rspo audit report · main surveillance assessment report report number cu827183...

RSPO Principles & Criteria Main Surveillance Assessment Report

Report Number CU827183

RSPOPC-SUM-REPORT.F01 JULY2013 of 34

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

TANJONG MALIM 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]

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





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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 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 1.7.3 Percentage of Planted Oil Palm by different Age Ranges ................................................................................... 5 1.7.4 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 2.6 PARTIAL CERTIFICATION AUDIT AGENDA.............................................................................................................. 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 ..................................................................................................................... 13

PART 4 ASSESSMENT FINDINGS ........................................................................................................ 15

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ................................................................ 15 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA ...................................................................................... 15

Principle 1: Commitment to Transparency .......................................................................................................................... 15 Principle 2: Compliance with Applicable Laws and Regulations .......................................................................................... 16 Principle 3: Commitment to Long-Term Economic and Financial Viability .......................................................................... 16 Principle 4: Use of Appropriate Best Practices by Growers and Millers .............................................................................. 16 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity .................................. 18 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers .......... 19 Principle 7: Responsible Development of New Plantings ..................................................................................................... 21 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity .................................................................. 21

4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ............................. 21 4.4.1 Non-Conformities Identified during this Audit ........................................................................................................... 21 4.4.2 Observations Raised During this Audit ....................................................................................................................... 28 Non noted during this audit ................................................................................................................................................. 28 4.4.3 Non-Conformity Identified during the last ASA .......................................................................................................... 28

4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ............................................................ 28

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ................................................................................... 30

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ...................................................................................................... 30 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM

KERNEL OVER A SPECIFIED PERIOD ................................................................................................................................ 30 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ................................................ 30 5.4 MONTHLY RECORDS OF CERTIFIED AND UNCERTIFIED FFB RECEIVED SINCE THE LAST AUDIT ............................................ 30 5.5 MONTHLY RECORDS OF CERTIFIED CPO AND PK PRODUCED SINCE THE LAST AUDIT ...................................................... 30 5.6 RECORDS OF CERTIFIED CPO & PK SOLD UNDER GREENPLAM TO BUYERS SINCE THE LAST AUDIT, IF ANY .......................... 30 5.7 RECORDS OF CERTIFIED CPO & PK SOLD UNDER UTZ ETRACE TO BUYERS SINCE THE LAST AUDIT, IF ANY .......................... 30 5.8 NON-CONFORMITIES IDENTIFIED DURING THIS AUDIT .............................................................................................. 30





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5.9 DESCRIPTION OF THE ORGANIZATIONAL MANAGEMENT SYSTEMS............................................................................... 31 5.10 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ................................. 31

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ........... 32

6.1 DATE OF NEXT ASA ......................................................................................................................................... 32 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ........................................................................................................ 32 6.3 SIGNING BY THE CLIENT .................................................................................................................................... 32 6.4 SIGNING BY THE LEAD AUDITOR ......................................................................................................................... 32 6.5 SIGNING BY THE CERTIFIER ................................................................................................................................ 32

PART 7: APPENDICIES ........................................................................................................................ 33

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT ............................................................................................. 33 APPENDIX 2: LIST OF ABBREVIATIONS ............................................................................................................................. 34





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PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details

Company Name: Kuala Lumpur Kepong Berhad

Business Address: 1, Jalan S. P. Seenivasagam, 30000 Ipoh, Perak.

Contact Person: Kuala Lumpur Kepong Berhad

Office Telephone: Mr Sin Chuan Eng

E-Mail: +6052417844

Web Site: +6052535018

Other Certifications Held: [email protected]

1.2 RSPO Membership & Certification Details

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

Registered Client Name: Kuala Lumpur Kepong Berhad

Certificate Number: C827183U-RSPO-01.2013

Start Date Of Certificate: 19th November 2013

End Date Of Certificate: 18th November 2018

Date Of Original Certification: 19th November 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 Assessment Details

Dates Of This Audit: 21st – 23rd January 2013

Audit Number: Main Assessment (1)

1.4 Assessment Type

This RSPO Principles &Criteria main assessment covers the palm oil mill, KLK Tanjong Malim and its supply base. The supply base for this assessment is coming from 5 estates, named Changkat Asa Estate, Kerling Estate, Sungai Gapi Estate, Bukit Kartho Estate, and Kampar Estate as described below.

1.5 Location of the Palm Oil Mill

Name Palm Oil Mill

Mill Capacity

Location GPS Reference

(POM) MT/Hour Address Longitude Latitude

Tanjong Malim POM 20 Beg Berkunci No 3, 35909 Tanjong Malim, Perak

E 101°29.145" N 3° 41.700"

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 2012/13(MT)

Projected 12 Months (MT) Forecast Certified in this Report

FFB CPO PK FFB CPO PK FFB CPO PK

- - - - - - 77,000 25,200 6,000

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1.7 General Description of Supply Base The company owns Tanjong Malim POM and its 5 supply bases. However, the company is also receiving FFB from non-associated independent smallholders. See table 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

OPP1 Changkat Asa Estate Ladang Changkat Asa, 35900 Hulu Bernam, Selangor

E 100° 29’ 34.7” N 3° 41’ 3.0” 1,278 1,278

OPP2 Kerling Estate Ladang Kerling, Peti Surat 202, 44109 Kerling, Selangor

E 101° 20' 24" N 3° 20' 23.99" 221 221

OPP3 Sungai Gapi Estate KM 62, Jalan KL-Ipoh, 44100 Kuala Kubu Bharu, Selangor

E 101° 36' 35.99" N 3° 34' 11.99" 267 267

OPP4 Bukit Kartho Estate Ladang Bukit Katho, 35500 Bidor, Perak Darul Ridzuan

E 101° 20' 11.58" N 4° 4' 51.491" 482 460

OPP 5 Kampar Estate

90, Jalan Tronoh Mines, 31910 Kampar, Perak

E 101 °6' 0" N 4° 16' 0" 708 708

Total 2,956 2,934

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) OPP1 CHANGKAT ASA ESTATE 33,910 1987-2010 25

OPP2 KERLING ESTATE 5,093 2003-2005 25

OPP3 SG GAPI ESTATE 7,087 1997-2000 25

OPP4 BUKIT KARTHO ESTATE 9,579 1984-2004 25

OPP 5 KAMPAR ESTATE 21,195 1984-2000 25

TOTAL 76,862

1.7.3 Percentage of Planted Oil Palm by different Age Ranges

CU Code Planting years by 5 year ranges (Ha)

Pre 1990 1991~1995 1996~2000 2001~2005 2006~2010 2011~2015 Total (ha)

OPP 1 180 271 451 177 199 0 1278

OPP 2 0 0 0 221 0 0 221

OPP 3 19 0 355 206 0 0 580

OPP 4 77 78 110 44 0 95 404

OPP 5 285 132 134 0 0 157 708

1.7.4 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

5 2 0 0

Explanation as to the selection of estates sampled Total supply bases are per listed above table 1.7.1 is 5, and square root of 5 is 2.

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 There are no associated smallholder or out grower (Not applicable for this audit). However, the mill is accepting crops from independent smallholders. Under SCCS verification, this mill is classified under the Mass Balance (MB) model since it is receiving outside crops.

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





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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 Compliance

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

All subsidiaries, estates and mills are included.

YES

2.3.2 Is the time bound plan challenging? Age of plantations. Location. Mill development. Infrastructure. Compliance with applicable law.

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.

Minor

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

YES





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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 realize the targeted achievement.

YES

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 below.

YES

2.3.6 Have there been any newly acquired subsidiaries?

The company has recently signed an MOU with the seller prior to the official acquisition of 40,000 Ha in Papua New Guinea which is still under due diligence.

YES

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.

YES

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.

YES

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.

YES

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)

Section Requirement Findings and any action required

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 as containing High Conservation Values (HCVs).

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

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.

2.4.3 Any new plantings since January 1st 2010 must comply with the RSPO

No new planting reported for existing units. However, the newly acquired lands will adhere to the NPP procedures when it is ready.





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New Plantings Procedure.

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

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





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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


Kuala Pertang POM

Kuala Krai, Kelantan, Malaysia

Kerilla Estate Pasir Gajah Estate Sg Sokor Estate

By 2013 Pending

Changkat Chermin POM

Manjung. Perak, Malaysia

Lekir Estate Changkat Chermin Estate Raja Hitam Estate Glenealy Estate Serapoh Estate Kuala Kangsar Estate Allagar Estate

By 2012


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,

Pang Burong Estate Sri Kunak Estate

March 2009 Certified





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Malaysia Tundong Estate Ringlet Estate

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.

2.6 Partial Certification Audit Agenda

Date Location Agenda

22/1/13 Changkat Asa Estate

Partial audit





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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: Haeruddin

Team member 2: Mohd Rizal Kassim

Team member 3: Jamal

Team member 4: Mahaswaran

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.

Member of CUC RSPO audit team since November 2010. Involved in audits conducted in Malaysia and Indonesia since November 2010 in 10 different companies in Malaysia and Indonesia.

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. Yes.

General knowledge of:

RSPO P&C standards. Yes

CUC organizational structure. Yes

CUC quality systems. Yes

Lead auditor role. Yes

Report writing. Yes

Stakeholder consultation. Yes

Certification decision process. Yes

RSPO SCCS program manual. Yes





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CUC filing systems. Yes

Correct use of RSPO trademarks. Yes

History and objectives of RSPO. Yes

CV available. Yes

Completion of CUC RSPO lead auditor training. Completed & Passed RSPO Lead Auditor training in 2011

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

Fluent in main local languages and English.

Mohd Rizal Kassim Fluent in Local languages and English

Mahaswaran Fluent in Local languages and English

Jamal Fluent in Local languages and English

Haeruddin Fluent in Local languages and English

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

Mohd Rizal Kassim Experience in forestry and manufacturing company

Haeruddin Workers welfare issues and social auditing experience. Environmental and ecological auditing

Mahaswaran Master in Business Administration, environment and OHSAS auditor. Working experience in manufacturing firm.

Jamal Involved in RSPO auditing since November 2010. Auditing experience in GMP and Globalgap.

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

Jamal Involved in RSPO auditing since November 2010. Auditing experience in GMP and Global gap.

Haeruddin Workers welfare issues and social auditing experience. Environmental and ecological auditing.


Mohd Rizal Kassim Have safety background. Training in Chemical handling.

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

Jamal Involved in RSPO auditing since November 2010. Auditing experience in GMP and Global gap.

Haeruddin Environmental and ecological auditing.

Mohd Rizal Experience as Safety officer in Malaysia manufacturing firm


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

Simon Selvaraj Completed SA800 course







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



Economic issues. Mahaswaran Master in Business Administration, environment and OHSAS auditor. Working experience in manufacturing firm.

Jamal Involve in RSPO auditing since November 2010. Auditing experience in GMP and Global gap

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 ongoing 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 labor. 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. The Palm Oil Mill audit verification included the following activities:

Mill and workshop inspections. Documentation review & 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.

3.3.2 Assessment agenda for this Audit

Date Location Main activities

21/1/13 Tanjung Malim

Rubber Factory

09.00am-Opening Meeting

Opening meeting. Introduction by team leader. Introduction of team





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members and assessment agenda. Presentation by Estate and Palm oil mill

Tanjung Malim POM 10.00 am-Plant & Field Operation(Haeruddin, Rizal, Mahas & Jamal)

Workers interviews

Chemical Stores

Workshops

Housing

Medical

School

Local Communities

Environmental

Document Review Mill SCCS verification audit-Simon

Previous 12 Months FFB received, processed (Production) & CPO

Sold. PK produced, Sold. (Uncertified)

Chosen SCCS module and model and its procedures.

Verification of other procedures if any.

22/1/13 Stakeholder Consultation at Rubber Factory

09.00am - Open stakeholder meeting. Simon & Rizal Capture any issues rose during the open stakeholder meeting. After Meeting, discussion with KLK Management.

Changkat Asa Estate Environmental audit ( Field visit & Document review) 09.30am – Jamal, Mahas & Haeruddin - P&C

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools. Local communities.

14.00pm- till end Partial Audit- Simon

23/1/13 Kerling Estate

09.00am- Haeruddin & Simon

Environmental audit ( Field visit & Document review)

09.00am – Asidatorn , Mahas, Rizal - P&C

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.

Local communities.

Environmental.

Document review

24/1/13 Tanjung Malim Rubber Factory

08.00am - Preparation for closing meeting. (All Auditor) 11.00am Closing meeting. Chaired by the assessment team leader.

Welcome and introduction by the team leader.

Presentation of findings by the assessment team.

Questions and answers.

Final summary by team leader

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





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PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification

The mill and supply bases are as per the above table 1.5 and 1.7 and were assessed in the field, offices, facilities, stores and document reviews were 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, committee and members of workers’ union took place in both formal and informal environments and worker interviews were conducted in both estates and in the mill. Subsequent to the stakeholders’ meeting which was conducted without the presence of the management staffs, the surrounding communities were visited so as to capture more feedback from the stakeholders. The stakeholders meeting feedback indicated two negative feedbacks and in fact more positive comments were received. The details are as per table 4.5, below. There were no complaints received during the field assessments and during interviews 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 nor from the public announcement in the RSPO website. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance as all the necessary procedures are in place. Since there is no production as certified products, more verification will be carried out during the 1st surveillance audit. However, some major and minor NC was found on this assessment. Detail NC as per table 4.4.1 below.

With full commitment towards RSPO P&C and RSPO SCCS implementation and compliance towards rules of partial certification and successful closure of major non-compliance, it is therefore the recommendation of the lead assessor: To award a certificate of compliance. Signed:

Name: Simon Selvaraj Date: 12/5/2013

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.

Principle 1: Commitment to Transparency

Criterion by Audit

Summary

With all the publicly available documents and maintaining of the request and response log book, it is very clear to the audit team that the company implements transparency with a non-conformity in negotiation procedure in 1.2.

MA 1.1 All records of meetings, requests for information and responses are maintained as per stakeholder consultation log book/requests and response log book. Each book also contains an example of how to handle and record a request.





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MA 1.2 No restriction as to the documents that are publicly available with the

exception of confidential commercial information. Publicly available

documents are Land Titles/user rights, Plans and impact assessments relating

to environmental and social impacts, Pollution prevention plans, Details of

complaints or grievances, Continuous improvement plans. However, the

company fails to provide evidence the negotiation procedure even though

there are no disputes reported so far. This was raised as Major NC.

Principle 2: Compliance with Applicable Laws and Regulations

Criterion by Audit

Summary All related laws and regulations were recognized and complied by the company. However, the facility missed to track a permit and expired which lead to Major non-conformance in 2.1.

MA 2.1 RSPO “Applicable Laws and Regulations”. No evidence of non-compliance to all laws and regulations. i.e. OSHA regulation 1994 (Act 514), Factories regulation (Act 139), National land code (Act 1965), Environmental Quality Act, Pesticide Act, Industrial relation Act, Solid waste management, Employment Act 1955 (act 265), workers Minimum Standard of Housing and Amenities Act 1990, Workmen compensation Act 1952, Trade Union Act 1959, Land Acquisition, Children and young person (Employment) Act 1966, Employee Social security Act, Estate Hospital Assistant )Registration) Act 1965, Immigration Act 1959/63 (Act 155), land conservation Act 1960, MPOB Act, Petroleum (Safety Measures) Act 1984, Police Act 1952 to appoint Auxiliary Police, Protection of wild life Act 1987, Road Transport Act 1987, Building Act 1974, Wages council Act 1947, Water Act 1929 to protect waterways; 26 permits and licenses are there for mills. MDC Publishers Sdn Bhd sends out periodical revisions on laws. Beside this Head Office will track any changes in law and keep all estates informed by internal circular and memorandums. Despite having the tracking system in place, a permit to purchase, store and usage of Sodium Hydroxide was found to be expired and this was raised as a Major NC.

MA 2.2 Land titles inspected for all the estates and the mills. Boundary stones and markers checked and verified in the field. Copies of land titles are held on file. All land use entitlements were checked and found to be complying with the term. i.e “The said land is demised herein expressly and only for the purpose of cultivation of oil palm and/or an agricultural crop of economic value”. And “Special terms and conditions: The said land is expressly and only for the Palm Oil Mills”. The GPS maps clearly identify the boundary stones and the boundary stones and markers were physically verified.

MA 2.3 Not applicable because there were no customary rights issues raised by the by internal and external stakeholders during the open stakeholder meeting and during the visit to surrounding communities.

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 as described in annual budgets covering FFB and CPO Production, OER, KER, Projected cost and covering vehicles maintenance, Human Resources, etc. Annual replanting included in annual budget for 10 years programme which also includes size of hectarage, yield projection, and annual reviews.

MA 3.1 The audit team sighted the financial planning with a 5-year projection cycle. Area of mature and immature crops. Mt/ha yield of FFB. Five years replanting plan is available.

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

Criterion by Audit

Summary The company has implemented the best practices in their operations. Full SOP system are in used and practiced. Monitoring of fertilizer and agrochemical is





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based on soil and tissue sampling. Safety and health is implemented in all operations however, during the assessment it is found that there are some area need to be given immediate attention as these has led to raise two Major NC in 4.4 and 4.7.

MA 4.1 Group Policy for all estates exist. Agricultural Oil Palm. Issued to the estates on 20th August 2007. It covers all best practices. Updates are circulated and then included in the file and implemented. 40 SOP’s covering all aspects of plantation management. Mills: SOP’s for mills are the same. 13 operations stages from FFB reception on weighbridge to CPO dispatch.

MA 4.2 Oil palm Manuring recommendations 2010/2011 by Applied Agricultural Resources. The recommendations are followed and records maintained by field and date of application. Annual soil and leaf sampling carried out to analyse and determine the soil and palm nutrient level. Based on these result and field visit by the Agronomist, final fertilizer recommendation is made. Zero burn policy. EFB application is carried out in accordance with the recommendations of the agricultural research department. Dry decanter Cake is used as soil conditioner. Actual BOD level is 132mg/L and allowable standard is 1000mg/L . Ground water quality is monitored and BOD is 15mg/L.

MA 4.3 Soil maps show soil types. And SOP 9 covers Erosion control. This details the actions to take to control erosion. However, this is not practiced to minimise soil erosion along riparian zones and non-conformity raised combining 4.4.1 indicator. Planting of mucuna is practised, frond staking to stop surface run off, flat and accessible area is maintained with grass cutting at harvesting path and road side, no blanket spray, only selective and circle spray and treated with the right choice of chemicals.

MA 4.4 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 buffer zone is then implemented i.e. no fertilizer applications and spraying of agrochemicals within riparian zones. However, it was also found that one of the estates does not implement this resulting in soil erosion along the river bank and the there is no marking or sign board pertaining to this riparian zone. This has been linked to 4.3.5 and raised as a Major NC. Another Major NC was raised under 4.4.3 for monitoring of outgoing water where, the estate does not carry out any water analysis at the stream to monitor its activities impact. Water usage monitoring records are in place in the mill which shows that the average use of 1.22 tonnes of water per tonne of FFB processed. There is a generic water management plan covering water source, construction of reservoir and water quality analysis, Protection of water courses and wetlands. Monitoring of water quality and usage. Piped water supply and emergency response plan available for mitigate any drought.

MA 4.5 Integrated pest management and pest and disease control. Cultural control. Chipping and pulverizing of felled palm trees at the time of re-planting. Types of census are use of biological control, chemical control, and manual control and at damage census –threshold 5%, barn owl occupancy census, rhinoceros beetle census at replanting area and immature field. Census result is mapped or tabled and documented. Pre and post treatment census to determine the effectiveness of the action taken. Monitoring the occupancy rate 59%. Identification. Treatment. Evaluation and record keeping. Throughout all





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estates the use of beneficial plants such as Tunera subulata, Cassia cobanensis, Antigonon spp. are very evident. Replant sites are restructured to allow enough light for these plants. Leguminous cover crops are also well-established to suppress growth of noxious weeds. SOP 3 covers all the documented IPM for major pest, use of biological control, cultural control, surveillance, evaluation, record keeping, Tunera is extensively planted. Barn owl boxes erected at the rate of 1/10ha.

MA 4.6 Chemical stores at all estates and mills were inspected and found to be in compliance with requirements. Well ventilated. Locked. MSDS leaflets. First aid kits. Warning notices. Pre-mixing takes place in bunded areas with shower facilities. Inspection of records, interviews with the workers and medical staff confirmed that annual checkups take place by registered OSH medical practitioner. Female workers are accompanied by female nurse and pregnant and breast feeding women are assigned to other work not involving agrochemicals. All workers are given PPEs by the company and confirmed by workers during interview with them in the field.

MA 4.7 OSH Plan, which includes a training program, however, there is no evidence of training records for the responsible person for chemical store to support the training program plan. This has been raised as a Major NC. All occupational hazards and risks have been assessed and identified. Guidelines on accident and emergency procedures are in place. Accident records are analyzed by the Safety executive on site and target set is zero. Accidents details reported to DOSH periodically. Safety measures explained to workers and included in all training. Also displayed on muster grounds. Interviews with workers confirmed knowledge of the plans and procedures and first aid training records were inspected and also confirmed by interview. Safe working environments observed in mills and places of work. Accident insurance covers any accidents during travelling to work and during work related accidents. Firefighting team available in estate and mills. Internal safety executive and external trainers provide training. Another separate risk assessment HIRARC conducted by the OSH department for all the operation chemical handling, workshop, field operation and other general work. Rating is given as low, medium or high. When the risk is high, preventive measures is developed to address the risk.

MA 4.8 Annual training program for all workers are there. Regular assessments take place to ensure all workers are up to date with training. Section 10 of the KLK-RSPO master copy gives details of all training required for operatives. This is laid out by month. Training program includes safe handling of chemical, first aid etc., except on non-conformity raised on 4.7.1. Training for spraying, driver, harvesting and save handling of chemicals record is in place. Mill training covers all the work stations.

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

Criterion by Audit

Summary

While the EIA has been carried out in the mill and estates, it was not comprehensive in the sense that not all impacts were identified and stakeholder input was limited. HCV areas and ERT were also not properly identified and as a result proper management plans cannot be put in place. Waste identification is also incomplete. Two Minor NC’s in 5.1, 5.3 & 5.6 and 1 Major NC in 5.2 was raised.

MA 5.1 Environment impact assessment and pollution prevention plans are available.

All processes and activities that may pollute are identified with the potential

hazard. The level of risk is assessed and then a plan is prepared with target

date, persons responsible and status. However, the EIA is limited for

example the hazards description: water pollution is mentioned in relation to





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the workshop, but it is not clear whether it relates to oil, chemical,

pesticides or other sources of pollution or such as human activities that

cause water and air pollution, and how such pollution occurs? (The root-

cause is not clearly detected). In most cases the landfill is not included.

When interviewing the staff, it is clear that there is far more information

available than presented in the EIA.

In general the format is not made specific enough for each site and misses

details on where, what, when, how, why and who. Thus, a Minor NC is

raised.

MA 5.2 No such complete identification and assessment is present. The company did identify HCV informally and a SOP is in place, but this was not done with the involvement of stakeholders and according to the national interpretation of HCV as described in the company’s SOP. No clear maps are available on which management decision can be taken. No information on presence of ERT in the area. There are limited management plans and monitoring activities (not consulted with stakeholders). Also not clear whether there are ERT’s in the estate and whether the present HCV overview is complete. Therefore, a Major NC is raised.

MA 5.3 The mill has a documented waste products, however, some of the estates do not have list of waste generated with source of pollutant is not completely covering all aspect in the estates. This was raised as Minor NC in 5.3.1. Schedule wastes are found to be stored together with other general items. Thus, a Minor NC is raised in 5.3.2.

MA 5.4 The use of both renewable and non-renewable energy in the mill is monitored on a monthly basis. Renewable energy is supplied by fibre and shell to the boiler for power generation. Fossil fuel use is clearly monitored for the gen-set in the mill and the estates.

MA 5.5 Company is observing the ASEAN guidelines by implementing a zero burning policy. No burning was identified during the audit. The company has adopted techniques such as felling and chipping for it’s replanting program.

MA 5.6 The assessment of polluting activities has been conducted and this has been incorporated in it’s EIA, covering the environmental aspects and impact in every activity/area, and how the cases are being categorised (normal, abnormal and emergencies) and how they measure the consequences, adequacy of existing control, determine the level and priority of risk, and the legal implications. However, plans to reduce the pollution and emission is not complete in both the mill and estates. This is raised as Minor NC.

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

Criterion by Audit

Summary

The SOP on procedures to deal with complaints and grievances is available and implemented. The policy for equal opportunities is clearly stated and this was confirmed during the audit through field interviews. However, there are still some minor non-conformance identified in 6.5, 6.9 & 6.11.

MA 6.1 All social impacts from the estates/mill operations have been identified through extensive consultation with relevant stakeholders and mitigation measures have been determined. These have been incorporated into the appropriate action plans to be executed by designated personnel within a specified timeframe.

MA 6.2 Field interviews and document reviews have confirmed that communications





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and relationships between the operating units and stakeholders are good.

MA 6.3 Documented evidence was inspected. Confirmation by interview with workers and stakeholders that the system is accepted and action taken in timely manner.

MA 6.4 No negotiations concerning compensation for loss of legal or customary rights were carried out, as there were no customary rights that were identified.

MA 6.5 Salary is documented under monthly check roll pay slip system. Workers are given pay slip and this is acknowledged by signing it upon receipt. There is a permit to carry out deductions. All terms and conditions of contract (whether Malaysian or foreign workers) are recorded under Labor Registration Cards. Direct contract of employment is evident and interview with workers confirm that they understand what is in the contract. Two rooms housing complete with kitchen and toilet is being provided. Clean water supply is available but in some operating units inadequate water supply was raised (see below for NC). Internal clinic available for free medical treatment. External doctor visits the operating units. The company, i.e., kindergarten, provides educational facility and the government provides the primary school for the workers children. The company subsidizes Bus/transportation. During the interview with workers, issues related to inadequate water

supply were raised. Water issue needs immediate attention. Water analysis

for drinking water is not completed as well. A minor NC raised under 6.5.3.

MA 6.6 Meetings with labour union and worker representative were carried out. Minutes of meeting with worker representatives are recorded. Besides labour union meetings, meeting with worker representatives is carried out through various committees (e.g.: OSH Committee and Sexual Harassment Committee).

MA 6.7 All policies state minimum age requirement of 16. Reference to Child Employment Policy of the company. No observation of under-aged persons working in the fields and Labour Registration Cards inspected. Interview with stakeholders and labour union confirm that there is no child labour. Child Labour Policy is in place.

MA 6.8 Policy displayed in office and muster ground. Wage records inspected and

rates confirmed as being the same for male, female workers and migrant

workers.

Equal opportunities policy publicly displayed in the office and at line-sites.

Employees are aware of this policy.

MA 6.9 Sexual harassment policy is publicly displayed in office and at linesite. Policy

also documented under SOP 40. However, the policy does not indicate the

reproductive rights. Thus, a Minor NC was raised.

Worker interviews confirmed that no sexual harassment takes place. All female employees have direct access to the gender committee which handles all sexual harassment issues. Gender committee formed by the female staff and workers.

MA 6.10 Head Office using a formula that is based on OER and cost of production does all the calculations for FFB price. Procedures of FFB price calculation are evident. The prices are displayed on the notice board at the palm oil mill. Contractual agreements include contractor’s details, pricing, terms and condition for work and payment, which are done through HQ. Interview with suppliers during stakeholder consultation confirmed that they understand the procedure. All payments are made in a timely manner. Payments are made by





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head office in the first week of every month.

MA 6.11 Contribution through Head Office and internally by the operating units. The operating units contribute to local development without a consultative method, which is not evident to the sum contributed. Therefore, a Minor NC is raised. Assistance given to schools and community are by providing the transport, permission to use the estate facilities and in the form of donations. Donations are given to worship places/temples. Since most of the operating units are located in the vicinity of township, most of the communities have access to government roads and facilities.

Principle 7: Responsible Development of New Plantings

Criterion by Audit

Summary

Not applicable as there is no new plantings were carried out to any of the

supply bases listed above. Above table on planting age denotes re-planting.

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

Criterion by Audit

Summary

The audit team found evidence in the field, document checks and interviews with stakeholders that estates and the mill are proactive and firmly committed to continuous improvement in the areas of social, environment and economic viablility.

MA 8.1 Continuous improvement program covers the following:

Maximizing recycling and minimize waste by re-using the used herbicide containers for mixing herbicides. Recycling was introduced to the workers to recycle domestic waste.

Social improvement includes the new housing facility.

Implementation of safety and health measures are enhanced with training and collection of information through internal feedback system to identify training needs. Internal audits by safety executive and RSPO team to ensure continuous improvement and compliance to RSPO P&C.

4.3 Non-conformity Raised During this Audit and Any from the Previous Year, if applicable This section gives an over view of new or revised non-conformities raised during this audit and of action taken to close out non-conformities raised during the previous audits, if applicable

If a minor-non-conformity raised at the last audit, is not closed out, then this will be raised to Major status and the company given 60 days to close this out.

The NC number is comprised of 2 parts to include the year in which the NC was raised as well as a sequential number.

4.4.1 Non-Conformities Identified during this Audit The following NC’s were raised for this audit.

NON CONFORMITY REPORT

NC number: 01/2013

Client name: KLK Tanjong Malim Complex

Date raised: 21-23 Jan 2013

Major or Minor: Major (CLOSED)

Raised by: Simon Selvaraj

Aspect of standard: Criterion: 1.2.6 Negotiation procedures





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Evidence of non-conformity:

Company have a SOP no: 3.0 for land acquisition mention for disputed issue should be consulting by negotiation procedure. However, company fail to provide evidence the procedure event no disputed reported so far Auditors signature:

Date: 23/01/2013

Proposed corrective action / improvement action by company. The company will look into this matter and discuss with top management will revise the said document accordingly. Timeline for conformance: Since this is a main assessment, the time line agreed is 4 months, (120days).

Review of corrective /improvement action: The negotiation procedure has been revised and has been linked with SOP 1 & 3 which will be used if there are any situation arises. This Major NC is CLOSED. Assessors signature:

Date: 10/5/2013


NC number: 02/2013





Aspect of standard: 2.1.1 Evidence of compliance with relevant legal Indicators.


Permit to purchase, store and use of Sodium Hydroxide date 05/10/2004 [register # BC389/2004], there is no evidence can

be demonstrated for the renewed license.

Auditors signature:

Date: 23/01/2013

Proposed corrective action / improvement action by company.

Timeline for conformance: Since this is a main assessment, the time line agreed is 4 months, (120days).

Review of corrective /improvement action:

The license is renewed and shown. The Major NC is CLOSED.

Assessors signature:

Date: 10/5/2013





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NC number: 03/2013





Aspect of standard: 4.4.1 and 4.3.5

Protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones along all

bodies of water at or before replanting. And;

Documented evidence of practices minimizing soil erosion and degradation (including maps).

Evidence of non-conformity: -

Stream is not observed for soil erosion practice where major erosion is cited along the stream banks. Furthermore, the riparian zone is not marked along the stream or sign board pertaining to this riparian zone. This has been linked to 4.3.5 and raised as 1 Major NC.

Auditors signature:

Date: 23/01/2013

Proposed corrective action / improvement action by company. Timeline for conformance: Since this is a main assessment, the time line agreed is 4 months, (120days).

Review of corrective /improvement action: The riparian zones are marked and sign boards have been erected. In maps, these locations are marked. The effectiveness

of this maintenance will be followed up at the next surveillance audit. Since the map, marking and sign boards have been

erected / completed, the Major NC is CLOSED.


Date: 10/5/2013


NC number: 04/2013





Aspect of standard : 4.4.3

Outgoing water into main natural waterways should be monitored at a frequency that reflects the estates and mills current

activities which may have negative impacts (Cross reference to 5.1 and 8.1).


The estate does not carried out any water analysis for incoming and outgoing of the stream. Which necessary to monitor

the estate activity.

Auditors signature:

Date: 23/01/2013





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The estate has identified the upstream and downstream points in the map and subsequently carried out the water analysis

and produced the result. Therefore, the Major NC is CLOSED.


Date: 10/5/2013


NC number: 05/2013

Client name: Tanjung Malim Complex


Major or Minor: Major


Aspect of standard: 4.7.1 (c)

An awareness and training program which includes the following specifics for pesticides.

Evidence of non-conformity: - Seen no evidence of training records for employees responsible for the chemical store. Auditors signature:

Date: 23/01/2013


Review of corrective /improvement action: The company has conducted an overall training once again to all workers involved in pesticide operations and specifically carried out the training for the storekeeper with a short test to evaluate the awareness. With this, the Major NC is CLOSED. Assessors signature:

Date: 10/5/2013


NC number: 06/2013





Aspect of standard: 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.





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No such complete identification and assessment is present. The Company identifies HCV informally and SOP is in place but

this was not done with involvement of stakeholder and according national interpretation of HCV as describe in company

SOP. No Clear map is available on which management decision can be taken. No information on present ERT in area.

There are limited management plan and monitoring activities also not clear whether there are ERTs in the estate and

whether the present HCV overview is complete.

Auditors signature:

Date: 23/01/2013




The assessment records show that people have been consulted, and research of potential HCV area within, and monitoring

record of HCV habitats. Final conclusion of the report is that, there is no ERT present within the estate. The assessment

carried out is evident and therefore this Major NC is closed.


Date: 10/5/2013


NC number: 07/2013

Client name: Tanjong Malim Complex




Aspect of standard: 6.1

Aspects of plantation and mill management 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.


Stakeholder meeting has been done to get input from the stakeholder. However, social impact assessment to identify any

social impact and to mitigate the social impact is not available.

Auditors signature:

Date: 23/01/2013


Review of corrective /improvement action: The impact identified was communicated to the relevant affected parties and consultative mitigation were discussed and documented. Since, the impact is being identified and recorded for mitigation measures, therefore, the Major NC is CLOSED.





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Date: 10/5/2013


NC number: 08/2013



Major or Minor: Minor


Aspect of standard: 5.1.1

Documented aspects and impacts risk assessment that is periodically reviewed and updated.

Evidence of non-conformity: -

The EIA is limited, for example the hazards description: water pollution is mentioned in relation to the workshop, but it is not

clear whether it relates to oil, chemicals, pesticides or other sources of pollution. Or human activities cause the water and air

pollution, but how it is not specified (The root-cause is not clearly identified). In most cases the landfill is not included. When

interviewing the staff, it is clear that there is far more information available than presented in the EIA.

In general the KLK format is not made specific enough for each site and misses the details on where, what, when, how, why

and who.

Auditors signature:

Date: 23/01/2013

Proposed corrective action / improvement action by company. Timeline for conformance: Next annual surveillance audit.


NC number: 09/2013





Aspect of standard: 5.3.1 Documented identification of all waste products and sources of pollution

Evidence of non-conformity: It was found that, the list of waste generated with source of pollution, does not completely cover all aspects in the estates.

Auditors signature:

Date: 23/01/2013






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NC number: 10/2013






Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce

pollution.

Evidence of non-conformity: Schedule wastes are found to be stored together with other general items.

Auditors signature:

Date: 23/01/2013



NC number: 11/2013





Aspect of standard: 5..6.1 Documented plans to mitigate all polluting activities (Cross ref to C5.1.)

Evidence of non-conformity: The assessment of polluting activities has conducted which incorporated in EIA, covering the environmental aspects and impact in actifity/area, how the case is happened (normal, abnormal and emergencies) the measures of consequences, adequaty of existing control, determine level and priority of risk, and legal implication. However, plan to reduce the pollution and emission is not complete in both of mill and estates.

Date: 23/01/2013



NC number: 12/2013






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 (Act 446) or above, where no such public facilities are

available or accessible.


Workers have been using water directly from the river without proper treatment at their houses. No evidence to show that,





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the estate has carried out tests on the water to identify, if the water is safe to use/consume.

Date: 23/01/2013


NC number: 13/2013





Aspect of standard: 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.


The policy to prevent sexual harassment and all other forms of violence against women are evidenced but the policy does

not indicate on the reproductive rights.

Date: 23/01/2013


NC number: 14/2013





Aspect of standard: 6.11.1 Demonstrable contributions to local development that are based on the results of consultation with local communities.


Management is allocating contribution to neighboring societies; however, there is no evidence of consultation is made against the sum being contributed.

Date: 23/01/2013

4.4.2 Observations Raised During this Audit

Non noted during this audit

4.4.3 Non-Conformity Identified during the last ASA

Not applicable as this is the Main Assessment

4.4 Issues that were raised during the Stakeholder Consultation, if any Stakeholders were either informed by the client or by Control Union via the RSPO website.

For Main Assessments, a 30 day Stakeholder consultation announcement is published on the RSPO website prior to the

audit. The same announcement is circulated by the client prior to the audit

For subsequent Annual Assessments, it is based on stakeholders reading the approved public summary reports available

on the RSPO website, the client’s procedures in receiving on-going feedback or if feedback was sent directly to Control





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Union prior to an audit or thorough RSPO complaints procedures.

During each assessment, the audit team will review the company’s implemented procedures in receiving feedback and will

execute field visits and interviews. Not limited to the following questions, any feedback received is reviewed and

summarized in this summary report for either Part 2 – Partial Certification or Part 4 – Assessment Findings above or noted

below, if applicable:

1. Do you have any remarks on the RSPO standard?

2. What is your relation with the applicant?

3. Are there any plantation or mill management practices that affect you?

4. Do you consider any management is in conflict with the RSPO principles and criteria?

5. Do you have any suggestions for management?

6. Are you aware of any HCV in the plantations or in adjacent land?

7. Are you aware of any endangered or rare species?

8. Are there any adverse (or positive) effects on local communities?

9. Additional comments?

11. Do you have any comments about the assessment team and would you like to meet with them?

12. Do you have any comments for the client’s management of any other plantations?

Subject raised Company response and proposed action to be taken

Audit team findings

Department of Environment -Report about the ammonia smell from the Latex factory.

The company will look into this issue and will address it accordingly.

To be follow up on next audit.

Health Department -Control of disease eg: Dengue mill or Estate fully support to control the disease.

Will continue to do so. Positive comments

Trade Union - Housing project for workers is still not in progress.

The company will speed up the plan and will work with budget planning.

To be follow up on next audit.





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PART 5: RSPO SUPPLY CHAIN CERTIFICATION

The palm mill mentioned in the scope of the audit was audited against the requirements of the following: RSPO Supply Chain Certification Systems. November 2011. RSPO Supply Chain Certification Standard. November 2011.

5.1 POM Included In The Scope Of The Audit

Name Palm Oil Mill

Mill Capacity

Location Supply Chain Model

(POM) MT/Hour Address (IP or SG or MB)

Kilang Kelapa Sawit Tanjung Malim

20 Beg Berkunci No. 3, 35909, Tanjung Malim, Perak

MB

5.2 Confirmation Of The Company’s Summary Of Annual Certified Volume Of RSPO Certified Palm Oil And Palm Kernel Over A Specified Period

Product CPO (MT) PK (MT) Specified 12 month period

CU Code

POM 1 25,200 6,000 Forecasted volumes between 31/1/2013 to 30/1/2014. See also 1.6 above.

5.3 Summary Report Including A Brief Description Of The Scope Of Certification

Tanjong Malim palm oil mill receives FFB from their own supply base and external FFB suppliers. This is processed into CPO and Palm Kernel as a product, using the RSPO SCCS MB model. The mill is able to handle certified products, as all the system procedures are in place. Furthermore, all the workers were trained with the RSPO SCCS requirements. A full RSPO SCCS certification audit was carried out during this main assessment and the findings support the certification decision, based on supply chain model, listed above.

5.4 Monthly Records of Certified and Uncertified FFB Received Since the Last Audit

No MONTH-YEAR Certified Supply Bases (MT), if main, put in the supply letter as per offer

Uncertified Supply Bases (MT), if any Total (MT)

1 N/A since it is Main assessment

5.5 Monthly Records of Certified CPO and PK Produced Since the Last Audit

No MONTH-YEAR Certified CPO (MT) Certified PK Total (MT)


5.6 Records of Certified CPO & PK Sold under GreenPlam to Buyers since the Last Audit, if Any

No Buyers Name Green Palm Trading No Certified CPO

(MT) Sold Certified PK (MT) Sold


5.7 Records of Certified CPO & PK Sold under UTZ eTrace to Buyers since the Last Audit, if Any

No Buyers Name UTZ eTrace Trading No Certified CPO

(MT) Sold Certified PK (MT) Sold


5.8 Non-Conformities Identified during this Audit

Timeline for compliance: 1. All non-conformances observed during an audit shall be classified as ‘major’ since all requirements for

Supply Chain certification have to be met before granting certification. 2. For Main Assessments, all non-conformances shall be addressed satisfactorily by the operation before

certification may be granted by the certification body. If non-conformances are not addressed within three





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(3) months of the audit, a full re-audit shall be required. The certification body shall assess the effectiveness of the corrective and/or preventive actions taken before closing out the non-conformances.

3. For Annual Surveillance Assessments, non-conformances raised after the certification are serious (i.e. must be considered as a major) and the integrity of the RSPO Supply Chain Certification is at risk. A maximum of one month is to be given to the certified client to satisfactorily address the non-conformance. The certification body shall assess the effectiveness of the corrective and/or or preventive actions taken. Should the nonconformance not be addressed within the one month maximum timeframe, a suspension or withdrawal of the certificate and a full re-audit may be necessary.

4. If no non-conformances are observed at an audit or when the corrective action plan has satisfactorily addressed raised non-conformance(s), the client shall be recommended for (re-) certification.

Non-were raised during this audit.

5.9 Description of the Organizational Management Systems

Including organizations, management and operational systems to ensure compliance with the RSPO Supply Chain Certification Systems and Standards as detailed above

It is the responsibility of the department heads to ensure that they and their subordinates comply with the requirements and procedures stated in SOP manual. It is their responsibility to maintain records that will allow verification of the RSPO status of the material. The MR is having the overall responsibility for and authority over the implementation of the requirements and compliance with all applicable requirements. He is having the full understanding and awareness of supply chain certification system and the facilities procedures for the implementation of the standard.

5.10 Final Certification decision by Control Union for the RSPO SCCS Audit of the POM

Recommendations made: Yes

Summary of non-compliances:

No non-compliance found.

Certification status of client: The POM included in the scope of this audit demonstrated full compliance with the RSPO SCCS. With effect from the certification date given in the RSPOPC certificate, this POM mentioned in the scope of this report is considered to be certified in accordance with the RSPO SCCS.





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PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

6.1 Date of next ASA

The provisional date for the next ASA is: Between 9 -12 months from the certification decision date.

6.2 Date for Closure of Non-Conformities

See sections above for details of NC’s, if any

All major NCs to be closed by: All Major raised is closed

All minor NCs to be closed by: Before next surveillance audit

6.3 Signing by the Client

I the undersigned, being the most senior relevant management representative of the operation seeking or holding certification, agree with the contents and audit findings as presented in this document. I also confirm:

Acceptance of liability in execution of the instructions given.

That this company was made aware that the findings of the audit team are tentative; pending review and decision making by the duly designated representatives of Control Union Certifications.

That during the closing meeting all agenda items was covered by the Lead Auditor.

Acknowledged by:

Name: Mr. Sin Chuan Eng

Position: Head of Sustainability (Plantations)

Date: 20/5/2013 Signature

6.4 Signing by the Lead Auditor

I the undersigned, being the Lead Auditor, confirm that this report is an accurate record of the findings and of the closing meeting. I further confirm that the summary of the findings as presented in this report are a true representation of the actual findings of the audit team.

Acknowledged by:

Name: Simon Selvaraj

Position: Lead Auditor


6.5 Signing by the Certifier

I the undersigned, being the Certifier, confirm that the information and conclusions included in this report have been prepared in good faith and that the certification decision has been based upon this information.

Acknowledged by:

Name: Hari Naveen Christopher

Position: Certifier






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PART 7: APPENDICIES

Appendix 1: Location Map for this Certification Unit

From 1.9, the location map(s)





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Appendix 2: List of Abbreviations

BRC British Retail Consortium

CHRA Chemical Health Risk Assessment

CoC Chain of Custody

CPO Crude Palm Oil

CSR Corporate Social Responsibility

CU Control Union

CUC Control Union Certifications

DOE Department of Environment

EFB Empty Fruit Bunch

EIA Environment Impact Assessment

ERT Endangered Rare or Threatened species

EU European Union

FFB Fresh Fruit Bunch

FSC Forest Stewardship Council

FSC COC Forest Stewardship Council Chain of Custody

FSC FM Forest Stewardship Council Forest Management

GGL Green Gold Label

GMP Good Manufacturing Practice

GOTS Global Organic Textile Standard

GTP Good Trading Practice

GPS Global Positioning System

HACCP Hazard Analysis and Critical Control Point

HCV High Conservation Value

HCVF High Conservation Value Forest

IPM Integrated Pest Management

JAS Japanese Agricultural Standard

MDC MDC Publishers Sdn Bhd ( Company Name)

MSDS Material Safety Data Sheet

NC Non Conformity

OE Organic Exchange

OSH Occupational Safety and Health

OSHAS Occupational Safety and Health Assessment Scheme

P&C Principle and Criteria

PEFC Programme for the Endorsement of Forest Certification

PK Palm Kernel

POME Palm Oil Mill Effluent

PPE Personal Protective Equipment

RSPO Roundtable on Sustainable Palm Oil

RSPO NI Roundtable on Sustainable Palm Oil National Interpretation

SA8000 Social Accountability 8000

Sdn Bhd Sendirian Berhad

SIA Social Impact Assessment

SOCSO Social Security Organisation

SOP Standard Operating Procedure

USDA/NOP United States Department of Agriculture – National Organic Program

MT Metric Tonnes

WHO World Health Organization

rspo audit report · main surveillance assessment report report number cu827183...

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