Roundtable on Sustainable Palm Oil - TÜV Rheinland...Sime Darby Plantation Sdn. Bhd is merger of...

Roundtable on Sustainable Palm Oil

Recertification Audit Report Report no.: RA_824 502 14019

Recertification assessment against the

RSPO Principles & Criteria NI Malaysia year 2014 &

RSPO Supply Chain Certiification Standard 2014

Sime Darby Plantation Sdn. Bhd.

SOU 11 Kerdau Palm Oil Mill

Level 3A, Main Block, Plantation Tower, No 2, Jalan PJU 1A/7, Ara Damansara,

47301 Petaling Jaya, Selangor Darul Ehsan,Malaysia.

Date of Assessment: May 30th – June 03rd, 2016

Report prepared by: Aswan Hasibuan

(RSPO Lead Auditor)

Certification Decision by :

Abdul Qohar (Director of TUV Rheinland Indonesia)

Certification Body: PT TUV Rheinland Indonesia

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

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

www.tuv.com/id

TABLE OF CONTENTS

1.0 SCOPE OF RECERTIFICATION AUDIT ................ ............................................... 3

1.1 National Interpretation Used 3

1.2 Type of Assessment 3

1.3 Certification Details 3

1.4 Location and Maps 4

1.5 Organisational Information / Contact Person 14

1.6 Description of Supply Base 15

1.7 Actual production volumes, tonnages and projected outputs. 15

1.8 Dates of Plantings and Replanting Cycles 16

1.9 Area of Plantation (Total, Planted and Mature) 17

1.10 Progress Against Time Bound Plan 18

1.11 Compliance to Rules for Partial Certification 18

1.12 Progress of associated smallholders or outgrowers towards RSPO compliance 20

1.13 Approximate Tonnages Certified 20

2.0 ASSESSMENT PROCESS .................................................................................. 21

2.1 Certification Body 21

2.2 Qualifications of Lead Assessor and Assessment Team 21

2.3 Assessment Methodology & Agenda 22

3.0 ASSESSMENT FINDINGS ................................................................................... 25

3.1 Summary of Findings 25

3.2 Status of Previously Identified Non-conformities 57

3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions 62

3.4 Noteworthy Positive Components 74

3.5 Issues Raised by Stakeholders and Findings Pertaining to Issues 74

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL

RESPONSIBILITY .................................... ........................................................... 76

4.1 Date of Next Surveillance Visit 76

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 76

APPENDICES ............................................................................................................ 77

Appendix 1: Details of Certificate 77

Appendix 2: Audit Plan 79

Appendix 3: List of Abbreviations 87

Appendix 4: List of Stakeholders Interviewed and Contacted 88

Appendix 5: Observations and Opportunities for Improvement 89

RSPO Recertification Audit Report

- Sime Darby Plantation Sdn.Bhd–

Kerdau Palm Oil Mill- Pahang-

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1.0 SCOPE OF RECERTIFICATION AUDIT 1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Malaysia National Intepretation (MY-NI) year 2014 of the RSPO Principles & Criteria and the RSPO Supply Chain Certification Standard 2014.

1.2 Type of Assessment

This re-certification assessment was carried out on 1 mill and 5 estates under Kerdau Palm Oil Mill owned by Sime Darby Plantation Sdn. Bhd. The date of certification of this unit was May 11 to 18, 2009.

1.3 Certification Details

The details of RSPO certification of Sime Darby Plantation Sdn Bhd, SOU 11 Kerdau Palm Oil Mill are as per the table below

Table 1: RSPO Certification details of Kerdau Palm Oil Mill

RSPO Membership no.: 1-0008-04-000-00

RSPO Certificate no.: 824 502 14019

Date of first RSPO certificate & validity: 07/07/2011 valid until 06/07/2016

Date of certification audit: May 11 to 18, 2009

Date of previous surveillance audit: 21 - 25 April, 2015

Date of revised RSPO certificate & va-lidity (if applicable):

17 October 2016 (reissued by PT TUV Rheinland Indonesia); validity unchanged

Previous CPO tonnages claimed: 48,520 MT

Previous PK tonnages claimed: 12,612 MT

Revised CPO tonnages claimed 40,943 MT

Revised PK tonnages claimed 10,377 MT




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1.4 Location and Maps

Figure 1(a): General location of SOU 11: Kerdau in Malaysia

SOU 11: Kerdau Palm Oil Mill & Estate




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Figure 1 (b): Location of SOU Kerdau estates and mi ll in Pahang, Malaysia

Kerdau POM & Estates




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Figure 2a: Kerdau Estate – East & West Division GPS Surveyed Map

Kerdau POM




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Figure 2b: Kerdau Estate – Tekal Division GPS Surve yed Map




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Figure 3: Jentar Estate estate map

Figure 4: Chenor Estate GPS Surveyed Map




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Figure 5a: Sg. Mai Estate – Main Division GPS Surve yed Map




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Figure 5b: Sg. Mai Estate – Jerantut Division GPS S urveyed Map




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Figure 6a: Mentakab Estate – Lanchang Division GPS Surveyed Map




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Figure 6b: Mentakab Estate – Mentakab Division GPS Surveyed Map




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Figure 6c: Mentakab Estate – Edensor Division GPS Surveyed Map




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Table 2: address GPS locations for all estates and mills included in certification assessment

1.5 Organisational Information / Contact Person

SOU 11 Kerdau estates are owned and operated by Sime Darby Plantation Sdn. Bhd, among the largest player in oil palm industry in Malaysia. The company previously had previously 65 “Strategic Operating Units” units (SOU’s) in Malaysia and Indonesia comprising individual mils and estates, from which 6 SOU’s in Malaysia were closed down or operations ceased. Hence the company currently has 59 individual SOU’s, i.e. 34 SOUs in Malaysia and 25 in Indonesia.

Sime Darby Plantation Sdn. Bhd is merger of Sime Darby Berhad, Golden Hope Plantations berhad and Kum-pulan Guthrie Berhad which was done on November 2007. The company represents one of the five core Divi-sions of Sime Darby group and is involved in the following: Oil Palm cultivation, Agribusiness & Food, Research and Development. The Plantation division has location in several Malaysia locations such as peninsular Malay-sia, Sabah and Serawak and Indonesia location such as Kalimatan, Sumatera and Sulawesi. Company has to-tal 524,624 hectares of planted oil palm. All products from Sime Darby Plantation Sdn. Bhd is supplied to their division’s downstream operations which has locations in 15 countries around the world. Its business activites include the following; Edible oil refining, production of oils and fats products, Oleochemical and Biodisel. Along-side oil palm, the division is also involved in agri business activities and cultivationof rubber.

In keeping with the aspiration of making sustainable future real for everyone, Sime Darby Plantation Sdn.Bhd claims to make a conscious and concerted effort towards conservation and protection of the environment, the rehabilitation of forests, wildlife protection and promotion of the well being of the communities in which it oper-ates.

Contacts details of the company are as follows:

Name of mill / estate Location

GPS locations Latitude Longtitude

Kerdau Palm Oil Mill

Kilang Kelapa Sawit Kerdau, Wakil Pos Kerdau, 28010 Temerloh Pahang

3º34’07”

102º18’28”

Kerdau Estate Ladang Kerdau, Wakil Pos Kerdau 28010 Temerloh, Pahang

3º34’07” 102º18’28”

Jentar Estate Ladang Jentar, Wakil Pos Kerdau, 28010 Temerloh , Pahang

3º34’07” 102º18’28”

Mentakab Estate Ladang Mentakab/ Lanchang/ Edensor, c/o Lanchang Division, 28500 Lanchang, Pahang Darul Makmur.

3º28’67” 102º10’95”

Sg Mai Estate Ladang Sungai Mai, 27000 Jerantut, Pahang 3º48’50” 102º21’40”

Chenor Estate Ladang Chenor (KT), Sungai Jerik, 26400 Bandar Pusat Jengka, Pahang

3º34’07” 102º18’28”

Company Name: Sime Darby Plantation Sdn. Bhd. Kerdau Palm Oil Mill

Address: Head Office : PSQM, Level 3A, Main Block, Plantation Tower, No. 2, Jalan PJU 1A/7, Ara Damansara, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia.

Mill Location: Kilang Kelapa Sawit Kerdau, Wakil Pos Kerdau, 28010 Temerloh Pahang

Contact Person: Shylaja Devi Vasudevan Nair

Telephone: 03-78484379

Email: [email protected]




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1.6 Description of Supply Base

The Kerdau palm oil mill sourced FFB from below mentioned group estate and smallholders under Sri Kerdau Sdn. Bhd., a FFB collector from smallholder. Table 3: FFB Supply Information for Kerdau Palm Oil Mill for FY2014/15 and FY2015/16 up until April

2016

FFB Contributors FFB received

July 2014 to June 2015 FFB received

July 2015 – April 2016

Tonnes % Tonnes %

Company owned estates:

Kerdau Estate 41,661.370 19.86 33,394.95 20.11

Jentar Estate 21,917.780 10.45 14,913.39 8.98

Sg Mai Estate 62,338.960 29.71 48,522.69 29.22

Mentakab Estate 44,261.86 21.10 39,167.68 23.58

Chenor Estate 33,175.87 15.81 25,295.56 15.23

Subtotal (estate) 203,355.84 96.93 161,294.27 97.12

Non- certified / other sources 4,552.96 2.17 3,999.74 2.41

Bukit Puteri & Jabor 1,912.20 0.91 788.50 0.47

TOTAL 209,821.000 100 166,082.510 100

1.7 Actual production volumes, tonnages and project ed outputs.

Table 4: Certified tonnages claimed, certified tonn ages purchased or sold, total and projected CPO and PK production from Kerdau Palm Oil Mill

* Total amount sold in eTrace in FY2015/16

Description Amount (MT)

FFB CPO PK

Total Actual Production for FY2014/15 209,821.00 43,564.538 10,444.074

Conversion Rate for FY2014/15 - OER:20.76%

KER:4.98%

Actual Certified Production for FY2014/15 205,355.84 42,613.645 -

Total Actual Production for FY2015/16 184,130.11 37,945.596 9,487.328

Conversion Rate for FY2015/16 - OER: 20.65 KER: 5.16

Actual Certified Production for FY2015/16 179,685.25 37,145.72 9,277.08

Projected/Budgeted Production for FY2016/17 227,843.57 49,246.22 12,335.56

Projected/Budgeted Conversion Rate for FY2016/17 - OER: 21.61 KER: 5.41

Projected/Budgeted Certified Production for FY2016/17 188,676.57 40,942.82 10,377.21

Certified tonnages sold* - 2,195.15 -




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1.8 Dates of Plantings and Replanting Cycles

Information on the dates of plantings is as per the table below. Table 5: Age and year of plantings of company estat e supplying to Kerdau Mill

Year of planting (Financial

year)*

Age of planting (years)*

Oil palm planted area (ha)

Kerdau Estate Jentar Estate Mentakab Es-tate Sg Mai Estate Chenor Estate

1985/86 31 - - - - - 1986/87 29 403.23 - - - - 1987/88 28 - 583.83 - - - 1988/89 27 - - - - 83 1989/90 26 - - 45.85 - 74 1990/91 25 - - - 91.12 - 1991/92 24 - - - 75.88 113 1992/93 23 - - - - 113 1993/94 22 - - 50.69 501.52 112 1994/95 21 - - 279.98 291.74 60 1995/96 20 - - 151.88 275.85 41 1996/97 19 - - 138.35 283.53 58 1997/98 18 175.04 - 267.59 324.90 130 1998/99 17 68.13 - 332.95 - 102 1999/00 16 214.35 - 294.52 347.14 216 2000/01 15 313.35 - 254.74 - 162 2001/02 14 - - - 250.33 181 2002/03 13 - - - 163.66 - 2003/04 12 - - - - - 2004/05 11 - - - - - 2005/06 10 - - - - - 2006/07 9 - - - - - 2007/08 8 - - - - - 2008/09 7 216.16 - - - - 2009/10 6 243.74 101.55 - - - 2010/11 5 302.15 100.00 72.72 - - 2011/12 4 157.49 316.82 271.79 - - 2012/13 3 233.93 161.13 393.72 - 108 2013/14 2 231.19 312.97 119.10 - 88 2014/15 1 374.94 154.69 139.67 - 88 2015/16 0 258.35 192.35 121.37 - 151

TOTAL 3192.05 1,923.34 2934.92 2605.67 1880




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Table 6: Planned oil palm replanting activities for SOU 11 Sime Darby Plantation Sdn. Bhd.

Year Total planned replanting area for each estate (ha) Total (Ha)

Kerdau Jentar Mentakab Sungai Mai Chenor

2016/17 235.87 313.21 167.00 45.85 242 1003.93

2017/18 167.36 270.62 126.52 142.82 253 960.32

2018/19 0 0 147.31 149.55 159 455.86

2019/20 125.88 0 220.00 184.68 130 660.56

2020/21 117.29 0 247.03 176.14 136 676.46

Total 646.4 583.83 907.86 699.04 920 3757.13

1.9 Area of Plantation (Total, Planted and Mature) Table 7: Oil Palm Planted Area Summary, FFB Product ion and Average yield/ha for Sime Darby Plantation Sdn. Bhd. SOU 11 Kerdau Palm Oil Mill in FY 2014/20 15

Estate Name Total area (ha)*

Oil Palm Planted area

(ha)

Mature (Production)

area (ha)

Immature (Non-

production) area (ha)

FFB Production (tonnes) Average

yield/ ha

Kerdau 3,310.97 3,192.05 2170.15 1,021.90 41,661.37 19.20 Jentar 2,207.30 1,923.34 1,102.20 821.14 21,917.78 19.89 Mentakab 3,226.49 2,934.92 2,161.06 773.86 44,867.32 20.34 Sg Mai 2,835.04 2,605.67 2,605.67 0.00 63,821.72 24.49 Chenor 1,999.75 1,880.00 1,553.00 327.00 34,234.98 22.04 TOTAL 13,579.55 12,535.98 9,592.08 2,943.90 206,503.17 21.53

* The total area for all estates except Sg. Mai estate is reduced from the previous year’s total area due to GPS survey done by the company’s Research and Development (R&D) department which showed a lower actual to-tal area than previously. The previous total area for the estates (except Sg. Mai estate which is the same) is as follows - Kerdau estate: 3446.93ha; Jentar estate: 2234.00ha; Mentakab estate: 3273.09 ha; and Chenor estate: 2001.27ha

Table 8: Land use data for SOU 11 Sime Da rby Plantation

Estate Name

Rubber planted

area (ha)

HCV/ Potential

HCV areas (ha)

Land used for other purposes* (ha)

Non-plantable area (more than 25 de-

grees)

Palm Oil Mill & Buildings

Road, Hous-ing & Drain-

age Etc.

Kerdau - 8.42 13.98 16.87 62.41 17.24

Jentar - 59 193.53 - 31.43 -

Mentakab - 31.7 7.77 29.53 222.57 0

Sg Mai - 48.74 88.66 7.39 84.58 0

Chenor - 7.82 - 14.24 84.3 13.39

TOTAL - 155.68 303.94 68.03 485.29 30.63




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1.10 Progress Against Time Bound Plan

Table 9: Time Bound Plan of Sime Darby Plantations

Status Countries with SDP SOUs Total

no. of SOUs

Remarks Malaysia Indonesia Liberia

RSPO Certified

34 24 0 58 Malaysia: Effectively 34 SOUs in Malaysia have been certified. Out of this, 6 previously certified SOUs, i.e.Sg Samak, Jeleta Bumi, Yong Peng, Sepang, Mostyn and Segaliud POM has been closed down and certificates withdrawn. There are no other uncerti-fied SOUs in Malaysia Indonesia: 24 SOUs in Indonesia have been certified with one SOU pending certification (see below).

Planned for Certifi-cati-on/Undergoing Stage 1 or Stage 2 Assess-ment/ RSPO EB Review

0 1 1 2 SDP is progressively undergoing the RSPO Certifica-tion process towards 100% RSPO certification of es-tates/mills.

Indonesia: PT Mitra Austral Sejahtera (MAS) has un-dergone RSPO Main assessment and is delayed due to some social disputes. The target date for certifica-tion is by 2016 subject to the progress of the matter being resolved.

Smallholders: As at December 2015, total of 24,820 Ha (59%) of total Ha, (42,008 Ha) of SDP’s associat-ed smallholders in Indonesia has been certified. Cer-tification process for the remaining associated small-holders areas is on-going. SDP expect to achieve 100% RSPO certification of associated smallholders and outgrowers by end 2019.

Liberia: A new mill will be set up in Liberia and planned for commissioning in February 2016. Prepa-ration to undergo the RSPO Certification process is in progress and SDP targets to undergo RSPO Certifi-cation by end 2017. *RSPO NPP process has been completed in 2011. Internal assessment against the draft Liberia NI has been completed and closing of gaps is in progress.

Total SOUs 34 25 1 60 Other remarks: In March 2015, Sime Darby Plantation completed the acquisition of New Britain Palm Oil Limited (NBPOL). NBPOL is managed under a sepa-rate entity and the reporting of timebound plan will be under NBPOL’s management. NBPOL is considered as a different entity/member under the RSPO and NBPOL is 100% RSPO Certified.

1.11 Compliance to Rules for Partial Certification

Compliance of the uncertified management units of Sime Darby Sdn. Bhd against the rules for partial certification according to RSPO Certification System clause 4.2.4 was assessed by Documentation review. There is currently only one SOU located in Indonesia (PT Mitral Austral Sejahtera (MAS)) that is not yet RSPO certified. A sum-mary of findings is as stated below.




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Partial Certification Requirements Audit Findings

(a) The parent organization or one of its majorities owned and / or managed sub-sidiaries is a member of RSPO.

Sime Darby Plantation Sdn. Bhd is RSPO member with mem-bership number is 1-0008-04-000-00.

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

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

The company has a timebound plan both for Malaysia site and Indonesia sites as determined on the table 9 above. Almost all of the company’s SOUs have been certified with only one un-certified company remaining in Indonesia, PT Mitra Austral Se-jahtera (MAS), which has already undergone the RSPO Certifi-cation Audit by PT Mutuagung Lestari, but certification is de-layed due to some social disputes, as explained further below.

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

PT MAS, as the only remaining SOU of Sime Darby Planta-tions which has not been certified, has undergone certification audit by PT Mutuagung Lestari. Compliance to this requirement was therefore evaluated by the certification body.

(f) Land conflicts, if any, 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.

PT MAS has a number of ongoing social disputes involving the local communities in the hamlets of Kerunang & Entapang, Sanggau District, West Kalimantan, Indonesia, who were sup-ported by TuK (facilitator) & Oxfam (represented by Oxfam Novib (observer). A complaint regarding the dispute was made by the Project Affected Communities (PAC) to the RSPO on 5th November 2012, in which the PAC listed 14 demands, mainly related to the indigenous and land rights of the local community, disagreement over the plasma partnership ar-rangement between the local community and PT MAS, and re-quested contributions to the community. Regular discussion is ongoing between Sime Darby Plantation and the group of community (PAC) through bi-monthly Tim Kerja Perwakilan Petani (TKPP) meeting since November 2012. In October 2013, representatives from two of nine villages (Kerunang and Entapang) left TKPP and supported by TuK and OXFAM. They have then requested SDP to enter into Dispute Settlement Fa-cility (DSF) in June 2014. Hence, SDP is currently having on-going negotiations with two groups of communities: 1) TKPP (7 of 9 villages) and 2) Kerunang & Entapang (2 of 9 villages)

Engagement with Kerunang/ Entapang: SDP visited the com-munities on 27 August 2014 to listen and have a better under-standing on their requests. The subsequent meeting with the communities was held on 12 December 2014 and community is continuing to engage directly with SDP.

Engagement with RSPO: RSPO Secretariat is kept in progress by SDP through regular briefings and progress reports. The latest report submitted to RSPO is dated 7th August 2015.

Engagement with TKPP: The most recent TKPP meeting was held on 16th October 2015. The meeting was on reviews on




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the current and planned CSR activities for the communities. To date, 12 of the 14 demands have been closed.

(g) Labour disputes, if any, are being re-solved through a mutually agreed process, in accordance with RSPO criterion 6.3.

PT MAS, as the only remaining SOU of Sime Darby Plantations which has not been certified, has undergone certification audit by PT Mutuagung Lestari. Compliance to this requirement was therefore evaluated by the certification body.

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

PT MAS, as the only remaining SOU of Sime Darby Planta-tions which has not been certified, has undergone certifica-tion audit by PT Mutuagung Lestari. Compliance to this re-quirement was therefore evaluated by the certification body.

1.12 Progress of associated smallholders or outgrow ers towards RSPO compliance

There are no associated smallholders supplying to Kerdau POM, only independent outgrower supply to Kerdau POM through one FFB agent i.e. Sri Kerdau Commodities Sdn.Bhd, there are no specific planning by Kerdau POM for independent outgrowers towards to RSPO compliance.

1.13 Approximate Tonnages Certified

The approximate tonnages certified have been revised to reflect the latest actual certified tonnages as per Table 4, which is as follows Crude Palm Oil (CPO) : 40,943 MT Palm Kernel (PK) : 10,377 MT




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2.0 ASSESSMENT PROCESS 2.1 Certification Body

PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent test-ing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 500 locations in 65 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, and SA 8000. PT TUV Rheinland Indonesia’s office is located in Jakarta, Indonesia.

2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this recertification audit are:

Name Position Qualifications / Experience

Aswan Hasibuan

Lead Auditor

Education: Bachelor of Industrial engineering, University of Sumetera Utara. Trainings attended: ISO 9000:2000 Series Auditor / Lead Auditor Training - TUV Rheinland Indonesia (Jakarta), IRCA ISO 14001) Auditor / Lead Auditor Training Course – TUV Rheinland Indonesia (Jakarta), OHSAS 18001 Lead Auditor Training Course - TUV Rheinland Indonesia (Jakarta). OHS special-ist Training Sucofindo, Indonesia SMK3 auditor-Jakarta Working experience: Experienced in Quality Control from 1999-2004. Auditor for Quality Management System since 2004 – present. Auditor for Environ-mental Management System since 2005 – present. Auditor for OHSAS 18001 since 2007 - present. Conducted over 100 Quality Management System au-dits since 2004, over 50 Environmental Management System audits since 2006 , and over than 8 year s OHSAS audits since 2007

Suniljit Singh Harbhajan

Singh

Auditor (Social)

Education : Higher National Diploma in Electrical and Electronic Engineering – Nottingham Trent University ISHM (Institute of Safety & Health Management) Accredited OSH Professional Certificate – OSHA Train Academy, USA. FMM Certificate in Safety and Health Officer – Federation of Malaysian Manu-facturers. Trainings attended : Various trainings in social accountability standards in-cluding on SA8000, SMETA (SEDEX Members Ethical Trade Audit), EICC (Electronic Code of Conduct) Auditor trainings. RSPO P&C training. Various trainings in quality, health, safety and environmental. Trainings in IRCA 9001, 14001 and 18001 management systems for auditors. Working experience : 9 years of experience in conducting quality, health, safety, environmental and social accountability audits in various industries.

Azizan Zakaria

Auditor (Supply Chain,

Best prac-tices, En-

viron-ment)

Education: Master of Engineering (Environmental) - Universiti Putra Malay-sia, B. Eng in Chemical Engineering - University of Wales, Swansea Trainings attended : ISO9001: Lead Auditor Training/Course, Internal Auditor, IMS Lead Auditor/ Auditor Training in IMS (ISO9001, ISO14001 & OHSAS18001) Working experience : 10 years experience in chemical management and polyurethane production and internal auditing for process compliance with in-tegrated Environmental Management System (EMS) and OSH Management System.

Yusof Nizar Auditor (Legal &

OSH)

Education : Diploma in Public Administration- MARA Institute of Technology, Malaysia (1991). Certificate of Safety and Health Officer-Malaysian Insurance Institute (2003). Bachelor of Corporate Administration (Hons)-MARA Universi-ty of Technology, Malaysia (2003), Master of Science in Occupational Safety and Health Management-Northern University of Malaysia (2011), Candidate for Phd in Occupational Safety and Health Management-Northern University of Malaysia. Trainings attended: ISO 9001:2000 IRCA/IATCA Lead Auditor Training-International Management & Technology Limited (Kuala Lumpur), ISO




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Name Position Qualifications / Experience

14001:2004 IEMA Approved EMS Advanced Lead Auditor Training Course-Aspects Moody Certification Ltd (United Kingdom). OH&SMS IRCA Certified Lead Auditor Training Course-Moody International (Kuala Lumpur). MS 1722 Lead Auditor Training-Niosh Certification (Kuala Lumpur) Working experience: Experience in managing, consulting, training and audit-ing quality, environmental, occupational safety and health management sys-tems such as ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, MS1722:Part 1:2005 from 1996-Current. Contract Trainer of OSH & Environ-mental Legal & Other Requirements Lead Auditors course for SIRIM Training Services Sdn Bhd & NIOSH Certification Sdn Bhd. Contract Auditor for Envi-ronmental Management System for Sirim QAS International (2006). Depart-ment of Occupational Safety and Health Malaysia (DOSH) Registered Safety and Health Officer (2003-2006). Approved Human Resources Development Fund (HRDF) Trainer (2011). Assessor for Prime Minister’s Hibiscus Award and involving assessment for oil and gas companies, plantations industries, manufacturings, utilities, cleaning and transportations services (2003-2011). OSH and Environmental Auditor for TUV Rheinland Malaysia RSPO Principles & Criteria.

2.3 Assessment Methodology & Agenda The recertification assessment was conducted from May 30 - June 03, 2016 as per the assessment program below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia’s RSPO audit proce-dure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for the country in which the assessment took place and rec-orded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com-promising the integrity of the assessment in anyway. All 5 estates and 1 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the cer-tification body 30 days after the closing meeting. Verification of closure of major non-conformances was con-ducted through document checked 1 month after the closing meeting of the surveillance audit and implementa-tion of corrective actions for minor non-conformities will be verified during the next suriveillance audit. The recertification audit agenda is as explained below. Recertification Audit Agenda.

Date Location/ Main sites Main activities

May 30th, 2016 08:30 till 12:30

Kerdau Clubhouse, Kerdau Mill

Opening meeting and Introduction Document review: Legal compliance register, mill licenses, evidence of legal compliance, schedule waste consignment notes, HIRARC, accident records, workers pay slips, attendance records, SOPs, effluent analysis records, mill pro-duction records, mill procedure for received FFB until Product delivery, SCCS mass balance record, HCV management program, energy efficiency, record of water usage, emission, pollution and GHG identification and GHG calculation, FFB Price Mechanism, local business partner and agreements, human re-sources management, pay and conditions, social impact assessment and man-agement plan, stakeholder consultation records and documentation, communica-tion, social policies implementation record, OSH Manual, OSH Policy SOP, legal compliance records, minutes of meeting for safety and health committee, HIRARC formats, accident records and statistics, noise monitoring report, Medi-cal Surveillance report, CHRA report, training records, permits, Emergency Pro-cedures and etc.




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Interviews: Assistant Mill Managers, Wireman, Boiler Chargeman, Effluent Treatment Pond operator, office clerks, Engine Driver, workers at mill and re-ceiving bay and Pahang Zone representatives

02:00pm- 05:00pm

Kerdau Clubhouse,

Stakeholder consultation

May 31th, 2016

Kerdau Palm Oil Mill

Document review: Estate procedure, record of fertilizer application, leaf analy-sis record, water management plan, HCV document, HCV monitoring plan and realization, zero burning activity, emission, pollution and GHG identification pro-gram and mitigation, GHG calculation, record of maintenance boundary stone, OSH Manual, OSH Policy, legal compliance records, chemical stock card, MSDS, medical surveillance report, HIRARC formats, CHRA report, training rec-ords and SOP. On-site visit: Riparian bufferzone in field number 87JK, signboard HCV protec-tion, boundary stone, spraying activity in field number 13A – 13B, integrated pest management, replanting area, terracing, harvesting, chemical store/temporary store, chemical mixing area, diesel tank area, scheduled waste store, clinic, plantation, fertilizer store, Workshop On-site visit: Mill, receiving bay, weight bridge area, general mill compound, boilers, scheduled waste store, wastewater treatment chemical store, effluent treatment pond final discharge, workshop,

Chenotr Es-tate

Document Review : Area statement, replanting program, FFB production, estate maps, worker’s namelist, sample worker’s contracts and payslips, accident rec-ords, schedule waste inventories and consignment notes, DOE licenses of schedule waste collectors, HIRARC, Legal Requirements Register, Standard Operating Procedures (SOPs), Biodiversity Baseline Study Report, human re-sources management, pay and conditions, social impact assessment and man-agement plan, stakeholder consultation records and documentation, communica-tion, social policies implementation records. Interview with management On-site visit: Chemical store/temporary store, chemical mixing area, scheduled waste store, worker’s housing area, sloped (terraced) areas, replanted areas, Kiab Hill (at Jentar Estate), Tree Planting Program area, barn owl boxes, com-post application areas, beneficial plantings, compost application, working area for Harvesting and chemist, housing and facilities Interviews: Estate Manager and assistants, harvesters (Indonesian and Indian), Chief Clerk, Estate Mandores, sprayers (Nepalese), general worker (Bangla-deshi), workshop supervisor, Pahang Zone representatives, contracted workers,

June 01st, 2016

Kerdau Estate

Document Review: Area statement, FFB production, replanting program, Legal Requirements Register, estate maps, chemical usage records, IPM records, schedule wastes inventories and consignment notes, internal audit report 2014, plantation advisor report FY2013/2014, SOPs, water management program, waste management plan, pollution prevention plan and continuous improvement plans, Biodiversity Baseline Study Report, On-site visit: Workshop, scheduled waste store, chemical store, landfill, spray-er’s PPE washing area, water catchment, riparian river buffer zones, barn owl boxes, 25 sloped area, local community village, compost application Interviews : Estate Manager and assistants, Indonesian and Nepalese workers (harvesters, sprayers and general workers), field mandores Store Clerk, Pahang Zone representatives

Jentar Estate

Document review: Estate procedure, record of fertilizer application, leaf analy-sis record, water management plan, HCV document, HCV monitoring plan and realization, zero burning activity, emission, pollution and GHG identification pro-gram and mitigation, GHG calculation, record of maintenance boundary stone, integrated pest management, OSH Manual, OSH Policy, HIRARC formats, legal compliance records, chemical stock card, MSDS, medical surveillance report, CHRA report. Minutes of meeting for safety and health committee, foreign work-ers compensation scheme, training record. On-site visit: Riparian bufferzone in field number 98B and 98A, boundary stone in field number 94A, Chemical Store, chemical mixing area, Diesel Tank Area,




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scheduled waste store, fertilizer store, plantation, workshop Interviews: Estate Manager, cutters, sprayers, harvesters, Store Clerk, Hospital Assistant, Mandores and Pahang Zone representatives

June 02nd, 2016

Sungai Mai Estate

Document Review : IPM census records, barn own box occupancy census re-cods, ganoderma census records, chemical application and usage records, Sime Darby land titles, sample land preparation agreement with contractor, diesel us-age records, sample pay slips of Bangladeshi workers and contracted worker, Biodiversity Baseline Study Report, estate procedure, record of fertilizer applica-tion, leaf analysis record, water management plan, HCV document, HCV moni-toring plan and realization, zero burning activity, emission, pollution and GHG identification program and mitigation, GHG calculation, record of maintenance boundary stone, integrated pest management, human resources management, pay and conditions, social impact assessment and management plan, stake-holder consultation records and documentation, communication, social policies implementation records, OSH Manual, Chemical Stock Card, HIRARC formats, MSDS, Medical Surveillance report, CHRA report. accident report and statistics, training records. On-site visit: Worker’s housing, harvesting activity in field number 99, planted block of Jerantut, and housing, chemical store, chemical mixing area, Diesel Tank Area, scheduled waste store, clinic, fertilizer store, workshop, plantation and workers cleaning room. Interviews: Estate Manager, cutters, harvesters, Store Clerk, Hospital Assis-tant, Mandores and Pahang Zone representatives

Mentakab Estate

Document Review : IPM census records, barn own box occupancy census re-cods, ganoderma census records, chemical application and usage records, Sime Darby land titles, sample land preparation agreement with contractor, diesel us-age records, sample pay slips of Bangladeshi workers and contracted worker, Biodiversity Baseline Study Report, estate procedure, record of fertilizer applica-tion, leaf analysis record, water management plan, HCV document, HCV moni-toring plan and realization, zero burning activity, emission, pollution and GHG identification program and mitigation, GHG calculation, record of maintenance boundary stone, integrated pest management, human resources management, pay and conditions, social impact assessment and management plan, stake-holder consultation records and documentation, communication, social policies implementation records, OSH Manual, Chemical Stock Card, HIRARC formats, MSDS, Medical Surveillance report, CHRA report, accident report and statistics, training records. On-site visit: Worker’s housing, harvesting activity in field number 9904, plant-ed block of Jerantut, and housing, chemical store, chemical mixing area, Diesel Tank Area, scheduled waste store, clinic, fertilizer store, workshop, plantation and workers cleaning room. Interviews: Estate Manager, cutters, harvesters, Store Clerk, Hospital Assis-tant, Mandores and Pahang Zone representatives

June 03rd, 2016

Kerdau Es-tate

Closing Meeting and Presentation of Audit Findings




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3.0 ASSESSMENT FINDINGS 3.1 Summary of Findings

The following is a summary of findings during this recertification audit for the criteria listed in the RSPO Princi-ples & Criteria Malaysia National Interpretation year 2014 and RSPO SCCS year 2014.

• RSPO P&C

Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decis ion making.

Findings: Kerdau Mill During this recertification audit, there is no revision made to the company procedure related to information request from stakeholder. This procedure available for all stakeholders. Kerdau Mill has recorded all of in-formation request received in Log Book record for incoming letter and outgoing letter. During the audit, it was found there has been no incoming letter or information request from stakeholder received by the mill in 2015 Kerdau Estate, Sungai Mae Estate and Mentakab Estate This estate has record of Log Book for incoming letter information request from their stakeholders. All of incoming letters has been replied by the estate with evidence in the form of related letters and was record in to Log Book. But, in 2015 there is no incoming letter or information request from stakeholders received by the Estate. Compliance status: Full compliance

Criterion 1.2: Management documents are publicly av ailable, except where this is prevented by commercial confidentiality or where disclosure of i nformation would result in negative environ-mental or social outcomes.

Findings: The company does not specifically define what documents can be made publicly available as per the list of documents under RSPO IN 1.2.1. For any requests for documents by external parties, the estate or mill management will review the request and forward it to the related department of the company to confirm approval to release any documents, for example, requests for land titles will be forwarded to the Land Management Department of the company, while OSH plans, SEIAs, pollution prevention and reduction plans, HCV documentation, and continual improvements plans will be forwarded to the Plantation Sus-tainability and Quality Management (PSQM) department for approval prior to release of any documents. Public Summary Reports are made publicly available on the RSPO website as per RSPO requirements, while the company’s human rights policy is available on the company’s website and entitled “Social and Humanity Management Policy”.

There was no evidence of request from external parties for any of the documents required to be made publicly available, hence there is no evidence of non-compliance to this requirement. Compliance status: Compliance with observations See Observation no. 1 in Appendix 5

Criterion 1.3: Growers and millers commit to ethica l conduct in all business operations and trans-actions.




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Findings: The company has a documented Code of Business Conduct (COBC) in the form of a booklet which lists the core values for ethical conduct, including integrity, respect and responsibility, enterpreneurship, and success. The COBC also defines specific working standards pertaining to :

- Cooperation - Prevention of Conflict of Interest - Handling Bribery - Provision of gifts, entertainment and sponsorships - Giving donations - Protection of shareholders - Dealing with colleagues and business partners - Dealings with government bodies, political parties and international organizations

The COBC training material sighted includes a website link to a complaint form, email addresses of con-tact persons to whom complainants can lodge complaints about breaches of the ethical conduct policy. The COBC has been briefed to all workers evidenced by the brief documents dated on October 12, 2012 attendant by 111 workers. Mentakab and Chenor Estate also has conducted the Code of Ethical Conduct briefing to all workers, and was include in the contract document to all outsource contract/third party, as seen in sample contract document number DOC.No.4300279299 dated on 01/04/2015. Compliance status: Full compliance

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

Findings: Licenses of the mill and estates were checked and found to be valid as follows: - Acknowledgement by the Companies Commission of Malaysia for change of company name of Sime

Plantations Sdn. Bhd. (established on 2 April 2004) to Sime Darby Plantations Sdn. Bhd. on 2 January 2008

- Department of Environment of Pahang license no. 004379 dated 1 July 2015 to 30 June 2016 for Sime Darby Plantation Sdn. Bhd., Kerdau Palm Oil Mill for production of crude palm oil and permission for dis-charge to water. As per the license, maximum processing capacity is 60 metric tonnes per hour

- Permission letter for installation of one (1) boiler, one (1) chimney and one (1) multicyclone dust collector at Kerdau Palm Oil Mill issued by the Department of Environment of Pahang dated 19 August 2009, at-tached with written permission certificate no. APB/018/2009 specifying the terms of the installation.

- Latest license no. 540761004000 from the Malaysian Palm Oil Board valid from 1 July 2015 until 30 June 2016, for maximum processing of 270,000 metric tonnes of FFB per year

- Written approval for, boiler, chimney and multicyclone dust collector dated 19/08/09 by Pengarah JAS Pahang was checked and found to be valid.

Sime Darby has shown their compliance to applicable law regarding Manpower and Human resources Management, such as: a. Migrant Worker recruitment.

All of estate (and Mill) employ migrant workers, mostly working in harvesting and maintenance. Mi-grant worker recruitment events is conducted by a partner, however some of Sime Darby officers are involved in the process, such as in interviews and contract agreement assignment process. It was in-formed by migrant workers from Indonesia that they were interviewed by and signed the contract agreement in front of Sime Darby’s officer in Mataram Indonesia, before they went to Malaysia. The contract has been developed in Bahasa and fully understood by the workers. Company held worker's passport as collateral (so that workers would not abscond during contract pe-riod), and will give back to the workers after they fulfilled their contract periodand/or when the worker take their vacation leave (after 2 years). This condition has known by the workers before they joined the company, and they accepted this as requirements. As substitution, Company give provisional ID Card (photo slip) for each worker while they live and work in Sime Darby’s operation area. This card containing information such as passport number and the company name they work for.




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b. Minimum Wage Payment

Evidences regarding worker payment for all estates and mills have collected during audit, such as worker piece rate calculation norm and payslips. The piece rate calculation norm per April 2014 giv-ing guidance for the worker regarding their rights related to wages calculation, such as: - Rate per Tonnes, - Minimum Productivity target per day, - Basic Wage Without Price Bonus - Price Bonus - Basic Wages + Price Bonus + Incentive Allowances - Rate per Unit for Price bonus and Incentive allowances

This piece rate norm complies with national minimum wage and achievable for normal harvesting worker. Reviewed pay recorrds for July 2015, Dec 2015 & April 2016 for 10 sampled employees from Jentar, Sg. Mai and Chenor estate during audit. Based on these evidences company shows their compliances according to national minimum wage requirement (RM 900).

c. General Leave, Sick leave and Annual Leave

There are some evidences shows regarding work leave such as Worker Offering Letter for Local Worker and Working Contract Agreement for Migrant worker. Worker offering letter mentions worker right to Paid Leave for: - General Leave 13 days per year; - Sick Leave 14 days (less than 2 years), 18 days (between 2 to 5 years), 22 days (over 5 years),

and maximum 60 days for hospital treatment/inpatient. - Annual leave 14 days (below 5 years) and 16 days (over 5 years).

d. Overtime in general and in specific conditions Checking to mill worker attendant record found that some worker has overtime more than 3 hours a day, which is within the legal requirements. The evidence sighted was a letter from Manpower Office of Peninsular Malaysia regarding Regulation of overtime under section 60A (4) (a) Employment Act. 1955. There are over 20 days of holidays in Malaysia, and in accordance with the Employment Act 1955, the company allocateds 13 days public holidays to workers, and allows them to choose certain holi-days based on their wish to celebrate those holidays. If workers a public holiday, than the company will pay the overtime as regulated by the government. There is a letter from Mill Manager to all staff, January 2016, regarding “Public Holidays for 2016. This letter explains the holidays for Malaysian and Indian workers. Checking to worker attendant record and wage calculation shows that company has comply with national regulations regarding holiday overtime payment. Based on payslips and worker attendance records showed during audit, company has shown their compliance regarding overtime payment.

e. Minimum Worker Age Requirement

Worker list for estates and mill has collected and checked during audit. There was no worker found aged below 18 years old. The youngest worker for each estates and mill were around 18 to 19 years old. All migrant workers has follow requirement regarding age limitation in according to prevent any child worker issues. From field check observations at housing, plantation areas and mill conducted during this surveillance, there is no child worker found in all of the company’s operations areas.

The Procedure For Legal and Other Requirements (Appendix 5.2.4) was reviewed. This purpose of the procedure is to identify the changes of legal and other requirements, notifying oil mill on the changes on the legal and/or other requirements, notify affected personnel. Mechanism for ensuring all the detailed LORR is enforced was detailed in the in Level 2; Standard Operation Manual (SOM); Appendix 5.2.4a Procedure For Legal and Other Requirements; 6.5 Evaluation of Compliance to Legislation and Other Re-quirements. PSQM (Plantation Sustainability and Quality Management) department located in KL HQ is assisting on updating and tracking the changes on the legal and/or other requirements. Email communica-tion from (PSQM) details the update on the LORR (Legal and Other Requirement Register) which super-sede the 2015 version. The latest updated reviewed LORR was on Dec 2015. Evaluation of compliance score-card for the LORR (Legal and Other Requirements Register) was pre-




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pared by Asst. Manager and approved by the manager. The LORR was reviewed and approved for compliance of the legal and other requirements annually. The latest review dates by the Asst. Manager and Manager were on The Legal and Other Requirements Register for Social details the following applicable legal require-ments:-

• Workers Minimum Standards of Housing and Amenities Act 1990, • Employment Act 1955 • Employee Provident Fund Act 1991 • Social Security Act 1969 • Trade Union Act 1959 • Minimum Retirement Age Act 2012 • National Wage Consultative Council Act 2011 • Minimum Wages Order 2012

In this register the status of compliance, accountability & responsibility and enforcing agency. However, there were several non-compliances found as listed below. Compliance status: Non-compliance Non-conformance RSPO00412 (Major non-conformity) 1. It was found that Kerdau Mill still not having a Fire Certificate even mentioned as compliance under Fire Services Act 1988 and Fire Services (Fire Certificate) Regulations 2001 in the LORR. 2. Also No Competent Certified Environmental Professional in the treatment of POM effluent (CEPPOME) and Certified Environmental Professional in Scheduled Waste Management (CepSWaM) yet as mentioned under Section 49A of Environmental Quality Act (Ammend) 2012. 3. There are found in Kerdau mill one foriegn workers working permit is already expire. Process to renew in progress. However, the workers are still working in site also not cover with Insurance. Kerdau Mill:- i) Review of the selected employees payslips for the month of May, Oct and Dec 2015 & Feb, March and April 2016 for e.g. for employee no. 23371, 111645, & 86423 details details the deduction of wages for Great Eastern Insurance premium payment on coverage of Critical Illiness. Noted the same type of deduction of was observed in Kerdau and Sungai Mai Estate with approval from State Labour Dept (Jabatan Tenaga Ker-ja, Pahang) in a form of Permit Potongan Daripada Gaji Pekerja as per Section 24 of Employment Act 1955. However no approval from State Labour Dept available for the deduction of wages in Kerdau Mill when re-quested. Sungai Mai Estate:- ii) Legal and Other Requirements Register (LORR) was reviewed and indicates that category - General where the Employment Act 1955 was listed scored as 100%. However there were no records on the Em-ployment Act 1955 list of evaluation was evident during the audit and as practiced for previous year. It was noted that State Labour Dept officer has issued ‘Failure to comply with a Notice of Compliance’ Dated: 7th Jan, 2015; Reference No: PMK 10604 / 06409 on incompliance towards Section 60A (3)(a), Section 60 (3)(a)(b)(c) and Section 60 D (aa) / (aaa) of Employment Act 1955. This contradicts the score indicated summary of result of the evaluation of compliance. In addition there is were no follow-up evidence sighted during the audit of the last communication dated 1st April 2016 made to State Labour Dept. Non-conformance RSPO00413 (Minor non-conformity) Found a Legal Register for Kerdau Mill, Chenor, Jentar and Mentakab Estates was not properly reviewed and documented as sampled: • Occupational Safety and Health Act 1994, The requirement not detailing explained the actual sections. For

example Part IV Gen. Duties of employer to formulate Safety and Health Policy. Actual this is unser Section 16. Under Part IV also have Section 15 General Duties of Employers and Self-employed Person to Employees, Section 17 General Duties of Employers and Self-employed Person to Person Other Than Their Employees. These were not included and explained. While Part VII not explained on requirement to conduct medical surveillance as specifically under Section 28. (Kerdau Mill)

• Ammendment of Factories and Machinery (Person In-Charge) (Ammend) Regulations 2014 not clearly defined the relevant heavy machinery under ammended schedule. (Kerdau Mill, Chenor, Jentar and Mentakab Estates)




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• Factories and Machinery (Steam Boiler, Unfired pressure Vessel) Regulations 1970 under Regulation 3, 45-64 and 72 were not clearly explained the actual requirements intead mentioned as refer the regulations in FMA for specific details of the conditions (Kerdau Mill).

• Occupational Safety and Health (Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 under Regulation 13 just mentioned Duty to Furnish Safety Data Sheet. The full requirement such as explanation that Safety Data Sheet need to be review by supplier every 5 years was missing (Kerdau Mill, Chenor, Jentar and Mentakab Estates)

• Factories and Machinery (Safety, Health and Welfare) Regulations 1979 (Revised 1983) from Regulation 6 to 30 all mentioned refer to regulations in FMA for specific details on conditions. Some af the applicable requirements such as Section 24 Space for Each Person, Regulation 25 Height of Workroom, Regulation 26 Air Cleanliness, Regulation 28 Temperature were mentioned as Not Applicable which actually applicable (Chenor Estate)

• Fire Services (Fire Certificate) Regulations 2001 was not applicable for all estate but mentioned as compliance

• Environmental Quality Act 1974 not included Section 22 Restriction of Pollution of Atmosphere, Section 23 Restriction of Noise Pollution, Section 29 Prohibiton of Dispose Waste to Malaysian was wrongly mentioned Prohibition of Open Burning which actually under Section 29A. Section 34B Prohibition against Placing, deposit and etc of Scheduled Waste was not included (Jentar Estate).

• Occupational Safety and Health Act 1994 not included requirements of Section 16, 17 and 30. (Mentakab Estate)

• Environmental Quality Act 1974 not included requirement of Section 34B Prohibition against Placing, deposit and etc of Scheduled Waste (Mentakab Estate).

Non-conformance RSPO00414 (Raised to Major non-conf ormity from previous audit) The mechanism to ensure legal and other requirements compliance was not effective as all reviewed of compliance at Kerdau Mill, Chenor, Jentar and Mentakab Estates scored 100% but found: • Occupational Safety and Health (Safety and Health Officer) Regulations 1997 showing compliance status.

Actually no SHO required for Mill (Kerdau Mill) • Pesticides (Lebelling) Regulations 1984 was not included in the LORR and compliance was not evaluated

(All Estates) • Deleted Environmental Quality (Sewege, Industrial Effluent) Regulations 1979 still evaluated and

mentioned as compliance. (Chenor Estate) • Applicable Environmental Quality (Refrigerant) Regulations 1996 wrongly mentioned as not applicable

(Chenor Estate) • Not applicable Fire Services (Fire Certificate) Regulations mentioned as compliance as actual no evidence

of compliance exist. (Chenor and Mentakab Estates) • Missing Sections 16, 17 and 30 of Occupational Safety and health Act 1994 compliance status were not

evaluated. (Mentakab Estate) • Factories and Machinery (Safety, Health and Welfare) Regulations 1970 (Revised 1983) mostly mentioned

as not applicable and compliance status were not evaluated properly (Mentakab Estate).

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

Findings: Kerdau Estate and Mill Found during this audit that there is no revised or new information about land title of the company. Kerdau Estate and Mill has legal land title/legal ownership accordance to the “Surat Hak Milik Keluaran Kanun Tanah Negara, Borang 11A”, or Letter of Land Ownership number document number 11A, Registered in Temerloh, No. H.S. (D) 5401 State of Pahang, with land purposes is for agriculture, in Mukim Kerdau, No. P.T.575 valid for 99 years until September 9, 2086, about 4856.232 Ha, for palm oil land purposes, issued on September 9, 1987. Kerdau Estate paid the land taxes for 2015 evidenced by the land taxes paid slip No. K/P 647766-V dated on 22/01/2015 for land about 4856.232 Ha located in Mukim, Kerdau, with ownership number 00005401, No. LOT/PLOT/PT 0000575. Mentakab Estate




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In the Mentakab Estate during this audit, it was found there were no revisions and changes to the legal land document also. The following legal land is: 1. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 9238, No. Lot 1807,

covering area 2140 Ha with unlimited time, registered on September 5, 1998 2. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 9296, No. Lot 1806,

covering area 6 Ha, with unlimited time, registered on August 2, 1998. 3. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 9299, No. Lot 1808,

covering area 1397 Ha, with unlimited time, registered on August 29, 1998 4. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 12, No. Lot 3097,

covering area 135 Ha, with unlimited time, registered on July 2, 1966 5. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 13, No. Lot 3080,

covering area 2 Ha, with unlimited time, registered on July 2, 1966 6. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 8857, No. Lot 2317,




covering area 14 Ha, with unlimited time, registered on September 24, 1998 10. Letter of Legal land ownership “Geran Mukim” document number 1823, No. Lot 918, covering area 45

Ha, with unlimited time, registered on September 1, 1998 11. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 10014, No. Lot 2473,

covering area 51 Ha, with unlimited time, registered on September 24, 1998. All of legal land documents mentioned that the land purposes is for rubber plantation, and Estate has submit for revision report of land purposes to the Agriculture Department. Estate also has land taxes payment evi-denced by the land taxes paid slip number Lot 0003080 dated on 11/04/2014. During the last surveillance audit, it was found that Mentakab Estate has several land titles stating conditions for planting only for rubber, however the estates are now fully planted with oil palm with no evidence of updated land titles with revised conditions of land use from the Land Department. This was raised as a non-compliance(NCR 2015 – 03 of 04). During this audit, it was found that there was an email from Sime Darby’s LMD which clarified that the planting of oil palm is still in accordance with the term of Chenor Estate’s Land Title no. 5690, lot no. 3274 with area of 1394,1398 Ha registered on 19 April 2000 stated permission for planting of permanent plants. According to reference sources from the Food and Agriculture Organization (FAO), World Programme for the Census of Agriculture 2010 and the the Center for International Forestry Research (CIFOR), oil palm falls under the definition of permament crops, and therefore for Chenor Estate, there is not non-compliance to the terms of the land title. This explanation was accepted by the audit team and no change of the land title is re-quired. For Mentakab Estate, email records between Mentakab Estate and Sime Darby’s Land Management De-partment (LMD) showed that for within August to October 2014 showed the company has been in progress of transferring the name of land owner of Mentakab Estate from the previous owner (Mentakab Rubber Company (Malaya) Limited) to Sime Darby Plantation. As informed by the company’s Land Management Department in email dated 23 October 2014, the land title transfer has been unsuccessful due to technical issues in the legal documentation which they are rectifying. However, in the email threads there is no spe-cific mention of request to also change the land title terms from rubber to oil palm. The company’s LMD is working on transferring the land title name under the company and simultaneously requesting for change in the land title terms to permit planting of oil palm instead of rubber. As the legal process is long and actions were observed to have been taken by the company, the progress of this NC will be checked again during the next surveillance audit. Chenor Estate There is no revision and new update of legal land ownership during this audit in Chenor Estate. The legal land ownership is: 1. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 5690, No. Lot 3274,

covering area 1394.1398 Ha, registered on April 19, 2000, land purposes for permanent crop 2. Letter of Legal land ownership “Geran Kanun Tanah Negara” document number 719, No. PT 469,

covering area 489.5646 Ha, with land purposes is for palm oil. Registered on August 1, 1998. 3. Letter of Legal land ownership temporary “Hak Milik Sementara” No. H.S.(D) number 720, No. PT




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470, covering area 116.0496, with land purposes is for palm oil. Registered on August 1, 1998 Estate has paid land taxes evidenced by land taxes slip dated on 12/02/2014, with No. Lot 000470.

There is evidence that physical markers are located and visibly maintained along the legal boundaries of chenor estate, particularly adjacent to state land, NCR land and reserves, and company has maintain boundary by made and maintain existing terance between company and their neighbor, such as in block 02D, next to small holder, and 16C next to Felda Plantation. Kerdau Estate has record map of boundary stone map. Based on record of boundary stone, indicated the boundary stone in good condition, and accessible. But also indicated boundary stone lost, and estate changed with big trench to keep land boundary. For Mentakab Estate, record of boundary stone mainte-nance is available also. On the record, showed the boundary stone in good condition, accessible, clean and clear, there is also trench for outside border. Compliance status: Compliance with observations See observation no. 2 and 3 in Appendix 5

Criterion 2.3: Use of land for oil palm does not di minish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

Findings: The company maintains a procedure document issued in November 1st, 2008 regarding “Flowchart and Procedures on handling land Disputes”. There are two kinds of potentials matters, On-Land and Ex0-Workers (staying in estate quarter). During this audit, there is no change found with regards to change to information about the right to use land. There is no evidence found that the company diminishes the le-gal, customary, or user rights of other user without their free, prior and informed consent. Compliance status: Full compliance

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

Findings: Kerdau Mill A documented management plan for 3 years long term economic commitment is available. The manage-ment plan includes a plan, projection of incoming FFB received, production plan, and expected output for CPO and PK, OER and KER. The 3 years management plan long term economic presented below: 1. Projection of FFB received:

- 2017 FFB received amount plan 227,843.57, tonnes - 2018 FFB received amount plan 245,323.60 tonnes - 2019 FFB received amount plan 265,815.42 tonnes

2. Projection of CPO production: - 2017 CPO production plan 49246.22 tonnes with OER 22.% and KER 5.50% - 2018 CPO production plan 53661.77 tonnes with OER 22.2% and KER 5.50% - 2019 CPO production plan 58622.79 tonnes with OER 22.05% and KER 5.50%

3. Projection of PK production: - 2017 PK production plan 13234.95 tonnes - 2018 PK production plan 14361.02 tonnes - 2019 PK production plan 15,127.45 tonnes

Long term economic commitment for, also available in the Estate, example for Kerdau estate, and Sungai Mai Estate. In the management plan for long term economic commitment showed the FFB production plan.

1. 2017 is about 74475.31 tonnes 2. 2018 is about 76968.45 tonnes




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3. 2019 is about 75,494.90 tonnes Replanting program only has been sighted at the Kerdau Estate.Replanting program at Kerdau estate as follow 2017-235.87 Ha 2018-167.36Ha 2019-no replanting 2020-125.88 Ha 2021-117.28 Ha 2022-106.06 Ha 2023-119.4 Ha 2024-120.64 Ha Compliance status: Full Compliance

Criterion 4.1: Operating procedures are appropriate ly documented and consistently implemented and monitored.

Findings:

Company has been maintaining document procedure that has been found in Sime Darby Plantations Estate Quality Management System (EQMS): SOP for Oil Palm Estates, issuance date 01/11/2008. The docu-ments includes SOPs pertaining to oil palm nursery, estate upkeep and cultivation activities (including re-planting, land preparation, weeding/spraying for mature and immature areas, census, pruning, manuring, and water management, and harvesting and collection

Sime Darby’s RSPO & Certification Unit carries out an annual internal audit for the estates, as seen from from a sample Internal Consultative Assessment Report (RSPO/ISCC), dated Januari 11th, 2016 for Chenor Estate. The internal audit report included 15 findings, including major and minor findings as well as opportu-nities for improvement (OFI). The estate also have annual Plantation Advisor visit. The last Plantation Advi-sor (PA) report for Sg. Mai estate for visit conducted on 21 – 24 April 2016 was sighted and included de-tailed summary of findings and recommendations pertaining to implementation of company’s operational SOPs, FFB yield, crop quality, etc. Aspects covered in the PA report include pruning and raking, harvesting, road maintenance, manuring, EFB/compost, pests and diseases, roads and bridges, etc. For example at Mentakab Estate, there was operating procedure available as sampled EHS Manual (SD/SDP/SQM/EHS/001-1 dated 01/07/12. Also available Estate QMS such as sampled dated 01/11/08 Version 01. Covering Oil Palm Nursery, Estate Upkeep and Cultivation, Harvesting & collection, Employee Welfare, Workshop and Maintenance, Record of amendment, Also available SOP (ME/SOP/011) Spraying. Workshop Safety SOP, Tractor Operating SOP. Loading Spike and Hood SOP. Harvesting at High Voltage Current Area SOP. Harvesting SOP. Company implement EFB to land as supplement to chemical fertilizer. However, there is no record of amount EFB applied, so it cannot be ascertained whether the use of palm EFB on land in accordance with the guidelines set out which set 180kg/palm for immature palm. Chenor Es-tate. This was raised as a non-compliance. Compliance status: Non-compliance Non-conformance RSPO00415 (Minor non-conformity) There is no record of amount EFB applied, so it cannot be ascertained whether the use of palm EFB on land in accordance with the guidelines set out which set 180kg/palm for immature palm. Chenor Estate

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

Findings: Sighted at Kerdau, Mentakab and Chenor Estates that the company continues to maintain their procedure for fertilizer application in section 8, version 4, issue date on 26/08/2013 about manuring activity with chemical fertilizer and EFB application in immature planted. When the EFB application different into two type based on:




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- Coastal soil, with dosage 25 ton EFB/ha/year application - Inland soil, with dosage 30 ton EFB/ha/year application

Application shall one layer with 0.3 – 0.45 meter range from palm base. For fertilizing application with chemical fertilizer and EFB in mature planted area, different into two type based on:

- Coastal soil, with dosage 180 kg EFB/ha/year application - Inland soil, with dosage 200 kg EFB/ha/year application

Application shall one layer with 0.3 – 0.45 meter range from palm base. Kerdau Estate: Record of fertilizer application available in the estate from January – March 2016 based on fertilizer recommendation. Actual application recorded on fertilizing logbook/costing book, and fertilization implementation followed the schedule and recommendation. Example for MOP fertilizer application in filed number 2009A with area 64.3 Ha, standing per hectare 148 trees, application dosage is 1.5 kg/tree, and the application compliance with recommendation. Sungai Mai Estate: Record of fertilizer application in the Sungai Mai Estate established well in log-book/costing book. During this re-assessment audit, fertilizer process application has followed the rec-ommendation. Example in main division in field number 2002s with standing per hectare 132 tree, palm tree planted 12768, for MOP fertilizer application, total application is 25987 and have been implementa-tion accordance to fertilizer recommendation with dosage 2kg/tree. To increase the soil nutrients, the company (estate) has strategy through the EFB mulching and was rec-orded in record of EFB mulching. In Kerdau Estate EFB mulching example was conduct in field number F2015A on January 2015, and complied with the procedure EFB application i.e.: one layer with 200 kg/palm oil tree. In Sungai Mai estate there are no application of EFB mulching. Record of Agronomic and Fertilizer Recommendation Report-Oil Palm issued by the R&D Centre – Up-stream Technology and Transfer and Advisory Services for leaf analysis conduct available for each es-tate, example in Kerdau Estate conducted on 20-22 June, 2016 Sungai Mai Estate conducted on January 15-16, 2015 . While for soil analysis conduct in every 5 years. The last of soil analysis was conducted in year 2012. Fertilizer application conducted in Chenor Estate for RP in August 2016 for examples in Field 98B with to-tal area 60 hectare and total palm 8075, recommended dosage 1.75kg per palm. To increase the soil nutrients, the company (estate) has strategy through the EFB mulching and was rec-orded in record of EFB mulching. That activities also conducted in Chenor Estate in January in Field 15 A , February in Field 15B, and March 2016 in Field 15A and Field 16B. Total EFB mulching for month February in field 15B are 1163 palm with dosage 180kg/palm, and totally apply 209,340 kg EFB. It was al-so seen at the mill that there is a composting plant and sighted in the fields of estates, i.e. Chenor Estate that composting is carried out at many areas which are recommended for compost application by the company’s agronomist. The estates also carry out frond stacking in U shape as part of their nutrient recy-cling strategy and also to reduce erosion. Compliance status: Full compliance

Criterion 4.3: Practices minimise and control erosi on and degradation of soils.

Findings:

All estates have semi-detailed soil maps surveyed and prepared by the Precision Agriculture Unit, Plantation Upstream, dated 14 May, 2010. Example soil map sighted for Jentar estate includes predominant soil type in the estate is of the series Kuala Brang (1,137.28ha) and other soil series available include Bungor (597.88ha), Gong Cenak (247.62ha), Kampung Pusu (20.10ha), Nami (22.23ha), Tebok (126.30ha), Terap (12.44ha). Jentar Estate consist of flat to sloped areas above 25 degrees slope. Sg. Mai estate area include 15 different soil series types, the predominant type being Jeram soils series, covering 10.2% of the estates area, and other soil series are Jempol, Bungor, Serdang. Kemahang, Kuala Brang, Nami, Kuah, Batu Lapan, Gajah Mati, Terap, Tebok, Kerayong, Rasau and Gong Chenak. Based on description of the differ-ent soil types, it was found that most soil types are moderately deep to deep yellowish brown, brown or red-dish sandy clay soils, with no significant marginal soils identified.




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Fragile soil in all estate has been identified further as follows, i.e: 1. Kerdau estate based on map of marginal soil with scale 1:23,000 has identified i.e.: slope soil, which

consist of: - 0 – 2o is about 702.65 Ha - 2 – 6o is about 1624.57 Ha - 6 – 12o is about 241.29 Ha - 12 – 20o is about 20.31 Ha - 20 – 25o is about 0.01 Ha

Sg Mai estate has map of potensial erosion or slope > 250 and evidence of practices minimizing soil erosion example in Jerantut division-Sg Mai estate such as terraces, planting mucuna (cover crop), maintaining good non-competitive ground covers in mature areas, advocating proper frond heap stacking such as countur shaped stacking. The road maintenance has available in estate such as Kerdau and Sg Mai estate in form road grading (total road maintenance program period of 2012/2013 in Sg Mai estate is 2891 ha, so all transport activity clearly and there is not peat soil in all company areas. The company has constructed drains/bunds between each 4 trees in lower land. 2. Mentakab Estate. In this estate, marginal soil has identified in 3 division, such as:

a. Lanchang division, based on slope map with scale 1:24,000, consist of: - 0 – 2o is about 414.37 Ha - 2 – 6o is about 910.79 Ha - 6 – 12o is about 261.57 Ha - 12 – 20o is about 44.51 Ha - 20 – 25o is about 3.78 Ha - > 25o is about 1.46 Ha

b. Edensor division, based on slope map scale 1:15,000, consist of: - 0 – 2o is about 253.34 Ha - 2 – 6o is about 619.31 Ha - 6 – 12o is about 119.03 Ha - 12 – 20o is about 2.16 Ha

c. Mentakab division, based on slope map scale 1:14,000, consist of: - 0 – 2o is about 141.09 Ha - 2 – 6o is about 340.11 Ha - 6 – 12o is about 186.16 Ha - 12 – 20o is about 8.88 Ha

Each estate has identified the marginal soil location through the map of marginal soil. To maintain the mar-ginal soil, the company has set the procedure i.e.: through the terracing to minimize the soil erosion. While there is no fragile soil found in Chenor estate.

The company implements an SOP for construction of terraces in accordance with Section 4: Land Prepara-tion of the Sime Darby Agriculture Reference Manual: Oil Palm Planting issue no. 1 year 2011, version 2, is-sued 01/07/2011. The SOP defines terraces for different levels of slope, that terraces should be back sloped and also stated that areas with slope greater than 25° slope should not planted and best left for biodiversity purposes.

Practices minimizing soil erosion is evident at all estates, such as terraces, planting mucuna bracteata (cov-er crop), maintaining good non-competitive ground covers in mature areas, advocating proper frond heap stacking such as countur shaped stacking. This was observed in the field at the main division of Sg Mai es-tate and Jentar Estate. Jentar’s area above 25 degrees which covers an area of 194.15 ha is not planted but is maintained as a natural secondary forest area and also used for establishment of a variety of tree species as part of Sime Darby’s Tree planting program. Tis program stil maintained. Estate also conducted the road maintenance through the road maintenance program and own a rear grader, roller, compactor and back bucket for road maintenance. In Kerdau Estate has conduct road grading from January 2015 in field number 2012A, 2012B, 2012C, 2013A, 2013B and 2013D. In Mentakab Estate record of road maintenance program also available, and conducted from July 2015 – December 2015. Example im-plementation of road maintenance in field number P01 Endensor division, and field number P95, with road grading and compacting activity. It was noted in the PA report for FY2013/2014 for Sg. Mai estate that fre-quent flash flood occurrence is P94SB, P95S and P97SB have been reduced with replacement of culverts




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and de-silting of drains.

There are no peat soils at the estates. Drainability assessments conducted prior to replanting to determine the long-term viability of the necessary drainage for oil palm growing. Company has develop water trap in replanting area. Compliance status: Full compliance

Criterion 4.4: Practices maintain the quality and a vailability of surface and ground water.

Findings:

The estates implement an SOP for Water Management as per their Estate Quality Management System dated 1/11/2008. The SOP defines measures to improve soil productivity and minimize loss of soil and nu-trients by controlling field water levels at acid sulphate and non-acid sulphate soil areas, maintaining water management infrastructure including drains, watergates, drain blocks and water table tubes, and monitoring water and soil pH and water salinity at appropriate intervals. In addition, there is also a guidance to protect watercourses stated on Sustainable Plantation Management System (SPMS) Appendix 14, version 1, 1 January 2010 as the best practice to include protection of water courses and wetlands, including maintain-ing and restoring appropriate riparian buffer zone or before replanting along the natural waterways within the estate.

It was observed at the field in Sg. Mai and Chenor estate that palms at riparian buffers zones at small streams within the main division of the estate as well as at the estate’s water catchment area are demarcat-ed with red paint about two palm trees width from the edge of the water body, as indication that no chemical application is permitted at these palms. It was confirmed through interviews with sprayers from Sg. Mai es-tate that no spraying is carried out at these palms. Estate has also installed signboard in the field such as in main road, collection road, riparian buffer zone, housing, office and others, with information mentioned in the signboard is about river protection from hazardous, chemical activity, and other types of activities to be avoided which will reduce the water quality. Estate has also installed signboard in the field such as in main road, collection road, riparian buffer zone, housing, office and others, with information mentioned in the signboard is about river protection from haz-ardous, chemical activity, and other types of activities to be avoided which will reduce the water quality. Dur-ing at Sungai Mai estate that site visit it observe that company has been marking 4 tree from river bank as buffer zone.

Sighted at Mentakab Estate, a license from the Pahang State Government of water source usage (No SWUL/LPSA/44/2016) dated 2 Dec 2015 with validity until 31 Dec 2016 to extract Semantan River water for domestic use at Mentakab Division. A water analysis has been conducted with latest analysis report sighted on 27 Jan 2016. The parameters checked were pH, Free Residual Chlorine, Turbidity, Aluminium and E.coli with results were found to be within specification of drinking water quality standard under Ministry of Health Malaysia, Quality Assurance Programme (QAP) Standard 2012. The latest sample have been sent for analysis dated 23 May 2016, how-ever the result is yet to be received .

At the Kerdau Oil Mill, the Quarterly Report Form (or AS4) Regulation 10 (2) of the Environmental Quality (Prescribed Premises) (Crude Palm Oil) 1977 has been submitted via online for 1st quarter 2016 with total CPO produced recorded at 7,114.29 mt/mth, FFB processed recorded 35,068.85 mt/mth and total water consumption at 39,189 m3/mth. Previous records dated 9 Jan 2016 with 4th quarter, total CPO produced rec-orded at 10,285.06 mt/mth, FFB processed at 48,390.64 mt/mth and total water consumption 34,152 m3/mth. The results available for Oct 2015 and Nov 2015, with missing data for Dec 2015 due to dry spell at the area. Also sighted for previous quarter, Sep 2015 is missing from the result with similar reason (dry spell). For 3rd quarter, total CPO produced recorded at 11,883.66 mt/mth, FFB processed at 55,837.10 mt/mth and total water consumption was 95,482.45 m3/mth. Analysis results for 1st quarter 2016 shows that pH within range of 9.40 - 9.70, BOD is within 22 - 39 mg/L, COD within 1,280 - 1,469 mg/l, SS in the range of 299 - 409 mg/L and TS between 8,670 mg/l - 10,250 mg/l.

The Kerdau Oil Mill used a treated water from Sg Jentar for internal consumption only, with valid license (No License SWUL/LPSA/116/2016) dated 9 Dec 2015. The license validity is from 1 Jan 2016 to 31 Dec 2016




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with issuance from the Perbadanan Air Pahang (PAIP) for ground surface water. DOE license (No 004379) dated 16 June 2015 have been issued to the mill under EQA (Prescribed Premise) (Crude Palm Oil) 1977 - P.U. (A) 342 adn EQA (Clean Air) 2014 - P.U. (A) 280 and EQA (Scheduled Waste) 2005 (Amendment) 2007 with validity 1 July 2015 to 30 June 2016. The license is to discharge the final ef-fluent via the watercourse directly to Jentar River with max effluent must less than 696 m3/day. Sighted also pH and TSS analysis test results of mill final discharge of effluent between Oct 2015 to March 2016 had exceeded DOE required legal limits

The mill has total of 14 ponds (2 cooling ponds, 6 anaerobic ponds and 6 aerobic ponds). Minimum one sample of effluent analysis of final discharge, anaerobic pond no. 1 effluent and raw effluent is sent once a month for analysis at Sime Darby Research Sdn. Bhd. - Lab Services Laboratories. However, it was seen from records of effluent analysis for some months that effluent quality had exceeded the legal parameters, i.e.:

It was seen from the effluent management logbook that the mill had taken action to reduce the effluent BOD and TSS, but further actions be may required due to consistent exceedance of the BOD. Noted as observa-tion.

Mill water use per tonne of Fresh Fruit Bunches (FFB) is monitored on a daily basis and reorded in logbook named 'Water Treatment Plant Meter Reading and Meter Analysis Record Book'. Based on the daily read-ings, average water usage ranges from 1.00 - 2.00 MT water per tonne FFB.

However a non-compliance was raised as below. Compliance status: Non-compliance Non-conformance RSPO00416 (Minor non-conformity) 1. Sighted pH and TSS analysis test results of Kerdau Mill final discharge of effluent from Oct 2015 to March 2016 had exceeded DOE required legal limits. No evidence that any actions have been taken to overcome the matter.

2. The water quality of the surrounding the estate shall be monitored by performing water sampling 4 times a year as per the Sustainable Plantation Management System (SPMS) Appendix 7. However, at Mentakab Estate sighted that the water analysis was last recorded in Jan 2016 and previously on Aug 2015 with the latest sample was sent in May 2016. See also observations no. 5 and 6 in Appendix 5

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

Findings:

The estates have an SOP for Pests and Diseases issed 11/1/2008 which covers integrated pest manage-ment techniques for common pests such as rats, bagworms and nettle caterpillars and rhinoceros beetles.

There is evidence that all estates implement biological methods in control of pests i.e in Kerdau Estate, Barn owl are available ,one barn owl in every 8 Ha.in Sungai Mai also sighted that barn owl are available. To monitor occupancy of barn owl, Company has been conducted barn owl census on the monthly basis ie.Sungai Mai estate date on 08.April 2016. Part of that company also planted beneficial plant such Turnera subulata and Antigonon, Kerdau Estate has been conducted. Chemical control such as spraying cyper-metrin to Control attach from Rhinoceros and Bagworm beetles Sg. Mai estate does not carry out prophy-lactic spraying as all their areas are mature areas and attack rates of bagworms and rats are low.

In Chenor Estate , during FY 2015/2016 there is no major pest attack. Company have plant such beneficial plat as Turnera Subulata and Antigonon leptopus.

There was no usage of cypermethrin, rat bait or other chemicals used for pest treatment as pest attacks are low or non-existent. No records of IPM Training were sighted, which was explained as being due to low pest attacks. Only on the job training on how to conduct pest census was conducted. As sampled census records appeared to show census was done correctly according to SOP, this was noted as an observation. Compliance sta-tus: Compliance with observations




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Criterion 4.6: Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used t hat are categorised as World Health Organi-sation Type 1A or 1B, or are listed by the Stockhol m or Rotterdam Conventions, growers are ac-tively seeking to identify alternatives, and this i s documented.

Findings: The company still refers to Sime Darby Agriculture Reference Manual Ver. 03 Issued Date: 01/07/11 as justification for application of pesticides and herbicides. Section 16 of the manual describes selection of pesticides to be apply to the target pest, weed or disease clearly shown in the table.

All estates maintain a documented summary of annual chemical usage in document named ‘Monitoring Pes-ticide Usage per Hectare and Per Ton FFB Production. Summary of chemical usage for Sg. Mai estate in FY 2014/2015 and FY2015/2016 up to April 2016 show chemicals used were only for herbicide manage-ment, i.e. Ally, Kenlon, Amine, Sodium Chloride, Wet & Stick, Thiram, Antracoal, Touch Up, Hextar Cyper, Basta and Glyphosate. There was no usage of cypermethrin, rat bait or other chemicals used for pest treat-ment. Similar chemical usage summary was also sighted for Chenor estate, which has records of usage of Ally, Glyphosate, Hextar Cyper, Basta, Kenlon, Sodium Chloride, Bayfolan, and Rat Bait. The document shows calculation of active ingredient used per ha and per tonne FB, however it is in total calculation of ac-tive ingredients of all chemicals applied, instead of for individual chemicals. This was noted as an observa-tion. There was no evidence of usage of paraquat. At Mentakab Estate as sampled there were availability of Monitoring of Pesticides Usage per Hectar and Per Ton FFB Production from July 2015 till Jun 2016. Chemicals used Thiram (Thiram), Antracoal (Pro-pineb), Ally (Metsulforon Methyl), Glyphosate (Glyphosate), Hextar Cyper (Cypermentrin), Basta (Glufosinate Ammonium) and Kenlon (Triclopyr Butoxy Ethyl Ester). All these chemicals categorized as World Health Organization’s requirement. At Chenor Estate, the pesticides were the one categorized by WHO and currently no Class 1A, 1B and II kept in inventory or being used. Also Pesticides used as in Pesticides Act 1974. While in Jentar Estate Pesticides categorized as WHO and Pesticides Act 1974 and USECHH 2000. Class II, III and IV were in control. At Jentar Estate, the Sprayers attended training on 17/12/15 and the number attended by 19 workers by Bayer. While in Mentakab Estate, found evidence of training on Safety for Sprayers done on 11/04/16 by a trainer from Bayer.

At Kerdau Estate, the chemical store was improved after last audit. Railing at staircase, correct exhaust fan installation, proper signages and good arrangement. All pesticides containers were properly labelled and stored.

During interviews with sprayers in the field at Jentar Estate, Sungai Mai and Chenor estates, it was found that the company provides proper PPE for sprayers, including aprons, googles, rubber gloves, rubber boots, and masks. The estate has a PPE washing area at their chemical store and it was confirmed with sprayers that they shower and clean their PPE at the store. Areas that have been sprayed are marked with a warning sign.

At Kerdau Estate, found four contracted workers attended circle spraying on 13/4/15, and another 17 con-tracted workers attended spraying training on 14/04/14. 6 workers attended Pest & Disease Spraying training on 15/04/15 at Nursery.

Empty chemical containers at Jentar Estate are triple rinsed, punched and kept at a secure store to be col-lected by a contractor, i.e. G- Planter Sdn. Bhd.

At Kerdau Estate, sighted a contract dated 01/01/15 for contractor supplying labourers to carry out chemi-cal spraying. Paragraph 16.1 of the contract requires a contractor to comply with legal such as OSHA 1994 and EQA 1967. Medical Surveillance for contractor workers will be done on 27/14/15 as letter dated




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22/04/15 the Estate Manager of Kerdau. This medical surveillance will include 17 workers including a worker interviewed at Block 13A. Based from Pictorial Safety Standard for Spraying (2008). Item 8.5 (6) mentioning that all workers including contractor should be sent for medical surveillance on chemical espo-sure every year. Medical surveillance for workers handling organophosphate was conducted on 11/06/14. 8 workers underwent the medical surveillance and 7 were found to be normal except one worker who was found to have high glucose and cholesterol (advice was to diet). Spraying mandore interviewed at Block 13A will be sent to medical surveillance programme in accordance with letter approved by the Estate Man-ager dated 10/04/15 with 10 other workers. 32 contracted workers under another contractor (Triang Leong) were also confirmed to have undergone medical surveillance. However, it was found that medical surveil-lance was conducted by Occupational Health Doctor (OHD) on 22/02/16 only on 3 workers from workshop at Jentar Estate. As sampled from Chemical Health Risk Assessment (CHRA) Report by Assessor (JKKP HIE 127/171-2 (124) conducted from 20-21/08/15. All chemical mixers, sprayers, manurers, foreman, storekeeper were recommended to maintain annual medical surveillance programme. Rait bait applicator workplace risk assessment also recommended to maintained annual medical surveillance. Previous Medi-cal surveillance was done on 19/12/14 on 25 workers. OHD also recommended to continue annual medi-cal surveillance. This was raised as a non-compliance

The company does not engage any female workers to carry out spraying or chemical application work, so there is no risk of pregnant or breast-feeding women involved in such activities. This was confirmed at sev-eral estates, where found no pregnant female workers involved with spraying or chemical handling activities. The only potential female staff handling chemicals is the store clerk. One female store clear at Mentakab Estate was found to be pregnant but her direct handling of chemicals is limited to avoid exposure and poten-tial contamination. When interviewed, she was also aware of the potential risk and understood what protec-tive measures to take accordingly. Compliance status: Non-compliance Non-conformance RSPO00417 (Major non-conformity) Found medical surveillance was conducted by Occupational Health Doctor (OHD) on 22/02/16 only on 3 workers from workshop at Jentar Estate. As sampled from Chemical Health Risk Assessment (CHRA) Re-port by Assessor (JKKP HIE 127/171-2 (124) conducted from 20-21/08/15. All chemical mixers, sprayers, manurers, foreman, storekeeper were recommended to maintain annual medical surveillance programme. Rait bait applicator workplace risk assessment also recommended to maintained annual medical surveil-lance. Previous Medical surveillance was done on 19/12/14 on 25 workers. OHD also recommended to con-tinue annual medical surveillance See also observations no. 7 and 8 in Appendix 5

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

Findings: At Kerdau Mill, OSH Policy was found in the Meeting Room dated January 2015. While in Chenor Estate and Jentar Estate, both having same OSH Policy. JE- Available Sustainability and EHS Plan FY 2015/2016. Mentakab Estate, OSH Policy available too and OSH pan for FY 2015/2016 consist of Risk Management, ESH Structure, Incident Reporting, ERP, Chemicals Management, Machinery Safety Mangement, SW Mgt, Water Quality Monitoring, Communication, Inspection, Monitoring Programme, Awareness and Training & Reporting. Found hazards and risks was not properly evaluated as required by OSH Manual dated August 2008 once yearly for effectiveness and circumstances of accident, new material, equipment, machinery or process. As evidence found: • Hirarc was reviewed due to an accidents occured on 24/11/15 approved by Mill Manager dated 21/03/16

but found no approve signature available. • Fatal accident involving Hadapan Mill was not considered and no review on Hirarc was not done

accordingly at Kerdau Mill. • Previous review for risk scored medium (4 and above) not having new proposed control measures and

clear action plan and dateline of implemention as it should be. (Kerdau Mill, Chenor, Jentar Estates). • Review also not comprehensive as only mentioned one Job step (maintenance with risk of electric shock




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and fire) for Motor & Compressor. Risk of explosion, rotating part , noise not explained (Kerdau Mill) • Hirarc was last reviewed on 16/01/15 on operating of fax machine and office operation. 15/03/15 on

workshop. No HIRARC review was conducted for 2016 No review of hirarc conducted after few accidents involving harvesters in 2015/2016 as reported in Minutes of Meeting of Safety and Health Committee (Chenor Estate).

This was raised as a non-compliance. In Chenor Estate at Block 15B, found group of sprayers wearing goggle as required by SDS. JE- Observe sprayers wearing proper PPE such as goggle, respirator with filter, apron, safety boots and nitrile glove. While harvesters found wearing safety boots and helmet. Mentakab Estate, available as sampled PPE is-suance records Nitrile Glove, Respirator, Apron, Safety Helmet. Training for harvester done on 23/01/16 attended by 14 workers inluding mandore from Endensor Division, Lanchang’s mandore and Badang driver and tractor were trained on 01/07/15 and also attended by other 21 drivers. Kerdau Mill, Safety and Health Committee (SHC) Organization chart was available. Meetings were con-ducted regularly as required on 21/03/16, 18/12/15, 18/09/15, 17/03/15. In Chenor Estate, SHC meeting was conducted on 08/03/16, 09/12/15, 10/09/15. While in Mentakab Estate, SHC meeting was conducted on 26/02/16, 21/12/15, 17/10/15, 14/07/15, 18/06/15. Available too Organization Chart for SHC for FY 2015/2016. Chairman is Estate Manager, Secretary is Medical Assistant. 9 employers Representatives and 10 employee Representatives. Kerdau Mill, accident involving Netrananda 24/11/15 was investigated on 24/11/15 too by Mohd Shahrin Shaari and Zul Hilmi Siran. JKKP 6 was sent to DOSH accordingly on 11/12/15. While at Chenor Estate, accident reported in meeting minutes 08/03/13. Torn Prick Anwar Hossain (21/12/15), Yusuf Effendi (21/01/16), Raju Roy (01/02/16). All on hand and fingers. Another one Harvesting (loading) FFB drop on body on 03/03/16. Another meeting on 09/12/15, 3 accident reported. In Jentar Estate, first aid training at-tended by 4 mandores and the trainer was Liyana on 25/10/15. In Mentakab Estate, mandore for harvest-er at Endensor Division (Arumugam) not having first aid box at field during sampling. Training for first aid available for Lanchang Division done on 07/01/16 attended by 14 workers and trained by Aiman Hashim (MA). Mentakab Division done on 08/01/16 attended by 6 mandores, Endensor Div. done on 09/01/16 at-tended by 5 mandore and clerks. In Chenor Estate, found workers accident coverage made from sampling of Form 8A SOCSO contribution for Mac 2016 RM 2,009.50 (66 workers) and April 2016 RM 1,862.10 (65 workers). Foreign Workers Co-moensation Scheme (FWCS) policy FW108474 from 30/03/15 till 29/03/16 amount RM 7,535.98 for 5/99 workers and FW078190 from 02/01/15 till 01/01/16 amount RM 5,407.42 for 3/29. In Jentar Estate, For-eign Workers Compensation Scheme Certificate no FW145087 covering 106 workers from 01/07/15 till 30/06/16 amounted RM 8,099.92. Form 8A for contribution of April 2016 for 30 workers amounted RM 1,007.99 and march 2016 amounted RM 1, 053.10 for 30 workers. ME- Evidence of Form 8A contribution for March 2016 amounted RM 3,032.80 for 93 workers. Confirmation Slip (SPPS) JTK1679287 dated 08/07/15 and Foreign Workers Compensation Scheme Certificate of Insurance FW149457 covering 135 workers amounted RM 10,313.20 from 01/07/15 till 30/06/16. At Jentar Estate, found incident statistics recorded in Loss Time Injury (LTI) for year 2014/2015 (3 LTI cases) recorded 48 LTI and 2015/2016 (4 LTI cases) recorded 31 LTI until April 2016. While in Mentakab Estate, available too statistics of incident in LTI for 2015 and 2016. As at April 2016, cumulative man hours without LTI was 180,280 while for 2015 cumulative man hours without LTI was 850, 640. Compliance status: Non-compliance Non-conformance RSPO00418 (Major non-conformity) Found hazards and risks was not properly evaluated as required by OSH Manual dated August 2008 once yearly for effectiveness and circumstances of accident, new material, equipment, machinery or process. As ecidence found: • HIRARC was reviewed due to an accidents occured on 24/11/15 approved by Mill Manager dated

21/03/16 but found no approve signature available. • Fatal accident involving Hadapan Mill was not considered and no review on Hirarc was not done


clear action plan and dateline of implemention as it should be. (Kerdau Mill, Chenor, Estates).




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• Review also not comprehensive as only mentioned one Job step (maintenance with risk of electric shock and fire) for Motor & Compressor. Risk of explosion, rotating part , noise not explained (Kerdau Mill)

• HIRARC was last reviewed on 16/01/15 on operating of fax machine and office operation. 15/03/15 on workshop. No HIRARC review was conducted for 2016 No review of hirarc conducted after few accidents involving harvesters in 2015/2016 as reported in Minutes of Meeting of Safety and Health Committee (Chenor Estate)

See also observations no. 9, 10, 11, 12, 13 and 14 in Appendix 5

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

Findings: At Kerdau Mill, there was Kerdau Mill Training Plan FR 2015/2016 consists of Hirarc, OSH Committee, EHS Policy, Boiler Operation, EQA, RSPO/ISCC, Fire Drill, Social/Gender, Effective workplace inspection etc. Also available training needs FY 2015/2016. Chenor Estate training needs for FY 2015/2016. Training Plan also available for FY 2015/2016. In Mentakab Estate, also available training needs plan covering Managers, Sr. asst, Asst, MA, Supervisor, Clerk, mandore and others workers. for FY 2015/2016. Also available as sampled Annual Training Plan covering RSPO requirements At Kerdau Mill, available training records for Safety Briefing conducted 03/05/16 attended by 7 workers, RSPO/ISCC training was conducted 19/01/16 attended by 26 workers. Boiler Operation (Dec 15), Chemical Handling and Operation (Jan 2016), Scheduled waste Mgt (Sept. 15), Effective workplace inspection/audit (Sep 15). Chenor Estate, found evidence of training such as CHRA training on 30/10/15 attended by 35 workers. Briefing on Code of Ethics done on 27/08/15 by estate manager attended by 121 workers. Safety working at catchment pond on 13/11/15 attended by 5 workers. Training and demonstration for harvesters on 18/07/15. 52 workers attended. Training for Badang operator done on 10/04/15 attended by 14 workers. Hirarc training was conducted on 07/04/16 attended by 10 workers. Trauma management attended by 20 workers on 14/08/15. Scheduled waste management training was conducted on 14/08/15 attended by 20 workers. While in Jentar Estate briefing for harvesting gang on 26/05/16 attended by 12 harvesters. Har-vesting competency training programme on 16/05 16 attended by 16 workers. Training for palm planting on 06/05/16 attended by 20 worker. Training for stacking attended by 24 workers. PPE training was conducted on 17/12/14, Safety briefing for sprayer attended by 19 workers. Mentakab Estate, on 08/04/16 Hirarc prep-aration training was attended by 9 staffs. Chemical Handling Training on 11/01/16 attended by 4 staffs. Ac-cident reporting and classification done on 26/08/15 attended by 17 workers. In Chenor estate also available training need analysis as baseline to determined training program in year 2016. Training program including chemical handling, safety in harvesting, fertilizer application, handling hazardous waste, There are sighted some personal training records for staff level, eg for warehouse staff have been trained regarding SOP and the danger of Pesticides. However, not all records of training for each employee was not maintained. Record are only available for Staff level and above. For Example Harvesting Mandore in Kerdau Estate Compliance not available. This was noted as an observation. Compliance status: Compliance with observations See also observation no. 15 in Appendix 5

Criterion 5.1: Aspects of plantation and mill manag ement, including replanting, that have environ-mental impacts are identified, and plans to mitigat e the negative impacts and promote the positive ones are made, implemented and monitored, to demons trate continuous improvement.

Findings: Sighted at Chenor Estate, the Environmental Impact Evaluation (EIE) was last reviewed in Feb 2013. There is no evidence that the latest review was conducted accordingly.

At Jentar Estate and Mentakab Estate, the EIE was reviewed on April 2016 for both Environmental Aspect and Impact (EAI) and Environmental Impact Evaluation (EIE). However, both EAI and EIE was dated back




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on 2013 with some information was outdated such as legal reference Environmental Quality Act (Scheduled Waste) Regulation 1989 and Environmental Quality Act (Clean Air) Regulation 1978. One of the legal EQA (Control Emission from Diesel Engines) Regulation 1996 which is the year 1996 is wrongly stated. In addition, Environmental Impact Evaluation Form (EIE) was not used properly for example spillage of die-sel was considered as normal condition (suppose emergency condition) For all aspects identified, there is a column asking if there is a high potential of non-compliance to environ-mental regulation. All were ticked as "No' but in actual, many of the aspects have risk of legal non-compliance if not managed according to the law. Compliance status: Non-compliance Non-conformance RSPO00419 (Major non-conformity) The EIE was reviewed on April 2016 for both Environmental Aspect and Impact (EAI) and Environmental Impact Evaluation (EIE) at Chenor Estate, Jentar Estate and Mentakab Estate.

However, both EAI and EIE was dated back on 2013 with some information was outdated such as legal ref-erence Environmental Quality Act (Scheduled Waste) Regulation 1989 and Environmental Quality Act (Clean Air) Regulation 1978. One of the legal EQA (Control Emission from Diesel Engines) Regulations 1996 which is the year 1996 is wrongly stated.

In addition, Environmental Impact Evaluation Form (EIE) was not used properly for example spillage of die-sel was considered as normal condition (suppose emergency condition) For all aspects identified, there is a column asking if there is a high potential of non-compliance to environ-mental regulation. All were ticked as "No' but in actual, many of the aspects have risk of legal non-compliance if not managed according to the law.

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

Findings: HCV Re-assessment Report for Pahang Zone dated March 2016 covering SOU 11 Kerdau and 2 other SOUs in the Pahang region has been prepared by the PSQM Department. The names, expertise and work-ing experience of the HCV assessment team were listed in the report including 3 team members, i.e. Team Leader with experience in wildlife conservation, forest research/management, and IMS auditing, 2nd member who is a certified SIA assessor with 3 years SIA assessment experience, and experience working with the wildlife department and in forest management, and 3rd member with a Bachelor in Plant Resource Science and Management, social worker executive for Pahang Zone and assisted in SDP’s tree planting project. However there is no evidence of peer review of the report. The report describes a total of 157.64 ha of HCV area identified in SOU 11:Kerdau which comprises HCV 4 and HCV 6 areas as follows:




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The report also includes a list of common wildlife identified in the area of SOU 11 and 2 other nearby SOUs (SOU 10 and SOU 12) including their IUCN and WCA 2010 conservation status. All species of animals iden-tified were listed as least concern, including White throated kingfisher, common myna, crested serpent ea-gle, barn owl, red jungle fowls, intermediate egret, lesser, whistling ducks, wild boar, long –tailed macaque, leopard cat, common civet cat, Malay civet, common cobra and monitor lizard. No threatened or endangered animal species were identified. The report only includes evidence of consultation with the Forestry Departments of Kuantan and Pahang, which was confirmed during the stakeholder consultation meeting where a representative of the Forestry Department confirmed that the company has approached the Forestry Department to get advice on any pro-tected animals in the area. However there is no evidence of consultation with other stakeholders such as surrounding villages, indigenous people and smallholders. All estates has a Biodiversity Action Plan for FY 2015/2016 which includes monthly monitoring activities for all HCV areas identified. The estates maintains records of monthly HCV monitoring done including observa-tions at HCV areas for signs of encroachment, wildlife issues, pollution or erosion and other, as well as maintenance of signages and fencing. It was seen from monthly monitoring records from July 2015 to May 2016 that there were no observations made in the areas above. Compliance status: Full compliance

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

Findings: The scheduled waste management is based from the Scheduled Wastes (Hazardous Waste) Management of Sime Darby Plantation – Plantation Sustainability and Quality Management (PSQM) (Operational Control Procedure) Doc. No. SD/SDP/PSQM (ESH)/0203-EN1 Rev 0 dated 26 Feb 2015. The specific procedure emphasizing on the treatment of empty containers to a licensed scheduled waste contractor.

A scheduled waste management plan has been established at Mentakab Estate dated 8 Dec 2015 re-viewed by the Assistant and approved by the Manager. The scheduled waste identified were SW103, SW305, SW306, SW410, SW425, SW110 and SW409 which are coming from workshop and chemical store. Domestic waste also been identified such as rubbish from line-site, office and general store, sewage, scrap metal, and medical equipment (SW404). Kualiti Alam Sdn Bhd (License No. 004047) is the approved contractor to collect the scheduled waste with valid permit from 1 May 2016 to 30 April 2017. The contractor is allowed to collect scheduled waste SW305, SW306, SW307, SW311, SW409 and SW410




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The inventory has been kept accordingly with properly labelling and disposal as sighted via consignment note. The disposal was done on every 6 months by the approved contractor by the DOE

At Kerdau Oil Mill, a list of scheduled waste been disposed accordingly to the licensed contractor; Kualiti Alam Sdn Bhd with valid license from 1 May 2016 to 30 Apr 2017. Latest inventory updated until April 2016 with latest data for SW305 (0.14mt), SW306 (0.07mt), SW409 (0.05mt), SW410 (0.09mt).

Meanwhile at Chenor Estate sighted a scheduled waste was disposed accordingly to the licensed contrac-tor, Kualiti Alam Sdn Bhd. with valid license from 1 May 2016 to 30 June 2017. The latest collection of scheduled waste was done on 24 Nov 2015 with collection of SW410 (0.35mt), SW409 (0.83mt), SW102 (0.2mt), SW313 (0.224mt) and SW305 (1.03mt). For clinical waste (SW404) latest collection was recorded on Apr 2016.

A scheduled waste at Jentar Estate was disposed by the licensed contractor, Kualiti Alam Sdn Bhd with val-id license from 1 May 2016 to 30 Apr 2017. Latest inventory was sighted on 6 Oct 2015 with collection of SW409, SW103. SInce then, there was no new scheduled waste been generated until 15 Dec 2015 where first generation of scheduled waste been produced (SW409).

However, the following observations were sighted: • Fertilizer bags were found left or dumped at the field in Chenor Estate and Mentakab Estate (Edensor

Divisyen). • No proper management at storage regarding on input and output date of waste disposal. • Recycling bins is sighted at the Chenor Estate and Mentakab Estate (Edensor Divisyen), however, the

segregation for recycling organic and inorganic waste is not properly monitored at the estates. • No proper of segregation of organic and inorganic waste sighted at Jentar Estate and Mentakab Estate

(Edensor Divisyen) landfill. Compliance status: Compliance with observations See observations no. 16 and 17 of Appendix 5

Criterion 5.4: Efficiency of energy use and use of renewable energy is maximized.

Findings: Kerdau mill has record of energy used from fossil fuel and renewable energy, and also for water used per ton FFB. Renewable energy used came from shell and fiber. Records are available from period of July 2015 – April 2016, i.e.:

1. July 2014: FFB processed was 18,032 MT, CPO produced is 3,847.45 MT, fiber usage is 12,622,40 MT, shell usage was 5,409.60 MT, and total renewable energy usage was 4.69 MT/CPO.

2. March 2015: FFB processed was 18,473.97 MT, CPO produced is 3,856.65 MT, fiber usage is 12,931.78 MT, shell usage 5,542.19 MT, and total renewable energy usage is 4.79 MT/CPO.

3. Water usage for July 2014 until March 2015 periode is 1.89 MT/FFB, still under standard quality set by the mill.

Compliance status: Full Compliance

Criterion 5.5: Use of fire for preparing land for r eplanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

Findings: As seen during site visit to newly cleared and replanted areas at Jentar Estate and Chenor Esatate, there is no evidence of burning. Palms are felled, chipped and stacked, in accordance with the company’s SOP for land preparation. A sample memorandum of agreement dated 1st November 2014 between Chenor Es-tate and contractor named Jasa Awah Enterprise for land preparation for replanting of 88ha at 1987A and 1987B in Division A was sighted. The agreement specifies work to be carried out and includes require-ments that standing palms are to be felled mechanically with excavators, chipped to specified sizes and stacked. There is no specific requirement prohibiting use of fire in land preparation, which should be in-cluded in the agreement to ensure land preparation contractors are aware of the company’s zero burning




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policy. Compliance status: Full Compliance

Criterion 5.6: Plans to reduce pollution and emissi ons, including greenhouse gases, are devel-oped, implemented and monitored.

Findings: Kerdau Mill has identified of all polluting activities including greenhouse gas (GHG) emissions from all ac-tivity, mill also has calculated GHG emission with the latest version of the RSPO endorsed Palm GHG tool. The result is: 1. POME treatment with emission value is about 24,421,617.54 kg CO2 eq/year, with total POME pro-

duced is 135,675,653.00 kg 2. Fuels consumption with emission value is about 87,684.50 kg CO2 eq/year, with total consumption is

27,925.00 litter/year 3. Electricity consumption with emission value is about 883,102.42 kg CO2 eq/year, with total diesel

consumption for genset is about 113,370.00 liters/year. Mill and estate has record of management plan to reduce and minimize the emission and pollution includ-ing GHG emission for 2015/2016. The management plan is similar to the previous year and mentioned about activity to reduce and minimize, such as daily monitoring smoke, reforestation in HCV area, effi-ciency energy, and others. This year’s Pollution Prevention Plan 2015/2016 for Sg. Mai estate includes types and sources of pollution was sighted, including actions to be taken, person-in-charge and status. Sources of air pollution identified included vehicle and machinery exhaust, road conditions, and pesticide spraying, noise pollution sources included machinery and vehicles, water pollution sources included pesticide disposal and water retaining rubbish and odor pollution source was garbage disposal. Actions to be taken generally involve mainte-nance of vehicles, proper waste management and protection of water bodies by avoiding indiscrimate waste dumping and spraying near water. Sime Darby HQ has a documented renewable energy implementation plan for all mills in Malaysia and In-donesia with planned mill to reduce the main source of greenhouse gases identified from the mill, i.e. me-thane production from POME treatment ponds through methane capture and flaring. The plan states 11 phases with each phase covering one financial year and planned number of mills to undergo the pro-gramme during each phase ranges from 4 to 7 mills each financial year. The plan also lists estimated CAPEX, potential carbon reduction per year, reduction from baseline (%) and cumulative reductions (%) for each phase. Kerdau Palm Oil Mill is included in Phase 3 which is planned to be implemented from FY 2015/16 with estimated potential carbon reduction per year of 239,703 tCO2 for 7 mills listed in that phase. At Chenor Estate, a Pollution Prevention Plan 2015/2016 has been sighted which includes air, noise, water and odour pollution. The sources of such types are coming from vehicle exhaust, machinery, pesticides spraying, and from garbage disposal as well. The activities taken such as to have scheduled maintenance for vehicles, maintain the buffer zone, and measures during spraying pesticides. Compliance status: Full compliance Criterion 6.1: Aspects of plantation and mill manag ement including replanting that have social im-pacts are identified in a participatory way, and pl ans to mitigate the negative impacts and promote the positive ones are made, implemented and monitor ed, to demonstrate continuous improve-ment. Findings: A Social Impact Assessment has been conducted covering estates and Mill. Documents and records re-garding Social impact assessment are as follows:

a. SOU 11: Mentakab, Sungai Mai, Jentar, Kerdau Est ate and Kerdau Palm Oil Mill Stakeholder Consultation regarding Social Impact Assessment has been conducted on 11 to 16th Janu-




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ary, 2016, in Kerdau Club House based on invitation letters sent to relevant stakeholders. The meeting agenda included: - To understand the relationship between mill/estate with contractor/supplier - To identify positive/negative impacts of Mill/estate’s practices/operations to contractor/supplier External stakeholders who attended the meeting were head of SMK Kerdau, Manager Assistant of

Felcra, social Welfare Executive Manager of PSQM, and Supplier’s representatives (Tree planting and Teck Guan Estate). Issues that arose during the stakeholder consultation were:

- The need of referral letter during checking and treatment at government clinic. - The need of translator for foreign worker - The need of transportation for injury worker to Hospital - The need to equalize migrant worker registration fee with local worker and estates paying their regis-

tration fees. Estate also conducted stakeholder meeting with “Orang Asli” or local community tribes surround the es-tate areas.

There are some observations found for Kerdau estate SIA, noted as follows: 1) Based on the SIA report assessment dated: 11 to 16th January, 2016 – Areas of Concern SOU shared

findings for Balai Bomba & Penyelamat Temerloh it is mentioned please refer to Kerdau Palm Oil Mill findings on page 15. When referred is should be page 14. In page 14 it was mentioned as below:-Interview with Tuan Azmi bin Mohamad Nor, OCS Balai Bomba & Penyelamat Temerloh – insisted the management to have an Emergency Response Team (ERT) in cases of emergency (E.g. Fire) which was evident thru as sighted for ERP Team Kerdau Estate 2015 / 16; Dated: 15th Feb, 2016. In addition there were comment made i.e. Training can be provided along with formal written request to the OCS Ketua Balai Bomba, Balai Bomba & Penyelamat, Bukit Angin and required for a plan of the internal area to be submitted. However the comment on required for a plan of the internal area was not clearly reflected in the Kerdau Estate SOU 11 Management Plan on Social Impact Assessment. Although the rest of the sampled issues action plans were in place and implemented such as on housing condition / living improvement in terms of building and cleanliness. Allocation of budgets (based on report account as at April 2016) to address the other issues raised by the stakeholders was sighted.

2) The reference used for conducting the Social Impact Assessment based on the Impact Assessment Manual by Federal Department of Town and Country planning Peninsular Malaysia and Malaysian Society of Impact Assessment was not evident during the audit and demographics on age range for both male and female population for Kerdau Estate was not included except for Malaysian children. Year 2015 Census on Headcount & Household at Kerdau & Sg Tekal Division which reflects age group for both male and female population including total conceive numbers and total bed ridden patient however this census was included as part of the demographic analysis of the Social Impact Assessment.

3) Based on the SIA report asssement 4.2 Methodology it was mentioned that for the group interview the local communities , the team based on their invitations on the lisf of informants interviewed (the selection criteria was based on a cross section of society. However there were no records of invitations sighted as practiced for previous year. For example Stakeholder Meeting: Social Impact Assessment (SIA) for RSPO Certification to Dr Nurul Ashikin bin Zasni (Klinik Kesihatan Kerdau) and Mr. Ahmad Kahar bin Mohamad Taib (Pejabat Penghulu Mukim Kerdau) and Mr. Shahrir bin Hj Othman (Sekolah Kebangsaan Kerdau) all dated: 27th Jan, 2015. Although the duly filled signed attendance list reflecting the stakeholder presence were available.

Compliance status: Compliance with observations See observations no. 18, 19 and 20 of Appendix 5

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

Findings: The estates still maintains a procedure for external communication. All communication accepted and recorded by a clerk and distribute to communication manager/officer. The officer review the records then




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decide how to response the communication. There is an appointed person for social issues as seen from a letter dated January 15th 2015 regarding “Appointment as Official management responsible for social issues in Estates and Kerdau Mill”. Based on this letter, his job description includes: - Management of Grievances and Complaints regarding social issues and formulate action plan as re-sponses. - Keeping and maintaining records of grievances, complaints and all of accomplishment records. - Technical advisories and counselling to workers who need assistance and support regarding social is-sues. - Assisting estates management inputs in Social Program/Training Development. There is document list of stakeholder available during this surveillance name as “List of Stakeholders 2015/2016”. The list has cover government agencies, schools, hospital, and other companies surround-ing the plantation. The estates and mill showed evidences that they maintain all of records regarding mi-nute of meeting with stakeholders. They also accepted, response and recorded their communication with the stakeholders. Based on the SIA report under 4.1 Data Collection & Sampling Procedures, in accordance with the re-quirements for information needed, the initial approach was to analyse SOU 11 Kerdau communities and stakeholder list (i.e. a description of the demography, social and cultural framework) to determine the sampling procedure based on random sampling where the results would represent an actual reflection of the impacts on the stakeholders. However noted Qualicast Sdn. Bhd- Supply rocks for road works – as reviewed from Bank Voucher Dec 2015 – Supplier and Great Eastern Life Assurance (M) Sdn. Bhd. – In-surance Company – as reviewed from Bank Voucher July 2015 were not reflected in the list of stake-holder including office representatives from MAPA / NUPW and MAPA / AMESU. Noted Mr. Periasamy – Site Chairman – MAPA/NUPW representative, Pn. Jamiselah binti Abd Rahman and Pn. Mariyai A/P Da-harmalingam both union members of MAPA / AMESU have attended the Social Impact Assessment meeting as evident from the List of Attendance dated: 12th Jan, 2016. The list of stakeholders were later updated on-site and shown. This was noted as an observation.

Compliance status: Compliance with observations See observation no. 21 in Appendix 5 Criterion 6.3: There is a mutually agreed and docum ented system for dealing with complaints and grievances, which is implemented and accepted by al l parties. Findings: The company still maintains a procedure for communication. All communications accepted are recorded by a clerk and distributed to the communication manager/officer. The officer review the records then de-cide how to response the communication. Social issues come from Internal (and migrant) workers also handled by officer responsible for handling social issues. This responsibility has mentioned on appointment letter as part of Officer responsibili-ties. Other communication channel that could use by workers is labour Union institutions. Kerdau Estate management conducts routine meeting with migrant worker, so all workers could directly deliver their complaint and grievances to management. There are some native speaker from workers (who work longer for estate) dedicated to translating if any migrant worker need to communicate their as-pirations/needs. Meetings were recorded. Compliance status: Full compliance Criterion 6.4: Any negotiations concerning compensa tion for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through t heir own representative institutions. Findings: Estates and Mill still maintain procedure document issued in November 1st 2008 regarding “Flowchart and Procedures on handling land Disputes”. The procedure document consist of:




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a. There are two kinds of potentials matters, On-Land and Ex Workers (staying in estate quarter). b. With regards to issues arising with ex-workers, it is to be dealt with the Employee Relations (ER) c. For On Land issues, upon any arising conflict, the Land Management Department is the responsible

body to gather information to support the respective cases. d. Upon gathering sufficient information and proof for the arising issue, it is to be tabled and presented

to the management of Sime Darby Plantation to seek for further direction. e. The subsequent steps will be followed by negotiation or legal proceedings, whichever applica-

ble/suitable or both can be carried out simultaneously. f. Proposed resolutions in the negotiations process among others. g. Legal proceeding is the subsequent action upon any failure of the negotiation process.

There is no land dispute issue and no negotiations concerning compensations process since last surveil-lance. Compliance status: Full compliance

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

Findings: Minimum Wage for Peninsular for 6 days work in a week as regulated by the government is RM 900. There are records and document shows that the company has communicate and implemented this regulations to all estates and mill’s Human Resources divisions, such as: a. Presentation material “Briefing to Address Minimum Wage order 2012 (Effective date January 1st

2013)”, Human Resources Department, Plantation Division. This presentation materials consist of: - Minimum wage for Peninsular is RM 900 and for Sabah and Sarawak is RM800. - Calculation for daily Wages rates for peninsular area (RM34.62) - Minimum Wages for Employees Who are paid by Piece rated, Tonnage, Trip or Commissions

b. Pieces rated (Wages calculation) for Kerdau and Sungai Mai Estate, April 2015. c. Workers Monthly Payslips for July 2015, Dec 2015 & April 2016 (Samples from estates and mills). The documents and record shows that company (estates and mills) has comply with minimum payment as regulated by the government.

All workers are provided with payslips, including details on basic pay, additional incentives and alow-ances, deductions (for levy or electricity), holidays and leave taken. There is a letter from Manpower Office of Semenanjung Malaysia to Sime Darby Director, December 2nd 2013, regarding “Implementation of Overtime according to Section 60A (4) (a) Working Act 1955”. There are conditions regarding overtime such as overtime duration, administrative requirement (agreement from the worker), overtime requirements as mentioned in section 60A, no 5 hours overtime in a day without rest time, develop overtime plan in every early months, ensure the worker has enough rest before start next job and provide information to Manpower office if asked to. In order to comply this regulation, company has published some follow up letter for management and workers, such as:

a. Memorandum from Kerdau Mill Management for Process Division, January 1st 2015 regarding public holidays for 2015.

b. Memorandum from Kerdau Mill Management for Process Division, April 12th 2014 regarding working at annual leave.

Evidences collected and checked to see the consistencies, such as: a. Punch Card and Time Records of 10 mill and estate workers , consist information regarding worker

attendances in detail. b. Payslips of Mill & Estate worker for July 2015, Dec 2015 & April 2016 , consist information regarding

overtime payments. Items posts as overtime payment for holidays is given the code FWDOR. In the bottom of the payslip there are information regarding how many hours/days the worker has worked on regular day and overtime work in general and special leave days.

Those three evidences show that mill has consistently implemented the regulations regarding overtime.

There are two main categories of workers, local workers and foreign/migrant workers. For local workers there is an offer letter for each that applied as contract agreement. The offer letter consist of: a. The start date of joining with the company b. Working area, wage and amenities based on agreement with the Malayan Agricultural Producers As-




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sociation (MAPA)/ National Union of Plantation Workers (NUPW) c. Job Description d. Working area exchanges regarding managerial purposes e. Probation periods of 6 months f. Worker signatures as agreements for each point.

For foreign/migrant worker there are working contract agreements documented as “Employment Contract For Foreign Workers Peninsular Malaysia”. Every single foreign worker has their own contract agree-ment. For Indonesian worker, the agreement written in Bahasa, for other foreign worker written in Eng-lish. Both agreement consists worker term and conditions such as: a. Duration of Services: 3 years b. Probationary Period: 3 months c. Working location: Name of the Estate or Mill d. Working Area Exchange: The rights of Employer e. Wage: The wage value based on Mutual Agreement with Labor Union (MAPA and NUPW). f. Working Hour: Based on tasks g. Medical: Company pays as regulated by the government (Work Act 1955). h. Housing: Company provide housing facilities joining among worker. i. Compliance to regulations: working permit and worker legal administrations requirements j. Amenities and insurance schemes k. Levy and FOMEMA Cost payment. l. Transportation m. Tools and working equipment n. End of agreements o. OHSA p. Other terms and conditions Interview result with foreign worker found that the worker has signed the contract before they went to Malaysia. There were some observations pertaining to employment contract at Kerdau Palm Oil Mill as below: i) It was observed the all the sampled offer of employment which is needed to be signed acknowledged

by the employees that binds as acceptance of employment states as follows “Labour Ordinance / Collection Agreement No. 1995”, meanwhile the Letter of Appointment As A General Worker states the benefits were in accordance with the MAPA / NUPW or any relevant Collective Agreement that subsequently replaces it. This reflects inconsistency between the point of references used as terms and conditions of employment.

ii) Review of the selected employees personnel file shows the Letter of Appointment and Offer of Employment were available for employees that are employed under Sime Darby Plantations. During the merger and acquisition exercise of the previous organization i.e. Golden Hope Plantations with Sime Darby Plantations (SDP), Golden Hope Plantations employees were absorbed into SDP. Although these group of employees were without Letter of Appointment and Offer of Employment in file. Review of their relevant records such as pay slips and working time clocking records i.e. punch cards and interviews , indicates they were provided with in general the necessary benefits and compensation such as Insurance Subsidy and Price Bonuses in accordance with requirement in the Articles as stipulated in the relevant latest MAPA / NUPW and MAPA / AMESU Collective Bargaining Agreement.

There were also some observations noted pertaining to hiring of subcontracted workers: i) There were 6 foreign workers sub-contractors hired for maintenance and repair works in the mill and

interviewed. Interview reveals that they were no negative feedback towards their contractor in terms of OSH and labor welfare, however the contract for service between the mill and sub-contractor does not reflect that sub-contractor is legally binding on compliance towards for example Employment Act, Immigration Act, etc. Work permit validity monitoring by the mill management which is linked to the registration of foreign workers compensation scheme (FWCS) only was in place.

ii) It was observed that for MAPA-NUPW union member employees they were allowed to take annual leave entitled to them and paid later on during the end year wage payment as evident in Dec 2015 pay-slips indicates as Vacation Leave. Interviews with the selected employees reveal that they have no negative feedback on method of payment on annual leave. They were no reported negative feedback during the stakeholder consultation meeting on this also. Meanwhile for MAPA-AMESU union member employees they were allowed to take annual leave




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entitled to them and were paid on their annual leave. This could be further checked and documented with the relevant local authorities.

There are some general facilities provide by the company for local and foreign workers such as housing (with some tools), sport field and water supplies. For local workers, the company provide housing for workers and their families. For foreign workers, a unit house with three rooms and kitchen is providing, with one house allocated for every 6 workers. Interview result with the Kerdau estate foreign worker found that they think facilities provided by the estates/mills are good enough for them. Some of housing broken parts will repaired by the company if they report the conditions to the estate/mill office. An inter-view with the harvesters at Chenor Estate, with one of them says that light at their house (No 3295) has been faulty for more than 1 month. Report been submitted but there is no action been taken until today. This was noted as an observation as well.

Compliance status: Compliance with observations See observations no. 22, 23, 24, 25, 26 and 27 in A ppendix 5 Criterion 6.6: The employer respects the right of a ll personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer f acilitates parallel means of independent and free association and bargaining for all such person nel. Findings: The company still keeps and maintain their policy regarding their respect the rights of all personnel to form and join trade unions of their choice and to bargain collectively. The existing Worker Union in Sime Darby operations area is National Union of Plantation Workers (NUPW) for Negeri Pahang. The union still con-duct their organizational activities such as meetings with internal board and members and also with rele-vant stakeholders. Compliance status: Full compliance Criterion 6.7: Children are not employed or exploit ed. Work by children is acceptable on family farms, under adult supervision, and when not interf ering with education programmes. Children are not exposed to hazardous working conditions. Findings: The estates and mills still maintain their commitment to the company’s child labour policy. The policy known as “Sime Darby Corporate Child Protection Policy”. A child is defined as a person under the age of 18 years in accordance with the United nations Convention on the Rights of The Child. This policy has socialized to all workers in all estates and mills. Management placed some printed policy to strategic places such as office and housing. Other implementation regarding this policy is on recruitment proce-dure as minimum age requirements. Worker master list per July 2015, Dec 2015 and April 2016 for Kerdau (mill and estate) and Sg Mai estate and mill was checked during audit. There was no worker below 18 years old. The youngest worker for each estates and mill were around 18 to 19 years old. All migrant workers’ age follow the requirement re-garding age limitation in according to prevent any child labor issues. During field checks and observations at housing, plantation areas and mill conducted during this surveillance, no child worker was found in all of the company’s operations areas. Compliance status: Full compliance

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

Findings: Worker master list per July 2015, Dec 2015 and April 2016 for Kerdau (mill and estate) and Sg Mai estate and mill was checked during audit also shows the worker heterogeneity regarding countries, ethnics and races. There are worker from Nepal, India, Indonesia and Bangladesh registered as workers. Interview




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result with some foreign workers confirmed that there is no discrimination issue among workers. There are some working groups (harvesters) that consist of worker with mixed nationality, ethnics, races, and re-ligion background. The group formed independently and voluntarily among workers. Anti-discrimination and equal opportunity policy also implemented in worker recruitment process. There is no indication found that company conduct violation against policy regarding equal opportunities. All of re-cruitment process has complied with procedures. There some evidence (record and documents) showed and checked during audit regarding recruitment process, such as: a. Job Vacancy Information for Tractor Operator, Plant Foreman and General Maintenance Worker

(2015 / 2016). The printed job opportunity information attached to some strategic places. b. List of applicants and worker interview attendance list c. Offer letters. d. Medical Check Up Printed result, issued by Estate Hospital Assistant. e. Workers administrative requirements (Copy of ID and certificate of competencies). f. Worker resume (recruited worker). Compliance status: Full compliance

Criterion 6.9: A policy to prevent sexual harassmen t and all other forms of violence against wom-en and to protect their reproductive rights is deve loped and applied.

Findings: The same as last surveillance result, Sime Darby’s Social Policy details the organization commitment against prevention of sexual harassment and other forms of violence as follows “To develop and apply policy to prevent sexual harassment and other forms of violence against women and to protect their re-productive rights”. The organization has developed manual on implementation of the Gender Policy which includes the following:- a. Statement Policy – Statement on the prevention of sexual harassment and all other forms of gender-

based violence b. Sexual Harassment Grievance Procedure c. Guidance for Policy and Grievance Procedure

There is no case regarding sexual harassment and all other forms of gender-based violence in the com-pany’s operations areas. There’s no report recorded regarding gender sensitive cases. Interview with female mandor in field confirmed that there is no cases reported to her regarding sexual harassment in her working areas. Based on her explanation, there are not many women working at field, all harvesters are men and come from foreign country; it is very small possibilities gender based violence could hap-pened in company’s operations area. All harvesters respect the female mandore as their supervisor.

In addition as the follow up of Gender Policy, there is a Gender Committee that actively conducted activi-ties preventing gender based violence. This gender Committee already has a planned meeting schedule for Year 2015/2016. Compliance status: Non-compliance Non-conformance RSPO00420 (Major non-conformity) 1) There is no clear policy to protect the reproductive rights of women. There is a phrase in the Social Policy which states that “the company is committed to ‘develop and apply a policy to ..... and to protect their repro-ductive rights.” (HQ) however no such policy was sighted. 2) As there is no reproductive rights policy yet, there is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at the reveal that the workers and staff do not understand what reproductive rights constitute. 3) No evidence in the gender committee minutes of meetings that the reproductive right policy has been communicated and implemented.

Criterion 6.10: Growers and mills deal fairly and t ransparently with smallholders and other local businesses.




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Findings: Findings during this audit remain the same as per last year’s surveillance. The company engages with lo-cal business in maintain their operations sustainability, such as local business partner for CPO Land Transportation. Main evidences showed during audit agreement on The land Transportation of Crude palm Oil (“CPO”) Peninsular Malaysia No. 647766-V between Sime Darby Plantation Sdn Bhd with Pan-gangkutan Jasa Sdn Bhd. The agreement includes some critical points such as: a. Article 3: Transporter’s Obligations and Undertakings (towards workmen, employees, servants and/or

agents). b. Article 4: Compliance with Law (employment/worker, OHSA, Road Transport regulation) c. Article 5: Insurance and Guarantee (SOCSO and workmen compensation insurance and all risk in-

surance).

In order to monitor that the deal fairly implemented by both parties, some forms and documents has de-veloped as guidance, such as: a. Annexure 1: Identities of both parties with contract duration. b. Annexure 2: Schedule of CPO Transportation Rates and Route Management.

- Allocation of Awarded Oil Mills). This documents giving standard rate for region, Form oil Mill (Origin), to Destination.

- Route Management for SD Mills (Peninsular). This documents giving guidance for partner re-garding loading place, destination, distance, route description, standard duration taken, stop al-lowed and total time taken.

c. Annexure 3: CPO Transport rates Adjustment Mechanism. This documents guide in the event of changes in the price of diesel by The Malaysian Government.

Another main local business partners engaged by the company are FFB suppliers. There are some evi-dences showed that Mills has fairly deal with their local business FFB Supplier partners, such as: a. FFB pricing is done in MPOB meeting each month. This statement is a monthly guidance for Mill in

FFB Price determination. There is a record of Malaysia Palm Oil Board (MPOB) monthly statement, March 2015 for Kerdau Mill.

b. Email record, April 6th 2015, from Sime Darby Head Office to Mill Kerdau regarding the rate changes of buying price for FFB from supplier.

c. Corp quality report Form (filled), shows the FFB quality that has unload in Mill Ramp. d. Current FFB Price publication attached to the place near weighbridge in mill area. e. Document of FFB Prices Calculation

Pricing of the FFb supplied during a month shall be calculated using the feollowing price fromulation: {(A-B)xC} + {(D-E) X F} - G = FFB PRICE.

A= MPOB monthly average traded price of CPO for peninsular Malaysia. B= MPOB cesses of RM13.00 actual transport cost RM31.00pmt of CPO as stated in the CPO

tarnsport agreement, and any other charges or additional cesses/levies/taxes imposed by the relevant authorities.

C= oil extraction rate: mill actual - 0.25% (mill margin)-penalty D= MPOB monthly average traded price of PK for peninsular Malaysia E= MPOB or government cesses/taxes/levy if any F= Kernel extraction rate (KER): 5.25% max or mill actual performance, whichever is lower G= Mill's processing cost of RM 39.00 [er metric ton of FFB

f. Procedure doc. No. SUB-Section 7.4, Appendix 7.4.1.2a, issued in November 1st 2008, regarding Supplier Evaluation Rom.

During the stakeholder consultation held during this audit, stakeholders interviewed included some con-tractors who did not complain about late payment or any other issues pertaining to the company. Compliance status: Full compliance

Criterion 6.11: Growers and millers contribute to l ocal sustainable development wherever appropri-ate.




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Findings: The organization’s contribution to local development is based on annual stakeholder meeting result and based on direct proposal from stakeholders. This contribution is part of the implementation of social im-pact management Plan. As this SOU has no associated smallholder, the company has no CSR programme to improve smallholder productivity. Compliance status: Full compliance

Criterion 6.12: No forms of forced or trafficked la bour are used.

Findings: From interviews with foreign workers, there was no evidence found of forced or trafficked labour or evi-dence of contract substitution. Workers passports are held by company until the worker accomplished their contracts. This practice is not an efforts to force the workers to work but rather than to prevent the worker take illegal actions such as running away from the company’s operations area. As a temporary passport substitution, company provide ID for each worker and provide cover letter if the worker need to go outside Sime Darby’s operations area. It was confirmed during interviews with sampled foreign workers that their passports are retained by the company, although this is agreed by the workers and they are al-lowed to return to their countries after completion of their 3 year contract with flight purchased on the company’s expense and return on renewed contract. There is no dedicated labour policy for migrant workers but the company has captured some elements of its commitment against forced labour through its Social and Social and Humanity Management Policies dated January 2015, e.g. Statement of the non-discriminatory practices and the company’s commitment to provid-ing decent living conditions to its employees, including foreign workers. Elements of a labour policy to protect migrant were also sighted in SDP’s SOP no. WMU/WMC-S0PP/MARCH2016 for the Workforce Manage-ment Centre (WMC) Sua Betong, which is the main recruitment centre of SDP where orientation and induc-tion for all newly arrived foreign workers is carried out before the workers are relocated to respective SOUs within Malaysia. Details of post arrival orientation programme are defined in this SOP as follows: - Section 3.3.4 WMCO4 regarding deployment of workers specifies that Employment contract with the

foreign workers will be endorsed at Operating Units (OU) and there shall be no substitution of contract - Section 3.3.3 WMCO4 regarding Induction Programme specifes the objectives of the programme is to

comply with the government guidelines/ requirements (Malaysian Palm Oil Association [MPOA] & MAPA), on foreign workers induction process incorporating modules on Company’s overview, basic la-bour laws, criminal law and procedures, immigration regulations, work safety, Malaysian culture and language. Under Section B. Scope, it is specified that induction materials are guided by MPOA/ MAPA modules with inputs from PSQM, Corporate Communication and Group IR (Corporate video and safety) and shall include the following:- i) Introduction to Sime Darby Plantation & Oil Palm ii) Language and Culture in Malaysia/ Estates/ Mills i) Safety and Health in the Workplace iii) Civil/ Crime Laws, Drug Laws and Road Transport Laws iv) Immigration Regulations v) Labor Law/ Employment Contract vi) Child Protection Act

Compliance status: Full compliance

Criterion 6.13: Growers and millers respect human rights.

Findings: As found in the last surveillance, the company continues to maintain a documented Plantation Charter dat-ed April 2013 which covers 6 principles, including Human Rights and Labour Practices. In this charter, it is stated that Sime Darby Plantation is committed to respect human rights throughout their business opera-




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tions and that the company supports the ten principles of the United Nations Global Compact and makes annual Communications On Progress demonstrating Sime Darby Plantation’s continuing efforts and im-provements in implementing those principles in its business operations. To support this commitment, there is a letter from the company’s President and Group Chief Executive to the United Nations (UN) Secretary General dated 25 Nove,ber 2010 stating their commitment to support the UN Global Compact principles. It is also stated that Sime Darby Group is also a member of the Global Business Initiative on Human Rights created in 2009 with the aim of advancing respect for human rights in the business sphere. Under the ‘La-bour Practices’ principle, it is stated that Sime Darby Group observes International Labour Organisation standards and employment practices. The company’s report on UN Global Compact Communication of Progress for year 2011 – 2012 was sighted, however, a progress for the past few years was not available. In addition, Sime Darby’s implementation of human rights practices is futher defined in the Company’s Social Policy. This policy consists of points regarding respect to human rights such as: a. All employees should be treated fairly in terms of recruitment, progression, terms and condition of

work and representation regardless of race, caste, nationality, gender, physical, sexual orientation, union membership, political view, religion and/or age.

b. To identify, through consultation, the potential social benefits and determine how they might be en-hanced for the mutual benefits of the company and the local community.

c. To ensure that any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented systems that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

d. To develop and apply a policy prevents sexual harassment and other forms of violence against wom-en and to protect their reproductive rights.

e. The company shell respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively.

f. The company does not condone forced labor or child labor. This social policy has been broken down into specific policies such as Gender Policy and child protection policy. This policy has been communicated to all level worker by direct communication such as meetings and morning roll call and indirect communications such as attached the printed documents to some board and placed in strategic areas. Compliance status: Full compliance

Principle 7: Responsible development of new plantin gs

Findings: No findings related to new development area because the company has no development area program. According to company’s plantation statement document, and plantation history document such land al-most all plantation is mature plantation, immature plantation only from replanting activities during 2008-2011. Compliance status: Not Applicable

Criterion 8.1: Growers and millers regularly monito r and review their activities and develop and implement action plans that allow demonstrable cont inuous improvement in key operations.

Findings: Evidence of continuous improvement plans were sighted, e.g. waste management plan and pollution pre-ventions plans are documented and sighted as described under CR5.3 and CR5.6 above. As seem from chemical usage records, the estate reduce usage of chemicals by not carry out prophylactic treatment of pests with chemicals, as there were no usage of chemicals for pest treatment in past three financial years. Management plans of the estates describes budgets and plan to encourage and optimise the yield of sup-ply base. Sime Darby HQ has a documented renewable energy implementation plan for all mills in Malaysia and In-donesia with planned mill to reduce the main source of greenhouse gases identified from the mill, i.e. me-




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• RSPO SCCS

Kerdau Mill is one of the palm oil mills owned by Sime Darby Plantation in Pahang State Malaysia. The mill was commissioned in September 1992 with a production capacity of 30 tons/hours. In November 1995 com-pany increased their capacity from 40MT/hour the increase to 60MT/hour in February 2006 to cater for crops from the estates previously under Golden Hope, a plantation company which is now merged with Sime Darby Plantation Sdn. Bhd. The mill was initially under Austral Enterprise Bhd (AEB) before taken over by Sime Darby Plantation under Strategic Operation Unit 11 (SOU 11).

SOU 11 Sime Darby Plantation consists of one palm oil mill (Kerdau mill) and 5 plantation estates called op-erating unit as FFB supplier, i.e. Kerdau estate, Jenor estate, Mentakab estate, Sungai Mai estate and Chenor estate. Beside crops from internal estate, the mill also receives crops from outgrowers under agent Sri Kerdau Commodities Sdn. Bhd.

All production process conducted internally; there is no outsourced process to third party or subcontractor.

Sime Darby plantation Sdn. Bhd has prepared a complete standard operation manual and standard operation procedure for all strategic operation unit for daily operation activities as seen on MQMS (Mill Quality Man-agement System) documents.

SOU 11 Kerdau Palm Oil Mill is producing CPO and PK, the company is registered on eTrace, the RSPO IT System for RSPO certified products sales transactions and has been conducting sales through the system. The control of IT system is under the mill manager’s responsibility.

The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements:

E.1. Definition Findings: The organization (Kerdau Mill) continues to implement the RSPO-SCCS Mass Balance Model. This model allowed the mixing of certified and uncertified FFB and product through the control by the Mass Balance record to ensure the quantity of certified product, and only certified product could be claim by the organization as a certified palm oil product. The organization has identified the volume of certified and uncertified FFB received. Based on Mass Balance record, showed the amount of FFB certified came from own estate i.e. Kerdau Jentar, Mentakab, Sungai Mai and Chenor estate, than the uncerti-fied FFB came from smallholders. During this audit, the latest data found was as follows: FFB received from2014-2015: 209,821.000510mt CPO produce from 2014-2015: 43,564.538mt PK Produce from 2014-2015: 10,444.074 Total sales of CSPO to date: 26,028.81mt Total sales of CSPO in FY2015/16 only: 2,195.15 mt Compliance status: Full compliance

thane production from POME treatment ponds through methane capture and flaring. The plan states 11 phases with each phase covering one financial year and planned number of mills to undergo the pro-gramme during each phase ranges from 4 to 7 mills each financial year. The plan also lists estimated CAPEX, potential carbon reduction per year, reduction from baseline (%) and cumulative reductions (%) for each phase. Kerdau Palm Oil Mill is included in Phase 3 which is planned to be implemented from FY 2015/16 with estimated potential carbon reduction per year of 239,703 tCO2 for 7 mills listed in that phase. At time of this audit, the plan was in initial stages of implementation, and status will be reviewed during next surveillance. Compliance status: Full compliance




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E.2. Explanation Findings: Estimated tonnages of CPO dan PK certified and uncertified product production is stated in Table 4 of this report. Kerdau Mill registered in RSPO IT Platform (e-Trace) with the member ID number RSPO_PO1000000295. The latest information on certified CPO and PK sales is as follows: Certified tonnages claimed: CPO 37,400.14 MT; PK 9,251.24 MT Certified tonnages sold to date: 26,028.81mt (based on e-Trace record) Certified tonnages sold in FY 2015/16 only: 2195.15 mt (based on e-Trace record) Compliance status: Full compliance E.3. Documented procedures Findings: The company has an SOP for RSPO Supply Chain Certification System and Traceability version 2 which was approved on March 2016 which is a general SOP applicable to all mills under Sime Darby Planta-tions and also applies for MSPO and ISCC certified mills. The SOP has been updated to define proce-dures for the applicable supply chain options which are now only Identity Preserved and Mass Balance (option for Segregation is no longer applicable). A summary of the SOP is as follows:

i) Responsibilities: The Head of the operating unit shall have overall responsibility for SCCS im-plementation and may assign roles to relevant personnel for the implementation of this SOP

ii) Control of documents & records: Specifies that records pertaining to SCCS shall be identified and maintained, states that appointed MR and identified personnel at each Critical Control Point shall be responsible to maintain the records, defines Critical Control Points and the estate and mill, and specifies that records shall be maintained for a period of ten years.

iii) Delivery of FFB from the estate: Specifies that all FFB from estates shall be to the designated mill in the SOU, with crop diversion permitted from other sites permitted as defined in their flowchart for crop diversion. The information required in the estate weighbridge ticket or con-signment note for all delivered FFB includes the RSPO certificate number

iv) Receiving FFB at the mill: States that the mill shall receive from pre-determined estates, display the list of certified FFB suppliers with certificate number, defines requirements of the mill to veri-fy the certification status of the supplying estate and states that the mill shall maintain records of all certified and non-certified FFB received

v) Process monitoring: Specifies requirement for Mill certified to IP and MB, where those imple-menting IP shall ensure that there is no mixing of RSPO certified and non-certified material in the processing and storage of sustainable products, while for MB, FFB from both certified and non-certified estate can be processed together with mass balance products inputs and outputs monitored on real-time basis

vi) CPO and PK dispatch: Specifies that all delivery shall be in accordance with the contract allo-cated by the Global Trading & Marketing Department (GTM), that outgoing documents including contracts and weighbridge tickets/dispatch notes shall specify the trade name (IP or MB) and RSPO certificate number, that the mill shall records and balance all receipts and deliveries of RSPO certified CPO and PK on a 3 monthly basis. This section also specifies that the GTM is responsible to make necessary transactions through the RSPO IT system or book and claim system and ensure there is no overselling

vii) Non-conforming material/product: Specifies that where there has been contamination of certified material during process, storage or dispatch, the mill shall downgrade the supply chain status of the material, that volume of downgraded material shall be recorded and GTM shall be informed. Any oversold material shall be treated as non-conforming product

viii) Product claims: Must be in compliance with the RSPO certification rules on Market Communica-tions & Claim (2015)

ix) Outsourced Contractor: Mill is to establish a list of outsourced contractors and inspect tank-ers/lorries before loading material to ensure no contamination, and may advise the certification body if audit of the contractors is deemed necessary

x) Training: Training for all personnel at CCP shall be conducted xi) Reclassification of Mill’s Supply Chain model: Defines the procedure for reclassification of a

mill’s implemented supply chain model and that the certification body shall be notified accord-ingly




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xii) Production Volume: Specifies that sales shall be limited to the certified volume, and where there is any projected overproduction, the mill shall inform PSQM, which shall in turn inform the certi-fication body of the SOU.

The SOP has a list of all the company’s mills, their implemented supply chain module, their supplying es-tates (based on RSPO certification), list of other group estates diverting crop to the mill and diversion from group mills. Under this list, Kerdau Palm Oil Mill is listed as implementing the Mass Balance supply chain option and the listed supplying estate and group estate diverting crop to the mill was confirmed to be consistent with the actual supply base and diverting estates. The person that have full responsibilities for implementation of SCCS at Kerdau Mill is the Senior as-sistant. Based on the interview, it was confirmed that the person in charge has a good understanding on the implementation of the RSPO Supply chain requirements. Kerdau Mill has records of incoming receiving certified and uncertified FFB through the weighbridge slip. The difference of incoming received of certified and uncertified FFB in weighbridge slip is based on origin of FFB, when the FFB came from own estate is automatically listed as a certified FFB and the FFB coming from smallholders is stated as non-certified. Compliance status: Full compliance E.4. Purchasing and good in Findings:

The mill maintains documentation of the tonnages and sources of certified and non-certified FFB re-ceived. All tonnages of FFB received from certified estates are recorded at the mill weighbridge. The de-livering estate will provide an FFB consignment note or FFB despatch advice ticket which includes the name of source (estate), vehicle and driver details, division, field, harvesting date and road, no. of bunches and weight. Consignment notes or despatch advice tickets are attached with a printout from the respective estate which includes the estimated and actual weight and RSPO certificate number. For crop received from non-certified sources, the FFB consignment note samples from non-certified sources stat-ed the year of planting, no. of bunches, estimated weight and vehicle number. The daily and monthly summary of FFB received from each sources are printed in a daily FFB summary report by supplier and after grading an processing, a Monthly Crop Report is auto-generated from the company’s FFB grading and OER Incentive System. The company’s SOP for Supply Chain dated March 2016 specifies that sales shall be limited to the cer-tified volume, and where there is any projected overproduction, the mill shall inform PSQM, which shall in turn inform the certification body of the SOU. It was confirmed from production and eTrace records that there was no overproduction of certified material sold through eTrace. Total amount of certified tonnages sold to date was determined to be 26,028.81mt tonnes, while tonnages sold on eTrace for FY2015/16 only was 2,195.15MT. Both of which is below the previously certified tonnages of 48,520 MT. Compliance status: Full compliance E.5. Record keeping Findings: Kerdau Mill has record and balances of all receipts of certified and uncertified incoming FFB, FFB pro-cess, CPO and PK, extraction rate, delivery palm oil products and others. In mass balance record in January 2015 until April 2016 time period showed the information of incoming FFB received, FFB pro-cess, CPO and PK produced, palm oil product, quantity stock/stock information for certified and uncer-tified FFB and palm oil product. The organization has maintenance all of records well. Record of sales certified product from the contract reference, DO, delivery note, B/L and other sales document for certified product showed the name of seller, name of buyer, contract number, DO num-ber, loading date, port of charge, quantity, quality product, SCCS model, shipment period and others accordance to RSPO SCCS requirement related document sales information. During that period




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above, CPO certified sold by Kerdau mill still under quota maximum certified. Kerdau mill also con-ducted the three monthly evaluation to ensure the certified product in positive stock condition, and up until this audit, the CPO and PK certified stock was found to be in positive stock condition. Howver it was found that the mill has sold some CPO through green palm as well as eTrace, with the following issues found and raised as a non-compliance: a) Records of Mass balance accounting system are available.However there are lack of information

from GTM department on the total sales of physical CSPO and CSPK sold through green palm. Mass balance accounting system is only referring to actual delivery based on contract.

b) Company has made sales of Palm kernel oil in the Green palm. There no evidence that these sales have been deducted according to the RSPO conversion rate.

Compliance status: Non-compliance Non-conformance no. RSPO00421 a) Records of Mass balance accounting system are available.However there are lack of information



3.2 Status of Previously Identified Non-conformitie s

During the previous annual surveillance assessment, a total of 5 nonconformances were identified. These consisted of 4 major non-conformities and 1 minor non-conformities. For the major non-conformances, the company had taken the necessary corrective action to close these non-conformances within 60 days of com-pletion of the assessment, and this was verified by the audit team through a document checked submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below: • RSPO P&C

Criterion 2.1.1 (Major indicator): Evidence of comp liance with relevant legal requirements shall be available.

Non-conformance 2015-01 of 05 (Major non-conformity ) There is evidence of legal non-compliances found, i.e.: 1) Stated in the mill’s DOE license dated 1 July 2014 to 30 June 2015 that the mill is required to install a

CCTV facing the mill’s chimney for visual record of the black smoke which is to be active for 24 hours and records maintained for 6 months. However, no such CCTV has been installed by the mill

2) The mill is required to carry out chimney emissions monitoring using the Continuous Emissions Moni-toring System (CEMS), however it was informed the CEMS system has been non-functional for al-most a year. The mill has a letter dated 29 October 2014 to the DOE of Pahang informing that the Smoke Density Meter (SDM) for boiler no. 2 was non-functional and was being repaired by their sup-plier, but there is no evidence of follow-up.

3) Found a compressor brand Hitachi Bebicon at the mill not having any valid registration (PMT). 4) The mill does not have a Fire Certificate yet as required by Fire Services Act 1988. 5) At Sg. Mai estate paint cans are also not managed as scheduled wastes. At Also at Mentakab estate,

flourescent tubes and contaminated waste such as gloves from workshop are not identified and managed as scheduled wastes

6) The last copy of consignment note of collection of clinical waste by Medivest was not received by the Mentakab Estate and this was not reported to Department of Environment as required by Environ-mental Quality (Scheduled Waste) Regulations 2005

7) No update of inventory for all types of SW 305, 410, 409 at Mentakab Estate.




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Correction : 1) Mill Management will apply for unbudgetted CAPEX from head office to install a CCTV. 2) Non-functional CEMS issue was informed to DOE of Pahang and it was further communicate with re-

gards this issue during recent visit of DOE officer. Purchase order has been issued to rectify non-functional CEMS received. Mill will carry out the rectification works

3) Hitachi Bebicon already has valid registration complete with certificate of fitness. The compressor was not having registration number marking due to painting work. Mill will do registration number marking as per requirement

4) Communication with Engineering Dept and the contractor has been done to expedite the works to achive Fire Certificate.

5) Scheduled waste Manager is to ensure all scheduled waste handled as per requirement. To conduct scheduled waste management training dated 21.05.2015

6) PIC (Aiman Hashim) follow up via email mentioned that we did nor received any consignment note from them. Email on 21.05.2015

7) Inventory was updated to include SW 305, 410, 409 as seen in updated inventory for month of June 2015)

Corrective Action: 1) ESHMR (SR Assistant Mill manager will ensure all the requirements are complied with at all times).

The mill will monitor everyday with support by Mill Operation every end of the month. 2) Assistant Mill Manager will be in charge to monitor CEMS. 3) Mill to established list of permit and lisence to monitor and to avoid any issues. Person in charge

Chief Clerk. 4) Installation of fire fighting system were in progress prior appllication of Fire Certificate. 85% work

completion has been executed. ESHMR of Kerdau POM will folow up progress. 5) PIC to managed (inventory, stored and disposed) all the stated items as per EQA Scheduled Waste

regulation 2005. 6) Will use the e-consigment system to implement the clinical waste disposal for every disposal of

scheduled waste. 7) PIC (En Shaifful) will informed the mandore at muster briefing to place the SW at the SW store and

informed him accordingly. PIC (En Shaiful) and update the SW 305, 410, 409 on monthly basis as per EQ (Scheduled waste) regulation 2005.

Verification during recertification: 1) Confirmed during on-site visit this year that CCTV installed at the mill is installed and visual records

of black smoke production are maintained. 2) Confirmed that the mill’s CEMS system is now functional and monitoring records of mill emissions

are made 3) The certificate of fitness for the compressor was sighted and confirmed to be valid 4) It was found that Kerdau Mill still not having a Fire Certificate even mentioned as compliance under

Fire Services Act 1988 and Fire Services (Fire Certificate) Regulations 2001 in the LORR. This was maintained as part of Non-conformance no. RSPO00412

5) Paint cans, fluorescent tubes and contaminated rags and gloves are now managed accordingly, as explained under Section 3.1, CR5.3.

6) The company is now using e-consignment system online to update their records of scheduled wastes produced and therefore is not required to retain the manifest of collection from the collector anymore. Sample of completed e-consignment note from all estates were sighted.

7) A scheduled waste management plan has been established at Mentakab Estate dated 8 Dec 2015 reviewed by the Assistant and approved by the Manager. The scheduled waste identified were SW103, SW305, SW306, SW410, SW425, SW110 and SW409 which are coming from workshop and chemical stores and inventories for all these scheduled wastes are maintained accordingly.

Auditor Conclusion:

- Parts 1, 2, 3, 5, 6, and 7 Closed. - Part 4 Open and maintained as Non-conformance RSPO0 0412




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Criterion 2.1.3 (Major indicator): A mechanism for ensuring compliance shall be implemented

Non-conformance 2015-02 of 05 (Major non-conformity ) All estates and mills have a mechanism for checking legal compliance, however it is not correctly done as it was found that the status of legal compliance for all legal requirements is stated as 100% compli-ant, but in actual, there are some legal non-compliances, examples as stated under NC no. 1, CR2.1.1

Correction : To review LORR to ensure all compliance status as per physical. Corrective Action: To appoint new ESH management representative (MR) and train them on their job description or re-quirement so that any review of LORR reflects actual situation on the ground. Review of compliance to be done collectively with ESH region. Verification during recertification: The mechanism to ensure legal and other requirements compliance was still not effective as all re-viewed of compliance at Kerdau Mill, Chenor, Jentar and Mentakab Estates scored 100% but found: • Occupational Safety and Health (Safety and Health Officer) Regulations 1997 showing compliance

status. Actually no SHO required for Mill (Kerdau Mill) • Pesticides (Labelling) Regulations 1984 was not included in the LORR and compliance was not

evaluated (All Estates) • Deleted Environmental Quality (Sewege, Industrial Effluent) Regulations 1979 still evaluated and

mentioned as compliance. (Chenor Estate) • Applicable Environmental Quality (Refrigerant) Regulations 1996 wrongly mentioned as not applicable

(Chenor Estate) • Not applicable Fire Services (Fire Certificate) Regulations mentioned as compliance as actual no

evidence of compliance exist. (Chenor and Mentakab Estates) • Missing Sections 16, 17 and 30 of Occupational Safety and health Act 1994 compliance status were not

evaluated. (Mentakab Estate) • Factories and Machinery (Safety, Health and Welfare) Regulations 1970 (Revised 1983) mostly

mentioned as not applicable and compliance status were not evaluated properly (Mentakab Estate). Auditor Conclusion: Open and raised as Major Non-co nformance RSPO00414 Criterion 2.2.1 (Major indicator): Documents showin g legal ownership or lease, history of land ten-ure (confirmation from community leaders based on h istory of customary land tenure, recognised Native Customary Right (NCR) land) and the actual l egal use of the land shall be available. Non-conformance 2015-03 of 05 (Major non-conformity ) 1) Found at Chenor Estate, National Land Code, Land Title no. 5690, lot no. 3274 with area of

1394,1398 Ha registered on 19 April 2000 stated permission for planting of permanent plants (cocoa/ coffee/kekabu/pinang) but the estate has been planted with oil palm 1989 with no evidence of updat-ed land title with revised conditions of use from the Land Department.

2) Mentakab Estate has several land titles stating conditions for planting only for rubber, however the estates are now fully planted with oil palm with no evidence of updated land titles with revised condi-tions of land use from the Land Department

Correction : Communication between Land Management Department, RSPO Unit and Legal Department SDP to change our crop cultivation as stated in out email dated 27/4/2015 was done via proposal to Legal Dept for review. Management of Mentakab Estate already notify our Land Management Department (LMD) to change our crop from rubber to oil palm as stated in our email dated 22/10/2014 and replied by Land Man-agement Dept on 23/102014.




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Corrective Action: Sime legal department found that no breach or nonconformance of the Express condition in Chenor Es-tate. PSQM will conduct assessment on land tiltle update on annual basis to ensure progress of land ti-tle issue. LMD has sent letter to Land Department Pahang for status and application. Verification during recertification: There was an email from Sime Darby’s LMD which clarified that the planting of oil palm is still in accord-ance with the term of Chenor Estate’s Land Title no. 5690, lot no. 3274 with area of 1394,1398 Ha regis-tered on 19 April 2000 stated permission for planting of permanent plants. According to reference sources from the Food and Agriculture Organization (FAO), World Programme for the Census of Agriculture 2010 and the the Center for International Forestry Research (CIFOR), oil palm falls under the definition of permament crops, and therefore for Chenor Estate, there is not non-compliance to the terms of the land title. This explanation was accepted by the audit team and no change of the land title is required. For Mentakab Estate, email records between Mentakab Estate and Sime Darby’s Land Management Department showed that for within August to October 2014 showed the company has been in progress of transferring the name of land owner of Mentakab Estate from the previous owner (Mentakab Rubber Company (Malaya) Limited) to Sime Darby Plantation. As informed by the company’s Land Manage-ment Department in email dated 23 October 2014, the land title transfer has been unsuccessful due to technical issues in the legal documentation which they are rectifying. However, in the email threads there is no specific mention of request to also change the land title terms from rubber to oil palm. The company’s LMD is working on transferring the land title name under the company and simultaneously requesting for change in the land title terms to permit planting of oil palm instead of rubber. As the legal process is long and actions were observed to have been taken by the company, the progress of this NC will be checked again during the next surveillance audit. Auditor Conclusion: Closed with observations

Criterion 5.1.1 (Major indicator): An environmental impact assessment (EIA) shall be documented.

Non-conformance 2015-04 of 05 (Major non-conformity ) 1) At Kerdau and Chenor Estate, found the aspect and impact assessment was not reviewed and up-

dated accordingly since 05/01/11 and not properly carried out in accordance to Standard Operating Manual (SOM) Version 1 dated 01/11/08.

2) The legal requirements used as reference was outdated such as Environmental Quality (Clean Air) Regulations 1987 (suppose 1978) that was replaced by new regulations in 2014.

3) Environmental Impact Evaluation Form was not used properly for example spillage of diesel was considered as normal condition (suppose emergency condition)

4) For all aspects identified, there is a column asking if there is a high potential of non compliance to environmental regulation. All were ticked as "No' but in actual, many of the aspects have risk of legal non-compliance if not managed according to the law.

Correction : Review all EAI and EIE regulations and impact evaluation sample for :

1. Petrol Diesel 2. FFB Transportation.

Corrective Action: A new ESH management representative was appointed. Training on EAI and EIE is planned to be con-ducted on 27th May 2015. Verification during recertification: The EIE was reviewed on April 2016 for both Environmental Aspect and Impact (EAI) and Environmental Impact Evaluation (EIE) at Chenor Estate, Jentar Estate and Mentakab Estate.

However, both EAI and EIE was dated back on 2013 with some information was outdated such as legal reference Environmental Quality Act (Scheduled Waste) Regulation 1989 and Environmental Quality Act (Clean Air) Regulation 1978. One of the legal EQA (Control Emission from Diesel Engines) Regulations




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1996 which is the year 1996 is wrongly stated.

In addition, Environmental Impact Evaluation Form (EIE) was not used properly for example spillage of diesel was considered as normal condition (suppose emergency condition) For all aspects identified, there is a column asking if there is a high potential of non-compliance to envi-ronmental regulation. All were ticked as "No' but in actual, many of the aspects have risk of legal non-compliance if not managed according to the law. Auditor Conclusion: Open and raised as Major Non-c onformance RSPO00419

Criterion 5.2 (Major indicator): Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itse lf and relevant wider landscape-level consid-erations Non-conformance 2015-05 of 05 (Raised as Minor non- conformity since guidance for this crite-rion was revised from the previous MY-NI) The company’s existing Biodiversity Baseline Study dated April 2009 is inadequate as it does not in-clude information on the conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affect-ed by the company’s activities

Correction : Communication with Social, Environment and Project Unit (SEPU), PSQM regarding Biodiversity Study at SOU 11 (Kerdau). Corrective Action: HCV re-assesment will be conducted in August 2015. Verification during recertification: HCV Re-assessment Report for Pahang Zone dated March 2016 covering SOU 11 Kerdau and 2 other SOUs in the Pahang region has been prepared by the PSQM Department. The names, expertise and working experience of the HCV assessment team were listed in the report including 3 team members, i.e. Team Leader with experience in wildlife conservation, forest research/management, and IMS auditing, 2nd member who is a certified SIA assessor with 3 years SIA assessment experience, and experience work-ing with the wildlife department and in forest management, and 3rd member with a Bachelor in Plant Re-source Science and Management, social worker executive for Pahang Zone and assisted in SDP’s tree planting project. However there is no evidence of peer review of the report. The report describes a total of 157.64 ha of HCV area identified in SOU 11:Kerdau which comprises HCV 4 and HCV 6 areas. The report also includes a list of common wildlife identified in the area of SOU 11 and 2 other nearby SOUs (SOU 10 and SOU 12) including their IUCN and WCA 2010 conservation status. All species of animals identified were listed as least concern, including White throated kingfisher, common myna, crested serpent eagle, barn owl, red jungle fowls, intermediate egret, lesser, whistling ducks, wild boar, long –tailed macaque, leopard cat, common civet cat, Malay civet, common cobra and monitor liz-ard. No threatened or endangered animal species were identified. Auditor Conclusion: Closed

• RSPO SCCS

There was no non-compliances raised against RSPO Supply Chain requirements during previous audit.




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

During this recertification assessment, related to the Principles and Criteria, a total of 10 nonconformances were identified. These consisted of 7 major non-conformities and 3 minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances with-in 60 days of completion of the assessment, and this was verified by the audit team through a document check of evidence submitted by the company. For the minor non-conformances, the company has taken cor-rective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below: • RSPO P&C

Criterion 2.1.1 (Major indicator): Evidence of comp liance with relevant legal requirements shall be available. Non-conformance RSPO00412 (Major non-conformity) 1. It was found that Kerdau Mill still not having a Fire Certificate even mentioned as compliance under Fire Services Act 1988 and Fire Services (Fire Certificate) Regulations 2001 in the LORR. 2. Also No Competent Certified Environmental Professional in the treatment of POM effluent (CEPPOME) and Certified Environmental Professional in Scheduled Waste Management (CepSWaM) yet as mentioned under Section 49A of Environmental Quality Act (Ammend) 2012. 3. There are found in Kerdau mill one foriegn workers working permit is already expire. Process to renew in progress. However, the workers are still working in site also not cover with Insurance. Kerdau Mill:- i) Review of the selected employees payslips for the month of May, Oct and Dec 2015 & Feb, March and April 2016 for e.g. for employee no. 23371, 111645, & 86423 details details the deduction of wages for Great Eastern Insurance premium payment on coverage of Critical Illiness. Noted the same type of de-duction of was observed in Kerdau and Sungai Mai Estate with approval from State Labour Dept (Jabatan Tenaga Kerja, Pahang) in a form of Permit Potongan Daripada Gaji Pekerja as per Section 24 of Em-ployment Act 1955. However no approval from State Labour Dept available for the deduction of wages in Kerdau Mill when requested. Sungai Mai Estate:- ii) Legal and Other Requirements Register (LORR) was reviewed and indicates that category - General where the Employment Act 1955 was listed scored as 100%. However there were no records on the Em-ployment Act 1955 list of evaluation was evident during the audit and as practiced for previous year. It was noted that State Labour Dept officer has issued ‘Failure to comply with a Notice of Compliance’ Dat-ed: 7th Jan, 2015; Reference No: PMK 10604 / 06409 on incompliance towards Section 60A (3)(a), Sec-tion 60 (3)(a)(b)(c) and Section 60 D (aa) / (aaa) of Employment Act 1955. This contradicts the score in-dicated summary of result of the evaluation of compliance. In addition there is were no follow-up evidence sighted during the audit of the last communication dated 1st April 2016 made to State Labour Dept. Root Cause : Kerdau Mill 1. Fire Certificate Contract to Supply, Install, Refurbish, Commissioning and Guarantee Performance of Fire Fighting Sys-tem at MILL Kerdau has been awarded to m/s Mecomb Malaysia Sdn. Bhd. Currently, contract works for the above has been completed and still in warranty period. However, the en-gineering drawing just been approved by BOMBA Pahang in end of April 2016 after several comments raise by bomba since last year on the requirement in order to approve the drawing. Anticipated, Bomba inspection will be carried out soonest possible in 2016 prior to the issuance of Fire Certificate. 2. Selected SDP Representatives whom was sent for the CEPPOME and CEPSWAM Training at EIMAS had not submitted their assignment to complete the course and to be Certified Professional. No specific person in-charge to monitor the progress of completion at SDP Level.




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3. Foreign Workers Permit & Insurance for Contractor at the point of audit, documentation of permit pend-ing approval at Immigration Dept Pahang. 4. JTK Permit for Salary Deduction – Great Eastern Insurance Mill did not write in to JTK for salary deduc-tion before since Mill already implemented consent letter that employees had signed as sign of agreement for salary deduction. (Mill Chief Clerk) Sg Mai Estate Follow Up with Pahang Labour Dept for AP Salary Communication previously had been made with SDP HR, MAPA and Labour Dept in relations to the No-tice of Compliance issued by State Labour Dept. However, the decision/final say had not cascaded down to operation team and state labour dept for noting. Correction: 1. Fire Certificate - Endorsed drawing submitted and received by BOMBA. Waiting for their reply on the inspection date.

PIC: Engineering Dept, MILL Manager

2. For CEPPOME, En Hafiz it is a Certified Professional and he already completed the courses. However, CEPSWAMrepresentative for SOU 11 Kerdau (En Roziman) to complete the assignment and sent for EIMAS approval before he to be certified.

PIC: Mill Engineer and Mill Manager

3. Foreign Workers Permit & Insurance for Contractor the renewed permit already obtained BY Contractor and kept in Kerdau Oil Mill Office for reference.

PIC: Chief Clerk, Mill Engineer and MILL Manager

4. JTK Permit for Salary Deduction – Great Eastern Insurance salary deduction application letter was sent to JTK Pahang on 08/06/2016. Internal memo has been issued out to workers representative to inform on the temporary on-hold the salary deduction until the permit is obtained.


Sg Mai Estate Follow Up with Pahang Labour Dept for AP Salary HR at SDP HQ is presenting Sg Mai Estate in settling the issue with Pahang State Labour Office.

PIC: Chief Clerk, OU Manager, and HR Dept Corrective Action: 1. Fire Certificate

Kerdau Oil Mill and Engineering Dept SDP to closely follow up with BOMBA in issuance of Official Inspection Letter and prepared Kerdau Oil Mill for inspection by BOMBA and obtaining the Fire Certificate.

PIC: Engineering Dept, MILL Manager

2. En Roziman with Mill Manager observation, to follow up progress of completion until certificate issuance by EiMAS.

PIC: Mill Engineer and Mill Manager

3. Foreign Workers Permit & Insurance for Contractor Chief Clerk of Kerdau Oil Mill to ensure close monitoring of all foreign labours in checkroll or by con-tractor to ensure all working permit, passport and insurance are valid. PIC: Chief Clerk, Mill Engineer and MILL Manager




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4. Amendment:

Estate to establish a master list of all permit and licence required including salary deduction permit and NC closed? The list includes the validity date and expiry date. Consent letter from the workers will also be ob-tained. This master list will be displayed at the office for monitoring purposes by Chief clerk and doc-umented in the filing system.


Sg Mai Estate Amendment: MAPA HQ representing SDP in closure of the issues. After the final decision being made, Estate Manager and Asst to act accordingly as per decision informed by HR Dept HQ. PIC: Chief Clerk, OU Manager, and HR Dept Verification Result: 1) Fire certificate:

The company submitted evidence of Letter of Acceptance issued to Mecomb Malaysia Sdn. Bhd. for Supply, Install, Refurnish, Commissioning and Guarantee Performance of the Fire Fighting Sys-tem at Kerdau Palm Oil Mill, dated 15 July 2013. It was informed by the company that installation of equipment had been done but due to issue with some equipment installed, this resulted in delay of the approval of the fire fighting equipment and application for fire certificate. Since the issuance of this NCR, the company is working together with a consultant, i.e. Tetuan Earth Tech Engineering to proceed to proceed with fire certificate application with request for inspection by BOMBA (the local fire department) to conduct inspection and approval of fire certification. Sighted evidence of inspec-tion done by BOMBA on 16 June 2016, with 9 comments from BOMBA on aspects that still required action from the company, which the mill needs to follow up on before BOMBA can issue fire certifi-cate. The company is currently in progress to get quotations from Mecomb Malaysia Sdn. Bhd. for the new equipment/changes required to the current system in order to meet the requirements for fire certification. This is accepted as evidence of the mill’s progress to obtain the fire certification and progress will be followed up again during next surveillance.

2) Competent person:

A competent person for treatment of POME has been assigned by the mill, i.e. staff named Mohd. Hafiz bin Kamaruddin. The certificate of confirmation of competency for CePPOME for Mohd Hafiz was sighted issued by the Department of Envronment on 2 January 2014. A mill staff named Roziman bin Ismail had also been sent by the company to attend CePSWAM training as seen from training attendance certificate for training issued by EiMAS (Environmental Institute of Malaysia) for training done on 29 September – 3 October 2014. The competency certificate is still pending from the DOE.

3) Expired permit of foreign worker/no insurance coverage:

As stated in the nonconformance, the permit of the foreign worker was confirmed to be under pro-gress of renewal by the mill. The mill also provided evidence that the worker, who is actually a con-tracted worker engaged for cleaning services under a contractor company named Junjungan Pelangi Sdn. Bhd., has insurance coverage which was paid by the contractor company. Sighted evidence of Foreign Worker Compensation Scheme coverage paid by the contractor for period of 03 May 2016 to 02 May 2017 including for the foreign worker identified in this noncompliance.

4) i) No Labour Permit for Deductions (Kerdau estate) The mill provided evidence of letter of application to the Labour Department of Pahang dated 16 June 2016 for permit for salary deductions, incuding for insurance scheme and savings for workers welfare scheme. The Labour Department provided an approval letter dated 14 July 2016 with ap-proval for deductions for worker’s union (AMESU) fees, life insurance, religious donation (‘tabung haji’) and national trust funds, with conditions that written consent of affected workers is required and deductions shall not exceed 50% of the worker’s salary. Pending the issuance of this permit, the mill also provided sample payslips of workers for June 2016 and July 2016 showing that these deductions were temporarily ceased pending the approval by the Labour Department.




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ii) Failure to comply with a Notice of Compliance (Sg. Mai Estate): The notice of compliance issued by the State Labour Department Dated: 7th Jan, 2015; Reference No: PMK 10604 / 06409 on incompliance towards Section 60A (3)(a), Section 60 (3)(a)(b)(c) and Section 60 D (aa) / (aaa) of Employment Act 1955, was regarding incorrect calculation of overtime payment (current calculation does not take allowances into consideration). As explained by the company, the calculation of overtime payment is in accordance with the MAPA/NUPW agreement which is a nationwide agreement between SDP and other plantation companies who are members of MAPA and the NUPW, hence following the notice issued by the Labour Department would result in payment of overtime which is inconsistent with the payment done by other plantation companies who are MAPA members. The company had communicated a request to the Pahang Labour Department for consideration to revoke the notice, however, this was rejected as per letter from Labour Department dated 8 June 2016 stating the request was not approved except for vehicle allowances. As such the company had requested MAPA to follow up with the Labour Department of Pahang to request for revocation of the notice as seen in letter from MAPA dated 27 June 2016 to the Pahang Labour Department explaining that the practice of calculation of overtime for Sg. Mai is the same for all MAPA members. MAPA had eventually decided to take the matter to the head office of the Labour Department located in Putrajaya to discuss this issue further. Sighted evidence of confirmation of meeting to be held between representatives of MAPA, NUPW and the Putrajayao Labour Department on 9 September 2016. It was confirmed this meeting was held, but to date there is not yet any communication from the Labour Department on this matter. The company has given commitment that if the Labour Department still does not agree to revoke the notice, then they will comply with the notice. While the issue is technically not resolved, the action taken to discuss the matter further with the Labour Department with consideration of notice revocation is accepted considering the matter affects not only the company but also other plantations companies under MAPA. Revision to overtime calculation to meet the notice issued by the Labour Department should be stated accordingly in the MAPA/NUPW agreement and apply to other MAPA members as well. The outcome of this issue will be checked further during next surveillance.

Auditor Conclusion: Closed with observations Closure date: 3 August 2016

Criterion 2.1.2 (Minor indicator): A documented sys tem, which includes written information on le-gal requirements, shall be maintained.

Non-conformance RSPO00413 (Minor non-conformity) Found a Legal Register for Kerdau Mill, Chenor, Jentar and Mentakab Estates was not properly re-viewed and documented as sampled: • Occupational Safety and Health Act 1994, The requirement not detailing explained the actual sections.

For example Part IV Gen. Duties of employer to formulate Safety and Health Policy. Actual this is unser Section 16. Under Part IV also have Section 15 General Duties of Employers and Self-employed Person to Employees, Section 17 General Duties of Employers and Self-employed Person to Person Other Than Their Employees. These were not included and explained. While Part VII not explained on requirement to conduct medical surveillance as specifically under Section 28. (Kerdau Mill)

• Ammendment of Factories and Machinery (Person In-Charge) (Ammend) Regulations 2014 not clearly defined the relevant heavy machinery under ammended schedule. (Kerdau Mill, Chenor, Jentar and Mentakab Estates)

• Factories and Machinery (Steam Boiler, Unfired pressure Vessel) Regulations 1970 under Regulation 3, 45-64 and 72 were not clearly explained the actual requirements intead mentioned as refer the regulations in FMA for specific details of the conditions (Kerdau Mill).

• Occupational Safety and Health (Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 under Regulation 13 just mentioned Duty to Furnish Safety Data Sheet. The full requirement such as explanation that Safety Data Sheet need to be review by supplier every 5 years was missing (Kerdau Mill, Chenor, Jentar and Mentakab Estates)

• Factories and Machinery (Safety, Health and Welfare) Regulations 1979 (Revised 1983) from Regulation 6 to 30 all mentioned refer to regulations in FMA for specific details on conditions. Some af the applicable requirements such as Section 24 Space for Each Person, Regulation 25 Height of Workroom, Regulation 26 Air Cleanliness, Regulation 28 Temperature were mentioned as Not Applicable which actually applicable (Chenor Estate)




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• Fire Services (Fire Certificate) Regulations 2001 was not applicable for all estate but mentioned as compliance

• Environmental Quality Act 1974 not included Section 22 Restriction of Pollution of Atmosphere, Section 23 Restriction of Noise Pollution, Section 29 Prohibiton of Dispose Waste to Malaysian was wrongly mentioned Prohibition of Open Burning which actually under Section 29A. Section 34B Prohibition against Placing, deposit and etc of Scheduled Waste was not included (Jentar Estate).

• Occupational Safety and Health Act 1994 not included requirements of Section 16, 17 and 30. (Mentakab Estate)

• Environmental Quality Act 1974 not included requirement of Section 34B Prohibition against Placing, deposit and etc of Scheduled Waste (Mentakab Estate).

Root Cause: Due to no dedicated competent person-in-charge to monitor the evaluation of compliance all applicable laws and regulations for estate and mill. Thus, it is a generic LORR provided by PSQM. Correction : PSQM to amend the specific section mentioned in the LORR based on the current update. The updated section will then be circulated to Mill and Estates.

PIC: PSQM, OU Manager, Estate Assistant/Mill Engineer Corrective Action: PSQM will update LORR based on Sime Darby Group Compliance Office‘s latest legal list applicable to Estate and Mill. Plus, legal compliances in relation to RSPO requirement to be put together in LORR.

To appoint dedicated competent person-in-charge at SDP HQ and Operational Level in revision of LORR as and when needed.

PIC: PSQM, OU Manager, Estate Assistant/Mill Engineer Auditor Conclusion: Corrective action plan accepte d. Effectiveness of implementation to be re-viewed during next surveillance

Criterion 2.1.3 (Minor indicator): A mechanism for ensuring compliance shall be implemented.

Non-conformance RSPO00414 (Raised to Major non-conf ormity) The mechanism to ensure legal and other requirements compliance was not effective as all reviewed of compliance at Kerdau Mill, Chenor, Jentar and Mentakab Estates scored 100% but found:

• Occupational Safety and Health (Safety and Health Officer) Regulations 1997 showing compliance status. Actually no SHO required for Mill (Kerdau Mill)

• Pesticides (Labelling) Regulations 1984 was not included in the LORR and compliance was not evaluated (All Estates)

• Deleted Environmental Quality (Sewege, Industrial Effluent) Regulations 1979 still evaluated and mentioned as compliance. (Chenor Estate)

• Applicable Environmental Quality (Refrigerant) Regulations 1996 wrongly mentioned as not applicable (Chenor Estate)

• Not applicable Fire Services (Fire Certificate) Regulations mentioned as compliance as actual no evidence of compliance exist. (Chenor and Mentakab Estates)

• Missing Sections 16, 17 and 30 of Occupational Safety and health Act 1994 compliance status were not evaluated. (Mentakab Estate)

• Factories and Machinery (Safety, Health and Welfare) Regulations 1970 (Revised 1983) mostly mentioned as not applicable and compliance status were not evaluated properly (Mentakab Estate).

Root Cause: Incorrect checking and verification of evaluation of compliance since lack of competency from estate and mill preson in-charge in relations to interpretation of legal compliance.




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Correction : Estates and Mill to amend the LORR as accordance current practise.

PIC: PSQM, RSPO Unit and ESH Unit, Estate Assistant/Mill Engineer) Corrective Action: PSQM to conduct training regarding on LORR to ensure estate and mill preson in-charge are having the same level of understanding of legal compliance checking and implementation on site.

PIC: PSQM, OU Manager, Estate Verification Result: The company provided an updated LORR for Kerdau Mill and the estates which now incorporates the missing details of legal requirements and also evaluation of compliance was redone. All aspects which were wrongly indicated as not applicable or not evaluated correctly have now been evaluated for com-pliance accordingly. The company also provided evidence of planned training schedule on how to con-duct evaluation of legal compliance in LORR as part of corrective action. Auditor Conclusion: Closed Closure date: 3 August 2016

Criterion 4.1.3 (Minor indicator): Records of monit oring and any actions taken shall be maintained and available, as appropriate.

Non-conformance RSPO00415 (Minor non-conformity) There is no record of amount EFB applied, so it cannot be ascertained whether the use of palm EFB on land in accordance with the guidelines set out which set 180kg/palm for immature palm. Chenor Estate Root Cause: No dedicated person in-charge with regards to EFB mulching. Records were not properly maintained. Correction : Manager to conduct briefing to assistant in-charge and staff in-charge in providing complete records of EFB Mulching. PIC: OU Manager and Estate Assistant Corrective Action: Estate Assistant to properly check and verified the records established by mandore and upkeep staff be-fore signed as checked records. Please refer to evidence submitted. PIC: OU Manager and Estate Assistant Auditor Conclusion: Corrective action plan accepte d. Effectiveness of implementation to be re-viewed during next surveillance

Criterion 4.4.3 (Minor indicator): Appropriate tre atment of mill effluent to required levels and regu -lar monitoring of discharge quality, shall be in co mpliance with national regulations (Criteria 2.1 and 5.6).

Non-conformance RSPO00416 (Minor non-conformity) 1. Sighted pH and TSS analysis test results of Kerdau Mill final discharge of effluent from Oct 2015 to March 2016 had exceeded DOE required legal limits. No evidence that any actions have been taken to overcome the matter.

2. The water quality of the surrounding the estate shall be monitored by performing water sampling 4 times a year as per the Sustainable Plantation Management System (SPMS) Appendix 7. However, at Mentakab Estate sighted that the water analysis was last recorded in Jan 2016 and previously on Aug 2015 with the latest sample was sent in May 2016.




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Root Cause: 1. Kerdau Oil Mill The off specs readings may be contributed by the draught season increased the pH readings and amount of bacteria may affect the TSS readings. Thus high PH and TSS found in the final discharged samples.

2. Water Samples for domestic usage and natural waterway - miss-comunication among staff Field/Office) Lanchang Division and Mentakab Divison Correction : 1. Kerdau Oil Mill Immediate investigation conducted by the KKS Kerdau ESH Committee in determining rootcause and ac-tion taken immediately. PIC: Mill Manager and Mill Engineer 2. Latest water samples had been sent on May 2016 after raised as finding in Internal Audit. The result available for reference. Corrective Action: 1. Kerdau Oil Mill • Close monitoring on daily ETP operation and promptly act for any abnomality by Mill Engineer. • Lab Analyst to be highlight to mill management in case of legal parameter off spec reoccurence and to

provide action taken immediately. PIC: Mill Manager and Mill Engineer

2. Senior Assistant with Medical Assistant (MA) to be in-charge on the monitoring of water sampling for both domestic usage and natural waterways. The schedule of water sampling to be availabe and follow-up during ESH Quarterly Meeting. Auditor Conclusion: Corrective action plan accepte d. Effectiveness of implementation to be re-viewed during next surveillance

Criterion 4.6.11 (Major indicator): Specific annual medical surveillance for pesticide operators, and documented action to treat related health condition s, shall be demonstrated.

Non-conformance RSPO00417 (Major non-conformity) Found medical surveillance was conducted by Occupational Health Doctor (OHD) on 22/02/16 only on 3 workers from workshop at Jentar Estate. As sampled from Chemical Health Risk Assessment (CHRA) Report by Assessor (JKKP HIE 127/171-2 (124) conducted from 20-21/08/15. All chemical mixers, spray-ers, manurers, foreman, storekeeper were recommended to maintain annual medical surveillance pro-gramme. Rait bait applicator workplace risk assessment also recommended to maintained annual medical surveillance. Previous Medical surveillance was done on 19/12/14 on 25 workers. OHD also recommend-ed to continue annual medical surveillance Root Cause: Based on Form F from recent Chemical Health Risk Assessment (CHRA), chemical mixers, sprayers, manurers, foreman, rat baiter, storekeeper recommended for health surveillance programme. Reference to USECHH Regulation 2000, Subregulation 27(3): Schedule II and Guidelines on Medical Surveillance; medical surveillance programme only to be conducted for 1. Pesticide operators for orghanophosphate 2. Foreman and welders for Manganese Correction : All workers involved with chemical activities and workshop staff to be sent for medical surveillance. PIC: Medical assistant (MA) and OU Manager




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Corrective Action: Medical Assistant (MA) to ensure all of the below in a schedule that will be guided by VMO:- 1. Continuity of health surveillance programme. 2. Staff and workers compulsory to be sent for medical surveillance annually.

PIC: Medical assistant (MA) and OU Manager. Verification Result: Jentar Estate provided evidence of medical surveillance done for 14 workers involved in work with chemicals with examination done between 20 to 29 June 2016 with summary of medical results provid-ed and signed off and stamped on 30th July 2016 by a Occupational Health Doctor from Sulaiman Clinic. Medical tests results were normal for all workers. Auditor Conclusion: Closed Date of closure: 30 July 2016 Criterion 4.7.2 (Major indicator): All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be docum ented and implemented to address the iden-tified issues. All precautions attached to products shall be properly observed and applied to the workers. Non-conformance RSPO00418 (Major non-conformity) Found hazards and risks was not properly evaluated as required by OSH Manual dated August 2008 once yearly for effectiveness and circumstances of accident, new material, equipment, machinery or process. As ecidence found: • HIRARC was reviewed due to an accidents occured on 24/11/15 approved by Mill Manager dated

21/03/16 but found no approve signature available. • Fatal accident involving Hadapan Mill was not considered and no review on Hirarc was not done


clear action plan and dateline of implemention as it should be. (Kerdau Mill, Chenor, Estates). • Review also not comprehensive as only mentioned one Job step (maintenance with risk of electric

shock and fire) for Motor & Compressor. Risk of explosion, rotating part , noise not explained (Kerdau Mill)

• HIRARC was last reviewed on 16/01/15 on operating of fax machine and office operation. 15/03/15 on workshop. No hiracrc review was conducted for 2016 No review of hirarc conducted after few accidents involving harvesters in 2015/2016 as reported in Minutes of Meeting of Safety and Health Committee (Chenor Estate)

Root Cause: Lack of understanding on proper HIRARC establishment and revision at estates and mill. Correction : To re-visit HIRARC and carry out revision on all job steps and activities. Any amendments to be updated accordingly with supervision of ESH Officer Regional.

PIC: PSQM, OU Manager, and Estate Assistant/Mill Engineer. Corrective Action: To conduct refresher training on EAI and EIE. EAI and EIE shall be reviewed and updated at least once a year and any changes to made accordingly (if any). PIC: PSQM, OU Manager, and Estate Assistant/Mill Engineer. Verification Result:




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• Revised HIRARC for Boiler Station, Sterilizer Station, Workshop (electrical) and Workshop (mechnicl) was provided by the mill and approved by Mill Manager dated 8 or 9 June 2016

• The Accident Warning from EHS PSQM (Ref No. EHS/12/08/2015) at Hadapan Mill involving a Fireman has been considered in revised HIRARC for Kerdau mill. The accident was regarding a case which occurred on 16 July 2015 where a mill worker was tasked to clean out the dust collector chute and found the chute was stuck. The worker tried to unclog the chute by using a long pipe to dig into the chute, which resulted in a large amount of hot dust (300° C) falling on top of victim. The victim suffered third degree burns and passed away. This risk was given risk level of 4 in HIRARC for the mill. The existing controls listed for opening manhole during shutdown including requirement for Permit to Work, dedicated PPE, training, barricaded area for persons with Permit to Work only, supervision and authorized person, while the recommended risk control listed included Permit to Work, PPE and training. The additional risk control should be different from the existing risk controls and be more detailed (i.e. what kind of training to be provided), hence this was noted as an observation.

• • Sighted the revised HIRARC for Kerdau mill now includes date of implementation and person in charge,

however the new proposed risk control measures for risk scored medium (4 and above) are still stating the same proposed control measures as existing control. The company’s PSQM departrment has acknowledged weaknesses in the understanding of the personnel at the mill and estates not only at SOU11: Kerdau but other SDP management units as well as weakness in the current HIRARC assessments done, which is planned to be replaced with a new format as well as training to be done personnel from all SDP SOU’s. A sample of the revised HIRARC format combined with EAI and EIE assessment format to be used was provided in excel format and found to comprise several tabs, i.e. Identification of Environmental Aspects and Safety and Health Hazards, Safety and Health Assessment Form, Environmental Impact Assessment Form, Summary of Safety & Health Risk and Environmental Impacts, Magnitude Matrix table for Safety Hazards, and Magnitude Matrix table for Environmental Aspects. The company also provided the training materials prepared to be used during trainings to SOU personnel on how to use the new combined EAI, EIE and HIRARC format and how to conduct assessment of safety hazards and environmental aspects. The PSQM department also provided the training schedule for New Risk Management Workshop trainings planned to be conducted for FY 2016/17 for all SOUs which was planned from 11 August to 6 October 2016. Training for SOU 16: Kok Foh is planned for 4 October 2016. While technically not closing the issue within 60 days, it is accepted as immediate evidence of the company’s efforts to resolve the issue of poor understanding of personnel at the SOU level on how to conduct HIRARC. Effectiveness of the training by PSQM and implementation of the new formet will be evaluated further during the next surveillance

• Training is being done for SOU11: Kerdau as well as all other SDP’s SOUs to address the issue of review of HIRARC not being done comprehensively, as explained above.

Auditor Conclusion: Closed with observations Date of Closure: 3 August 2016

Criterion 5.1.1 (Major indicator): An environmental impact assessment (EIA) shall be documented.

Non-conformance RSPO00419 (Major non-conformity) The EIE was reviewed on April 2016 for both Environmental Aspect and Impact (EAI) and Environmental Impact Evaluation (EIE) at Chenor Estate, Jentar Estate and Mentakab Estate.

However, both EAI and EIE was dated back on 2013 with some information was outdated such as legal reference Environmental Quality Act (Scheduled Waste) Regulation 1989 and Environmental Quality Act (Clean Air) Regulation 1978. One of the legal EQA (Control Emission from Diesel Engines) Regulations 1996 which is the year 1996 is wrongly stated.

In addition, Environmental Impact Evaluation Form (EIE) was not used properly for example spillage of diesel was considered as normal condition (suppose emergency condition) For all aspects identified, there is a column asking if there is a high potential of non-compliance to envi-ronmental regulation. All were ticked as "No' but in actual, many of the aspects have risk of legal non-compliance if not managed according to the law. Root Cause:




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Lack of understanding on EAI and EIE establishment and revision at estates and mill. Correction : To re-visit EAI and EIE and carry out revision on all aspects and impacts. Any amendments to be updated accordingly with supervision of ESH Officer Regional. PIC: PSQM, OU Manager, and Estate Assistant/Mill Engineer. Corrective Action: To conduct refresher training on EAI and EIE. EAI and EIE shall be reviewed and updated at least once a year and any changes to made accordingly (if any).

PIC: PSQM, OU Manager, and Estate Assistant/Mill Engineer. Verification Result: The company’s PSQM departrment has acknowledged weaknesses in the understanding of the per-sonnel at the mill and estates not only at SOU 11: Kerdau but other SDP management units as well as weakness in the current EAI and EIE evaluation forms being used, which is planned to be replaced with a new format as well as training to be done personnel from all SDP SOU’s. A sample of the revised EAI and EIE format combined with HIRARC assessment format to be used was provided in excel format and found to comprise several tabs, i.e. Identification of Environmental Aspects and Safety and Health Hazards, Safety and Health Assessment Form, Environmental Impact Assessment Form, Summary of Safety & Health Risk and Environmental Impacts, Magnitude Matrix table for Safety Hazards, and Magnitude Matrix table for Environmental Aspects. The company also provided the training materials prepared to be used during trainings to SOU personnel on how to use the new combined EAI, EIE and HIRARC format and how to conduct assessment of safety hazards and environmental aspects. The PSQM department also provided the training schedule for New Risk Management Workshop trainings planned to be conducted for FY 2016/17 for all SOUs which was planned from 11 August to 6 October 2016. Training for SOU 11: Kerdau is planned for 4 October 2016. While technically not closing the is-sue within 60 days, it is accepted as immediate evidence of the company’s efforts to resolve the issue of poor understanding of personnel at the SOU level on how to conduct EAI and EIE, which should be more effective than requiring the SOU personnel to redo the EAI and EIE using the existing templates and with poor understanding on how to conduct the evaluations. Effectiveness of the training by PSQM and implementation of the new formet will be evaluated further during the next surveillance Auditor Conclusion: Closed with observations Date of Closure: 3 August 2016

Criterion 6.9.2 (Major indicator): A policy to prot ect the reproductive rights of all, especially of women, shall be implemented and communicated to all levels of the workforce.

Non-conformance RSPO00420 (Major non-conformity) 1) There is no clear policy to protect the reproductive rights of women. There is a phrase in the Social Pol-icy which states that “the company is committed to ‘develop and apply a policy to ..... and to protect their reproductive rights.” (HQ) however no such policy was sighted. 2) As there is no reproductive rights policy yet, there is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at the reveal that the workers and staff do not understand what reproductive rights constitute. 3) No evidence in the gender committee minutes of meetings that the reproductive right policy has been communicated and implemented. Root Cause: “Reproductive Rights” is being embedded in the Social and Humanity Policy. Thus, there is no need spe-cific policy Correction :




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As for now, SDP to establish training plan to equip gender committee and Operating Unit management team on reproductive rights. Estate/Mill Management team to cascade down the information to all level of workforce.

PIC:PSQM and SOU Managers Corrective Action: Monitoring of reproductive rights implementation at estates and mill will be via gender committee. SEPU Unit, PSQM shall be the point of reference for estates and mills implementation.

PIC:PSQM and SOU Managers Verification Result: It was confirmed that the company’s Social and Humanities Policy dated January 2015 includes a statement of protection of reproductive rights of women and hence not required to develop a separate policy for protection of reproductive rights. It is noted that the policy does not specify any commitment to ongoing activities such as education and awareness programmes for the purpose of implementation of this policy. This is noted as an opportunity for improvement. The company has developed training materials entitled ‘Introduction to Reproductive Rights’ Policy in our Plantation’. The training material includes discussion on issues pertaining to gender discrimination, sexual health, and family planning, and includes the definition of reproductive rights, global statistics on reproductive issues, SDP’s policy on protection of reproductive rights, as well as the efforts taken by SDP to protect the reproductive rights of their workforce and a reminder to go through the Gender Committee to report any issue pertaining to this. The material ends with a quiz to check the under-standing of training participants. A training by PSQM entitled ‘Introduction to Reproductive Rights Policy & Gender Committee Refresher Training’ was conducted on 25 July 2016 for 24 participants at Kerdau Estate Club House, including managers, assistant managers and gender committee representatives from each estate and the mill, with evidence of attendance lists and photos. Training materials used for the session were entitled ‘Introduction to Reproductive Rights’ Policy in our Plantation’. The training material included discussion on issues pertaining to gender discrimination, sexual health, and family planning, and includes the definition of reproductive rights, global statistics on reproductive issues, SDP’s policy on protection of reproductive rights, as well as the efforts taken by SDP to protect the reproductive rights of their workforce and a reminder to go through the Gender Committee to report any issue pertaining to this. The material ends with a quiz to check the under-standing of training participants. Estate level training was also done by the gender committee representatives of each estate, with evi-dence sighted as follows: - Kerdau Palm Oil Mill: Training done on 29 July 2016 with 10 female participants, including clerks and

housewives. Photos of meeting were sighted - Kerdau estate: Training done on 19 August 2016 with 22 female participants - Chenor estate: Training done on 25 August 2016 with 16 female participants - Jentar estate: Training done on 12 August 2016 with 9 female participants. Photos of meeting were

sighted - Mentakab estate: Training done on 30 August 2016 with 17 female participants, including workers,

clerks and housewives. - Sg. Mai estate: Training done during Gender Committee meeting on 22 August 2016 for 16 partici-

pants Auditor Conclusion: Closed Date of Closure: 30 August 2016

• RSPO Supply Chain Certification System (SCCS)




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Clause E.5.1: a) The site shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis. b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios st ated by RSPO. c) The site can only deliver Mass Balance sales fro m a positive stock. Positive stock can include product ordered for delivery within three months. H owever, a site is allowed to sell short.(ie prod-uct can be sold before it is in stock.)

SCCS Non-conformance no. RSPO00421 (Major non-conformity): a) Records of Mass balance accounting system are available.However there are lack of information



Root cause: All the Sales for Sustainability Products maintained at HQ Level by Global Trading and Marketing De-partment. Current operation is site basis only have product information to be ready for transportation and shipment on physical stock where as GTM Dept have whole information regards to figures of physical trading and certificates sold under greenplam for SDP. Correction: • GTM Dept shall determine on communication of figures traded under greenpalm cascaded down to

mill level that to be accounted in the MB Accounting System. • For PKO under greenpalm is autocalculated in the greenplam system.

PIC: GTM Dept, PSQM, MILL Manager Corrective Action: Based on the correction decision, the activity shall be a continued accordingly and Kerdau Oil Mill person in-charge for SCCS to closely monitor of sustainability sales to not exceeded on quarterly basis.

PIC: MILL Manager and Mill Engineer Verification results: 1) During the audit, sighted records of sales on Greenpalm but it could not be confirmed which SOU had made the sales to Greenpalm. The company has since confirmed that Greenpalm sales were not from Kerdau Palm Oil Mill but from 6 other mills registered on Greenpalm (Bukit Puteri mill, Binuang mill, Bukit Benut mill, Bukit Kerayong mill, Merotai mill and Sandakan Bay mill). The mass balance sheet for Kerdau Palm Oil Mill has been updated to indicate Greenpalm sales and currently indicate no sales on Greenpalm in the past. 2) Same as above, the current sales of PKO on Greenpalm were confirmed to be from the other 6 mills and not from Kerdau Palm Oil Mill. The company also provided evidence of communication with the person-in-charge of Greenpalm, Mr. Bob Norman, as per email dated 25 February 2016, stating that the company is only required to key in the certified PK volumes and the PKO volume of 45% will be automatically calculated on the Greenpalm system Auditor Conclusions: Closed Date of closure: 3 July 2016




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3.4 Noteworthy Positive Components

No. Criteria Positive observation

1. - Good cooperation and support from management and staff of Chenor, Jentar and Men-takab Estates during the audit process.

2. - At Kerdau Mill it was noted the documents and records related to the audit were accessi-bility and good retrieval system was in observed. In addition the Administration Team consists of Chief Clerk and Assistants were able to show the relevant evidence as needed for verification.

3. - At Sungai Mai Estate observed document and records were practiced thru the use of Loan Tag with photos of staffs for tracking purposes. The documents and records were clearly identified with file name and arranged accordingly.

4. 4.3 Kerdau Palm Oil Mill has a composting plant and observed in the estates that composting is carried out in widespread manner with compost application program sighted

5. 4.6.5 At Kerdau Estate, the chemical store was improved after last audit. Railing at staircase, correct exhaust fan installation, proper signages and good arrangement. All pesticides containers were properly labelled and stored.

6. 6.5.3 At Sg. Tekal Division Housing observed the environment surrounding most of the houses were well maintained. For e.g. no rubbish in the drains, no rubbish at back and front of the houses including no stagnant and dirty water observed.

7. 6.5.3 Workers generally mentioned that the working environment in the company is very posi-tive. The workers are satisfied with the work and living conditions.

3.5 Issues Raised by Stakeholders and Findings Pert aining to Issues A) Issues Raised during Stakeholder Consultation Me eting

No. Issues Raised Audit Verification

1. • Contractor for 1 year. Transportation – for FFB. • Safety okay. • SDP has checked on License, Road Tax.

Noted as positive comment

2.

• Contractor needs supporting letters from SDP for foreign workers

• Contractor for 1 month only use by SDP. • 2016 many changes. Living cost higher. • Electricity and Water System good. • Workers housing is better than other plantations

Noted as positive comment and requests

3. • Safety Training provided. • Medical Check - yes. • If pregnant worker, not allowed for spraying

Confirmed as described under Section 3.1, CR 4.6

4. No land conflict / title issues.

Confirmed as described under Section 3.1, CR 2.2

5.

• Price problem for FFB. • Before 27.35 / Feb 25 ++ • Payment revised for Jan to follow Feb rate. • Sent letter to Manager from SDP on price reduction. • Calculation base on SDP not base on Contractor. • Spare parts all are chargeable with GST. SDP does

not know. Please help to inform. • Payment slight delay if the day falls on holiday. But

Price of FFB fluctuates depending on price from MPOB. Could not confirm this issue based on evidence sighted. Company should look into this complaint.




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B) Issues Raised during Stakeholder Interviews On-s ite

No issues were raised by stakeholders interviewed on-site

ok. • No discussion on the payment rate revision. • Terms and Conditions with HQ. • Housing okay. Company assists 100%. • SDP has checked on License, Road Tax.

6.

• Value of payment less - FFB - • 8.70 per tan. Now 8.65 per tan. • Less FFB to be harvester • Staying at Jentar Estate

As above




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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance audit is planned for April 2017.

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

It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content. Signed on behalf of Sime Darby Plantation SOU 11: Kerdau …………………………………………. Name Position: Date:

Signed on behalf of PT TUV Rheinland Indonesia

…………………………………………. Aswan Hasibuan Lead Auditor Date: 5 October 2016




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APPENDICES

Appendix 1: Details of Certificate




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Appendix 2: Audit Plan

Date / Time (1)

Organizational Unit and Process-es

Auditor / Ab-brev. Interviewee

Procedure - EM/QM Ele-ment -

Standard Chapter Sunday, 29 May 2016

- Indonesian Audit team member travel from Jakarta to KL (morning) - Audit team travels to hotel in Temerloh, Pahang (afternoon):

U Design Hotel Mentakab,Jalan Bukit Bendera, Taman Bendera, 28400 Mentakab, Pahang

Aswan Hasi-buan (AH), Azizan Zakar-ia (AZ) Suniljit Singh (SS) Yusof Nizar (YN), Rizal Kassim (RK)

Monday, 30 May 2016 – Kerdau Palm Oil Mill (MORNING) & Stakeholder Consul tation

08.30am – 09.00am

Opening meeting at Kerdau Club-house - Introduction by audit team leader - Presentation of estates and mill by respective managers - Finalization of audit plan

All

Top Manage-ment and Relat-ed Managers

Start audit at Kerdau Palm Oil Mill

9.00am – 12.30pm

Mill supply base & production Records • FFB reception records • CPO & PK production rec-ords • OER & KER SOPs, OSH, Training, Environ-ment • Land legality & land disputes (if any) • SOPs & Internal audit • Chemical stores & work-shops • HIRARC • OSH Committee & safety records • Accident record • Training & PPE issuance • EIA/ Aspects Impacts analy-sis

AH Estate manager / assistants

General production data RSPO Principle 2 : CR2.2, 2.3 Principle 4 : CR4.1, 4.7 Principle 5 : CR5.1,




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Date / Time (1)




Standard Chapter

9.00am – 12.30pm

Supply Chain Certification Audit • Supply Chain Management Manual • SOPs, & related records • eTrace Transaction records • Sales invoices • SCC training records • Weighbridge slips Business Management Plan • Business management plan

RK Supply Chain Certification Standard 2014 Principle 3: CR3.1

9.00am – 12.30pm

SOPs, OSH, Training • Field operations (spraying, harvesting, manuring) • Worker interviews • SOPs & Internal audit • Chemical stores & work-shops • HIRARC • OSH Committee & safety records • Accident record

YN Estate manager / assistants

RSPO Principle 2: CR2.1 (OSH & Env) Principle 4: CR4.7, 4.8

9.00am – 12.30pm

Legal Requirements , Social as-pects – Workers, local communi-ties, communication, CSR • Workers/ Contractor interviews • Housing • Local communities • List of workers • Contracts • Working hour & overtime rec-ords, pay slips • Land conflict (if any)

SS Estate manager / assistants /Local communities / workers

RSPO Principle 2: CR2.1 (Social) Principle 6: All Principle 8: CR8.1 (Social)

9.00am – 12.30pm

Transparency, best practices, en-vironment • Requests for information & responses • Ethical conduct policy • Water management plan • Energy efficiency monitoring and records • Continuous improvement plan

AZ Estate manager/ assistant man-ager/ local com-munities / work-ers

Principle 1: CR1.1, 1.2, 1.3 Principle 4: CR4.4 Principle 5: CR5.3, 5.4, 5.6 Principle 8: CR8.1 (Social)

12.30pm – 1.30pm

LUNCH

1.30pm – 2.00pm

Preparation for stakeholder consultation – Kerdau Club House

All auditors

Relevant personnel

Relevant personnel to assist with setting up projector, microphone and meeting room at Kerdau Club House for presentation to 30 – 50 participants

2.00pm – 5.00pm

Stakeholder Consultation – Ker-dau Clubhouse All auditors Relevant

personnel SD representative(s) may give




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Date / Time (1)




Standard Chapter

• Introduction/welcome note • Presentation by TUV Rhein-land on RSPO & purpose of meeting • Open discussion with stake-holders • Stakeholder survey forms

welcome note to stakehold-er consultation participants. Af-ter which all SD personnel shall not be present during the discussion with stakehold-ers, except worker/union representatives and gen-der committee members (Please request them to attend)

5.00pm – 5.30pm

Soft closing All auditors Estate manager / assistants

5.30pm End of Day 1 Tuesday, 31 May 2016 – Kerdau Oil Mill (Continue) & Chenor Estate Team 1: Rizal & Sunil (Continue at Kerdau Oil Mill) 8.30am – 12.30pm

Supply Chain Certification Audit • Supply Chain Management Manual • SOPs, & related records • eTrace Transaction records • Sales invoices • SCC training records • Weighbridge slips SOPs, OSH, Training, Environment • SOPs & Internal audit • Chemical stores & work-shops • HIRARC • OSH Committee & safety records • Accident record • Training & PPE issuance

RK Mill manager / assistants

Supply Chain Certification Standard 2014 RSPO Principle 4 : CR 4.7, 4.8 (to liase with other auditors on outstanding aspects to check)

8.30am – 12.30pm

Legal Requirements , Social as-pects – Workers, local communi-ties, communication, CSR (Con-tinue from Monday) • Workers/ Contractor interviews • Housing • Local communities • List of workers • Contracts • Working hour & overtime records, pay slips

SS Mill manager / assistants

RSPO Principle 2: CR2.1 (Social) Principle 6: All Principle 8: CR8.1 (Social)

Team 2: Chenor Estate (Aswan, Azizan & Yusof)

8.30am – 12.30pm

Land legality, best practices, fi-nancial viability, • Land titles, land conflict (if any) • Land disputes (if any) • Business management plan


Principle 2 : CR2.2, 2.3 Principle 3 : CR3.1 Principle 4 : CR4.1,4.2, 4.3, 4.5 Principle 5 : CR5.2,




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Date / Time (1)




Standard Chapter

& replanting program • SOPs & Internal audit • Soil fertility & management (sloped areas, marginal soils, peat areas, EFB application, etc) • Integrated pest management • High Conservation values (HCV)

8.30am – 12.30pm

Legal Requirements, OSH, Train-ing, SOPs • Field operations (spraying, harvesting, manuring) • Worker interviews • SOPs & Internal audit • Chemical stores & work-shops • HIRARC • OSH Committee & safety records • Accident record • Training & PPE issuance


RSPO Principle 2: CR2.1 (OSH & Env) Principle 4: CR4.6, 4.7, 4.8

8.30am – 12.30pm

Transparency, environment, social • Requests for information & responses • List of publicly available doc-uments • Ethical conduct policy • Water management plan • Energy efficiency monitoring and records • Use of fire (if applicable) • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consulta-tion procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) • Continuous improvement plan

AZ Estate manager / assistants

RSPO Principle 1: CR1.1, 1.2, 1.3 Principle 4: CR4.4 Principle 5: CR5.3, 5.4, 5.5, 5.6 Principle 6: ALL Principle 8: CR8.1 (Social)

12.30pm – 1.30pm

Lunch

1.30pm – 5.00pm

Aswan, Azizan and Yusof continue audit at Chenor Estate

AH AZ YN

Estate manager / assistants

1.30pm – 5.00pm

Suniljit and Rizal continue at Ker-dau Mill

SS RK

Mill manager / assistants

5.00pm – 5.30pm

Soft closing at respective location Estate manager / assistants/

5.30pm End of Day 2




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Date / Time (1)




Standard Chapter

Wednesday, 1 June 2016 – Kerdau Estate & Jentar Estate

Team 1: Kerdau Estate (Aswan, Sunil & Rizal)

08.30am – 12.30pm

Estate Production Area • Area statement • FFB supply information • Replanting program • Small grower/outgrower cer-tification plan (if applicable) Land legality, OSH, Training • Land titles, land conflict (if any) • Customary rights • Field operations (spraying, harvesting, manuring) • Chemical stores & work-shops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analy-sis • Waste management • Zero burning policy


RSPO Principle 2: CR2.2 – 2.3 Principle 4: CR4.6, 4.7, 4.8 Principle 5: CR 5.1, 5.3, 5.4, 5.5, 5.6

08.30am – 12.30pm

Legal Requirements, SOPs, Environment best practices, fi-nancial viability, HCV, • Worker interviews • Business management plan & replanting program • SOPs & Internal audit • Soil fertility & management (sloped areas, marginal soils, peat areas, EFB application, etc) • Integrated pest manage-ment • High Conservation values (HCV)

RK Estate manager / assistants

RSPO Principle 2: CR2.1 (OSH & Environment) Principle 3: CR3.1 Principle 4: CR4.1, 4.2, 4.3, 4.4, 4.5 Principle 5: CR5.2

08.30am – 12.30pm

Social aspects – Workers, local communities, communication, CSR • Requests for information & re-sponses • Ethical conduct policy • Legal compliance (social) • Workers/ Contractor interviews • Housing • Local communities • List of workers • Contracts

SS Estate manager/ assistant manager/ local communities / workers

RSPO Principle 1: CR1.1, 1.2, 1.3 Principle 2: CR2.1 (social), Principle 6: all Principle 8 (Social)




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Date / Time (1)




Standard Chapter

• Working hour & overtime records, pay slips • Land conflict (if any)

Team 2: Jentar Estate (Azizan & Yusof)

08.30am – 12.30pm

Legal Requirements, SOPs, OSH, Training, Environment • Field operations (spraying, har-vesting, manuring) • Worker interviews • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident record • Training & PPE issuance • EIA/ Aspects Impacts analysis


RSPO Principle 2: CR2.1 (OSH & Environment) Principle 4: CR4.1, 4.6, 4.7, 4.8 Principle 5: CR5.1

08.30am – 12.30pm

Best practices, environment, so-cial aspects, • Requests for information & re-sponses • Ethical conduct policy • Land titles, land conflict (if any) • Customary rights • Soil fertility & management (sloped areas, marginal soils, peat areas, EFB application, etc) • Integrated pest management • High Conservation values (HCV) • Waste management • Pollution & emissions • Use of fire • Greenhouse Gas Management • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities

AZ Estate manager/ assistant manager/ local communities / workers

RSPO Principle 1: CR1.1, 1.2, 1.3 Principle 2: CR2.2, 2.3 Principle 4: CR4.2, 4.3, 4.4, 4.5 Principle 5: CR5.2, 5.3, 5.4, 5.5, 5.6 Principle 6: all Principle 8: CR8.1

12.30pm – 1.30pm

Lunch

1.30pm-5.00pm

Continue audit / document review at the same location

All auditors Estate manager / assistants /Local communities / workers

5.00pm – 5.30pm Soft closing All auditors Estate manager /

assistants

5.30pm End of Day 3

Thursday, 2 June 2016 – Sg Mai Estate & Mentakab Es tate

Team 1: Sg Mai Estate (Aswan, Suniljit and Rizal)




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Date / Time (1)




Standard Chapter

8.30am – 12.30pm

Estate Production Area • Area statement • FFB supply information • Replanting program • Small grower/outgrower certifica-

tion plan (if applicable) Land legality, OSH, Training • Land titles, land conflict (if any) • Customary rights • Field operations (spraying, har-

vesting, manuring) • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management


RSPO Principle 2: CR2.2 – 2.3 Principle 4: CR4.6, 4.7, 4.8 Principle 5: CR 5.1, 5.3, 5.4, 5.5, 5.6

8.30am – 12.30pm

Legal Requirements, SOPs, Environment best practices, fi-

nancial viability, HCV, • Worker interviews • Business management plan & re-

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

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

• Integrated pest management • High Conservation values (HCV)

RK Estate manager / assistants

RSPO Principle 2: CR2.1 (OSH & Environment) Principle 3: CR3.1 Principle 4: CR4.1, 4.2, 4.3, 4.4, 4.5 Principle 5: CR5.2

8.30am – 12.30pm

Social aspects – Workers, local communities, communication, CSR

• Workers/ Contractor interviews • Housing • Local communities • List of workers • Contracts • Working hour & overtime records, pay slips • Land conflict (if any)

SS Estate manager/ assistant manager/ local communities / workers

RSPO Principle 1: CR1.1, 1.2, 1.3 Principle 2: CR2.1 (social), Principle 6: all Principle 8 (Social)

Team 2: Mentakab Estate (Azizan and Yusof) 8.30am – 12.30pm

Legal Requirements, SOPs, OSH, Training, Environment • Field operations (spraying, har-

vesting, manuring) • Worker interviews • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident record • Training & PPE issuance


RSPO Principle 2: CR2.1 (OSH & Environment) Principle 4: CR4.1, 4.6, 4.7, 4.8 Principle 5: CR5.1




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Date / Time (1)




Standard Chapter

• EIA/ Aspects Impacts analysis • Waste management

8.30am – 12.30pm

Best practices, environment, so-cial aspects,

• Requests for information & re-sponses

• Ethical conduct policy • Land titles, land conflict (if any) • Customary rights • Soil fertility & management (sloped

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

• Integrated pest management • High Conservation values (HCV) • Waste management • Pollution & emissions • Use of fire • Greenhouse Gas Management • Workers/ Contractor interviews &

personnel records • Labour policies • Trade union representatives &

records • Housing • Local communities

AZ Estate manager/ assistant manager/ local communities / workers

RSPO Principle 1: CR1.1, 1.2, 1.3 Principle 2: CR2.2, 2.3 Principle 4: CR4.2, 4.3, 4.4, 4.5 Principle 5: CR5.2, 5.3, 5.4, 5.5, 5.6 Principle 6: all Principle 8: CR8.1

12.30pm – 1.30pm

LUNCH

1.30pm – 5.00pm

Continue document review at re-spective locations All auditors

Estate manager / assistants

5.00pm – 5.30pm

Soft closing at respective loca-tions All auditors Estate manager /

assistants

5.00pm End of Day 4

Friday, 3 June 2016 – Closing Meeting

8.30am-10.30am

Prepare for Closing Meeting at Kerdau Club House - Consolidate findings

All -

10.30am-12.30pm

Closing Meeting - Summary of findings

All Top Manage-ment and Relat-ed Managers

12.30pm End of audit Audit team travels back to KL/Jakarta




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Appendix 3: List of Abbreviations

AMESU All Malayan Estates Staff Union BOD Biological Oxygen Demand CEMS Continuous Emissions Monitoring System CePPOME Certified Environmental Professional in the Treatment of Palm Oil Mill Effluent CepSWaM Certified Environmental Professional in Scheduled Waste Management CHRA Chemical Health Risk Assessment CLASS Classification, Labelling and Safety Data Sheet of Hazardous Chemicals CPO Crude Palm Oil DOE Department of Environment DOSH/JKKP Department of Occupational Safety & Health / Jabatan Keselamatan & Kesihatan Pekerja EAI EIA

Environmental Aspect and Impact Environmental Impact Assessment

EiMAS Environmental Institute of Malaysia EIE EMP

Environmental Impact Evaluation Environmental Management Plan

EMS Environmental Management System ERTs Endangered, Rare & Threatened species EQ / EQA Environmental Quality / Environmental Quality Act ESH Environmental Safety & Health EQMS Estate Quality Management System FFB Fresh Fruit Bunches EFB Empty Fruit Bunches FMA Factory and Machineries Act HCV High Conservation Value HIRARC Hazard Identification, Risk Assessment and Risk Control HQ Headquarters IPM Integrated Pest Management JBA Jabatan Bekalan Air (Water Supply Department) JKKK Jawatankuasa Kemajuan dan Keselamatan Kampung (Village Development and Security

Committee) JPAM Jabatan Pertahanan Awam Malaysia (Malaysia Civil Defense Department) KER Kernel Extraction Rate LCC Leguminous Cover Crops LMD Land Management Department LTA Lost Time Accident LORR Legal and Other Requirement Register MAPA Malaysian Agricultural Producers Association MOP Muriate of Potash MSDS Material Safety Data Sheets MQMS Mill Quality Management System NGO Non-Government Organization NUPW National Union Plantation Workers OER Oil Extraction Rate OSH Occupational Safety & Health PERKESO Pertubuhan Kebajikan Sosial (Social Welfare Organization) PIC Person-in-charge PKO Palm Kernel Oil PMT P Permit/Pendaftaran Mesin Tekanan (Permit / Registration of Pressure Machine) POM POME

Palm Oil Mill Palm Oil Mill Effluent

PPE Personal Protective Equipment PSQM Plantation Sustainability and Quality Management QMO Quality Management Officer R&D Research and Development SDP Sime Darby Plantation SDPA Sime Darby Plantation Academy SEPU Social, Environment and Project Unit




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SHC Safety & Health Committee SIA Social Impact Assessment SPMS Sustainable Plantation Management System SOCSO SOP

Social Security Organization Standard Operating Procedure

SOM Standard Operation Manual SOU Strategic Opération Unit SW Scheduled Wastes UN United Nations

Appendix 4: List of Stakeholders Interviewed and Co ntacted

No. Name of Stakeholder Institution - Address Remark Stakeholders Interviewed During Stakeholder Consult ation Meeting

1. Thiban a/l Selvaraju Mahu Berjaya Enterprise Contractor

2. Aripin Bin Arizal Perniagaan Aripin Contractor

3. Muhammad Hanafi Bin Kasim Napi Bersatu Enterprise Contractor – Grass Cut-ting and Spraying

4. Hummugam a/l Subramaniam Sri Thanagas Enterprise Contractor

5. Lim Chee Peng Eng Heng Hardware Sdn. Bhd. Supplier

6. Ideris Shah Penghulu Mukim Kerdau

7. Enek Bin Luman Transport, Harvesting – Employee Jentar Estate

8. Azman bin Abdukl Hamid Kerdau Head of Police

9. Jofri bin Ahmad Canteen

10. Muhammad Arif bin Hussin N/A Contractor

11. Ahmad Yusmita bin Abdul Rahman

N/A Contractor

Stakeholders Interviewed On-Site

12. Tengku Amri Tuan Ismail Estate Manager-Kerdau Estate

13. Batu Malasamy Estate Manager-Jentar Estate

14. Wan Nasrul Muhaimin Asst. Manager 1-Jentar Estate

15. Abd. Rahman Yusof Asst. Manager 2-Jentar Estate

16. Muhamad Shokkeri Jab Kerdau Mill Manager

17. Azizulfaizei Mohd Ariff Sr. Assistant-Kerdau Mill

18. Roziman b. Ismail Assistant -Kerdau Mill

19. Zul Hilmi Assistant-Kerdau Mill

20. Umar b. Mohamad Suffian Assistant Engineer-Kerdau Mill

21. Ropadilah bt. Abdullah Mandore-Kerdau Estate

22. Zaiton Mandore-Kerdau Estate

23. Ahmad Zairil Zainal Manager-Mentakab Estate

24. Roslan Teh Asst. Manager Mentakab Estate

25. Irwan Ramlee Amran Sr. Assiatant Manager-Mentakab

26. Nur Iliyana bt Ali Hanapiah Medical Assistant-Jentar/Kerdau

27. Taqiudin Abd Aziz Store Clerk- Mentakab Estate

28. Aiman Hashim Medical Assistant

29. Mohammad b. Ishak Estate Manager-Chenor

30. Jefri b. Ahmad Mandore-Chenor




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31. Mohd Adzhari b. Roslan Assistant Manager-Chenor

32. Jaafar b. Sain Assiatant Manager-Chenor

33. Mohd Anwar b. Abd Aziz Medical Assiatant

34. Md Faris Kasyfullah b. Abu Bakar

Foreman- Chenor

35. Izi Izriani bt Saiful Bahri Store Clerk-Chenor

36. Norjihatunisak bt. Zakaria Chief Clerk-Jentar Estate

Appendix 5: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for Improvement Criteria 1. The company does not specifically define what documents can be made publicly avail-

able as per the list of documents under RSPO IN 1.2.1 1.2.1

2. The company is in progress of transferring the name of land owner of Mentakab Estate from the previous owner (Mentakab Rubber Company (Malaya) Limited) to Sime Dar-by Plantation and simultaneously requesting for change in the land title terms to permit planting of oil palm instead of rubber. As the legal process is long and actions were observed to have been taken by the company, the progress of this NC will be checked again during the next surveillance audit.

2.2.1

3. Grant for Jentar Estate dated 7 Oct 2005 Geran (No. H.S. (D) 5401), have different hectarage 2,207.30ha as claimed but actual hectarage sighted at 2,229.08 ha.

2.2.1

4. Duly specified time interval since the EFB ushered in the field by the time it’s applied to prevent the development of pests which are not needed

4.1

5. Domestic Water Monitoring Testing Only result of the domestic water monitoring testing was reflected in the lab testing re-sult. There were no side-side comparison (actual result against allowable limit as per the standard) was indicated in lab testing report.

4.4.1

6. During site visit at Sungai Mai estate, area for buffer zone is not clearly demarking

4.4.2

7. No records of IPM Training were sighted, which was explained as being due to low pest attacks. Only on the job training on how to conduct pest census was conducted. As sampled census records appeared to show census was done correctly according to SOP, this was noted as an observation that records of such training should be main-tained

4.5.2

8. Need to consider allocating emergency shower and eye wash nearer the chemicals store for easy access at Chenor Estate and Endensor Division and improve the signages further at Endensor Division.

4.6.6

9. Medical Surveillance was last conducted on 31 workers on 20/05/15 and for the current year 2016, it was not yet conducted at Chenor Estate.

4.6.11

10. Occupational Health and safety already define and implemented, however there are some uncontrolled operation found in field: - Fire Extinguisher no 14 not in proper condition, (safety pin broken, pressure indicator

blurred) - Cigarette butt around Chemical store (no smoking area) - Used oil without identity in Scheduled Waste Store - Contaminated hand gloves outside scheduled Waste store - There are found that, the implementation of OSH at mill is not adequate. example as

follow - has been found that one Bangladesh workers has no proper wearing PPE, and

Smoking at the potential fire area, - There is no fire extinguisher in workshop. - Electrical hazard-Found that no proper installation of air-conditioner at the Charge

men room.

4.7.1

11. Presentation of Safety & Health Briefings to Audito rs 4.7.1




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Observed during the opening meeting at Kerdau Mill, Kerdau Estate and Sungai Mai Estate the level of content of Safety of Health Briefing to Auditors were observed incon-sistent, for example at Kerdau Mill and Kerdau Estate the briefing on emergency evac-uation were simplified meanwhile for Sg. Mai Estate the emergency evacuation part were shown in detail with recorded instructions on what specifically to do during emer-gency evacuations. Although the overview of the emergency evacuation information may seem sufficient, the consistency on the level of content of the briefings can be re-viewed against the relevant in-house standards if any.

12. Sg. Tekal Divison (Kerdau Estate) During the visit to the vernacular primary school it was observed that there was electri-cal cable at lower height within reach of people connected between the security guard post and main school building were the office was located. This was already known by the interviewed security guard and was mentioned communicated to the person in-charge for repairs but was not avail during the audit.

4.7.2

13. Hazard and risk was reviewed for the year 2015 and 2016 covering all activities in es-tate operation at Mentakab Estate & Jentar Estate. However the review process should consider few unclear action plan and dateline.

4.7.2

14. Found at Endensor Division, a mandore for group of harvesters not having first aid box as it was left in the office.

4.7.5

15. Incident Reporting – Kerdau Mill According to the details of the Social Security Organization (SOSCO) Accident Report for Mr. Abdul Aziz details the incident occurred on 24th Nov, 2015 and was reported lat-er on to the mill management on 30th Nov, 2015. The case was referred to SOSCO of-ficer and supporting documents required to given later on since based on the report there were no witness present during the incident and it was initially considered as non-occupational injury. Furthermore SOSCO has provided the payment to Mr. Abdul Aziz on Jan 2016 as evident on the payment statement. Investigation conducted was based on verbal conversation between the mill management and the said employee and was not recorded.

4.7.6

16. Not all records of training for each employee are maintained. Records are only availa-ble for Staff level and above. For Example Harvesting Mandore in Kerdau Estate Com-pliance not available

4.8.2

17. Fertilizer bags were found left or dumped at the field in Chenor Estate and Mentakab Estate (Edensor Divisyen). No proper management at storage regarding on input and output date of waste dispos-al.

5.3.1

18. Recycling bins is sighted at the Chenor Estate and Mentakab Estate (Edensor Divisy-en), however, the segregation for recycling organic and inorganic waste is not properly monitored at the estates. No proper of segregation of organic and inorganic waste sighted at Jentar Estate and Mentakab Estate (Edensor Divisyen) landfill.

5.3.1

19. SIA – Kerdau Estate Based on the SIA report assessment dated: 11 to 16th January, 2016 – Areas of Con-cern SOU shared findings for Balai Bomba & Penyelamat Temerloh it is mentioned please refer to Kerdau Palm Oil Mill findings on page 15. When referred is should be page 14. In page 14 it was mentioned as below:- Interview with Tuan Azmi bin Mohamad Nor, OCS Balai Bomba & Penyelamat Temer-loh – insisted the management to have an Emergency Response Team (ERT) in cases of emergency (E.g. Fire) which was evident thru as sighted for ERP Team Kerdau Es-tate 2015 / 16; Dated: 15th Feb, 2016. In addition there were comment made i.e. Train-ing can be provided along with formal written request to the OCS Ketua Balai Bomba, Balai Bomba & Penyelamat, Bukit Angin and required for a plan of the internal area to be submitted. However the comment on required for a plan of the internal area was not clearly reflected in the Kerdau Estate SOU 11 Management Plan on Social Impact As-sessment. Although the rest of the sampled issues action plans were in place and im-plemented such as on housing condition / living improvement in terms of building and cleanliness. Allocation of budgets (based on report account as at April 2016) to address

6.1.1




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the other issues raised by the stakeholders was sighted.

20. SIA – Kerdau Estate The reference used for conducting the Social Impact Assessment based on the Im-pact Assessment Manual by Federal Department of Town and Country planning Pen-insular Malaysia and Malaysian Society of Impact Assessment was not evident during the audit and demographics on age range for both male and female population for Kerdau Estate was not included except for Malaysian children. Year 2015 Census on Headcount & Household at Kerdau & Sg Tekal Division which reflects age group for both male and female population including total conceive numbers and total bed rid-den patient however this census was included as part of the demographic analysis of the Social Impact Assessment.

6.1.1

21. SIA – Kerdau Estate Based on the SIA report asssement 4.2 Methodology it was mentioned that for the group interview the local communities , the team based on their invitations on the lisf of informants interviewed (the selection criteria was based on a cross section of society. However there were no records of invitations sighted as practiced for previous year. For example Stakeholder Meeting: Social Impact Assessment (SIA) for RSPO Certification to Dr Nurul Ashikin bin Zasni (Klinik Kesihatan Kerdau) and Mr. Ahmad Kahar bin Mo-hamad Taib (Pejabat Penghulu Mukim Kerdau) and Mr. Shahrir bin Hj Othman (Sekolah Kebangsaan Kerdau) all dated: 27th Jan, 2015. Although the duly filled signed attendance list reflecting the stakeholder presence were available.

6.1.1

22. Kerdau Estate: Based on the SIA report under 4.1 Data Collection & Sampling Proce-dures, in accordance with the requirements for information needed, the initial approach was to analyse SOU 11 Kerdau communities and stakeholder list (i.e. a description of the demography, social and cultural framework) to determine the sampling procedure based on random sampling where the results would represent an actual reflection of the impacts on the stakeholders. However noted Qualicast Sdn. Bhd- Supply rocks for road works – as reviewed from Bank Voucher Dec 2015 – Supplier and Great Eastern Life Assurance (M) Sdn. Bhd. – Insurance Company – as reviewed from Bank Voucher July 2015 were not reflected in the list of stakeholder including office representatives from MAPA / NUPW and MAPA / AMESU. Noted Mr. Periasamy – Site Chairman – MAPA/NUPW representative, Pn. Jamiselah binti Abd Rahman and Pn. Mariyai A/P Daharmalingam both union members of MAPA / AMESU have attended the Social Im-pact Assessment meeting as evident from the List of Attendance dated: 12th Jan, 2016. The list of stakeholders were later updated on-site and shown.

6.2.3

23. Offer of Employment – Kerdau Mill It was observed the all the sampled offer of employment which is needed to be signed acknowledged by the employees that binds as acceptance of employment states as fol-lows “Labour Ordinance / Collection Agreement No. 1995”, meanwhile the Letter of Ap-pointment As A General Worker states the benefits were in accordance with the MAPA / NUPW or any relevant Collective Agreement that subsequently replaces it. This reflects inconsistency between the point of references used as terms and conditions of employ-ment.

6.5.2

24. Employment Contract – Kerdau Mill Review of the selected employees personnel file shows the Letter of Appointment and Offer of Employment were available for employees that are employed under Sime Darby Plantations. During the merger and acquisition exercise of the previous organization i.e. Golden Hope Plantations with Sime Darby Plantations (SDP), Golden Hope Plantations employees were absorbed into SDP. Although these group of employees were without Letter of Appointment and Offer of Employment in file. Review of their relevant records such as pay slips and working time clocking records i.e. punch cards and interviews , in-dicates they were provided with in general the necessary benefits and compensation such as Insurance Subsidy and Price Bonuses in accordance with requirement in the Ar-ticles as stipulated in the relevant latest MAPA / NUPW and MAPA / AMESU Collective Bargaining Agreement.

6.5.2

25. Third Party Contract Workers . There is no mechanism on the part of the Mill & Estate management to monitor compli-ance of contractors pertaining to the Labour Laws and other relevant legislation related

6.5.2




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to labour. For e.g. for Lotus Two Enterprise contractors used for welding, machine and equipment repair works. In addition the existing contract sighted did not bind the con-tractor to abide such legal requirements.

26. Subcontractor – Maintenance – Kerdau Mill There were 6 foreign workers sub-contractors hired for maintenance and repair works in the mill and interviewed. Interview reveals that they were no negative feedback to-wards their contractor in terms of OSH and labor welfare, however the contract for ser-vice between the mill and sub-contractor does not reflect that sub-contractor is legally binding on compliance towards for example Employment Act, Immigration Act, etc. Work permit validity monitoring by the mill management which is linked to the registra-tion of foreign workers compensation scheme (FWCS) only was in place.

6.5.2

27. It was observed that for MAPA-NUPW union member employees they were allowed to take annual leave entitled to them and paid later on during the end year wage payment as evident in Dec 2015 pay-slips indicates as Vacation Leave. Interviews with the se-lected employees reveal that they have no negative feedback on method of payment on annual leave. They were no reported negative feedback during the stakeholder consul-tation meeting on this also. Meanwhile for MAPA-AMESU union member employees they were allowed to take an-nual leave entitled to them and were paid on their annual leave. This could be further checked and documented with the relevant local authorities.

6.5.2

28. An interview with the harvesters at Chenor Estate, with one of them says that light at their house (No 3295) has been faulty for more than 1 month. Report been submitted but there is no action been taken until today.

6.5.3

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