request for corrective action to end non conformity outlined below

Certification Assessment – Public Summary Report

Table of Contents Page

1. SCOPE OF THE CERTIFICATION ASSESSMENT 31.1. National Interpretation Used 31.2. Scope of Certification 31.3. Location 31.4. Description of Supply Base 71.5. Date of Planting and Replanting Cycles 71.6. Other Certifications Held 81.7. Organisational Information/Contact Person 81.8. Time-Bound Plan for Other Management Units 81.9. Areas of Plantations 91.10. Approximate Tonnages Certified 101.11. Date Certification Issued and Scope of Certificate 10

2. ASSESSMENT PROCESS 102.1 Certification Body 102.2 Assessment Methodology

Certification Assessment Checklist of Principles and Criteria 112.2.1 Review of Documents 122.2.2 Onsite and Follow-up Interviews 122.2.3 Resolution of Non-compliances 13

2.3 Qualifications of the Lead Assessor and Assessment Team13

2.4 Outline of Stakeholder Consultation and how Stakeholders were Contacted16

2.4.1 List of Stakeholders Interviewed 162.4.2 Questions Asked in Interviews of Stakeholders 16

2.5 Date of Next Surveillance Visit 16

3. ASSESSMENT FINDINGS 173.1 Summary of Findings for each RSPO Criterion with Objective Evidence on Conformance

or Non-Conformance 173.2 Details of Non-Conformances, Corrective Actions Taken

and Auditors’ Conclusion 293.3 Noteworthy Positive Components 363.4 Issues Raised by Stakeholders and Findings by Assessment Team

373.5 Auditee’s acknowledgement of internal responsibility 383.6 Formal Sign-off of Assessment findings

38

Annexes

Annex – A : Draft Certificate for RSPO Compliance 39

Annex – B : Certification Assessment Plan 40

Prepared by PT. TÜV NORD Indonesia of 42 Rev.02 date 28.04.2009


Summary

PT. TÜVNORD Indonesia (TNI) is a member of the German TÜV NORD group. TNI has comprehensively audited Lonsum and found it to be in compliance with the Indonesian National Interpretation of the RSPO Principles and Criteria (RSPO INA-NIWG) May 2008, and therefore recommends it to be approved as a producer of RSPO Certified Sustainable Palm and Palm Kernel Oil. The scope of the certification is:

− Turangie Palm Oil Mill (POM) 50,148 tonnes/year CPO*− Begerpang Palm Oil Mill (POM) 53,236 tonnes/year CPO*

2,772 tonnes/year PKO*− Dolok Palm Oil Mill (POM) 31,211 tonnes/year CPO*− Gunung Melayu Palm Oil Mill (POM) 34,885 tonnes/year CPO*

* Production based on Jan-Dec 2007

Begerpang is the only POM expressing PKO from PK. The others sell off their PK. Their 2007 PK production are.

Turangie POM : 13,236 tonnes Begerpang POM : 13,484 tonnes Dolok POM : 7,960 tonnesGunung Melayu POM : 8,821 tonnes

Abbreviations

CPO Crude Palm Oil PKO / PK Palm Kernel Oil / Palm KernelFFB / EFB Fresh Fruit Bunch(es) / Empty Fruit Bunch(es)

SM-K3Sistim Manajemen – Keselamatan dan Kesehatan Kerja (Management System of Occupational Safety and Health)

SPO Sustainable Palm OilEMS Environmental Management SystemCSR Corporate Social ResponsibilityIPM Integrated Pest ManagementHGU Hak Guna Usaha (Land Use Permit)

UKL/UPLUpaya Kelola Lingkungan/Upaya Pemantauan Lingkungan (Environmental Management Efforts and Environmental Monitoring Efforts)

POM / POME Palm Oil Mill / Palm Oil Mill EffluentLCC Legume Cover CropLD50 Lethal Dosage (for50% of the population to be killed)PPE Personal Protective EquipmentKLH Kementrian Lingkungan Hidup (Ministry of Environment)Bapedalda Badan Pengendalian Dampak Lingkungan Daerah (Local Environmental Body)B3 Bahan Berbahaya dan Beracun (Toxic and Hazardous Materials)

RKL-RPLRencana Kelola Lingkungan dan Rencana Pemantauan Lingkungan (Environmental Management Plan – Environmental Monitoring Plan)

Deperindag RIDepartemen Perindustrian dan Perdagangan (Department of Industrial Affairs and Commerce of the Republic of Indonesia)

GPS Global Positioning SystemEIA Environmental Impact AssessmentMSDS Material Safety Data SheetLonsum London Sumatra (PT London Sumatra Indonesia, Tbk)TNI PT. TÜV NORD IndonesiaKAN The Indonesian Accreditation CommitteeDAR Deutscher Akkreditierungs Rat



1.0 Scope of the Certification Assessment

1.1 National Interpretation

The standard requirements of the Indonesian National Interpretation of the RSPO Principles and Criteria (RSPO INA-NIWG) version May 2008 were used to assess the operation of the Palm Oil Mills and their supply of FFB.

1.2 Scope of Certification

The scope for certification is the CPO production from 4 (four) palm oil mills processing FFB from 12 (twelve) company-owned plantations. In addition, Begerpang POM is certified for its PKO production.

None of the mills process outside crop, so all the FFB was internal.

1.3 Location

Lonsum has 4 mills and 12 plantations, all in North Sumatra province. Table 1 gives the geographical coordinates of the mills and Table 2 for the plantations (actually, the plantation offices). The coordinates are either GPS readings taken or from Atlas Indonesia, Satellite Imagery-Trimble GPS Geo XT on October 2008.

Table 1: Mill GPS locations

Mill Latitude Longitude

Turangie 3.478072199 98.267950285Begerpang 3.459214057 98.824349121Dolok 3.164909771 99.430328894Gunung Melayu 2.701162817 99.573972896

Table 2: Plantation office GPS locations

Plantation Latitude Longitude

Bungara 3.532592247 98.187799876Pulo Rambong 3.157748415 98.240064514Turangie 3.497813210 98.217984160Sei Merah 3.509048221 98.823927517Begerpang 3.444558465 98.820000318Rambong Sialang 3.438504830 99.009309310Sibulan 3.250307118 99.160864591Bah Bulian 3.200162884 98.977957354Bah Lias 3.181601392 99.344310238Dolok 3.165304107 99.429934557Gunung Melayu 2.694574353 99.561003966Sei Rumbiya 1.025117151 100.084857171



Figure 1a: Map of Sumatra Island showing locations of mills and estates in North Sumatra province (in red box)

Figure 1b: Expanded box from Figure 1a showing locations of mills and estates.



Figure 1c: Close-up of locations of Gunung Melayu POM and Gunung Melayu and Sei Rumbiya estates.

Figure 1d: Close-up of locations of Turangie POM and Bungara, Pulau Rambong, Turangie and Begerpa estates.



Figure 1e: Close-up of locations of Dolok POM and Si Bulan, Dolok, Bah Bulian and Bah Lias estates.

Figure 1f: Close-up of locations of Bagerpang POM and Sei Merah and Rambong Sialang estates.


1.4 Description of Supply Base

The FFB processed is wholly produced by the 12 company-owned plantations (no purchased crop). Therefore, Principle 7 of the RSPO Indonesian National Interpretation is not applicable.

Table 3 shows the FFB production by the estates.

Table 3: FFB production by estates (January – December 2007)

Estate Location/District FFB (tonnes)

Turangie Langkat 78,339Pulo Rambong Deli Serdang 66,623Bungara Langkat 63,616Sungai Merah Deli Serdang 39,708Begerpang Deli Serdang 98,980

Rambong Sialang Deli Serdang 76,171Bah Lias Simalungun 44,856Dolok Asahan 60,618Sibulan Deli Serdang 12,739Bah Bulian Simalungun 8,347

Gunung Melayu Asahan 111,450Sei Rumbiya Labuhan Batu 32,083

Total 693,530

1.5 Date of Planting and Replanting Cycles

The company generally adopts a 25-year planting cycle freely variable for contingencies and management/economic considerations. The age profiles of the palms are given in Table 4.

Table 4: Age profiles of palms by estates.

Estate Age of palms (years)

0 - 5 6 - 10 11 - 15 16 – 20 20 - 28

Turangie - - 77% 11% 12%

Bungara - - 63% 33% 4%

Pulo Rambong - - 32% 36% 32%

Sungai Merah 9% 43% 17% 22% 9%

Begerpang 12% 31% 20% 12% 24%

Rambong Sialang 45% 32% 18% 3% 3%

Bah Lias 53% 21% 7% 5% 14%

Dolok 18% 46% 19% 4% 13%

Si Bulan - 79% 21% - -

Bah Bulian 54% 46% - - -

Gunung Melayu 4% 25% 44% 14% 13%

Sungai Rumbiya 33% 4% 7% 7% 49%

1.6 Other Certifications Held

The individual estates/mills/research unit of Lonsum have received various certifications, viz.,

− Quality Management System (ISO 9001:2000) for Bah Lias Research by PT. LRQA Indonesia.− Quality Management System (ISO 9001:2000) for Tea Factory by PT. TUV International Indonesia.− Product Certification of Crumb Rubber Factory by PT. YOKA Indonesia, and − Environmental Management System (ISO 14001:2004) for Palm Oil Mills (except Tirta Agung), Crumb

Rubber Factories, Tea Factories, Oil Palm and Rubber Plantations, Tea Plantation, Cocoa Plantation and Bulking Station by PT. TUV NORD Indonesia.

− PROPER Assessment of Turangie POM by Ministry of Environment (KLH) and awarded Grade Blue (National Grade for Environmental Performance).

1.7 Organisation Information/Contact Person

All information pertaining to this certification assessment should be addressed to:

Contact Person: Mr. Bambang Dwi LaksonoPosition: Head of Environment and CSR CoordinationOrganization name: PT PP London Sumatra Indonesia Tbk (Lonsum)Address: Jl. Ahmad Yani No.2, MedanPostal code, city: 20111, Sumatra UtaraCountry: IndonesiaTelephone Nr: +62 61 4532300Fax Nr: +62 61 4550421Email: [email protected] www.londonsumatra.com

1.8 Time-Bound Plan for Other Management Units

Lonsum has drawn up a time-bound plan for its other oil palm/palm oil management units to achieve RSPO certification (Table 5). The plan is deemed sufficiently challenging as required by RSPO. In 2005, Lonsum carried out an internal assessment of its plantations for HCV areas using the 2003 HCV toolkit as part of an EIA done. In 2006, Akesenta was appointed independent HCV assessor (with WWF Indonesia as observer) for its proposed development areas in East Kalimantan and South Sumatra.

There is no palm oil mill in East Kalimantan yet, so certification there has to await the construction of one.

Table 5: Time- Bound Plan for RSPO Certification of Other Lonsum Oil Palm/Palm Oil Management Units

No Mill Location

Annual Output

CPO (tonnes)

PKO (tonnes)

Proposed Time for certification

1 Tirta Agung Musi Banyuasin, Sumatra Selatan 8,107 - December 2010

2 Gunung Bais Musi Rawas, Sumatra Selatan 10,180 - December 2011

3 Arta Kencana Lahat, Sumatra Selatan 10,174 - December 2012

4 Belani Elok Musi Rawas, Sumatra Selatan 51,973 - December 2013

5 Sei Lakitan Musi Rawas, Sumatra Selatan 67,730 - December 2014

6 Terawas Musi Rawas, Sumatra Selatan 21,166 - December 2015

http://www.londonsumatra.com/

mailto:[email protected]

1.9 Areas of Plantations

Table 6: Area details of 12 estates for this certification (Data as at September 2008)

Estate LocationArea Summary (ha)

Total Under Oil Palm

Mature

Immature

Turangie Kabupaten Langkat, Sumatra Utara

3,156.45 2,851.66 2851.66 -

Bungara Kabupaten Langkat, Sumatra Utara

2,777.48 2,587.82 2587.82 -

Pulo Rambong Kabupaten Langkat, Sumatra Utara

3,098.47 2,849.95 2849.95 -

Sungai Merah Kabupaten Deli Serdang, Sumatra Utara

1,854.46 1,769.20 1,764.20 5.00

Begerpang Kabupaten Deli Serdang, Sumatra Utara

5,724.16 5,112.33 5,112.33 -

Bah Lias Kabupaten Simalungun, Sumatra Utara

4,052.16 3,658.59 2,258.99 1,399.60

Dolok Kabupaten Batubara, Sumatra Utara

3,190.79 3,067.42 2,689.15 378.27

Bah Bulian Kabupaten Simalungun, Sumatra Utara

1,246.46 625.20 625.20 -

Si BulanKabupaten Serdang Berdagai, Sumatra Utara

1,240.83 529.51 529.51 -

Rambong Sialang

Kabupaten Serdang Berdagai, Sumatra Utara

5,275.12 4,825.70 3,305.50 1,520.20

Gunung Melayu Kabupaten Asahan, Sumatra Utara

4,988.69 4,936.45 4,901.45 35.00

Sei Rumbiya Kabupaten Labuhan Batu, Sumatra Utara

5,882.14 1,619.66 1,619.66 -

The unplanted areas may have been allocated other uses, e.g., rubber (in Si Bulan and Sei Rumbiya), housing and HCV areas.

1.10 Approximate tonnages certified

All the FFB processed by the 4 mills are produced internally, i.e., no purchased crop. The outputs of the mills are shown in Table 7.

Table 7: Mill Outputs in 2007.

Mill Location

Outputs in 2007 (tonne/year)

CPO PKO PK

Turangies Kabupaten Langkat, Sumatra Utara 50,148 - 13,236Begerpang Kabupaten Deli Serdang, Sumatra Utara 53,236 2,772 13,484

Dolok Kabupaten Batubara, Sumatra Utara 31,211 - 7,960

Gunung Melayu Kabupaten Asahan, Sumatra Utara 34,885 - 8,821

TOTAL 169,480 2,772 43,501

1.11 Date certificate issued and Scope of Certificate

The scope of certification covers palm oil and PKO production from the 4 POMs processing FFB from the 12 plantations. The certificate will be dated on approval of this Assessment Report by the RSPO Secretariat. An example certificate is given in the Annex.

2.0 Assessment Process

2.1 Certification Body

TNI is a subsidiary of the German TÜV NORD Group. Our company is a market leader in Indonesia for inspection, testing and certification services. We are offering not just high added-value services but also trust and confidence in our certificates / reports. We satisfy not only our direct customers but also the other stakeholders like regulators and affected society at large including NGOs through our competent auditors, inspectors and analysts.

TNI, with its Headquarters in Germany, is a member of the International Accreditation Forum (IAF). It is accredited by DAR (Deutscher Akkreditierungs Rat, a German Accreditation Body) and the Indonesian Accreditation Committee (KAN).

Services provided by the Systems Certifications are Food Safety Management Systems (ISO 22000), Information Security Management Systems (ISO 27001), Social Accountability (SA 8000), Food Hygiene (HACCP), Medical Device Directive (MDD, ISO 13485), Occupational Health and Safety (OHSAS 18001), Product Certification(: GS-Mark, CE-Mark, SNI Mark), Inspection for ISPS Code, Clean Development Mechanism (CDM) Validation & Verification, British Retail Consortium (BRS Issue 4).

The office of TNI in Indonesia:

Branch office Menara Bank Danamon 11th Floor Suite 1106Jl. Prof. Dr.Satrio Kav. E4 No. 6 Jakarta 12950 – IndonesiaTel : +6221 57992211Fax : +6221 57992210

President Director: Mr. Robert NapitupuluEmail: [email protected] : www.tuev-nord.de www.global-warming.de www.tuvit.de

2.2 Assessment Methodology

The certification assessment of Lonsum by the RSPO P & C was carried out from 15-18 September 2008 and 06-09, 14-15 and 17-18 October 2008.

The assessment was conducted 3 phase of each mill and company-owned plantations.

Desk audit (document check) of the RSPO-required documents with the help of a customised checklist;

Ground truthing. On-site inspection of what is going on – normal auditee activity like spraying, mill operation, EFB application, interviews with stakeholders, etc. – and assessing complaints and action taken.

Proposing of corrective actions and discussion with the auditee for verification of the corrective action in Certification Body’s premises.

The summary public report of this assessment includes Corrective Action Requests.

http://www.tuvit.de/

http://www.global-warming.de/

http://www.tuev-nord.de/

2.2.1 Review of Documents

SPO submitted its documents in August 2008, and its management was reviewed through a checklist.

2.2.2 Onsite Inspections and Follow-Up Interviews

To ensure objectivity, information was collected randomly. Interviews were held with staff, workers and some stakeholders.

The certification assessment was completed at 18 October 2008.

TNI conducted on-site interviews with SPO management staff and POM workers to verify certain information and to resolve issues identified in the document review and SPO operation. The people interviewed and the topics of the interviews are summarised in Table 8.

Table 8: Persons Interviewed and the topics discussed

Persons Interviewed Interview topics

Managers, Staff, Workers - General issues for RSPO certification assessment - Chemical stores- The SPO documentations and records - Environmental Policy- Quality, SM-K3 and Environmental Management System- Involved personnel and responsibilities - Justification for RSPO principles and criteria- Monitoring and measurement of environmental performance of waste

water treatment plant- Identification of environmental aspects and impacts- Flora, fauna, ecology and biodiversity- Land and conversion planting- Socio economic impacts on the local population- Decreased paraquat use- Licenses, operation & maintenance authority and responsibility- Sanitation and hygiene of dormitories- Legal aspects related to SPO management - Water management- HCV identification- Replanting and handling of chemical packaging wastes- Zero burning - Mill operation including inspection of incoming FFB, FFB transport,

road maintenance and workshops for heavy trucks, loaders, etc.- IPM (Integrated Pest Management)

Stakeholders, including NGOs

- Environmental protection within the estates and mills, including the use of pesticides, and waste and effluent management.

- Biodiversity conservation within the estates and surroundings where impacted by the estate/mill operations.

- Fairness of wages, overtime and piece-rate work.- Housing, sanitation, amenities and educational support.- Company approach to community development.

2.2.3 Resolution of Non-Compliances

In this assessment, 4 major nonconformities and 2 minor nonconformities, and some improvements were identified, and the required corrective actions proposed. The SPO management is required to resolve or close out the issues (whether by the recommended or any other actions) in the relevant time frames given. As of the date of this report, corrective actions have been taken for all the nonconformities. The actions have been reviewed by the Certification Body and deemed to be appropriate. Accordingly, the nonconformities are considered closed.

Qualifications of the Lead Assessor and Assessment Team

Lead Assessor : Hasnop Putra

No RSPO Requirements Qualification

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

S1 (Ir, Engineer) degree in mechanical engineering from University of Jayabaya (1994-1997);

A.Md (Ahli Madya) degree in mechanical engineering from the Polytechnic of the University of Indonesia (1988-1991);

CDM training in Essen, Germany (June 2008); Training in Environmental Rules & Regulations

and Implementation by BAPEDAL (April 2000) Practical Course on Environmental Management

System, Environmental Aspect and Impact Assessment, Documentation Establishment and Internal Audit by Japan Audit and Certification (JACO) (December 1998)

Training in Environmental Management Law and Environmental Policy by EX-CORPORATION - BAPEDAL (December 1997)

2 At least 5 years’ experience in an area of work relevant with the audit (e.g., palm oil management; agriculture, ecology; social science);

− Did certification of business management systems in PT. TÜV International Indonesia (TÜV Rheinland Group) (February 2001 to May 2004), PT. TÜV SUD PSB Certification (formerly PT. PSB Certification) (May 2004 to November 2004) and PT. TÜV NORD Indonesia (TÜV NORD Group) (November 2004 till now).

− Qualified in auditing all sectors of Oil palm / palm oil operations – plantations, mills and manufacturers since 2001. Audited:

PT. PN 3 Persero Medan PT. PN 4 Persero Medan PT. PN 5 Persero Pekanbaru PT. PN 13 Persero Kalimantan (oil palm

plantation and palm oil mill) PT. Sampoerna Agro (formerly PT. Selapan Jadi Jaya) PT PP London Sumatra Indonesia, Tbk− Auditing production of CPO into frying oil at

Wilmar Group PT. Multi Nabati Asahan PT. Multi Nabati Sulawesi PT. Sinar Alam Permai – Kumai- Auditing SA 8000 standard for textile and garment

industry, shoe and toy manufacturing since 2007.

3 Training in the practical application of the RSPO criteria, and RSPO Certification System

Training for Lead / Internal Assessor of Sustainable Palm Oil by Indonesian Palm Oil Board and KAN (National Accreditation Committee) in March 2008 to April 2008.

Lead Assessor : Hasnop Putra

No RSPO Requirements Qualification4 Completed ISO 9000/19011 lead auditor

course− PE International - ISO 9000:2000 Series Auditor/

Lead Auditor Training Course - Certificate LA 072, June 2001.

− PE International - ISO 14001:2004 IEMA Advanced EMS Auditor Training Course - Certificate IQR/EMS4/00102, England and Wales, March 2001.

5 Supervised training in practical auditing against the RSPO Criteria or similar sustainability standard, with a minimum of 15 days’ experience in past audits of different organizations

Extensive experience in sustainable management system certification in the oil palm /palm oil industry with more than 30 days’ experience in auditing PT. PN 3 (all oil palm plantations and palm oil mills)PT. PN 4 (4 palm oil mills and 1 palm kernel mill)PT. PN 5 (5 palm oil mills)PT. PN 13 (7 palm oil mills)PT. Sampoerna Agro (formerly Selapan Jaya) (5 oil palm plantations and 4 palm oil mills)PT PP London Sumatra Indonesia, Tbk (all oil palm plantations palm oil mills in North Sumatra, South Sumatra, East Kalimantan and South Sulawesi.

Qualifications of assessment team

No Person and Qualifications1 Sudarmadji (Assessor)

Electrical engineer qualified in environmental auditing with sustainability management system such as EMS. Completed Lead Auditor training for ISO 14001, ISO 9001 and CDM certification, and Lead Assessor / Internal Assessor training for certifying Sustainable Palm Oil by the Indonesian Palm Oil Board and KAN (National Accreditation Committee). Has audited palm oil manufacturers for ISO 14001 for a total of 15 days. Also, knowledgeable in Occupational Health & Safety Management System as Lead Auditor.

2 Hariyadi (Technical Expert) PhD in agronomist and Specializing in socio-environmental aspects of agriculture. Has assisted in socio-environmental assessment and research in Green Giant NPK fertilizer effect on immature oil palm growth. Experienced in research of water and nutrient requirements of crops, irrigation and fertilization planning, seedling selection, pest and weed control management (IPM) and assessment of biodiversity. Has been involved in auditor training in oil palm plantations and mills against the EMS and RSPO Principles and Criteria. Completed EMS training for ISO 14001:2004 and has practical experience in assessing oil palm EFB and fertilizer packaging wastes for their impacts on the plantation environs and employee residential area.

3 Ujang Sehabudin (Technical Expert)Agronomist with socio-economic knowledge. Participated as researcher in the Impact Study of Area Development Program and is a member of the Indonesian Agribusiness and Agro industry Community. Has assisted in socio-economic assessments over the past three years, such CSR assessment of oil palm companies. Also assisted in audits of oil palm plantations against ISO 14001:2004 and was involved in auditor training for oil palm plantations against the RSPO Principles and Criteria. Gained good experience from the design and identification of water resources in a farm area in West Java over the past 2 years.

2.4 Outline of Stakeholder Consultation and List of Stakeholders Contacted

The SPO management has a list of relevant stakeholders to its operations which it consults regularly. Before conducting the assessment, the audit team went through the minutes of all the meetings to appraise itself of the issues involved. Then the stakeholders were invited to discuss critical issues on community development, including progress of the current community plan and the targets to be achieved. The topics raised were maintenance of prayer houses (churches, mosques), roads, irrigation and drainage, and schools. In addition, the company was asked to provide scholarships, welfare and decent dormitories for habitation around the estates and mills. The discussion with the stakeholders was well organized. The audit team visited some of the stakeholders to interview them on the SPO operation of the estates and mills.

The meeting discussions were properly recorded and the points raised are incorporated in the assessment findings.

2.4.1 Stakeholders interviewed

No Stakeholders consulted Remarks

1 Kades Bah Lias Local community2 Kades Penggalian Local community3 LSM Topan – RI Tebing Tinggi Local community4 PUK SPSI Si Bulan Estate Workers’ Organization5 Adat Jawa (Pujakesuma) Indigenous people6 Kapolsek Bandar Pulau Police7 Dan Ramil Bandar Pulau Local community8 Camat Bandar Pulau Local community9 Kades Gunung Melayu Local community10 LSM Pelita Local NGO11 PMS Merga Silima Local Community

2.4.2 Questions asked in interviews of stakeholders

Were you aware of this RSPO certification assessment from the SPO management, which should have been available publicly and communicated to the stakeholders?

What benefits do the local community expect from this SPO certification? Does the SPO management hold regular meetings to discuss community development? Has the SPO management a proper system to communicate with people living around the estates and

mills? Does the SPO management respond well to complaints? Is there a priority system of grievances and complaints to be addressed by the Company? Are there any complaints on land acquisition by the Company? Have there been any environmental impacts caused by the SPO management? Are the conflicts solved satisfactorily? Is there a procedure for settling conflicts made known to the local community? Does the SPO management meet the people regularly to discuss community development?

Do the workers receive a salary in line with government regulations? Is there a system to inform the local community of emergencies?

2.5 Dates for Next Surveillance Visit

The next surveillance visit will be one year from approval of this report by the RSPO.

3.0 Assessment Findings

3.1 Summary of Findings

As mentioned in Section 2.2, objective evidence was obtained in the certification assessment. Information was sought for all the RSPO indicators for the 4 mills and 12 plantations, and the evidence then assessed for compliance. The evidence for major and minor indicators of a criterion was aggregated to provide ‘overall’ findings as detailed in Section 3.2.

This assessment was made against the RSPO Principles and Criteria (Indonesian National Interpretation). There were 4 major and 2 minor non-conformities found and corrective actions were suggested for them. The SPO management has already submitted an action plan to remedy all the non-conformities. TNI has reviewed the plan and the date for its implementation and found them acceptable. Corrective action has already been taken for all the major non-conformities. For the minor non-conformities, the corrective action will be assessed on the next surveillance visit, failing which they will become major non-conformities to be closed out in 60 days.

Thus, it is recommended that Lonsum be approved as a producer of RSPO Certified Sustainable Palm Oil.

The assessment findings are given below by the individual criterion.

Criterion 1.1Provide adequate information to other stakeholders on environmental, social and legal issues relevant with the RSPO Criteria, in the appropriate languages and forms to allow for effective participation in decision-making.The SPO management has a procedure for communicating with stakeholders. However, the procedure merely requests the mill and plantation managers to communicate with the local communities and stakeholders. This is deemed insufficient satisfaction of the criterion, e.g., no minutes of meetings with stakeholders were available, suggesting a lack in transparency on the issues relevant to stakeholders.

The management of palm oil mill(s) and palm oil plantation(s) are required to provide full information to stakeholders on environmental, social and legal issues relevant to the RSPO principles and criteria. Thus, all the required information should at all times be readily available. However, in some mills and estates, some information could not be got. Thus, there is still insufficient transparency in the system. A major nonconformity was issued. See Non-Conformity Report T01.10/08.

Criterion 1.2Management documents are publicly available, except where these are prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomesNo information was available on the conditions of land use to the stakeholders

Some regulations and / or follow up from stakeholder meetings on environmental and social issues were not communicated to the public or stakeholders. The system information is insufficient to ensure effective communication with stakeholders and the public. In some mills and estates, there were no documentation of the social activities, social program, health and safety plans. A major nonconformity was issued. See Non Conformity Report T02.10/08.

Criterion 2.2The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rightsLonsum land is clearly demarcated by boundary stones as well as in photographs with the GPS coordinates superimposed. The General Affairs and Legal departments have the responsibility to resolve all land conflicts. For the moment, there is no land dispute. The managers (of mills and plantations) have all registered their lands under the HGU.

Boundary stone with estate name

Criterion 2.3Use of land for oil palm does not diminish the legal rights or customary rights of other users, without their free, prior and informed consentAs found in the assessment of SPO management, there are no customary rights of other users. There are no land acquisition and open sharing land with the people living in the estates. SPO management ensures that all the land is planted with only the permitted crops. Some estates provide recreation facilities for their staff, e,g,, children’s playground and fishing ponds.

Criterion 3.1

There is an implemented management plan that aims to achieve long term economic and financial viability

SPO management has a long-term business plan for production of FFB. The business plan is based on document “North Sumatra Replanting Program in 2009 - 2013. Replanting program, including targets for FFB production performance”. The replanting program and targets appear well understood by all the managers interviewed.

Criterion 2.1There is compliance with all applicable local, national and ratified international laws and regulationsThe SPO management keeps copies of all the laws and regulations applicable to its operation. The mill and plantation managers have the responsibility to ensure compliance with them, including renewing licenses and permits. Updating the list of laws / regulations is the responsibility of the Environment Manager and his team.

Criterion 4.1

Operating Procedures are appropriately documented and consistently implemented and monitored

The Environmental Department has prepared a manual on Standard Operating Procedures (SOP) that incorporates the best practices for mills and plantations. Most of the SOPs have been integrated in the Quality and Environmental management systems. More than 10 SOPs for mills and plantations have been established. The following are the procedures:

a. SOP for oil palm (nursery management, land preparation, planting, field upkeep, harvesting, waste management, HCV assessment, emergency preparedness and response, and environmental monitoring).

b. SOP for Palm Oil Mill (boiler operation and upkeep, power generation, water treatment, land application, electrical system, quality (inc monitoring of CPO parameters), dispatch and laboratory).

The manual includes SOPs, working instructions and forms as for Environmental System, Health & Safety implementation. The manual is frequently updated. The SOPs include monitoring FFA and moisture in CPO before customer delivery. The monitoring records are safely kept in a laboratory cabinet with the appropriate identification.

Criterion 4.2Practices to maintain soil fertility at, or, where possible, to improve soil fertility to a level that ensures optimal and sustained yieldBah Lias Research & Development makes annual fertilizer recommendations from soil testing and foliar analysis. Soil sampling is done every three years, and foliar analysis yearly. The planting of beneficial weeds is discussed in Criterion 4.5.

SPO management practices crop protection by growing legume cover crops (LCC) to protect the soil from erosion, fertilizing and practising weed control. The LCC grown are Mucuna brachteata, Pueraria javanica, Calopogonium caeruleum. To reduce the application of inorganic fertilizer, EFB (empty fruit bunches) are applied as mulch. There is a recommendation for some estates not to fertilize, and the document is sighted.

Criterion 4.3Practices to minimise and control erosion and degradation of soilsThe SPO management implements practices to control soil erosion and degradation. In replanting, legume covers are quickly established, terracing/platforms built, fronds stacked, sedimentation pits dug and the old crop chipped and windrowed.

Erosion monitoring plots have been constructed to study erosion and relate it to the soil type, slope and ground cover. They are started at replanting and maintained until the oil palm canopy closes over. It was found that planting legume covers can totally stop erosion.

Figure-1: Erosion Monitoring Plot at Bah Bulian Estate

Criterion 4.4

Practices to maintain the quality and availability of surface and ground water

The SPO management provides potable water in storage tanks to mills, plantations and staff housing. Industrial water is abstracted from rivers and for household/domestic use from various water sources (HCV 4).The SPO management policy is to maintain the water sources as HCV 4 and protect the existing riparian strips by leaving the rubber trees in converting to planting oil palm.Some of the water sources have been around for over a hundred years, testimony to the SPO Management’s social and environmental responsibility.However, there are some lapses. There are no data on daily consumption. Most of the water is used to clean the mills, drinking and bathing and for the staff quarters. A minor nonconformity was issued. See Non-Conformity Report T03.10/08.

Figure-2: Water source and water storage tank for domestic consumption at Turangie Estate

Criterion 4.5

Pests, diseases, weeds and invasively-introduced species are effectively managed using appropriate Integrated Pest Management (IPM) TechniquesThe common pests of oil palm are insects and rats. SPO management employs a pest engineer to regularly monitor the pest levels in the estates. IPM and natural control were seen in all the plantations. Pesticide use is recorded by the plantation managers. The management plants beneficial plants to ward of insect pests and reduce the need for chemical control. The plants are Turnera subulata (bunga pukul delapan), Antigonon leptopus (air mata pengantin), Euphorbia heterophylla (patik emas), Agerotum conyzoides (babadotan) and Oxalis borreliari (belimbingan).

Figure-3: Insects attacking on oil palm leaf.

Figure-4: Turnera subulata planted on road side.

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 that are categorized by the world health organization as Types 1 A or 1 B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives and this is documented

Information is available on the hazardous agrochemicals used, i.e., those classified by WHO as Types 1A and 1B. The Environmental Manager and R&D Department have committed to reducing the use of hazardous agrochemicals with implementation of the environmental management system in beginning 2007. Agrochemicals used since 2007 have to be approved by Managing Director. There is an electronic record of the pesticides used. Approval for use must first be sought from the Environmental Manager and Research Manager, and applied according to the Standard Operation Procedures and MSDS. Only on rare occasions are ‘unusual’ chemicals used, but care is taken to ensure that no undue danger is posed.

Staff/workers handling pesticides are sent for regular health checks. Medical records are kept for every individual. Every plantation has a clinic visited by a doctor weekly. Staff/workers involved with pesticides are required to wear PPE during their work. There is a booklet - Guide to the Safe Use of Pesticides – that contains the toxicity of various pesticides, safe storage precautions, solution preparation and application, pesticide waste disposal, first aid, protective clothes and a list of the pesticides allowed for use.

The SPO Management has constructed standard warehouses for temporary storage of B3 (toxic and hazardous materials) wastes with approval from the Ministry of Environment. All B3 wastes stored are recorded.

The sprayers are required to go for yearly medical checks and be properly trained in the use of pesticides.However, the dangers of using pesticides have not been adequately communicated to the workers dealing with them. Therefore, a minor nonconformity was issued. See Non Conformity Report T04.10/08.

Figure 5: Herbicide storage. They have been recorded.

Figure 6: Warehouse for temporary storage of B3 wastes at Bah Lias Estate

Criterion 4.7An Occupational Health and Safety Plan is documented, effectively communicated and implementedThe SPO management has a safety, health and environment policy under the responsibility of the safety engineer (SM-P2K3). The written policy is available in the mills and plantations; and communicated to all subcontractors. The safety engineer is tasked to carry out daily monitoring and inspection of all facilities and mill operation for likely problems. The records of these inspections are kept in the safety engineer’s room, easily traced and retrievable. Any incident in the mills involving violation of a working procedure or other instructions is investigated and the findings presented to the mill manager in the safety meeting.

Some estates have assessed the risks of their activities using form P-07 - Identification of Risk. The method of assessment is defined and applied for environmental aspects and impacts. Hazards and risks in their activities are documented in Form P-05, along with the proposed means to tackle them, targets and programs. However, in one of the mills, no identification of hazards and risk assessment had been carried out nor the daily monitoring required in the safety program. Thus, a major nonconformity was issued for the lack of an Occupational Health and Safety Plan. See NCR T05.10/08

Criterion 4.8

All staff, workers ,smallholders and contractors are appropriately trained

The mill and plantation managers annually identify the need for safety training by their workers, especially pesticide sprayers. Some contractors are trained in some safety aspects by the safety engineer. The smallholders receive training in emergency procedures and for spaying pesticides and chemical handling. The emergency training includes the response to fire / explosion as well as safety in the handling and use pesticides. All staff / workers are assessed regularly on their need for training. All the training records are kept.

Criterion 5.1Aspects of plantation and mill management, including replanting, that have environmental impacts are identified and plans to mitigate the negative impacts and to promote the positive ones are made, implemented and monitored to demonstrate continuous improvementLonsum has been certified with ISO 14001 for its environmental management system, environmental aspects and impacts. The certification reviewed the negative and beneficial impacts by the company. The company was last reviewed in August 2008. However, the assessment report (RKL/RPL) and environmental social aspects and impacts of crops and estate (EMS-F01) were not presented to the certification body, and also the 6-monthly environmental assessment report (RKL/RPL period July’07 – December’07). Accordingly, a minor non-conformity was issued against this criterion. See NCR T06.10/08.

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

The SPO management has prepared a list of the flora and fauna on its land in its “Flora and Fauna Identification Book”. The HCV areas have been determined to be 4.1, 4.2 and 6. The HCV areas at Bungara, Begerpang, Gunung Melayu, Sungai Merah estates are well demarcated with signboards.Figure 7: High Conservation Value (HCV) area in Bungara estate. Identification of the HCV areas is documented in “Laporan Hasil Identifikasi Flora & Fauna” and regularly updated by the Environment-Technology Transfer Department.

The Environmental Policy (evidenced in an internal memorandum by the Managing Director for Operations) is to

maintain the HCV areas.

Training for awareness and understanding of HCV areas was conducted internally in 2006. The same year, CSIRO was co-opted to develop a model for managing the riparian strips. In 2008, WWF Indonesia was invited to train the estate managers on identification of Flora and Fauna. The maps of HCV were formally issued by BLRS (Bah Lias Research Station) in 2008, complete with the types of HCVs and GPS points. Despite Lonsum cultivating its plantations for >100 years, the fact that some HCV areas are still found is testimony to the management’s concern for the environment.

Figure 7:Riparian strip at Begerpang Estate Figure 8: Riparian strip at Bungara Estate

Figure 9: Protected plant (Nephentes sp.) at Sei Rumbiya estate

The SPO Management also monitors the river water quality periodically based on National Regulation No. 82/2001 for river water, to ensure that its operation is not affecting the river.

Criterion 5.3Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible mannerThe environment has been assessed and a study done on the activities likely to impact on it, including the disposal of wastes. Used pesticide containers are stored in a permanent area sheltered from rain. Prior to storage, the containers are crushed to prevent re-use. Metal scraps are sold for recycling. EFB is applied as mulch in the fields. Liquid wastes are discharged to the waste treatment plant where the BOD, COD and pH are regularly monitored to ensure that they are under control by the standards of the Ministry of Environmental No. 51/1995.

Criterion 5.4Efficiency of energy use and use of renewable energy is maximisedThe SPO management is committed to using renewable energy. The shell is burnt to produce steam for the turbine generator, allowing the diesel generator to be put on stand-by only for emergencies.

Criterion 5.5Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations as identified in the Asean guidelines or other regional best practicesThe SPO management has a zero burning policy. The audit team has confirmed that the policy is implemented throughout the group. The wastes from the mills and plantations are treated properly within the premises and not dumped outside.

Figure 10: Heavy fire equipment with portable water tank at Bagerpang Estate

Criterion 5.6Plans to reduce pollution and emissions, including greenhouse gases are developed, implemented and monitoredThe prevention of pollution is a part of the SPO Management Policies on health & safety; and the environment. Gaseous emissions are monitored for their parameters to be within the legal limits. Every 6 months, the boiler and vehicle (for transport of FFB) emissions are tested by an independent laboratory. The results are given to the Environmental manager to take whatever action is deemed necessary. A copy of the results is given to the local Environmental Agency (Bapedalda) and included in the Group RKL-RPL (Environment Management and Monitoring) Semester Report.

Criterion 6.1Aspects of plantation and mill management including replanting that have social impacts are identified in a participatory way and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored to demonstrate continuous improvementThe SPO management keeps track of all the issues involving the local communities. The social issues are investigated for their environmental aspects and impacts, and the results reported to the Environmental Manager. The report is also distributed to concerned parties, such as the Environmental Impact-Controlling Agency, every 6 months.

Criterion 6.2There are open and transparent methods for communication and consultation between growers and/or miller, local communities and other affected or interested partiesThe SPO management has had ISO 14001:2004 certification since 2008, and the requirements have been adapted to documenting the environmental management system. There are regular meetings between the growers, millers and local communities, and the SPO management has drawn up a procedure for external communication, and a list of interested stakeholders, including the local communities, NGOs, indigenous people, organization workers and the police. Some of the stakeholders were contacted for this audit. The estate manager and the respective environmental and CSR coordination staff are responsible for communication between the estate and respective other parties concerned. The community development manager is responsible to ensure that the community program is run effectively and also communication and consultation with the stakeholders.

Criterion 6.3There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all partiesThe SPO management has established a complaints, grievance and dispute procedure, integrated in the communication procedure for Environmental Management System. This procedure has been communicated to all stakeholders at the mills and plantations, and positive responses from the stakeholders seen. Communication and consultation with the stakeholders are done regularly. During the visit, the audit team did not hear of any complaint, grievance or dispute with the auditee.

Criterion 6.4Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous people, local communities and other stakeholders to express their views through their own representative institutionsThere has been no claim for loss of rights or compensation. However, there is a procedure to address such problems and it has been communicated to the stakeholders.

Criterion 6.5Pay and conditions for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wagesThere is a detailed list of pay and working conditions for all the employees by their level and rank. The SPO management follows the relevant legislations on working days / holidays, working time, minimum wage by region and employee insurance. The salary received by the workers is a decent living wage.

Criterion 6.6The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnelThe workers have established a labour union in accordance with national legislation, UU No. 13 2003. The union is empowered to bargain with the company over the working conditions – wages, time of work, overtime, etc.

Criterion 6.7Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervisions and when not interfering with education programmes. Children are not exposed to hazardous working conditionsAll the workers (for mills and estates) are employed with their personal particulars taken, including age. Browsing the particulars, no worker was <16 years old – the legal minimum age to work.

Criterion 6.8Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age is prohibitedThe SPO management is an equal opportunity employer – all employees can be promoted to the limits of their excellence. Opportunities for promotion are constantly being developed, and announced by the Head of the General Affairs Department

Criterion 6.9A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and appliedThere is a policy on the proprietary rights of women, drawn up by the General Affairs Department and communicated and explained to all the workers and staff.

Criterion 6.10Growers and mills deal fairly and transparently with smallholders and other local businessesLonsum does not purchase external FFB, so has no dealings with smallholders. The only things ‘purchased’ from outside are services for repair and maintenance of equipment which are usually under contract, pre-agreed by both parties.

Criterion 6.11Growers and miller contribute to local sustainable development wherever appropriateThe SPO management helps the local communities in offering free services – building / repairing buildings (schools, places of worship, community halls) which is documented in the Government and Community Relation Annual Report distributed to each estate and mill. Regular meetings are held with the local communities to ascertain their needs, and to see if the company can help. Free medical treatment is also available at the clinics.

Criteria 7.1 to 7.7Not applicable.There has no new planting since November 2005.

Criterion 8.1Growers and millers are regularly monitored and reviewed of their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations The SPO management continually seeks to improve on its FFB delivery to the mills. Boiler and vehicular gaseous emissions are regularly monitored for exceeding the parameter limits. There is a policy to reduce the use of dangerous agrochemicals like paraquat. Used pesticide containers are properly handled and stored in the chemical house before final disposal.

3.2 Details of Non-Conformances, Auditor’s recommendations for Corrective Actions and Auditee Action taken

Non Conformity Report – T01.10/08

Date issued 16.10.2008 NCR issued by : Hasnop Putra

Location Estates and Mills Discussed with : Managers and staff

RSPO – Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant with RSPO criteria.

Description of Finding / Recommended Corrective Action

In some mills and estates, some information deemed necessary by the RSPO P & C could not be got.

Recommended corrective action:

The management of palm oil mill(s) and palm oil plantation(s) should have readily available all the information for stakeholders on environmental, social and legal issues as required by the RSPO principles and criteria.

Classification Major Minor Improvement None

Corrective Action Taken: Date of implementation: 04 November 2008 – continuously1. Estates and mills managers have written up the minutes of all stakeholder meetings and filed them properly2. The Head of Environment and CSR Coordination is reviewing the procedure for communication (including

transparency) and will propose changes to the Operations Director.3. The Head of Environment and CSR Coordination will then communicate the new procedure to the estate and

mill managers.4. The estates and mills have now all the required information for dispensing to any interested stakeholder.

Auditee’s signature:

Auditor’s Comments: The minutes of all stakeholder meetings are now available and also all the relevant documents required by the RSPO P & C. Further improvement will be made to the procedure for disseminating information but this is over and above the corrective action required. The nonconformity is therefore closed.

Conclusion s: To check in next verification visit

Appropriate action not taken

Date of verification: 20.11.2008

Appropriate action taken Corrective action in compliance with the

requirements

Auditor’s signature:


Date of issue 16.10.2008 NCR issued by : Hasnop Putra

Location Estates and Mills Discussed with : Managers and staff

RSPO – Criterion 1.2 : Management documents are publicly available, except where they are prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social of comers.


In some mills, there were no documentation of the social activities, social program, health and safety plans.


The documents should be available at the mill(s) and estate(s), and not kept in the head office. Even simple, non-controversial documents like documentation of social activities, social program, Health and Safety plan and continuous improvements records were not available, and should be made available.


Corrective Action Taken: Date of implementation: 04 November 2008 and continuously

A list was compiled of the documents to be kept on site in consultation with internal and external people. Copies of the documents have been made and are now available. Where the original documents are required, they are now kept on site.


A uditor’s Comments : The corrective action taken has been verified and accepted. The nonconformity is closed.





requirements

Auditor signature:



Location Palm Oil Mill Discussed with : Managers and staff

RSPO – Criterion 4.4 : Practices to maintain the quality and availability of surface and ground water


There was no monitoring of the water consumption, and no usage statistics worked out e.g., water use per tonne FFB processed.


The monitoring should be started with installation of the required equipment.


Corrective Action to be Taken: Date of implementation: 04 November 2008 – continuously1. Water meters to be installed – for all mills and specific areas to derive usage statistics.2. Mill managers to derive regular usage statistics, e.g., water use/tonne FFB processed.


Auditor’s Comments : The action taken will be checked at the next surveillance visit.





requirements

Auditor sign:



Location Palm Oil Mill Discussed with : Managers and staff

RSPO – Criterion 4.6 : Pests, diseases, weeds and invasively introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.


The dangers of using pesticides are not adequately communicated to the workers dealing with them.


The workers should be informed of the dangers of using pesticides – verbally in talks as well as with printed literature in the local language(s).


Corrective Action Taken: Date of implementation: 15 November 2008

The workers have been informed of the dangers of pesticide use. Pamphlets on the subject are being prepared.


Auditor’s Comments : With the low education level of the workers, the dangers of pesticide use must be frequently reiterated until they become familiar with the subject. The nonconformity is closed but the diligence in carrying out the corrective action will be assessed in the next surveillance visit.

Conclusion s: To check in next verification visit.




requirements

Auditor signature:



Location Palm Oil Mills Discussed with : Managers and staff

RSPO – Criterion 4.7 : An occupational health and safety plan is documented and implemented.


- Health and safety measures are poorly implemented;- No identification and assessment in mills for some of the activities;- Not all workers provided with PPE. No ear plugs for workers in noisy areas, welders not provided with dark

glasses;- Accident-prone areas not identified;- Neither proper OHS plan nor monitoring of health / safety records.


A concerted effort should be made to implement fully all the health and safety measures, identify accident-prone areas and keep proper health / safety records. All the workers should be provided the appropriate PPE for their work.


Corrective Action Taken: Date of implementation: 04 November 2008 – continuously1. Mill managers have identified and assessed the risks in mill activities 2. Mill managers and Health and Safety Coordinator have listed all the PPE’s required. They will explain the

necessity for wearing PPE and enforce the wearing3. The mills have been mapped for their potentially risky areas. Evacuation areas will be created and the employees

taught the precautions to be taken for safety 4. Mill managers and the Health and Safety Coordinator have drawn up an OSH programme and will monitor its

implementation.


Auditor’s Comments : The corrective action recommended is considered to have been adopted. The nonconformity is therefore closed.




Appropriate action taken

Corrective action in compliance with the requirements

Auditor signature:



Location Estate(s) and Mill(s) Discussed with : Managers and staff

RSPO – Criterion 5.1 : Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.


- It is claimed that environmental monitoring is carried out every 6 months. However, none of the reports were available.

− In the six-monthly environmental monitoring, there seems no assessment of replanting for its environmental and social impacts.


The environmental monitoring reports should be available and obtainable on request. The reports should have more details on the various plantation activities, such as replanting, on the environmental and social impacts.


Corrective Action Taken: Date of implementation: 20 January 2009 - continuously Back issues of the reports are now available at all the mills and estates. Future reports will include more details on the impacts by the estate activities, and evaluation of their environmental and social impacts. Copies of the report will be distributed to the mills / estates.


Auditor’s Comments : The action taken is deemed sufficient remedy. The nonconformity is closed.

Conclusion s: To check in next verification visit.



Appropriate action taken

Corrective action in compliance with the requirements

Auditor signature:

Table 9: Table of Conformity Finding to RSPO Criteria

Audit type Certification Assessment

Criterion Audited Complied Major NC Minor NC Total NC Status

1.1 No 1 1 Closed

1.2 No 1 1 Closed

2.1 Yes

2.2 Yes

2.3 Yes

3.1 Yes

4.1 Yes

4.2 Yes

4.3 Yes

4.4 No 1 1 Closed

4.5 No

4.6 Yes 1 1 Closed

4.7 No 1 1 Closed

4.8 Yes

5.1 No 1 1 Closed

5.2 Yes

5.3 Yes

5.4 Yes

5.5 Yes

5.6 Yes

6.1 Yes

6.2 Yes

6.3 Yes

6.4 Yes

6.5 Yes

6.6 Yes

6.7 Yes

6.8 Yes

6.9 Yes

6.10 Yes

6.11 Yes

7.1 N/A -

7.2 N/A -

7.3 N/A -

7.4 N/A -

7.4 N/A -

7.5 N/A -

7.6 N/A -

7.7 N/A -

8.1 Yes

Total of Nonconformities 4 2 6

Recommendations for improvement at Gunung Mulia POM during site +visit are

- The standard operating practice (SOP) for stacking chemicals should have clear instructions for the user.- The sulphuric acid storage should have clearer labels for easier identification. - Drums filled with hazardous wastes should have proper labels. - The MSDS of DOWEX (a product of DOW Chemical) should be translated into Bahasa so that the storekeeper can

understand. - There is no SOP or working instruction for the fire engine operation in engine room.- Used oil drums are randomly placed – they should be removed to the store for hazardous wastes. - The actual working days should be used to calculate the basic salary for the daily-rated staff.- The communications procedure is insufficient to resolve conflicts, complaints and grievances. It should be

strengthened.- There is a lack of maintenance for the infrastructure. E.g., access roads to mills.

and the recommendations adopted by auditee

- The mill managers are to improve their store management for chemicals and oils, e.g., separate chemicals and oils, store oils by their different characteristics, have a Material Safety Data Sheet (MSDS) and procedure for fire engine operation, store used oils as B3 waste.

- The working days of daily-rated workers will be recorded to calculate their basic pay.- The communications procedure will be reviewed and strengthened.- Better maintenance of infrastructure, especially access roads to mills and the areas around.- Draw up a procedure for fire.- Make an MSDS for DOWEX and distribute to mills.

3.3 Noteworthy Positive Components

The audit made some positive observations.

Waste, Safety and Health Management:

- All mills and estates have safety guidelines in accordance SM-K3 (Management System of Occupational Safety and Health) standard for their operations as well as safety monitoring.

- Turangie POM was awarded Grade Blue for excellence in its environmental performance.

- There have been zero accidents from 2007 to mid-2008. Pesticide containers were not reused as containers, but punctured and disposed of for recycling.

Zero Burning:

The ban on burning has been communicated to all employees.

Protection of Plantations Land:

There is a readiness to tackle fires in the plantations. There are fire facilities and a fire brigade on constant stand-by with water trucks.

Protection for HCV areas

High priority is accorded to protection of all HCV areas in the plantations, and all the stakeholders have been so informed. The protection is clearly required in the EIA done and 2003 HCV toolkit. The HCV areas were identified by independent operators – Aksenta and WWF Indonesia.

Organic wastes and land application:

EFB are used to mulch the palms, in the process improving the soil. Palm oil mill effluent is also applied to the land after treatment to reduce its BOD and COD.

Awareness and commitments:

All employees are aware of the requirements by the RSPO P & C. The company is run to ISO 14001:2004 standard and in accordance to RSPO requirements.

ISO 14001 implementation:

A high priority is set on conservation and protection of the environment. Thus, the company is constantly monitoring the environmental impacts of its activities and sending its staff for training to increase their environmental awareness. Targets have been set for boiler and diesel engine operations.

CDM Program:

There is currently an effort to reduce the use of diesel generators and use self-produced methane instead.

3.4 Issues Raised by Stakeholders and Findings Assessment Team

The audit team did not receive any comments from the stakeholders on social and environmental impacts by the mills and plantations. Interviews were therefore used to probe the stakeholders on various issues. The issues raised by the stakeholders were then posed to the company for its response. The questions and responses are given below.

The photo shows an interview with a local community to obtain feedback on the company operations.

Table 10: Issues raised by stakeholders

No Question Stakeholder feedback SPO management comments

1 Are you aware of RSPO certification?

RSPO is little heard of by the stakeholders. Meetings will be held regularly to explain RSPO. The meetings will be minute and the action taken monitored.

2 What will be the benefits to the local community if the company obtains RSPO certification?

No one seems to know, although some of the stakeholders have received donations in kind and cash from the company – repairs to infrastructure, free medical consultation, etc.

The company will explain to them the benefits of certification.

3 Does the company meet regularly with the local communities to discuss community development?

There are meetings to learn about the community development every 6 months..

More regular meetings will be held.

4 Does the company have means of quick communication with the local communities?

Stakeholders are informed of activity taken by the company according to the RSPO P & C. We are free to voice any complaint through the grievance procedure.

Any revision to the procedure will be based on feedback on the meetings with stakeholders.

No action need to provide evidence for correction, corrective and even, preventive actions which were taken, if there was a need for revisions through local community meeting informed.

5 Are there any land disputes over the plantations?

No, the company acquired the land a long time ago, and there are no current conflicts.

None

6 Has the company operations had any impact on the environment?

So long as the company acts responsibly, and regularly monitors its operations, there should be no negative imparts. There have been no water pollution, soil contamination and extermination of flora and fauna.

We try to conserve the environment as much as possible by monitoring our impacts on it - pollution, noise, stench, dust, etc.

No Question Stakeholder feedback SPO management comments

7 Are you aware of any procedure to settle conflicts with the company?

The company regularly tells us about this. It has been very informative.

We have drawn up a list of relevant stakeholders to inform about this.

8 Does the company regularly invite you to discuss issues in community development?

The company regularly invites us to meetings by calling our cell phones. It has been a good benefactor to us.

The company wants to discuss about the aid required.

9 Are the workers receiving a legal salary?

Yes. There are no complaints on salary, days worked, holidays and overtime.

We will always comply with the labour regulations.

10 Are you aware of any emergency procedures by the company?

We have been trained to use fire extinguishers and have had emergency drills and learnt evacuation procedures.

None.

3.5 Auditee’s acknowledgement of Internal Responsibility

Please sign on the certification assessment and confirm the acceptance of the assessment report contents including assessment findings. The company Managing Director of Operations and Environment Manager will sign for the certification assessment report. Complete signatures are shown in section 3.6.

3.6 Formal Sign-Off of Assessment Findings

Signed for and on behalf ofPT PP London Sumatra Indonesia, Tbk

Date 01.12.2008 - Managing Director of Operation : Bryan Dryer- Head of Environment and CSR Coordination : Bambang Dwi Laksono

Signed for and on behalf ofPT. TÜV NORD Indonesia – System Certification Management

Date 01.12.2008 - Lead Auditor : Hasnop Putra

Annex - A

Draft RSPO Certificate for RSPO Compliance

Annex - B

The certification assessment plan