workers representatives. Minutes of meeting of such meetings were sighted.

MA 6.7 The company has a Child Labour policy in place. This policy states that the minimum age for employment is 16 years old. Labour Registration Cards were sighted and inspected and field inspections were carried out and it was found that no under-aged persons were working as employees for this company.

MA 6.8 An Equal Opportunities policy has been established by the company, communicated, displayed and publically available at all assessed operation for both mill and estate. There has been no evidence of discrimination of workers and staff based on gender, nationality, age, race or religion.

MA 6.9 The company has a policy regarding sexual harassment and violence and this has been communicated to the staff and workers. This policy, however, did not include protection of women’s reproductive rights. Workers that were interviewed are aware of this policy. The workers that were interviewed confirmed that there were no incidents of sexual harassment and violence in both the estates and mill. This was also verified through the document review





Tel: +603-3377 1600 / 1700

of monthly checklist filled up by women workers. A grievance mechanism is also in place and this is clearly stated in the flow chart “Handling of Sexual Harassment”. Allegations will be channelled to the members of the Gender Committee and this information will be passed to the chairperson of the Gender Committee. The chairperson of the Gender Committee will inform the manager of the operating unit and an investigation will be launched. A representative from the health and safety department may be called in to assist with the investigation. The Gender Committee also conducts regular meetings with the company and minutes of meeting were sighted.

MA 6.10 The FFB pricing is in accordance with the MPOB pricing system. The computation of payment for FFB purchased is reviewed and updated on a fortnightly basis.

MA 6.11 The company has demonstrated that they care about the local community development. Among the contributions that have been made are:

Contributions for the education of school going children

Contributions to the family of an employee in the event of a death of employee

Donations to the local kindergarten

Donation to the local primary school of dated on 09/10/2012 which resulted from consultation with stakeholders

Donation to the estate temple

Principle 7: Responsible Development of New Plantings

Criterion by Audit Summary

N/A, as no new planting has taken place in this project. Above table on year percentage denotes re-planting.

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

Criterion by Audit

Summary The company is clearly committed to compliance with the RSPO and they have improvement plans for estate and mill

MA 8.1 Detail of the continuous improvement plans and targets for the estates and mill is found in file ‘SOP 16 – Continuous Improvement Plan’. The mill and estates have identified their wastes and plans have been made

to minimize or reduce wastes. Evidence of this is found in the file ‘SOP 10 -

Environmental Impact Assessment’.

Batu Lintang Palm Oil Mill has requested for the construction of additional holdi