RSPO audit Report · 2014. 11. 2. · RSPOPC-SUM-REPORT.F01 JULY2013 Page 2 of 44. Control Union...

RSPO Principles & Criteria Main Assessment Report

Report Number CU820909

RSPOPC-SUM-REPORT.F01 JULY2013 of 44

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 CHANGKAT CHERMIN 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 Calculation of the Number of Production Units (N) to Sample for the Mill ..................... 6

1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ............. 6 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ........................................................... 6

PART 2: PARTIAL CERTIFICATION ........................................................................................................ 7

2.1 MANAGEMENT STRUCTURE ............................................................................................................... 7 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ................................................................................... 7 2.3 SUMMARY OF THE TIME BOUND PLAN ................................................................................................. 7 2.4 UN-CERTIFIED UNITS OR HOLDINGS .................................................................................................... 8 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ..................................................................... 11

PART 3: AUDIT PROCESS.................................................................................................................... 12

3.1 ABOUT THE CERTIFICATION BODY ..................................................................................................... 12 3.2 AUDIT TEAM ................................................................................................................................. 12

3.2.1 Qualifications of the Lead Auditor ......................................................................................... 12 3.2.2 Qualifications of the Assessment Team ................................................................................. 13

3.3 AUDIT METHODOLOGY.................................................................................................................... 14 3.3.1 General Overview ............................................................................................................ 14 3.3.2 Assessment agenda for this Audit ................................................................................... 15

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 ........................................................................................................................................................ 24 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ........................................................................................................................ 25 Principle 7: Responsible Development of New Plantings ................................................................ 27 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ............................. 27

4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE ......... 28 4.3.1 Non-Conformities Identified during this Audit ...................................................................... 28 4.3.2 Observations Raised During this Audit .................................................................................. 37

4.4 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ......................................... 38

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ................................................................................... 40

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT ..................................................................................... 40 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM

OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ...................................................................................... 40





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5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATION ............................. 40 5.4 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM ................... 40

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ........... 41

6.1 DATE OF NEXT ASA ........................................................................................................................ 41 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ...................................................................................... 41 6.3 SIGNING BY THE CLIENT ................................................................................................................... 41 6.4 SIGNING BY THE LEAD AUDITOR ........................................................................................................ 41 6.5 SIGNING BY THE CERTIFIER ............................................................................................................... 41

PART 7: APPENDICIES ........................................................................................................................ 42

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT .......................................................................... 42 APPENDIX 2: LIST OF ABBREVIATIONS ........................................................................................................... 44





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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: 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: C820909CU-RSPO-01.2013

Start Date Of Certificate: 10th

September, 2013

End Date Of Certificate: 9th

September, 2018

Date Of Original Certification: 10th

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 Assessment Details

Dates Of This Audit: 26th

to 30th

November 2012

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 Changkat Chermin POM

60 Batu 13 ½, 32400 Ayer Tawar, Perak

N 4.288974 E 100.765152

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 2011/12(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 242,303 46,448 9,595

mailto:[email protected]





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1.7 General Description of Supply Base

There are 10 plantations which are owned by the company which supplies FFB to above said mill. The productions of FFB are tabulated as 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 Changkat Chermin Estate

Batu 13 ½, 32400, Ayer Tawar, Perak

N 4.27527 E100.78498 2540 1720

OPP 2 Lekir Estate Batu 12, 32020 Sitiawan, Perak

N 4.12290 E 100.7818 3285 2538

OPP 3 Raja Hitam Estate

Bt 18, Kg Jering, 32400 Ayer Tawar, Perak

N 4.35439 E 100.7799 1545 1545

OPP 4 Glenealy Estate

Jalan Si Putih – Batu Hampar, 32800 Parit, Perak

N 4.45861 E 100.9305 616 557

OPP 5 Allagar Estate Ladang Allagar, 34800 Trong, Perak.

N 4.59934 E 100.7357 805 776

OPP 6 Serapoh Estate

Ladang Serapoh, 32800 Parit, Perak

N 4.52087 E 100.8917 667 651

OPP 7 Kuala Kangsar Estate

Ladang Kuala Kangsar, 33700 Padang Rengas, Perak

N 4.79709 E 100.8677 177 158

OPP 8 Pinji Estate Ladang Pinji, P.O.Box 1027, 30820 Ipoh, Perak

N 4.55194 E 101.0666 465 433

OPP 9 Batu Dua Estate

Ladang Batu Dua, P.O.Box 1027, 30820 Ipoh, Perak

N 4.50194 E 101.0724 101 89

OPP 10 Menglembu Estate

Ladang Menglembu d/k No. 1, Hala Kledang 4, Taman Kledang, 31450 Menglembu, Perak

N 4.62953 E 101.0354 42 42

Total 10,243 8,410

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 Changkat Chermin Estate 45,164 2001-2011 25

OPP 2 Lekir Estate 78,281 1989-2011 25

OPP 3 Raja Hitam Estate 47,115 2002-2007 25

OPP 4 Glenealy Estate 16,489 1984-2012 25

OPP 5 Allagar Estate 17,263 1989-2012 25

OPP 6 Serapoh Estate 17,179 1996-2011 25

OPP 7 Kuala Kangsar Estate 4,377 2002-2006 25

OPP 8 Pinji Estate 12,500 1985-2011 25

OPP 9 Batu Dua Estate 2,675 2000-2010 25

OPP 10 Menglembu Estate 1,260 1999 25

TOTAL 242,303





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1.7.4 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 0 0 0 488 1538 466 2492

OPP 2 329 495 57 1649 298 457 3285

OPP 3 0 0 0 901 645 0 1545

OPP 4 124 100 49 238 46 59 616

OPP 5 36 0 263 239 175 63 776

OPP 6 0 0 199 337 115 16 667

OPP 7 0 0 0 119 58 0 177

OPP 8 29 17 207 140 40 32 465

OPP 9 0 0 43 46 12 0 101

OPP 10 0 0 42 0 0 0 42

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

10 3 0 0

Explanation as to the selection of estates sampled

Total supply bases are per listed above table 1.7.1 is 10, and square root of 10 is 3. However, the totals sampled during this assessment are 6 which contain 3 of larger estate and another 3 of smaller estates. The estates visited are as per the audit plan below.

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

No associated smallholders are attached to the mill.

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

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

All subsidiaries, estates and mills are included.

2.3.2 Is the time bound plan challenging? Age of

plantations. Location. Mill

development. Infrastructure.

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.





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Compliance 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 realize 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?

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.

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 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.





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2.4.3 Any new plantings since January 1

st 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

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





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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


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,

100% independent smallholders, not to be

N/A N/A





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Malaysia included in the scope of the certification

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.





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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: Jan Franse

Team member 2: Mohd Rizal Kassim

Team member 3: Iamsirisanthong Asidhatorn

Team member 4: Mahsawaran

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 and English

Mahaswaran Fluent in Local and English

Iamsirisanthong Asidatorn Fluent in English

Jan-Frans Bastianse Fluent in English

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

Mohd Rizal Kassim Experience in forestry and manufacturing company

Jan-Frans Bastianse 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.

Iamsirisanthong Asidatorn Involved in group audit in organic farming since 2010. Global GAP in 2011 and RSPO in early 2012

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

Iamsirisanthong Asidatorn Involved in group audit in organic farming since 2010. Global GAP in 2011 and RSPO in early 2012

Jan-Frans Bastianse 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).

Iamsirisanthong Asidatorn

Completed OHSAS 18001 training

Jan-Frans Bastianse 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 Complete SA800 course


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





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manufacturing firm.

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.

Iamsirisanthong Asidatorn

Experience in investment and economic issue

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. 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.





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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

26/11/2012 Changkat

Chermin

Estate

08.00am-Opening Meeting

Opening meeting. Introduction by team leader. Introduction of team members and assessment agenda. Presentation by Estate and Palm oil mill

Changkat

Chermin

POM

10.00 am-Plant & Field Operation(Jan-Frans, Rizal, Mahas & Asidatorn

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.

27/11/2012 Changkat Chermin Estate

09.00am - Open stakeholder meeting. Simon & Rizal Capture any issues rose during the open stakeholder meeting. After Meeting, discussion with KLK Management. 09.30am- Jan-Frans ( Other estate on his call, ex: Lekir, Raja Hitam & Glenealy) Environmental audit ( Field visit & Document review) 09.30am – Asidatorn & Mahas - P&C

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.

Local communities.

28/11/2012 Kuala Kangsar Estate

09.00am- Jan Frans & Simon( Other estate on his call, ex: Serapoh, Allagar)

Environmental audit ( Field visit & Document review) 09.00am – Asidatorn , Mahas, Rizal - P&C

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.





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Local communities.

Environmental.

Document review

29/11/2012 Pinji Estate Mahas & Simon

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.

Local communities.

Environmental. Document review

Batu Dua Asidatorn

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.

Local communities.

Environmental. Document review All audit ends at 18.00pm

Mengelembu

Estate

Jan Frans & Rizal

Worker interviews.

Chemical stores.

Workshops.

Housing

Medical.

Schools.

Local communities.

Environmental. Document review

30/11/2012 Pinji Estate 08.00am - Preparation for closing meeting. (All Auditor) 10.0 Am -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: 5 Total number of person days used for the assessment on site: 25





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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 1.2 and 1.3 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 no negative feedback and in fact more positive comments were received. The details are as per table 3.4, 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 1

st surveillance audit. See table 3.4.1 to 3.4.4 for current recommendation and status.

However, some major and minor NC was found on this assessment. Detail NC as per table 3.3 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 is that: To award the certificate of compliance. Signed:

Name: Simon Selvaraj Date: 12/4/2013

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.

Principle 1: Commitment to Transparency

Criterion by Audit

Summary

Records of requests and responses are available. Complaints and requests are registered well. All documents that are to be made publicly available is stated clearly in the SOP. However at Pinji Estate not all stakeholder requests are documented although responses to complaints have made. The land title for Pinji estate the land is also kept confidential. A Major NC was raised under this principle.

MA 1.1 The system allows any stakeholder to request information required in order





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to commit to transparency except confidential documents which another process involved by redirecting to the head quarter where the top management involve in reviewing of the specific request and subject to final approval. The request and response book are well maintained and are available upon

request at the respective supply base and mill. This, the staff will invite the

person to put in writing of the requested information. At the same time the

staff also helps to write down if the requester were unable to write. These

request will be redirected to the in charge person to analyse the time frame

of the requested information and will inform the manager on actions needed.

Finally, this will be response with appropriate manner to requester

immediately or with a time frame needed.

However at Pinji Estate not all stakeholder requests are documented although responses to complaints have made. An observation was raised for this matter. Company have a procedure to receive and response to the request by providing a specific form which records the requester’s detail and information requested. At the same form, there is a section for acknowledgement of the in charge person who receives the form. Further to it, time frame, action taken, approval and feedback are also recorded. There is a 7 year retention period for these documents. Documents that can be made publicly available are clearly stated. However, Pinji estate has not fully documented all the stakeholder comments and requests however they did follow up. The estate should maintain all the records. Raised Observation.

MA 1.2 All individual documents are according to its subject and legally required documents and land titles are available. Some procedures have been merged under one SOP where the SOP are divided into section and linked to another records. This looks complicated; however, the management has given a clear demonstration on how it is being used and what are the related documents. All visited sites have a clear overview of publicly available documents. This is all in line with the KLK policy of transparency of documentation. However at two places, the POM and Pinji estate, the land title documents are not publicly available. They are kept confidential. 1 major NC was raised. Licences, land titles, safety and health plan, EIA and SIA, pollution prevention

plans, complaints and grievances, negotiation procedures and continuous

improvement plan are available for public. Apart from above documents,

other documents also available except confidential documents. Some of the

mentioned documents are merged into one but will then be handled

according to the specific content.

Land lease is for 99 years beginning from 1981.

Original land title was found confidential and file is marked confidential.

Principle 2: Compliance with Applicable Laws and Regulations

Criterion by Audit

Summary

The company has a comprehensive system for ensuring all estate and mill managers are up to date with the applicable laws and they have an internal monitoring system to ensure compliance. Applicable licenses and permits have been displayed where appropriate. A complete set of relevant national law and regulation books are available and systematically documented at point of audit. The system that implemented within relevant legal





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department of the company to ensure changes are tracked need further enforcement. Mill and estate land titles are clearly designated for oil palm mill operation and no restrictions in the terms of the land titles noted as being abused. No disputes been recorded at both mill and estates.

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, allows the delegation of 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. 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)

Ministry of Trade.

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)

Arms Act 1960

Children and young person (employment) act 1966

Commercial vehicles(Licensing Board Act 1987)

Electricity Supply Act 1990

Employment Act 1955





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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

Electricity Supply Act 1990.

However the following was also observed:

Latest applicable list of laws are available but there needs to be control

on the establishment information [date/rev] as well the approval

process and to address only the applicable laws.





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Insufficient records are available to demonstrate the conformity that

applicable laws are made aware to stakeholders.

No evidence of the applicable laws discussed internally.

Reviewing process by those responsible PIC need further enhancement. Thus raised minor NC.

MA 2.2 Land title is available for mill and it is kept in the Changkat Chermin estate. All

the estates have their own land title. Altogether there are 25 land titles.

Estate boundaries are not clearly defined. Approval is sought from KLK management to hire a land surveyor for mapping all the estate areas. Observation raised. There is a mechanism in place to resolve any land conflicts. However, there is no land disputes noted and this is verified through surrounding land owners interviews.

MA 2.3 Maps are clearly available to demonstrate land ownership. There were no customary rights issues raised 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 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.

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

Criterion by Audit

Summary

The company have implemented the best practices in their operations. Full SOP system are in used and practiced. Monitoring of fertilizer and agrochemical is based on soil and tissue sampling. Water management is kept maintained by observing buffer zones and water analysis is carried out periodically. Safety and health is implemented in all operations. Training is conducted for all workers and contractors. However, during the assessment it is found that there is still a need for improvement. Annual medical surveillance for sprayers were not carried out within the one year stipulated time frame. There was also no risk assessment done for a newly used fertilizer. Implementation of what is stipulated in the SOP especially with regards to water sampling was not adhered to. As such, 2 Major NCs and 1 minor NC were raised under this principle.

MA 4.1 The Group Plantations Procedures from seeding land preparation and through to harvesting Policy no. GP/AGRIC/OP, updated on 29-03-2010, forms the Standard Operating Procedure manual that covers land development and covering all aspects of preparing, planting and maintaining oil palm. It also covers field operations for immature crops, planting, mulching, manuring, pruning, and selective harvesting and covers all operations for mature plantations. Similarly, the mill too has an SOP which covers receiving of FFB, best mill management & operation system right up to deliveries of CPO and PK. Master list of document and version updated available and verified.





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Monitoring of implementation is conducted thru internal audit and conducted on 25-27/7/2012. Production record for monitoring performance is available for past 12 month. However, with regards to the implementation of SOP, the following was also observed: Changkat Chermin Estate: The Standard Operating Procedure for water

sampling was established on 01-04-2013. The sampling of river water, raw &

treated water as well as domestic waste water is to be conducted at a

frequency of once in every 4 months and water analysis will be done by

TQCC. However, the first water sampling was conducted in Nov-2012, 7

months after the establishment of the SOP. This was verified through the

official letter sent by Ladang Changkat Chermin to TQCC on 16-11-2012. The

result of analysis is still not available on the date of this audit.

Pinji estate: Based on the water treatment results on 05-07-12, it was

verified that the raw water, treated water and waste water from the line site

was tested for pH, Total Coliform and E-coli and the results within the

standard limit. However, the waste water from the line site was not tested

for the BOD parameter. Observation raised.

MA 4.2 Monitoring of fertilizer usage is according the recommendation which issued by Applied Agriculture Resources Sdn Bhd. The record of fertilizer that was applied the field is matched with the recommendations made. Fertilizer recommendation is made based on soil and leaf analysis. Records of fertilizer used is available for each block, including the type of fertilizer used and its quantity.

MA 4.3 A procedure to prevent erosions called, “Soil erosion and fertility and road maintenance” no. 4.0, dated 01 April 2012 was sighted. Planting of mucuna is practised. Frond staking to stop surface run off was applied. Flat and accessible area is maintained with grass cutting at harvesting path and road side. No blanket spray but only selective and circle spray with the right choice of chemicals is applied. Road maintenance programs were done with the guide of maps and in accordance with the time table. This was verified in Kuala Kangsar estate, Changkat Chermin and Batu Dua estate. There are no peat lands in the concession

MA 4.4 Water course is identified based on maps. In Kuala Kangsar estate there is a river that passes through the estate area. Buffer zone and riparian zone is identified with markings. No activities are carried out at the riparian zone area. Estate river water analysis is carried out once in 4 months. The sampling point and parameter is identified. BOD, COD, TSS, Ammonical Nitrogen and Dissolved Oxygen is used to determine level of pollution in the river. Result for water analysis is carried out by TQCC and all the results are within the standards. Rainfall monitoring is available. Monitoring of water used at mill is available. The mill used on average 0.58m3 of water/MT FFB

MA 4.5 IPM system according the procedure of Pest and Disease in GP/Agric/OP4 that was last updated on 1 July 2006 is applied in Changkat Chermin estate. This covers all the documented IPM for major pest, use of biological control, cultural control, surveillance, evaluation and record keeping. Tunera subulata is extensively planted. Barn owl boxes erected at the rate of 1/20ha. Use of biological control, manual control and monthly census for bagworm is





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conducted.

MA 4.6 The procedure of agrochemical use is mentioned in “Safe use of Agrochemical” rev. 5, dated 1 February 2012. High toxic agrochemicals are replaced by less toxic ones. Agrochemical used is based on the specificities. Evidence to eliminate pesticides categories 1A and 1B is apparent. Paraquat is being eliminated and replaced by glyphosate. Chemicals used are in compliance with Pesticide Act 1974 and oil palm (Food Act 1983) and within the allowable dose. List of chemicals used is available and according to the USECHH 2000 regulation and Pesticides Act 1974. MSDS is available in both English and Bahasa Malaysia. PPE distribution based on job description and based on recommendation the by supplier of pesticides. Record of distribution of PPE is available and maintained. Storage of pesticide and herbicide was verified during site visit. There was good ventilation and the stores were in good condition. MSDS is clearly visible in the store. Training is given to the all workers in the mill and estate especially for handling of chemical and pesticides used. Training records were verified. Pregnant women are not allowed to handle chemicals.. The last annual medical surveillance for sprayers was carried out on 11-04-11 in MEDICLINIC SINARAN. The following sprayers, Ms. Kaliyamah A/P Palanisamy and Mr. Selamat Abdul Ghani last received medical check-up on that day. The next annual medical surveillance program for FY2011/12 for the same sprayers has been scheduled in December 2012, which is 7 months exceeding the one year period specified by the law and the RSPO standard. This is a non-compliance against USECHH 2000 regulations and also the RSPO standard and as such a major NC has been raised.

MA 4.7 An occupational Safety and Health Policy is in place for all assessed

operations, clearly communicated, implemented and publically available. The

company has a set of generic SOPs for the estates and mill. The record of

training shown that the company has carried out training sufficiently.

Safety and Health Programme was sighted for the year 2012. A safe working environment is demonstrated in the mills and the estates by utilizing a checklist that is to be used during safety audits. However, it was found during the audit that:

The adverse risk for the newly introduced fertilizer [Taiko 61] was not identified through risk assessment.

All PPE is provided by office staff. However an inventory list of PPE to

monitor the stock level is not maintained.

MSDS is not understood by local workers at chemical storage area as it

was not available in the local language [Bahasa Malaysia].

First aid kit needs to be equipped with an inventory list.

It was also verified that latest accident record occurred on 22/10/2012. The incident involved a harvester by the name of Mr. Ahmad Baidi [employee number AR 467812] whose motorbike fell on his feet. The 22 man-days that was lost as a result of this accident was not tabulated in the LTA calculations. Here, an observation is raised.

MA 4.8 The training schedule for 2012 is available for the mill and estate. Contractor training is verified in the contract between the company and the contractor





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need to comply with safety requirement in the mill. Training records are maintained. Training attendance record that is signed by the participants was sighted.

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. 1 Major NC and 4 Minor NCs were raised under principle 5.

MA 5.1 All visited sites have an EIA. However, stakeholder consultation was not done

in relation to input for the EIA. Stakeholders were informed about the results

and were asked to respond. The Stakeholder processes are documented. The

stakeholder input in the process is limited. In all cases the only input for the

EIA is the knowledge of staff and employees of the company.

The EIA is limited in for example the hazards description:

1) Water pollution is mentioned in relation to the workshop, but it is not

clear whether it relates to oil, chemical pesticides or other sources of

pollution.

2) Human activities cause water and air pollution but how it is causing an

impact not specified. The root cause is not clearly detected.

3) 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.

There are also negative impacts identified. It is not possible however to decide whether the root cause is addressed as the EIA lacks details. The EIA’s give the impression that effects are addressed, not the root cause. There is no consistent monitoring of environmental impacts. Therefore it is not clear whether negative effects are mitigated and improvements are made. In general the KLK format is in place, but not made specific enough, in some cases not completely filled in and mitigating measures are not always implemented, monitored and clearly addressing the root cause. Also all visited sites implement many improvements and mitigating measures, however the documentation and link with the EIA is missing. A minor NC is raised.

MA 5.2 In the mill itself no rare, threatened and endangered species are present. The area is covered by the HCV assessment made by the estates. All estates have not formally assessed HCV and ETR species. They used their

own knowledge. No consultation with experts was done. Some estates have

HCV present. The HCV is not performed according to the SOP that prescribes

the use of the Malaysian interpretation on HCV.

Buffer zones are put in place and clearly identifiable. All estates have guards,

checkpoints and gates in place. A Major NC was raised on this criterion.

MA 5.3 In the mill, office waste and mill waste is separated into glass, paper and

plastic. Different bins for different waste are in place. However the

identification of all waste of the mill and estates is incomplete as it not

includes among others the glass, paper and plastic. In the mill, not all waste is

identified and documented and not all waste is disposed of in the prescribed





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way. For example:

1) Waste water that is leaving the mill is not monitored

2) Amount of recyclable waste is not registered

3) Amount of domestic waste going to landfill is unclear

4) There are wastes found in the boiler ash stored in Changkat Chermin

estate

Estates: Like the Mill the estates have a system in place. However most

estates do not have a complete waste identification either. In most cases the

recycling of glass, paper and metal is not incorporated in the plan. Some of

the visited estates have evidence of inappropriate waste disposal at several

locations in the estates such as:

1) The landfill of Pinji estate and Glenealy estate consists of waste that,

according to company procedures, shall not be disposed of in the landfill.

2) Raja Hitam estate clearly identified 5 sampling point on water monitoring

including relevant parameters. Most estates however have not

sufficiently identified the water sampling point and their parameters.

3) Estates that collect rubber have not identified the outlet of this collection

point as waste. Also important that the farmers in the rented area

underneath the power lines produce a lot of waste (Raja Hitam, Changkat

Chermin), including wastes of chemical pesticides.

In general, the mill and estates implement more than they document, but the identification is not complete and an operational plan for avoiding and reducing waste is not complete, consistent, implemented and objectives are partly missing. Monitoring is only for scheduled wastes and in some estates for wastewater in place. Two minor NCs were raised under 5.3.1 and 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 was applying the guidelines from ASEAN zero burning policy. No burning was identified during the audit. Company applied felling and chipping for replanting program.

MA 5.6 The pollution and emissions sources in the mill have been identified. Monitoring and analysis of the pollution risks were conducted regularly.

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

Criterion by Audit

Summary

Minutes of meeting for the communication and consultation with local

community through regularly meeting were available and evident. The policy

for freedom of association, equal opportunities and sexual harassment and

violence are clearly stated and it was confirmed through interviews during the

audit. Workers union meetings are held at operating units. OSH meeting is

held quarterly to discuss and improve on issues related to safety and health.

Female employees are attending Gender Committee meetings to discuss their

issues.

Social impact assessment was done but there is no indication of assessment

period and assessing personnel details. There is no review output and

conclusion of the assessment done [negative / positive] in order to take

appropriate action plans. There is no clear evidence of workers and scheme





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members and affected parties being involved in the process. The assessment

done as and when with no specific time frame. As such a minor NC was

raised.

There was also overcrowding in the labour quarters and furnishings were found to be inadequate. As such a minor NC was raised.

MA 6.1 Social impact assessment was done but there is no indication of assessment period and assessing personnel details. Non-restrictive format incorporating elements spelt out in this criterion were shown; however it was not done in participatory way. The latest social assessment was done on 22/11/2012 for awarding new worker's quarters but the assessment method and input need further enforcement with more variety of questions. There is no review output and conclusion of the assessment done [negative / positive] in order to take appropriate action plans. There is also no clear evidence of workers and scheme members and affected parties being involved in the process. The assessment was also done on an ad-hoc basis with no specific time frame. A minor Nc is raised.

MA 6.2 SOP 1.0 Stakeholder Engagement dated 1.4.2012 rev 1 is shown as a documented consultation and communication procedure. The mill and estates are using a complaint form for handling any complaint and grievances. Mill and estate maintain records of any stakeholder that effected by the mill and estates. In the estate a representative for handling complaint and grievance in nominated. However there is no clear nominated person in the mill that handles complaints and grievances.

MA 6.3 SOP 1.0 Stakeholder Engagement dated 1.4.2012 rev 1 is shown as the documented grievance procedure. The respective estate and mill managers are the appointed person to execute the task. The date, time, location, name, contact phone number, details of complaint, person who recorded the complaint and action taken are being recorded for each complaint received. Evidence sighted during the audit shows that complaints are effectively and timely resolved in an appropriate manner.

MA 6.4 The procedures on negotiation on purchase of land from the owners have been developed and document of compensation of land owner is clear and well kept. 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 The Malaysian workers are covered by Kadar Upah Pekerja Ladang (Payment rates for estate workers). RM 200 [Special Gratuitous Payment - SGP] as per circulation from MAPA [36/2011] dated on 09/09/2011 is being paid according to criteria spelled in the memo dated on 30/09/11. For local workers full payment will be paid but as for foreign workers only RM 100 paid and another RM 100 transferred to employee's account for savings. The rate of wage is determined by the collective agreement by the estate and the workers union. All wage related information is effectively mentioned in the contract agreement. Pay wages & slip are evident and employees know the content of the payslip. 1 unit of labour quarters should be occupied by 6 workers. However the audit team found 10 workers in a harvester quarter [W43] during the site visit. The quarters were also not adequately furnished. Electricity is supplied by TNB. Water is supplied by company treated and used to estate and workers use. Sanitation was found to be adequate during the field visit. Workers housing





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also provided drinking water. There was also no unauthorized extension. With

this, a minor NC is raised.

MA 6.6 There are no National Union of Plantation Workers (NUPW) members but they have their own Workers Union and they do conduct internal meetings with the union representative. Minutes of meeting with worker reps are recorded. Meeting with worker representatives are also done through the various committees (e.g.: OSH Committee and Sexual Harassment Committee).

MA 6.7 The company has been created and implemented the minimum age policy as stated in “Child employees” policy. According to interviews with workers and staff and document review, it is confirmed that no children below 16 years old are working in the estate or mill.

MA 6.8 Policy of equal opportunities is publicly displayed in the office and at the line-

site. Interviews with workers revealed that the company has implemented

equal opportunities policy for all workers, including migrant workers.

The records of pay slips of both local and foreign worker show that there is no

discrimination against them as the pay rate is exactly the same. Also, it is

noted that the worker can get promotion to be a staff.

MA 6.9 The company has a policy regarding sexual harassment and violence. According to the interview with workers and document review of monthly checklist for women workers, there are no cases of sexual harassment and violence that has happened. There is also a quarterly meeting for women association which, at which the policy is included on the agenda.

MA 6.10 All the calculations for FFB price is done by Head Office using a formula that is based on OER and cost of production. Procedure of FFB price calculation is evident. The prices are displayed on the notice board at the palm oil mill. Contractual agreements include contractor’s details, pricing, term 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 head office in the first week of every month.

MA 6.11 The whole ethos is to help with the development of local communities.

Schools, houses, sports facilities and medical facilities were provided.

Road repair works is being done once in 3 months.

The request by neighbouring residents for furniture for the mosque was granted on 16/07/12. The company has also provided financial support for the Tamil Primary School

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 which falls within this Changkat Chermin

certification scope. 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 mill are proactive and firmly committed to continuous improvement in the areas of social, environment and economic viability.

MA 8.1 The continuous improvement plan set by the company was verified. Among the improvements noted were: - The ban of the use of Paraquat. - Environmental Impact Assessment has carried out to study impact of the





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operations towards the environment. There are mitigation plans to reduce of pollution

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.

4.3.1 Non-Conformities Identified during this Audit

NON CONFORMITY REPORT

NC number: 01/2012

Client name: Kuala Lumpur Kepong Berhad

Date raised: 30-11-2012

Major or Minor: Major (CLOSED)

Raised by: Simon Selvaraj

Aspect of standard: 1.2.1 Documents that must be publicly available include: Land titles/user rights (criterion 2.2).

Evidence of non-conformity:

The Palm Oil Mill failed to provide evidence that the original land titles are publicly available on request. They

are kept in a file that is marked as ”confidential” and also in the master list it is marked as “confidential”.

Pinji Estate: The land title documents are not publicly available on request.

Auditors signature:

Date: 30-11-2012

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).





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Review of corrective /improvement action: Publicly available list provided and SOP on reference document list amended with revision on status or type of availability documents. Therefore, this major NC is closed. Assessors signature:

Date: 10/4/2013


NC number: 02/2012





Aspect of standard: 5.2.1: Identification and assessment of HCV habitats and protected areas within landholdings; and attempt assessments of HCV habitats and protected areas surrounding landholdings. 5.2.2 Management plan for HCV habitats (including ERTs) and their conservation.

Evidence of non-conformity: 5.2.1:

Mill: In the mill itself no rare, threatened and endangered species are present. The area is covered by the HCV

assessment made by the Changkat Chermin estate.

Estates: All estates have not formally assessed HCV and ETR species. They used their own knowledge. There is no

consultation with experts. Some estates have HCV present. The HCV assessment is not performed according to the

SOP that prescribes the use of the Malaysian interpretation on HCV.

5.2.2: Mill: N/A

Estates: No formal assessment was done hence there was also no management plan in place.

Auditors signature:

Date:30-11- 2012

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:

HCV assessment has been carried out on 26-12-12 with stakeholder consultation.to identify if the pond in area

05C constitutes an HCV. Based on discussions with stakeholders, it was verified that the pond in area 05C is not

used as an economic source and not used for drinking water. It is thus confirmed that the pond in area 05C does

not make up an HCV. Thus, the major NC is closed.





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Assessors signature:

Date: 10/4/2013


NC number: 03/2012





Aspect of standard: -

Criterion 4.6.5

Annual medical surveillance as per CHRA for plantation pesticide operators

Evidence of non-conformity: -

The last annual medical surveillance for sprayers was carried out on 11-04-11 in MEDICLINIC SINARAN. The

following sprayers, Ms. Kaliyamah A/P Palanisamy and Mr. Selamat Abdul Ghani last received medical check-up

on that day. The next annual medical surveillance program for FY2011/12 for the same sprayers has been

scheduled in December 2012, which is 7 months exceeding the one year period specified by the law and the

RSPO standard.

Auditors signature:

Date: 30-11-12

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: Annual medical surveillance for Ms Kaliyamah and Mr Selamat has been carried out on 10.12.12. Based on the

medical report and recommendation by the doctor, both the sprayers are fit for work. A revision took place on

medical planning for all workers in order to monitor and to ensure no exceeding on time line. With this, the

major NC is closed.


Date: 10/4/2013





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NC number: 04/2012






Criterion 4.7.1

A health and safety policy, which is implemented and monitored.


The adverse risk for the newly introduced fertilizer [Taiko 61] was not identified through risk assessment.

All PPE is provided by office staff. However an inventory list of PPE to monitor the stock level is not

maintained.

MSDS is not understood by local workers at chemical storage area as it was not available in the local

language [Bahasa Malaysia].

First aid kit needs to be equipped with an inventory list.

Auditors signature:

Date: 30-11-12


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

Review of corrective /improvement action:

Risk assessment was carried out to identify, assess and control the risks for the introduction of the new

fertilizer (Taiko 65).

PPE distribution list is available with the inventory list.

MSDS is now available in both Bahasa Malaysia and English.

First aid kits also have been maintained with inventory list.

With that this major NC is closed.


Date: 10/4/2013


NC number: 05/2012



Major or Minor: Minor





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Criterion 6.1.1

A documented social impact assessment. Evidence that the assessment has been done with the participation of

affected parties. Participation in this context means that affected parties are able to express their views

through their own representative institutions during the identification of impacts, reviewing findings and plans

for mitigation, and monitoring the success of implemented plans.


Social impact assessment was done but there is no indication of assessment period and assessing

personnel details.

Latest social assessment was done on 22/11/2012 for awarding new worker's quarters but the assessment

method and input need further enforcement.

There is no review output and conclusion of the assessment done [negative / positive] in order to take appropriate action plans.

The assessment was done on an ad-hoc basis with no specific time frame.

Auditors signature:

Date: 30 -11- 12


Timeline for conformance: To be verified during the next annual surveillance audit


NC number: 06/2012





Aspect of standard: 5.1.1 Documented aspects and impacts risk assessment that is periodically reviewed and

updated.

Evidence of non-conformity: Mill/Estates: All visited sites have an EIA. However, stakeholder consultation was

not done in relation to input for the EIA. Stakeholders were informed about the results and were asked to

respond. The Stakeholder processes are documented. The stakeholder input in the process is limited. In all cases

the only input for the EIA is the knowledge of staff and employees of the company.

The EIA is limited in for example the hazards description:

4) Water pollution is mentioned in relation to the workshop, but it is not clear whether it relates to oil,

chemical pesticides or other sources of pollution.

5) Human activities cause water and air pollution but how it is causing an impact not specified. The root cause





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is not clearly detected.

6) 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 details on where, what, when,

how, why and who. However all visited sites do have an EIA.

Auditors signature:

Date: 30-11- 2012

Corrective action Taken

To be verified during the next annual surveillance audit


NC number: 07/2012






Criterion 2.1.1

Evidence of compliance with relevant legal Indicators.


Latest applicable list available but there needs to be control on the establishment information [date/rev]

as well the approval process and to address only the applicable laws.

Insufficient records available to demonstrate the conformity that applicable laws are made aware to

stakeholders.

No evidence of the applicable laws discuss internally.

Reviewing process by those responsible PIC need further enhancement.

Auditors signature:

Date: 30-11-2012







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NC number: 08/2012






Criterion 4.1.2

Records of monitoring and the actions taken are maintained and kept for a minimum of 12 months.


Changkat Chermin Estate: The Standard Operating Procedure for water sampling was established on 01-04-

2013. The sampling of river water, raw & treated water as well as domestic waste water is to be conducted at a

frequency of once in every 4 months and water analysis will be done by TQCC. However, the first water

sampling was conducted in Nov-2012, 7 months after the establishment of the SOP. This was verified through

the official letter sent by Ladang Changkat Chermin to TQCC on 16-11-2012. The result of analysis is still not

available on the date of this audit.

Pinji estate: Based on the water treatment results on 05-07-12, it was verified that the raw water, treated

water and waste water from the line site was tested for pH, Total Coliform and E-coli and the results within the

standard limit. However, the waste water from the line site was not tested for the BOD parameter.

Auditors signature:

Date: 30-11-2012




NC number: 09/2012





Aspect of standard: 5.1.2 Environmental improvement plan to mitigate the negative impacts and promote the

positive ones is developed, implemented and monitored.

Evidence of non-conformity: Mill/Estates: There are negative impacts identified. It is not possible however to

decide whether the root cause is addressed as the EIA lacks details. The EIA’s give the impression that effects

are addressed, not the root cause. There is no consistent monitoring of environmental impacts. Therefore it is

not clear whether negative effects are mitigated and improvements are made. In general the KLK format is in

place, but not made specific enough, in some cases not completely filled in and mitigating measures are not

always implemented, monitored and clearly addressing the root cause. Also all visited sites implement many

improvements and mitigating measures, however the documentation and link with the EIA is missing.





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Auditors signature:

Date: 30-11-2012




NC number: 10/2012





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


Mill: Office waste and mill waste is separated into glass, paper and plastic. Different bins for different waste are

in place. However the identification of all waste of the mill and estates is incomplete as it not includes among

others the glass, paper and plastic. So not all waste is identified, not all is documented and not all waste is

disposed of in the prescribed way. For example waste water that is leaving the mill is not identified and

recyclable waste is not identified.

Estates: Like the Mill the estates have a system in place. However most estates do not have a complete waste

identification either. In most cases the recycling of glass, paper and metal is not incorporated in the plan.

In general: the mill and estates implement more than they document, but the identification is not complete.

Auditors signature:

Date: 30-11-2012




NC number: 11/2012





Aspect of standard: 5.3.2: Having identified wastes and pollutants, an operational plan should be developed and





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implemented, to avoid or reduce pollution.


Mill: Not all waste is identified and documented and not all waste is disposed of in the prescribed way. For

example:

5) Waste water that is leaving the mill is not monitored

6) Amount of recyclable waste is not registered

7) Amount of domestic waste going to landfill is unclear

8) There are wastes found in the boiler ash stored in Changkat Chermin estate

Estates: Some of the visited estates have evidence of inappropriate waste disposal at several locations in the

estates.

4) The landfill of Pinji estate and Glenealy estate consists of waste that, according to company procedures,

shall not be disposed of in the landfill.

5) Raja Hitam estate clearly identified 5 sampling point on water monitoring including relevant parameters.

Most estates however have not sufficiently identified the water sampling point and their parameters.

6) Estates that collect rubber have not identified the outlet of this collection point as waste. Also important

that the farmers in the rented area underneath the power lines produce a lot of waste (Raja Hitam,

Changkat Chermin), including wastes of chemical pesticides.

In general: the mill and estates implement more than they document, but the identification is not complete and

an operational plan for avoiding and reducing waste is not complete, consistent, implemented and objectives

are partly missing. Monitoring is only for scheduled wastes and in some estates for wastewater in place.

Auditors signature:

Date: 30-11-2012




NC number: 12/2012






Criterion 6.5.3

Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in

accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no

such public facilities are available or accessible.


1 unit of labour quarters should be occupied by 6 workers. Nevertheless the audit team found 10 workers in a

harvester quarter [W43] during the site visit. The quarters were also not adequately furnished.





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Auditors signature:

Date: 30-11-2012



4.3.2 Observations Raised During this Audit

Observation 1





Criterion 4.7.2

Recording of occupational injuries. Suggested calculation: Lost Time Accident (LTA) rate (either specify acceptable maximum, or demonstrate downward trend).


It was verified that latest accident record occurred on 22/10/2012. The incident involved a harvester by the

name of Mr. Ahmad Baidi [employee number AR 467812] whose motorbike fell on his feet. The 22 man-days

that was lost as a result of this accident was not tabulated in the LTA calculations.

Auditors signature:

Date: 30-11-2012

Observation 2




Aspect of standard:

Criterion 1.1.1

Records of requests and responses must be maintained.





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Although Pinji estate did follow up on all comments and requests, they did not fully documented all

stakeholder comments and requests as well as the follow up actions. The estate should maintain all these

records.

Auditors signature:

Date : 30-11-2012

Observation 3

Client name: Changkat Chermin Estate




Criterion 2.2.3.1

Evidence that boundary stones along the perimeter adjacent to state land and other reserves are being located

and visibly maintained. Growers should attempt to comply with this Indicator within 15 months from date of

announcement of first audit. Refer to State Land Office for examples of other reserves..


Currently, the boundary of the estate is only identified through various types of trees that have been planted

along the boundaries. The management is waiting for approval for land survey to demarcate the estate

boundaries from the top management of the company. This is verified through the minutes of the RSPO

management review meeting dated 28/02/2012.

Auditors signature:

Date: 29-11-12

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 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 –





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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

Suppliers complained that some of the spraying measurement containers have been modified.

The company responded that modification is done out of necessity. Calibration has also been done for the containers.

Record of calibration was verified

Internal stakeholder complained that the new fertilizer used is affecting workers health.

Company is aware about this issue. Content of fertilizer is not in within specification. Company has stopped using this type of fertilizer.

Record of medical surveillance of workers that have been involved in manuring was verified. Company has taken action on this issue

Representatives from the local community complained about foreign workers abusing local community.

Company will arrange a meeting with their workers to inform them about this matter.

To be verified during the next surveillance visit

There are complaints that the estate vehicles are driven exceeding the speed limit.

Company will arrange a meeting with their drivers to inform them about this matter.

To be verified during the next surveillance visit

The Agricultural Department complained that estate tractor and backhoe drivers do not have legal licence to operate those heavy vehicles.

Company has given training to their tractor drivers before they can drive them. Tractor driver There is no compulsory need for legal license if the tractor is driven in the estate.

Record of training for tractor drivers was verified.

Workers complained about the main gate at Kuala Kangsar estate was locked on Sunday. Workers unable to enter estate.

Company said on Sunday the gate was closed to avoid damage to the new bridge that was being built there.

No issue

There were complaints that Class 1 and Class 2 pesticides were used in the estate.

Company is not using Class 1 and Class 2 pesticides.

During the site visit to the estate, it was verified through the record of purchase that Class 1 and 2 pesticides were not used.

A worker complained about the culvert near her house that is too small and this resulted in floods near her house during heavy downpour.

Company will investigate the complaint and will come out with plan to mitigate flood near the workers house.

To be verified during next surveillance 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)

Changkat Chermin POM

60 Batu 13 ½, Ayer Tawar, Perak IP

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 46,448 9,595 Forecasted volumes between 1/12/2012 to 30/11/2013. See also 1.6 above.

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

Changkat Chermin palm oil mill receiving FFB from own supply base and processed into CPO and Palm Kernel as a product using RSPO SCCS IP model. The mill is able to handling certified product as all system procedure is in place. Furthermore, all the workers was trained with the RSPO SCCS requirement.A full RSPO SCCS certification audit was used during this annual assessment and the findings support the certification based on supply chain model listed above.

5.4 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: 29/04/2013 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

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