roundtable on sustainable palm oil - tÜv rheinland · the location permit (‘izin lokasi’)...

Roundtable on Sustainable Palm Oil

Public Summary Report Report no.: 117292

Certification assessment against the

RSPO Principles & Criteria Indonesia National Initiative 2008

Wilmar International Limited PT Kerry Sawit Indonesia

Location of client’s holding

Jenderal Sudirman Road Km. 62, Sampit-Pangkalan Bun Seruyan District, Central Kalimantan Province,

Indonesia

Report prepared by: Dian S. Soeminta

Malaysian office: TUV Rheinland Malaysia Sdn. Bhd. No. 26 – 32, Jalan Perindustrian USJ 1/6, Taman Perindustrian USJ 1, 47600 Subang Jaya, Selangor Darul Ehsan, Malaysia. Tel: +6 03 8024 2400 Fax: +6 03 8023 1505 www.tuv.com

Indonesian office: PT TÜV Rheinland Indonesia Menara Karya 10th Floor Jl. H.R. Rasuna Said Block X-5 Kav 1-2 Jakarta 12950 Tel : +62 (0)21 – 579 44 579 Fax : +62 (0)21 – 579 44 575 www.tuv.com

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT 3

1.1 National Interpretation Used 3 1.2 Type of Assessment 3 1.3 Location and Maps 3 1.4 Description of Supply Base 4 1.5 Dates of Plantings and Replanting Cycles 5 1.6 Other Achievements and Certifications Held 5 1.7 Organisational Information / Contact Person 5 1.8 Description of Company History and Environment 5 1.9 Time Bound Plan for Other Management Units 7 1.10 Area of Plantation (Total, Planted and Mature) 9 1.11 Approximate Tonnages Certified 10 1.12 Recommendation for Certification 10 1.13 Date of Certificate Issued and Scope of Certificate 10 2.0 ASSESSMENT PROCESS 11

2.1 Certification Body 11 2.2 Qualifications of Lead Assessor and Assessment Team 11 2.3 Assessment Methodology 12 2.4 Stakeholder Consultation and Stakeholders Contacted 14 2.5 Date of Next Surveillance Visit 14 3.0 ASSESSMENT FINDINGS 14

3.1 Summary of Findings 14 3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions 44 3.3 Noteworthy Positive Components 47 3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues 47 3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 59 APPENDICES 60

Appendix 1: Details of Certificate 60 Appendix 2: Certification Audit Plan 61 Appendix 3: List of Abbreviations 64 Appendix 4: List of Stakeholders Interviewed and Contacted 65 Appendix 5: Observations and Opportunities for Improvement 66

RSPO Certification Assessment Report - PT Kerry Sawit Indonesia – Central Kalimantan

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1.0 SCOPE OF CERTIFICATION ASSESSMENT 1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Indonesia National Interpretation year 2008 of the RSPO Principles & Criteria.

1.2 Type of Assessment

The main certification assessment was carried out on one mill and three (3) estates under PT Kerry Sawit In-donesia owned by Wilmar International Indonesia

1.3 Location and Maps

Figure 1: Location map of PT Kerry Sawit Indonesia in Seruyan District, Central Kalimantan, Indone-sia


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Table 1: GPS locations for all estates and mills included in certification assessment

1.4 Description of Supply Base PT Kerry Sawit Indonesia mill is one of the palm oil mills that is owned by Wilmar International located in Cen-tral Kalimantan. PT Kerry Sawit Indonesia Mill was established in 2009 with a production capacity of 45 ton-nes/hours or 250,000 tonnes per year in accordance with the terms of their plantations business permit (Izin Usaha Perkebunan (IUP)) for the company’s head office location at Jl. Madang, No. 262-Sampit, Central Kali-mantan. The development of the company was approved by the State Minister of Investment Funds / Chairman of the Investment Coordinating Board and Indonesian Capital Investment Coordination Board. PT Kerry Sawit Indonesia Mill receives supplies from its 3 company-owned estates as well other estates under Wilmar Interna-tional Indonesia located within the company’s Central Kalimantan Project, as describe below. The scope of this assessment only covers the 3 company-owned estates under PT Kerry Sawit Indonesia, which are Kerry Sawit Indonesia (KSI) 1, 2 and 3. Table 2: FFB Supply Information for PT Kerry Sawit Indonesia for year 2009 & 2010

FFB supplied in 2009(*) FFB supplied in 2010(**) FFB Contributors

MT % MT %

Company owned estates: KSI 1 13,970 43.3 100,746 37.93 KSI 2 6,790 21.0 32,199 12.12 KSI 3 4,421 13.7 27,267 10.27 Sub Total 25,181 160,212

Other FFB sources (under Wilmar Group):

Sarana Titian Permai 1295 4.0 89,096 33.55 Mustika Sembuluh 5781 17.9 16,281 6.13 Sub Total 7076 105,377

TOTAL 32,263 100 265,589 100

Note : (*) October to December 2009

(**) January to December 2010

GPS locations Name of mill / estate Location Latitude Longtitude

PT KSI Mill Danau Sembuluh I Village, Danau Sembuluh subdistrict, Seruyan district, Central Kalimantan, Indonesia

02° 47’ 06.2”S 112° 30’ 32.2”E

KSI 1 Estate Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia

02° 43’ 27.4”S 112° 43’ 27.4”E


02° 45’35.7”S 112° 29’ 32.2”E


02° 48’ 40.075”S 112° 31’ 0.291”E


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1.5 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings are as per the table below. Table 3: Age and year of plantings of company estate supplying to PT Kerry Sawit Indonesia

Oil palm planted area at each estate(ha) Age & Year of Plant-ings KSI 1 KSI 2 KSI 3

0 – 5 yrs (2006 – 2010) 5,658.2 3408.9 3147.1

5-10 yrs (2001 – 2005) 376.1 2,081.6 942.3 TOTAL 6,034.3 5,490.5 4,089.4

The company’s replanting programme is still not planned yet as the first year of plantings was only in 2003.

1.6 Other Achievements and Certifications Held PT Kerry Sawit Indonesia still has not obtained any certifications or other achivements.

1.7 Organisational Information / Contact Person

Contacts details of the company are as follows:

1.8 Description of Company History and Environment 1.8.1 Company’s History

PT Kerry Sawit Indonesia (PT KSI) is located within the central to southern areas of Wilmar’s Central Kalimantan Project (CKP) in the Seruyan Province of Central Kalimantan, Indonesia. PT Kerry Sawit Indonesia was estab-lished in year 1996 and the company has the notarial deed no. 182 and deed of establishment dated 26 Novem-ber, 1996. Initially, there were 3 companies that invested their capital to open oil palm plantations in this location i.e. PT. Kerry Sawit Indonesia, PT. Salawati Makmur and PT. Rimba Harapan, based upon an approval letter from the Indonesian State Minister of Investment / Chairman of Investment Coordinating Board. Approval for invest-ment was obtained from the Indonesian President of Foreign Investment, as per their letter dated July 25, 1996 for PT. Kerry Sawit, PT. Salawati Makmur and PT. Rimba Harapan. The first plantation, PT Salawati Makmur, had a total area of 15,000 ha based on letter dated 12 May 1998 from the Indonesian Republic’s Ministry of Forestry and Plantations, regarding approval of forest land located in the Central Kalimantan province for conversion to oil palm plantations by PT Salawati Makmur. The company also re-ceived approval from the Ministry of Forestry for extension of their forest land area to ± 16,850 ha. PT Salawati Makmur finally obtained a forest land release permit (Surat Pelepasan Kawasan), from the Ministry of Forestry for a total area of 17,202.36 ha located within in the Danau Sembuluh district, East Kotawaringin province, to be used for plantations operation.

Company Name: PT Kerry Sawit Indonesia

Address: Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia

Contact Person:

Mr. Tan Tong Sin

Telephone: +62-531-34522

Email: [email protected]

mailto:[email protected]�


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The ownership of shares of PT Salawati Makmur was transferred to PT Kerry Sawit Indonesia in June 29, 1998. On 26 February 2, 1999, the Land Department Head of East Kotawaringin issued a decree letter for the change of name of the location permit holder from PT Salawati Makmur to PT. Kerry Sawit Indonesia for areas to be used as oil palm plantation. This includes parts of areas located within Bangkal Village, Sembuluh I Village, Sembuluh II Village, and Jahitan Village, located within the Muara Dua sub-district and Danau Sembuluh sub-district of Seru-yan Hilir, East Kotawaringin. The company also received a decree letter dated 26 February 1999 from the Head Office of the East Kotawaringin land department, stating approval for transfer of ownership of the location permit from PT Salawati Makmur to PT Kerry Sawit Indonesia for an area of 17,500 ha. PT KSI started carrying out land preparation of their oil palm plantation areas since 2002 for the area of 17,202.36 ha, the area stated in the letter for forest land release permit that previously was owned by PT Salawati Makmur. The location permit (‘izin lokasi’) granted to PT Salawati Makmur expired at the time, so PT Kerry Sawit Indonesia applied for extension of the location permit which was approved by the Land Department Head of East Kotawar-ingin through their letter dated June 11, 2002 for PT KSI’s oil palm plantation areas located in Bangkal Village, Sembuluh I Village, Sembuluh II Village, Jahitan Village and Muara Dua Villages within Danau Sembuluh sub-district in East Kotawaringin. In 2002, there was a government regulation (Indonesia Republic Regulation no. 5 year 2002) stating that the Se-ruyan district, which was previously part of East Kotawaringin province, would be separated to form part of Cen-tral Kalimantan. As PT’s KSI administration office is located in Seruyan District, the company submitted an appli-cation to the new government of the Seruyan district requesting for a revision to their location permit (‘ijin lokasi) from an area of 17,500 ha to 19,200 ha. In response, on 22 December 2, 2003, the Seruyan district government issued a letter stating an amendment to the location permit for oil palm plantation development areas belonging to PT. Kerry Sawit Indonesia in accordance with the company’s request. PT KSI also applied for a Business License (‘Ijin Usaha Perkebunan’) and the license dated 6 July 2005 has been issued by the government of Seruyan District through. On 27 October 2005, PT KSI submitted their application for the Land Use Rights certificate (‘Hak Guna Usaha’-HGU) to the National Land Agency (‘Badan Pertanahan Na-sional’ - BPN). BPN assigned a team, Cadastral Land Inspection Committee "B", to measure PT KSI’s area and the team produced a cadastral map of PT KSI’s legal boundaries and report which stated the measurement re-sults for an area of 18,994.135 ha belonging to PT KSI. However in 2006 there was a letter issued by the Head of BPN of the Seruyan District dated 15 August 2006 in-forming on the issuance of HGU certificates would be suspended and HGU processing for all applicants who ap-plied for HGU certificates prior to September 11, 2006 would be delayed. This was because the local government is developing a spatial land management plan for the Central Kalimantan province and currently is pending ap-proval from the Indonesian Parliament. HGU certificates for that are being studied, which includes PT KSI’s area, cannot be issued until the spatial management plan is approved. PT KSI then received a letter on 2 September 2007 from the BPN of Central Kalimantan requesting the company to reapply for their land forest release letter to the Minister of Forestry, upon which the BPN of Central Kalimantan would issue the HGU certificate for the com-pany. PT KSI’s management only just began to follow up on this matter in 2009 by submitting an application letter dated October 21, 2009 to the Ministry of Forestry. From the chronological of events described above, it can be seen that PT KSI still does not have all the necessary documentation and licenses to demonstrate complete legal ownership of their land. The location permit of PT KSI has expired. Even though PT KSI has already obtained their Plantation Business License (‘Izin Usaha Perusa-haan’ - IUP) from the government of Seruyan government, PT KSI should continue to ensure they obtain all nec-essary legal documentation to concretely demonstrate their legal ownership of the land and ensure their long-term business activities in this area. The company is continuing to communicate with the relevant government agen-cies to obtain their permit of land release (‘Ijin Pelepasan Kawasan’), and the company has documented letters of correspondences made. To date, the company’s application for their HGU certificate is still pending due to ongoing processing for the change of company name from PT Salawati Makmur to PT Kerry Sawit Indonesia. In addition, the Spatial Man-agement Plan for Central Kalimantan province is still not completed by the provincial government. This plan will include management of forested areas, and the company must comply with the requirements laid out in this plan. This is another reason for the delay of approval of the company’s HGU.


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1.8.2 Description of Estate Environmental Parameters

For its operation, PT. Kerry Sawit Indonesia plantation is divided into 3 estates to facilitate their plantation management, namely KSI estate 1, KSI estate 2 and KSI estate 3. The total area under PT KSI’s operation is 18,994.135 ha, according to the cadastral map that was issued by the BPN of Seruyan district, with mature plantation area comprising 12,214.13 ha. All FFB produced by the 3 PT KSI’s plantation estate are processed at PT Kerry Sawit Indonesia palm oil mill located in KSI 2 estate. PT KSI mill has an installed capacity of 90 tonnes per hour of FFB processed but has a permit allowing processing of only 45 tonnes per hour. Table 4: General information on PT Kerry Sawit Indonesia

Company Location PT Kerry Sawit Indonesia (Estate 1, 2 and 3), Jenderal Sudirman Road Km. 62, Sampit-Pangkalan Bun Seruyan District, Central Kalimantan Province, Indonesia

Geographical location 02° 43’ 27.4” S, and 112° 43’ 27.4” E Location of local government admin office

Seruyan District

1.

Location of plantation administra-tion office

Seruyan District

Surrounding stakeholders Stakeholders located at north boundary of plantation

PT Mustika Sembuluh and PT Hamparan Sawit Mas

Stakeholders located at east boundary of plantation

PT Rimba Harapan Sakti

Stakeholders located at south boundary of plantation

PT Sarana Titian Permai

2

Stakeholders located at west boundary of plantation

PT Selonok Ladang Mas Sembuluh 1 Village, Sembuluh II Village

3. Total Land Area 18,994 ha 4. Land Condition Flat to undulating (0-12%) 5. Soil type Podzolic, Sandy (Serai) and Shallow Peat ( Gali) 6. Climate condition B/Wet (Schmidt & Fergusson classification)

1.9 Time Bound Plan for Other Management Units The time frame laid out below is considered to be both challenging and realistic. The company will be using the experience of this main assessment to ensure that the other management units conform to the RSPO Princi-ples & Criteria. The audit team is satisfied that the company conforms to the RSPO requirements for partial certification as laid out in Clause 4.2.4 of the RSPO Certification Systems document. Table 5: Time bound plan for other Management Units

Name of Holding/ Plantation Location Area (ha)

Time bound plan for

certification/ Year of Audit

Certification status

PT Perkebunan Milano North Sumatra 4975 2009 Certified PT Mustika Sembuluh Central Kaliman-

tan 15,897 2009 Certified

PT Tania Selatan South Sumatra 3775 2010 Certification ap-proved

PT Kerry Sawit Indonesia Central Kaliman-tan

18,994 2010 Under Review by RSPO

PT Kencana Sawit Indone- West Sumatra. 7,728 2010 Certified


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sia PT Bumi Sawit Kencana Central Kaliman-

tan 7,266 2011 Planned

PT AMP Plantation West Sumatra 7,541 2011 Pre-Assessment completed

PT Primatama Muliajaya West Sumatra 1,397 2011 Planned PT Sarana Titian Permata Central Kaliman-


PT Buluh Canang Plantations South Sumatra 223 2011 Planned PT Tania (Bamboo Kuning) South Sumatra 1800 2011 Planned PT ANI (Sambas) West Kalimantan 9,095 2011 Planned PT Daya Labuhan Indah North Sumatra 5,010 2012 Planned PT Milano (CDE) North Sumatra 618 2012 Planned PT Citra Riau Sarana Riau 2,268 2012 Planned PT Gersindo Minang Planta-tions

West Sumatra 3,146 2012 Planned PT Permata Hijau Pasaman West Sumatra 2,363 2012 Planned PT Mentaya Sawit Mas Central Kaliman-


PT Asiatic Persada Jambi 15,223 2012 Pre-Assessment completed

PT Pratama Prosentindo West Kalimantan 3423 2012 Planned PT Putra Indotropical West Kalimantan 3133 2012 Planned PT Sinarsiak Dianpermai Riau. 1,114 2012 Planned PT ANI (Landak) West Kalimantan 4281 2013 Planned PT Murini Sam Sam Riau 1,288 2013 Planned PT Agro Palindo Sakti South Sumatra 872 2013 Planned PT Musi Banyuasin Indah South Sumatra 4473 2013 Planned PT Karunia Kencana Per-maisejati

Central Kaliman-tan

8,070 2013 Planned PT Agro Palindo Sakti West Kalimantan 5033 2013 Planned PT Daya Landak Plantation West Kalimantan 3774 2013 Planned PT Indoresins Putra Mandiri West Kalimantan 3730 2013 Planned Total 164611

Palm Oil Mills Location

Annual CSPO

produc-tion (mt)

Year of Audit Certification status

PT Milano (Pinang Awan) North Sumatra 27,554 2009 Certified PT Mustika Sembuluh Central Kaliman-

tan 81,350 2009 Certified

PT Tania Selatan South Sumatra 12,800 2010 Certification ap-proved

PT Kencana Sawit Indone-sia

West Sumatra. 37,200 2010 Under Review by RSPO

PT Kerry Sawit Indonesia Central Kaliman-tan

51,335 2010 Certified

PT Bumi Sawit Kencana Central Kaliman-tan

27,700 2011 Planned

PT AMP Plantation West Sumatra 37,900 2011 Pre Assessment complated


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PT Buluh Canang Plantations South Sumatra 33,800 2011 Planned PT Agro Nusa Investama (Sambas)

West Kalimantan 17,600 2011 Planned PT Sarana Titian Permata Central Kaliman-


PT Sinarsiak Dianpermai Riau 6,400 2012 Planned PT Daya Labuhan Indah-2 North Sumatra 25,800 2012 Planned PT Citra Riau Sarana (ML) 1 + 2

Riau 46,300 2012 Planned PT Gersindo Minang Planta-tions

West Sumatra 35300 2012 Planned PT Mentaya Sawit Mas Central Kaliman-


PT Asiatic Persada Jambi 57,300 2012 Pre Assessment completed

PT Agro Nusa Investama (Landak)

West Kalimantan 30,600 2013 Planned PT Murini Sam Sam Riau 7,500 2013 Planned PT Musi Banyuasin Indah South Sumatra 35,400 2013 Planned PT Karunia Kencana Per-maisejati

Central Kaliman-tan

41,400 2013 Planned PT Agro Palindo Sakti 1 West Kalimantan 19,400 2013 Planned PT Citra Riau Sarana 3 Riau 20000 2013 Planned

Total 719,239

1.10 Area of Plantation (Total, Planted and Mature)

Table 6a: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Kerry Sawit Indonesia for year 2010

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

KSI 1 7,466.00 6,034.30 5,658.22 376.08 100,745.62 17.80 KSI 2 6,418.00 5,490.47 3,408.86 2,081.61 32,199.103 9.45 KSI 3 5,110.00 4,089.40 3,147.05 942.35 27,267.45 8.66

TOTAL 18,994 15,614.17 12,214.13 3,400.04 160,212.68 13.11 *Note: FFB production from January 2010 to December 2010

Table 6b: Oil Palm Planted Area Summary, Projected FFB Production and Average Yield/ha for PT Kerry Sawit Indonesia for year 2011

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

KSI 1 7,466.00 6,034.30 5,761.59 272.38 132,000 22.90 KSI 2 6,418.00 5,490.47 5,155.11 335.36 61,000 11.83 KSI 3 5,110.00 4,089.40 4002 87.4 41,800 10.44

TOTAL 18,994 15,614.17 14918.87 695.14 234,800 15.74 By January 2011, some 2,704.74 ha or 22% of young area will come into maturity and this is anticipated to in-crease the yield by 47% or 74,588 tonnes more than 2010. This is attributed to palms in KSI 1 that was estab-lished between 2003 to 2005 which will be reaching their prime.


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Table 7: Land use data for PT Kerry Sawit Indonesia

Note: * Some HCV / potential HCV areas listed above are areas belonging to local communities as well, which are still in good forest condition and will be preserved by the company as HCV areas.

1.11 Approximate Tonnages Certified

The approximate tonnages certified, based projected production in year 2011 (as per Table 6a), OER of 22.0% and KER of 4.0% (based on 2010 production data) are as follows: Crude Palm Oil (CPO) : 51,656 tonnes (OER of 22.0%) Palm Kernel (PK) : 9,392 tonnes (KER of 4.0%)

1.12 Recommendation for Certification PT Kerry Sawit Indonesia has established and maintains an effective system to ensure compliance with the RSPO principles and criteria. The audit team has confirmed through the audit process that the company’s prac-tices complies with, adequately maintains and implements the requirements of RSPO Principles and Criteria National Intrepretation Indonesia version 2008. TUV Rheinland Malaysia recommends that PT Kerry Sawit Indonesia be approved as a producer of RSPO Cer-tified Sustainable Palm Oil.

1.13 Date of Certificate Issued and Scope of Certificate

The scope of the certificate covers production of palm oil from PT Kerry Sawit Indonesia and its company-owned estates, which includes KSI 1, KSI 2 and KSI 3. The date of certificate issued is 18 June 2011. Further details of the certificate are as per Appendix 1.

Land used for other purposes (ha) Estate Name

Total area (ha)

Oil Palm Planted

Area (ha)

HCV/ potential

HCV areas* (ha)

Housing, Road, mill Nursery Uncleared

Area

Non plantable

area

Conflict/Enclave

KSI 1 7466.00 6034.30 147.25 295.51 43.72 19.78 627.06 260.33 KSI 2 6418.00 5490.47 55.18 256.09 - 94.35 162.89 325.58 KSI 3 5110.00 4089.40 9.01 158.17 - 713.07 3.46 128.44 TOTAL 18,994.135 15,614.17 211.44 709.77 43.72 827.20 793.41 714.35


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2.0 ASSESSMENT PROCESS 2.1 Certification Body

TUV Rheinland Malaysia Sdn. Bhd. is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 61 countries on all five continents. TUV Rheinland Malaysia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, as well as CDM Project Validations. TUV Rheinland Malaysia’s office is located in Subang Jaya.

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

Dian S. Soeminta

Lead Auditor

Education: Bachelors Degree in Forestry - Bogor Agriculture Institute. Indonesia, (1990 to 1995). Trainings attended: ISO 9001:2000 lead assessor course 1996 - Neville Clark; ISO 14001 lead assessor course - PE International; OSHAS: 2007 training, Sustainable Forest Management (SFM) - Forest Stewardship Council (FSC) system training; Chain of Custody training for FSC System. Working experience: Professional forester since 1995 to 2000. Lead Auditor for Forest Stewardship Council (FSC), Sustainable Forest Certification (SFC) and Chain of Custody (COC) Certification. Lead auditor for Environmental Management System (EMS) and Quality Management System (QMS) audits. Conducted sustainable forest management certification audits on FSC and Indonesian Ecolabel Institute (Lembaga Ecolabel Indonesia - LEI) standards for 20 companies, 50 COC FSC/LEI audits, and EMS and QMS audits at more than hundred companies for TUV Rheinland Indonesia. Instrumental in the preparation of TUV Rheinland Indonesia for Sustainable Forest Management Certification System and TUV Rheinland Malaysia for RSPO Certification. Member of Task Force for Indonesian National Interpretation (Guidance on scheme smallholder RSPO certification). Developed TUV Rheinland RSPO Gap Assessment Checklist and report template.

Fadli Auditor

Education: Bachelor of Anthropology, Department of Anthropology - University of Indonesia, Jakarta. Trainings attended: Sustainable Natural Production Forest Management (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Eco-label Institute (LEI), Forest Management and Agriculture Auditor Training; ISO 9001:2008, ISO 14000:2004, OHSAS 18001:2007 trainings - Smart-wood/Rainforest Alliance; SA8000 training - SA International; RSPO Lead Audi-tor Training -Indonesian Palm Oil Commission. Working experience: Experienced as lecturer for D3 Tourism programme, Uni-versity of Indonesia. Social aspect auditor of PT. TUV International Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Researcher of stakeholder mapping for CSR Indonesia.

Rahma-wati Noor Auditor

Education: Bachelor of Chemical Engineering, Sriwijaya University Palembang and Master of Occupational Health and Safety, University of Indonesia, Jakarta. Trainings attended: RSPO Training by the Indonesian Oil Palm Commission (13-18 July 2009). Lead Auditor for ISO 9001, ISO 14001 and OHSAS 18001 since 2001 for PT. TUV International Indonesia, and has audited more than 100 companies. Involved in ISO 9001, ISO 14001 and OHSAS audits for several palm oil plantations and mills. Since 2007, involved in CDM validation projects for several palm oil mills in Indonesia. Had 5 years experience as environ-mental consultant for PT. Dames and Moore Indonesia, prior to working for PT. TUV International Indonesia.


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Carol Ng Expert

Education: Bsc. Biotechnology & Bsc. Environmental Management - Monash University. Trainings attended: RSPO Malaysian National Interpretation Requirements and Certification – SIRIM; Implementation of RSPO Principles & Criteria - QA Plus; RSPO Stepwise Support Programme; 2nd Biodiversity Seminar – RSPO; Certifi-cation Body Biodiversity Forum & Workshop – RSPO; Environmental Quality Act 1974 (DOE) and ISO9001:2008 QMS Conversion Requirements (TUV Rheinland). Working experience: Experience in implementing sustainable practices in Sime Darby plantations to comply with RSPO requirements, performing RSPO internal audits and implementing sustainability projects. Prepared training materials and conducted several RSPO requirements trainings and workshops to plantation management teams (2008).

Irpan Kadir Auditor

Education: Bachelor of Agriculture, Department of Social and Economic of Agriculture, Bogor Institute of Agriculture.

Trainings attended: Sustainable Natural Production Forest Management (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI). Working experience: Experienced as external auditor of PT. TUV International Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Has experience in conducting assessments of performance and social mapping for mining and forestry companies. He is a senior researcher and trainer at A + CSR Indonesia.

2.3 Assessment Methodology The certification assessment was conducted between 06 and 10 December 2010 as per the assessment pro-gramme below. The assessment was carried out in accordance with TUV Rheinland Malaysia’s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for Indonesia and recorded 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 any way. All 3 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 certification body 30 days af-ter the closing meeting. Verification of closure of minor non-conformances was conducted 1 month after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below.


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Table 8: Main Assessment Agenda for PT Kerry Sawit Indonesia

Date Location/ Main sites Main activities

06.12.2010 PT KSI Head Office

Opening Meeting Presentation from management of PT Kerry Sawit Indonesia Document Check for general Information (area statement, annual production for estates and mill)

07.12.2010 KSI Estate 1 Division 1, Block 25, 24 & 23 HCV areas

On-site visits to: Boundary Stone locations and & checks of legal boundaries HCV areas Workers housing area and facilities Hazardous waste store Wetland areas, Sandy areas Land areas under dispute with other parties

Sampit, Ho-tel Wella

Open Stakeholder Consultation in Sampit, Interviews with workers regarding welfare and allowance Checking warehouse in KSI 2 On-site check of POME land application at KSI 2,

08.12.2010

KSI 2 estate, Block 74 & 75, KSI 2 of-fice

Document & on-site checks for: Waste water monitoring Identification and monitoring of environmental impacts

KSI 2 estate On-site visits to: HCV areas of KSI 2 Wetland and riparian river protection Peat land area and subsidence monitoring plot Sandy soil areas and marginal soil areas Workers housing and facilities Water treatment facility FFB harvesting process Building construction sites Legal boundaries of estate Sembuluh 1 & 2 Village

09.12.2010

KSI 3 estate On-site visits to: Tebiku Village Enclaved production forest area HCV area KSI 2 Wetland and riparian river protection Peat land area and subsidence monitoring plot Sandy soil areas and marginal soil areas Legal boundaries of estate

10.12.2010 KSI Mill Checks of documents and relevant mill & equipment licences Interviews with mill workers Document check of mill legal documents Plant tour to the whole area of POM to checking the implementation of PPE, OHS and waste handling. Checking of chemical stores and hazardous waste stores Review all audit result and preparing for closing meeting. Closing meeting.


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2.4 Stakeholder Consultation and Stakeholders Contacted The stakeholder consultation involved both external and internal stakeholders. External stakeholders were noti-fied to make comments on the certification assessment by placing an invitation to comment on the RSPO web-site. Stakeholders included those immediately linked with the operation of the company such employees, out-growers, the local government, NGO’s, trade and labour unions and local communities. Stakeholder consultation took place in the form of meetings and interviews. Meetings with stakeholders were held to seek their views on the performance of the company with respect to the sustainability practices outlined in the RSPO Principles & Criteria, and to comment on aspects where improvements could be made. Meetings with local communities were held at their respective premises within and near the company’s area. A stake-holder consultation meeting was also held at Hotel Wella Sampit, Central Kalimantan on December 08, 2010. Letters inviting individual stakeholders to the stakeholder consultation meeting were prepared and sent to the individual stakeholders, while electronic mail and telephone calls were made to arrange the meetings. In all the interviews and meeting, the objectives of the RSPO and the purpose of the assessment was clarified at the outset followed by an evaluation of the relationship between the stakeholders and the company before discussion proceeded to obtain the stakeholders feedback on the company’s compliance to different aspects of the RSPO Principles & Criteria. Although several stakeholders were not familiar with RSPO but they agreed with its objective and expressed their willingness to collaborate in the promotion of sustainable palm oil in North Sumatera province. In all interviews and meeting, the assessment team did not restrict discussion of both the positive and negative aspects of operations conducted by PT Kerry Sawit Indonesia estates and mill. No man-agement representatives of the company were present during stakeholder consultation in order to prevent any forms of intimidation. The stakeholder consultation meeting held with stakeholders during the audit was extensive and productive, with an attendance of about 50 attendees. This was followed by site inspections, including visits to the local communities, interviews with land claimants and contractors, and inspections of worker amenities and infra-structure. All stakeholder issues raised were recorded and forwarded to the management for their written reponse, and this is summarized in Section 3.4.The list of stakeholders that attended the stakeholder consulta-tion meeting and stakeholders interviewed during the assessment is included as Appendix 4.

2.5 Date of Next Surveillance Visit The next surveillance visit is planned for April 2012.

3.0 ASSESSMENT FINDINGS 3.1 Summary of Findings

Since the company became a member of RSPO in September 2005, the company’s management has commit-ted to comply with all RSPO Principles and Criteria in all company operations activities. As implementation of its commitment, the company applied to TUV Rheinland Malaysia to conduct the assessment of their compliance to all RSPO requirements for PT Kerry Sawit Indonesia (PT KSI) mill and the 3 estates of PT KSI which supply their FFB to PT KSI palm oil mill. A pre - assessment was conducted on May 25-28, 2010 and the company has worked hard to address all identified non conformities raised during the pre-assessment. There is evidence of a considerable effort on behalf of all staff in the preparation of manuals, standard operat-ing procedures and other documents not only to conform to RSPO requirements, but for the company’s im-provement of process effectiveness and efficiency. ‘

In general, objective evidence demonstrating compliance to the RSPO requirements was obtained from each of PT Kerry Sawit Indonesia estates as well as PT Kerry Sawit Indonesia mill. The results from assessment of each site within the certification unit have been aggregated to provide an assessment of overall conformance of the company to each criterion.


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Seven (7) nonconformities were assigned against minor indicators. Twenty-eight (28) observa-tions/opportunities for improvement were identified. Details of the nonconformities are provided in section 3.2 below. The company prepared a corrective action plan for minor nonconformities that was reviewed and accepted by TUV Rheinland Malaysia within the 30 days which shall be verified during next surveillance audit. The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Indonesian National Interpretation year 2008.

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 decision making.

Findings: Requests for information made by stakeholders at the palm oil mill and the estates were recorded in one document together with any other requests or letters received from stakeholders, as required by company’s procedure. As seen from the company’s log book, there is one record of request of informa-tion with corresponding response from the company, as follows:

A letter dated 5 May 2010 from the Forestry Department and Plantation Institution Office of Seruyan requesting the company’s monthly production report for sales activivty of FFB, palm kernel oil, and CPO. There is a letter dated on 24 May 2010 from the company in response to this information request from Forestry Department and Plantation Institution Office of Seruyan on the company’s production re-port.

It is mentioned in PT KSI’s standard operating procedure no. 04/SOP 36/CKP/(1)/0310 that the com-pany shall maintained all records of requests for information and responses made by the company for at least 3 years. Evidence so far shows that the company maintains these records in accordance with this SOP. Compliance status: Full compliance

Criterion 1.2: Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative envi-ronmental or social outcomes.

Findings: As evidence that the company makes their management documents publicly available to stakeholder, the company has sent a letter dated 6 March 2010 to their stakeholders informing them regarding documents that are publicly available. The company’s documents that can be accessed by the public as stated in the company’s procedure include the company’s social and environmental impact assess-ment (AMDAL), environmental management and monitoring reports (‘laporan RKL/RPL’), company an-nual reports, company policies, copies of licenses, monthly mill and estates operational reports, area statements, soil maps, hydrology maps, topography maps, maps of estate and village boundaries, tra-ditional rights areas, estate and mill procedures, company organization structure, high conservation value (HCV) reports and management plans, social impact assessment (SIA) report, company maga-zine and bulletins, investment activity reports, estate activity reports, estate statistic monitoring reports, company worker information, expatriate information, land usage information, CPO purchasing informa-tion and company Community Development and CSR report. There are receipt slips received from stakeholder, including local community and relevant government institutions, indicating that they have received this information letter. The company has a procedure to maintain records of information requested and responded to for a


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minimum of 3 years. Compliance status: Full compliance

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

Findings: It was found that the company has traceable records demonstrating compliance to all applicable regu-lations. The company holds the licenses required under Indonesian law for mill and estates operation which were found to be valid. These include their Plantation Business Permit, certificate of company registration, Location Business Permit (‘Ijin Tempat Usaha’), trading permit (‘Ijin Usaha Perdagangan’) required for international investment companies, Annual Disturbance Permit (‘Ijin Gangguan Tahunan’) for the mill, and approval of foreign investment from the State Minister of Investment / Chairman of the Capital Investment Coordinating Board. The company also has other licenses related to operations such as a Building Construction Permit (‘Ijin Mendirikan Bangunan’ - IMB) for construction of worker’s quarters and office buildings at KSI 2 and inside Tabiku Village, license for temporary storage of hazardous wastes (including used oil containers, used batteries, filters, petrol containers and grease trap containers), a copy of license of contractor for hazardous waste collection and storage (PT. Nazar) and valid licenses for all mill equipment, such as back pressure vessels, steam separators, vertical sterilizers, boilers, diesel engines, and steam turbine compressors. The mill has a permit to conduct land application of palm oil mill effluent (POME) for trial purposes and the mill has applied for approval for permanent land application permit, with documented evidence that approval of application by the local government is currently in progress. The company has a recommendation letter for approval of the permit from the Head of Seruyan government. It was verified that PT KSI conducts monthly sampling and analysis of POME quality in accordance to legal require-ments for POME application, and bi-annual checks of land application areas are carried out by local au-thorities to ensure land applications meet legal requirements while approval of the permit is pending. As the company is complying with legal requirements for POME land application and the delay in approval of the permit is due to the local government (an external party), this was raised as an observation. The company has a law register document listing the expiry dates of their various licenses or permits and applicable regulations, which is used to monitor when the licenses or permits are to be renewed. There is evidence that the company complies with legal regulations pertaining to employment, such as follows: 1. Based on summary reports of employee data for period May 2010 which contains information on the age of employees, the auditors did not find evidence of any company employees under 18 years old (worker’s minimum age as determined by the ILO conventions and Law No. 13 of 2003). 2. There is evidence that company complies with Indonesian employment law (Manpower Ministry regulation no. 100 year 2004 chapter 10 article 3) which states that all temporary workers who work for the company for 21 days or more continuously within 3 months must be employed as permanent work-ers. Evidence was seen from several company letters from KSI 1 and KSI 2 estates regarding the ap-pointment of several temporary workers to become permanent daily workers. 3. The company applies for the work permits and extensions required for expatriate staff as required by the Manpower and Transmigration Head Office of Kalimantan Tengah Province. Evidence was seen from copies of limited residence permits cards for two expatriate Malaysian staff issued by the Immigra-tion Office of the Republic of Indonesia. 4. The company revises the wages of their workers in accordance with changes in minimum wage as per decree letters issued by the local government. For example, as seen from sample pay slips, the wages of permanent daily workers was revised to a total of Rp. 1,520,356. This is following the new minimum wage regulation for East Kotawaringin from the governor of Central Kalimantan on November 19, 2009, stating a new minimum wage of Rp. 1,058,838 (for the plantation sector) which shall apply from 1 January 2010 onwards. There is a sand mining activity within PT Kerry Sawit’s areas which is carried out by the contractor, PT Sepindo, where sand is used for the purposes of the company’s internal corporate activities. The com-


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pany has recently completed an environmental impact assessment including sand mining activities and this has been endorsed by the Environment Agency Seruyan District. The company has since applied for a permit for sand mining operations which as yet to be approved as the license approval process by the Indonesian government is a slow process. The company has followed the necessary procedures and meet legal requirements to obtain this license, although it was noted that the company has not paid retribution for ‘Galian C’ type sand mining activities, which is important as part of contribution to local community development, and this was raised as non-conformity under CR6.11. When providing compensation for land owned by the community, the company calculates compensa-tion based on the East Kotawaringin Regency Head regulation No. 316 year 2007 regarding basic compensation price for land and crops in East Kotawaringin. The company has a list of applicable legal requirements. The company updates their list of applicable legal requirements through communication with the government to obtain updates on legal require-ments. This was viewed from examples of recently updated regulations included in the company list of applicable legal requirements, such as updates to regulations from the Ministry of Environment regard-ing management of water pollution control, preparation of manual of environmental impact analysis and requirements for competent authors to document the environmental impact analysis, regulation from the Ministry of Health concerning drinking water quality, and updated regulations pertaining to road traf-fic. The process of updating and maintaining the legal requirement register document is done by the re-lated operational department and document control division. The company has established a mecha-nism for evaluation of applicable law and regulation to be done every 6 months. Evaluation results are documented in the legal requirement register document, as seen for the register of safety and health regulations which reviewed and evaluated in January 2010. The company has established an action plan to comply with certain requirements that have not been met yet. It was observed that the company’s doctor has not yet been sent for Company Hygiene & Occupational health (Hyperkes) training as required under regulation from Ministry of Manpower, Transmigration and Cooperative No. 01/1976. The company already has a corrective action plan by established a training programme and plan to send the doctor as well as company paramedics for Hyperkes training as soon as such training is being conducted by the local government. Compliance status: Compliance with observations

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

Findings: At the time of the main assessment, the land use right certificate (HGU) for PT KSI was not yet issued by the National Land Institution as the company’s application for the change of company name from PT Salawati Makmur to PT Kerry Sawit Indonesia is still ongoing. In addition, the Spatial Management Plan (RTRWP) for Central Kalimantan province is still not completed by the provincial government. This plan will include management of forested areas, and the company needs to comply with this requirement. HGU certificates for the area are only issued by the local government upon approval on the plan, hence, this has also contributed to the delay in issuance of the company’s HGU certificate. However, while the company has yet to receive their HGU, the company was able to demonstrate that they had already gone through the process of application of all other necessary legal documents required to demonstrate land ownership, and this process was explained in detail under Section 1.8.1 (Company’s History). As the delay is caused by the relevant authorities, this was raised as an observation. The company has prepared a monitoring plan to continue following up on this matter and the progress shall be monitored during the next surveillance audit. The company has cases of land disputes with local communities, and maintains records of the dispute resolution process. At KSI 1 there are 4 cases of land conflicts that have not been resolved as agree-ments on a compensation price have not been reached with the relevant parties, but resolution of the disputes is in progress. The land claims made for KSI 1 are as follows:


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- Claim for an area of 6.5 ha at blocks 2T 27-28 by Maswer & Kerry, - Claim for an area of 65 ha at blocks 2T 27, 28, 29 and 3T 30 by Jaelani/ Aji - Claim for an area of 40 ha at blocks 6T 32-34 by Darmani - Land acquisition in 2003, claimaint named Anang Haerun Cs (no specific area coverage). Some ongoing land conflicts at KSI 2 are as follows: - Claim for a total area of 12ha at block 2B 4 (8 ha) and block 1T 55 (4 Ha) by Kusuma Yuda - Claim for area of 2 ha at block 1T 58 by Edo - Claim for area of 70 ha at blocks 3B 57-58 and 4B 57-59 made by Indra Some ongoing land conflicts at KSI 3 are as follows: - Claim for an area of 30ha at block 4B 75-76 by Giaynsyah/ Piyul The company has made efforts to negotiate through formal and informal approach with relevant parties (including government and community) to find a resolution that is agreeable to all parties, including compensation. Some land claims have been accepted but some other still have not been accepted. The company maintains evidence of land dispute resolution processes carried out or ongoing is as follows: 1. There is a meeting minutes of negotiations held on 2 February 2010 at PT Mustika Sembuluh I office with a land claimant, Mr.Indra claiming a land area of 38 ha located within PT KSI II, block 3B 57-58 and another claim of 32 ha within PT KSI area at block 4B 57-59. The land was planted by the com-pany and the claimant was demanding compensation for the original crops. The company has yet to reach an agreement on the compensation amount, and the company has submitted Mr.Indra’s request for compensation amount of IDR 190 million to the management of Wilmar International Group CKP plantation. There some documentation evidence of the negotiation process such as photographs and attendance lists. The company has an action plan for resolution of the dispute and the next scheduled meeting is December 15, 2010. There are maps showing the area of the land claim. 2. There are minutes of negotiations dated 1 December 2010 held at PT Mustika Sembuluh I office, be-tween Wilmar’s Partnership Development or ‘Bina Mitra’ department (which is responsible for all land acquisition process in Wilmar’s Central Kalimantan project) held with another land claimant, Mr. Ahmad Supendi and several villagers of Sembuluh II Village. The location of the land claimed is at PT KSI II, block 3B 58, total for an area of 10.80 Ha which now has been planted with oil palm. For records of the negotiation process, it was seen that both parties discussed and finally agreed on a compensation price of Rp. 22.5 million. There is evidence of the negotiation process such photographs and attendance list. At the time of the audit, the payment had not yet been made by the company. 3. On 3 December 2010, PT KSI received a letter from community groups, chaired by Mr. Nuhranwho claimed that they are the owners of land area located in KSI II which was claimed by the villager Mr In-dra from Sembuluh I Village. The group provided a list of 17 individuals claiming to be owners of the land located at blocks 3B 57.58. This dispute has yet to be resolved as it was raised just prior to the audit, and the company is planning to communicate with the first land claimant to clarify on this matter. 4. There is a letter dated 27 August 2010 from a villager of Sembuluh I village, H. Nurmansyah, asking for land compensation for the land that already planted by company. But the company did not respond to this letter as the claim is not valid anymore since the company has already paid compensation. Ac-cording to interviews with the village heads of Sembuluh I and Sembuluh II, H. Nurmasyah is not the owner of the land but only representative of the owner and the payment was already made by the com-pany to the owner. 5. There are minutes of negotiations for Jaelani’s land in November 28, 2010 for land in block 2T 27, 28, 29 and 3T 30 for an area of 64.49 Ha. The negotiation consisted of 4 stages, where initially, the claimant demanded a price of IDR 90 million, but the company was only capable of paying IDR 65 mil-lion. At the fourth round of negotiation they reached an agreement on a compensation value of IDR 80 million. 6. The company has an official report dated 5 November 2010 on the resolution of a land dispute in-volving two individuals, Armani which claimed an area of 43.94 ha, and Arsiun which claimed an area of 36 ha located within Armani’s claimed area. In this report, it was stated that Armani released the land area of 43.94 ha to PT KSI, but an area 36 Ha in this area was also claimed by another villager, Arsiun. Arsiun did not attend the meeting with the company but Armani agreed to be responsible for his deci-sion to release the land back to the company.


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The company has established a standard operation procedure for all land acquisition and conflict reso-lution process, and all issues are resolved following this procedure. During the time of the audit, it was also found that there are several memorandums of understanding (MoU) between the company and some communities. The MoUs include a statement from company which provides options for people who will not / do not want to release their land rights to the company. They also welcome to conduct activities (such as planting or cultivation of plants or crops) on the land. The documents have been signed by relevant parties and there is photographic evidence of the meet-ings held to discuss and implement the MoU. There are other areas of land within the company’s location which have been enclaved because compensation to traditional owners have not been made yet (where agreed with the claimants) or the communities refuse to take compensation payment. There are 15 enclaved areas located in KSI 1 covering an area of 260.33 ha and claimed by at least 12 individuals, while there are also 15 enclaved locations in KSI 2 which are claimed by at least 17 individuals, and there are 5 enclaved locations in KSI 3 claimed by at least 6 inviduals. The traditional owners of these areas are allowed to carry out their activities in these enclaved areas. As explained in the company’s SOPs for complaint resolution, the mechanism to resolve these issues is to hold meetings with the parties who have made claims. Since the year 2010, the company con-ducts meetings two days in a week on Wednesday and Friday, either at PT KSI office or at the commu-nity location. The results of each meeting are documented and company has developed action plans with targets for resolution of the disputes. Compliance status: Compliance with observations

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

Findings: The company has a MoU document regarding Management of Traditional Rights and Management of High Conservation Value. This document is based on a meeting between PT KSI and community rep-resentatives from each village (Sembuluh 1, 2 and Tabiku Sembuluh). The MoU explain that both par-ties have the right to carry out subsistence activities within PT KSI’s operational area, such as fishing in the rivers, and communities can operate in the land areas that have already been enclaved. In the MoU, it was also agreed that both parties are responsible to protect and maintain the environment. There are records of the negotiation process in which the traditional right to be included in the MoU were discussed, including photos of the meeting held and meeting minutes signed by all parties. There is a map depicting the location of the PT KSI and villages along the territory of their traditional rights. The company provided copies of the documented agrement (MoU) on traditional rights of the communi-ties to the public. Interviews with community shows that the company has already informed the com-munities of their plantation programmes before commencing any operational activities in this region. Compliance status: Full compliance

Criterion 3.1: There is an implemented management plan that aims to achieve long-term eco-nomic and financial viability.

Findings: The company has a long term management plan for a 5 years period i.e. budget for 2010 and projec-tion for 2011 to 2015 with information on this document consisting of company activities such profit and loss information from Total Revenue and Total Operating Cost, including information about gross oper-ating cost, profit/loss before tax and profit and loss after tax. The company has a financial schedule for


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yearly budget. Information on document consist of general routine operational activities such plantation maintenance, harvesting, fertilizer, investment plans such enrichment planting (planting of various plant species to enhance biodiversity), mill activities such FFB processed, projected oil extraction rate (OER) and kernel extraction rate (KER), projected crude palm oil (CPO) and palm kernel (PK) production, CSR programmes and environmental monitoring, HCV management plan and other activities to fulfil RSPO requirements. The company has also developed a medium term plan for a 5-year period (2010-2015), containing information on the budget for each activity (including activities for environmental management programmes and all CSR related expenses, legal compliance and RSPO P & C compli-ance) and revenue from company's production including all company's liabilities. The amount of profit estimated to be achieved each year was clearly calculated, and all information is clearly explained in PT KSI’s projection plan for a period of 5 years from 2010 to 2015. In a cash flow projection document, there is also a plan for 5-year cash inflow from the sale of FFB to another factory because of the surplus of FFB on all 3 estates, sales of CPO and palm kernel sales. The main points of cash outflow is the overall production cost of the estate and the mill include the cost of estate maintenance (susnainability cost), as well as the combination of costs associated with envi-ronmental and social monitoring activities. As the plantation is still new, 2010 was the first year in which the company earned profit because the past years were use for investment and maintainance. Docu-mentation of cost projection for estates and mill are integrated, and the projected financial feasibility of the company for next 5 years based from the current FFB price can be seen from these documents. The company implements a replanting cycle every 25 years, and the company’s plan for a replanting activities will begin in 2028, because the first plantings in PT KSI were in 2003 for for an area of 330.39 ha, while in 2004 the planted area was 2,178.26 ha, and in 2005, the planted area was 2,053.66 ha. The total planted area up to 2010 is 15,614.17 ha. Compliance status: Full compliance

Criterion 4.1: Operating procedures are appropriately documented and consistently imple-mented and monitored.

Findings: The Standard Operating Procedures (SOPs) for estate activities are available as seen in Wilmar International Ltd. Agriculture Manual & SOP for Oil Palm 2007. The SOP covers all estate activities such as pre-development and planning, nursery practices, land clearing and preparation, establishment and maintenance of leguminous cover crops, oil palm planting density and pattern, and maintenance, harvesting, pest and disease management, replanting, and mulching. It was noted that this document is in English, but workers are trained in the SOPs related to their job function, provided with a list of job functions and SOPs related to their job function in Indonesian. Workers are required to sign that they have read and acknowledged the list of job functions received. SOPs for other company activities are also available such as SOPs related to OSH (OSH Committee, Emergency Response Procedures, Accident Investigation, PPE, Risk Assessment, Training, First Air training, etc), environmental protection (Identification of Environmental Aspects and Impacts, Purpose and Targets for Environmental Management, POME management, solid waste management, riparian buffer zone management, management of wildlife etc), and social aspects (prevention of discrimination, complaints procedure for workers, provision of information to stakeholders, etc). SOPs for Kerry Sawit POM is available for all operations, including the weighbridge, operation of sterilizer, loading ramp, thresher, digester, press, vibrating screen, decanter, sludge separator, ripple mill, clay bath, depericarper, kernel, boiler, water treatment plant, and for taking water samples from POME, SOPs for the laboratory and logistics (from reception to despatch of CPO and PK). The person-in-charge of sorting FFB was interviewed on site and found to be following the documented SOP for FFB sortation (SOP/KSYPOM-STS-001). SOP for maintenance of machinery is also available and records of maintenance checks are conducted as required in the SOPs. From site visits to the mill, it was also observed SOPs are displayed at mill stations, e.g. vibrating screen station. Wilmar's Eco Management Unit (EMU) conducts regular audit and monitoring of estate operations and


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produces weekly field audit reports for the estate division and field checked. The weekly audit report includes the list of audit findings and recommendations for improvement for field activities such as FFB grading, manuring. For example for KSI 1 report of period 1 - 7 Nov 2010, findings included high rat infestation of 25-32% (where rat baiting was recommended), and findings that manurers were not wearing suitable gloves during manuring at field 077. Monthly summary reports on manuring quality, FFB grading at mill ramp, and immature areas are also prepared and an annual agronomic report is also prepared, i.e. 4th Annual Agronomic Field Quality Audit Report for December 2009 - KSI 1 including leaf survey, palm status, crop production, 2010 fertilizer recommendations, and RSPO implementation progress. A similar report is available for KSI 2 and KSI 3. The mill has a OSH/EHS officer which conducts visual checks on the condition and function of mill stations once every 3 months, i.e. for 5 August 2010 and 18 November 2010 where checks were conducted for the boiler, diesel motor, sterilizer, and there are also daily maintenance reports on the condition of mill machinery where repairs are needed. However, there were no records of internal audits to ensure that the mill's SOP is followed. All estates maintains monthly reports of harvesting statistics and other operational results as required in their SOPs, which includes data on the amount (tonnes) of FFB harvested from each estate block, no. of bunches harvested, average bunch weight and yield per ha. The estates also maintain records of amounts of chemicals used each month (recorded in 'Agrochemical Use Summary' for each year). The mill maintains records of operational results as required in their SOPs, examples as follows: - Daily records of FFB received from all estates (KS1, KS2, KS3, Sarana Titian Permata (STP) 1, STP2, STP3, Mustika Sembuluh (MS)1 and MS2), - Monthy summary report including oil extraction rate (OER) and kernel extraction rate (KER) data. For Jan to April, OER was between 22.13 to 23.53% while KER was 3.46 to 4.44%. - Monthly FFB grading summary reports. - Daily crude palm oil (CPO) and palm kernel (PK) despatch records made to their purchaser, PT Sinar Alam Permai - CPO quality reports (FFA, moisture and dirt content for CPO despatch). Compliance status: Non-conformance no. 1 of 7 The mill has no records of internal audits to ensure that the mill's SOPs are followed.

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

Findings: Leaf nutrient analysis is conducted annually and fertilizer recommendations report for each respective estate are prepared based on analysis results, while visual analysis results are documented for each estate. Annual reports are prepared by the Eco Management Unit (EMU) of Wilmar and last report for KSI 1 was produced in December 2009 while last report for KSI 2 & 3 was combined and produced in January 2010. Each annual report includes a summary of findings and recommendations. For example, From the 2009 report for KSI 1, it was noted that overall nutritional status in KSI1 has improved in the past year, except for many suboptimal levels of nitrogen (N). A detailed soil analysis was conducted for all Kerry Sawit estates by Param Agricultural Soil Surveys Sdn. Bhd. in June 2007. The report includes a soil survey, where 13 soil series were mapped, consisting of well-drained soils (Tebok, Rasau, Kechor, and Nangka series), imperfectly drained soils (Gong Chenak, Bukit Tuku, and Banar series), poorly drained soils (Kampong Pusu, Cherang Hangus, and Lunas series) and sandy soils (Buso, Miri and Serai series). The Bungor and Banar soil series were sampled for soil analysis and the soil samples were found to generally be of low fertility. The company prepares reports on implementation of their environmental management and monitoring plan (RKL & RPL) to the government every 6 months as required by law. However there is no evidence that measurement of soil chemical parameters has been conducted and reported in the most recent report for 2010, although it is stated in the company’s RKL & RPL document that this is required to be done annually. The last measurement was only done in June 2009.


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All estates maintain soil fertility through fertilizer applications as well as land application of EFB. The estate has a system to monitor whether actual fertilizer applications meet recommended fertilizer applications. It was noted for KSI 3 that actual applications did not match recommendations for 2010, and according to estate representatives, early applications are due to excess stock while late applications were due to lack of manpower. KSI1 also has targets to carry out plantings of leguminous cover crops (LCC) in 2010 for 78.60 ha of block no. 220 which is a sandy area where planting was carried out in year 2010, however actual area planted with LCC so far is only 29.70 ha. All estates maintain records of EFB applications, and planned EFB applications, although it was noted that actual EFB applications are not in accordance with recommendations. It is estimated that at least 24,000 mt of EFB is required by KSI1 for application at the planted sandy area which covers 977 ha. Based on records of EFB applications from Jan to April 2010, the total EFB application for the sandy areas is only 3,394.84 MT, which is lower than the recommendation. Records at KSI 2 and KSI 3 estates show a similar issue and it was explained by management that this issue was due to lack of manpower and resources to tranport EFB for application to fields. This was noted as an opportunity for improvement that all estates should try to meet the standard for application of EFB recommended by the in-house agronomist. Compliance status: Non-conformance no. 2 of 7 Annual soil chemical parameter analysis for year 2010 was not conducted and reported in the company implementation progress report for 2010 as required by the company’s approved environmental management and monitoring plan (RKL & RPL).

Criterion 4.3: Practices minimise and control erosion and degradation of soils.

Findings: The company has a detailed soil map showing gradients and all soil types within all 3 estates, done by Param Agricultural Soil Surveys (M) Sdn. Bhd., dated June 2007. Marginal soils identified include sandy soils and peat, as described below: - Shallow dark brown to white sand of the soil series Buso which covers area of approximately 2521 ha (13% of total area) - Moderately deep brown to light grey sand of the soil series Miri which covers area of 773 ha (4% of total area) - Deep light grey white sand of the soil series Serai which covers area of 46ha (0.2% of total area) - Shallow to moderately deep organic soils of the soil series Gali which covers total area of 483.3 ha (2.5% of total area) - Organic clay muckcovering area of 195.4ha (1% of total area) Soils are classified as level (0-4%) or undulating (4-12%) or rolling (12-24% slope, approximately 1% of estate area only) The company has marked observation points in KSI 3 to monitor the subsidence of peat soil within the company’s area, where the largest area of peat is located in KSI 3. From the results of monitoring of peat soil subsidence, it can be seen that the subsidence level of peat at the observation point 083 at KSI block 3 in November 2010 reached a decrease of 2 cm when compared with previous measure-ments, but for the other observation points, there were no changes in peat subsidence levels. As one mechanism to prevent the decline in water level of peat, the company has made weirs to trap water to ensure that the flow of water in the estate canals conditions is maintained at a certain level. The company also conducts monitoring of water levels on a daily basis, such that the average height is maintained at around 35 cm from the water table (measuring instrument), although this level is still be-low the standard set by the company which is 70cm. However, asides from peat subsidence and a decrease in water level, PT KSI has not measured other parameters of the peat soil area as required by Government Regulation No. 150, 2000 which states a requirement that the pH, pyrite content, electrical conductivity and other chemical parameters of the peat are also monitored. Compliance status: Non-conformance no. 3 of 7


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PT KSI has not measured other parameters of the peat soil area as required by Government Regula-tion No. 150, 2000 which states a requirement that the pH, pyrite content, electrical conductivity and other chemical parameters of the peat are also monitored.

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

Findings: The company has identified all streams that flow inside of estate area and created a riparian buffer zone management programme, which will be conducted for 3 years from 2010 until 2012. There are no large rivers in the area of PT KSI, wide river ranges from 5 to 10 meters. KSI 1 is the only estate with natural streams (KSI 2 and 3 only has small canals) and KSI 1 has a plan for protection of river riparian buffer zones along natural streams through felling of oil palm trees adjacent to these natural streams and replanting the buffer zone areas with leguminous cover crops (LCC), as well as building of weirs at canals flowing into rivers, in order increase the retention time of canal water potentially contaminated with chemicals or surface run-off into main streams. According to the Weir Building Plan for KSI 1 in Dec 2010, it was planned to build 144 weirs but only 82 has been completed so far. The other estates have a similar plan. All estates also have a plan to remove oil palm trees located 2.5 m adjacent to the river/canals to be replanted with woody species such as Melaleuca sp. For example, from KSI 1’s plan, a total of 4,638 oil palm trees are planned for felling but to date, 3,738 trees have been felled. Field ob-servations showed that oil palm trees located at riparian buffer zones of blocks 1/2010/B KSI, and KSI3/2010/A have been marked and are in process of being felled. It was observed at the main stream at Block 1T31 that an area of approximately 5m width of both stream banks has been planted with LCC to reduce chemical contamination. Buffer zones are also marked, and KSI1 has a plan to complete 1907 markers by December 2010, and 1607 have been completed. Use of chemicals for spraying weeds at palms adjacent to streams is prohibited, although the company does carry out manuring and spraying activities at oil palm plants located adjacent to collection drains. The company has established an SOP for riparian belt management. It is stated in the SOP that riparian belt management will conducted in 3 stages: 1. Short term management from April 2010 - April 2013, which includes preparing buffer zone markers/ signs throughout stream buffer zones, ceasing of all chemical application at stream riparian buffer zones, removing all crops within less than 2.5 M from streams or canals, conducting necessary training twice in one year for all employees, and conducting water sampling and analysis. 2. Mid-term management (April 2013 to April 2014), which conducting an evaluation of riparian buffer zone management activities that have been done in the first 3 years and preparing action plans in ac-cordance with the results of the evaluation. 3. Long-term management plan (5th to 10th year), which includes planting of suitable timber species in the riparian belt areas according to plan. Stream water quality monitoring is conducted at three points,i.e. sampling point 1 in block 121 (KSI 2), sampling point 2 in 097 blocks (KSI 2) and sampling point 3 in blocks 8 (KSI 3). Surface water quality analysis has done by independent laboratories, i.e. PT. Unilab Perdana as recorded in the water quality monitoring result on July 2, 2010. All estates have an Environmental Management Activities Programme and Plan (Objectives and Targets) for year 2010 which includes a plan to reduce usage of water for spraying through replacement of old sprayer nozzles with more water-efficient nozzles and recording amount of water used for spraying, e.g. for KSI1, there are records that 20 old sprayers nozzles with water usage of 138 litres/ha were replaced with 20 sets of more efficient nozzles with water usage of only 75liters/ha. The programme for all estates also includes plans to enhance the cleanliness of water sources used by the workers by installing water treatment units at the water sources (wells, and pond pumps) and conducting analysis every 3 months of the water quality resulting from the water treatment. First water analysis results for 11 water samples from housing areas from all estates are available and dated 9 May 2010, and no significant water quality issues were found. The estates maintain daily records of water usage at housing areas as well as records on estimated amount of water used for chemical mixing and washing of sprayers's PPE. This water is recycled to be reused for spraying.


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The mill has a documented water management plan which states how water usage is measured in the mill (using flow meters) and also steps taken to ensure quality of water, i.e. water treatment by separation of suspended soils/dirt and microorganisms through coagulation, flocculation and settling. The plan includes a schedule of activities to manage water efficiently by constant checks of mill pipes for leakages, installation of propil ball blocks and water flowmeters at housing areas to control water usage, and having training on reduction of water usage at housing areas. The mill carries out land application of palm oil mill effluent (POME), and PT KSI’s environmental division conducts sampling of effluent BOD once a month for discharge points as well as monitoring wells. POME analysis is conducted by the Banjarbaru Technical Station of Environmental Health and Prevention of Contagious Disease and analysis results available e.g. 27 Oct 2010, 27 Sept 2010, 23 August 2010 and 30 July 2010. The results for all months showed BOD levels from samples were well below the legal requirement for land application (5000ppm) as per regulation KepMen LH no. 28 Tahun 2003 regarding technical guidelines for study on utilization of wastewater from the palm oil industry to soil, i.e. for 27 Oct 2010, BOD was 1424.5; for 27 Sept 2010, BOD was 956.9; for 23 August 2010, BOD was 2149.8 and for 30 July 2010, BOD was 672.0. The mill also conducts water sampling and analysis of the monsoon drain water against parameters for clean water as per the regulation from the Health Ministry, no: 416/MENKES/PER/IX/1990. Last analysis results are available for 19 May 2010 and it was found that opacity was 27.2, which is over the legal limit of 5. The mill has done treatment of the water to reduce the opacity and has recently conducted water analysis in Nov 2010, but results are still pending. This was raised as an observation. The mill records daily water usage per tonnes FFB for process, and the mill has a standard for water usage which 1.5 tonnes of water per tonnes of FFB processed. Data on water usage at the mill shows that the mill exceeded their target for water usage in June (1.8 tonnes of water used per tonnes FFB processed), July (1.7), Nov (1.7), and this was due to the mill using water for cleaning. Compliance status: Compliance with observations

Criterion 4.5: Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

Findings: The company has a documented SOP for Detection and Census of Oil Palm Pests and Diseases. The SOP is in Indonesian language and includes a detailed flow chart on the Procedure for Census and Management of Rats (incidences of rat attacks in KSI1 are highest compared to other types of pests in the estate). The SOP refers to Wilmar's Agriculture Manual and SOP Procedures for Oil Palm (2007), Chapter 8 - Plant Protection - Pest & Disease Management. All estates also have a documented IPM programme which includes a schedule for planting of the beneficial plants, vertiver grass (to reduce erosion) and turnera subulata (a plant which attracts natural predators of leaf pests), at each estate division and the area to be planted. All estate maintain monthly records for Progress of Planting of Beneficial Plants as part of their IPM programme, where records of areas where plantings are recorded, i.e.,there ara records of plantings of turnera subulata in August 2010 at KSI 1. From site visits, it was observed that turnera subulata have indeed been planted along most areas of the estates. All estates maintains records of IPM implementation with records of census activities conducted to determine attacks of pests such as bagworms, nettle caterpillars, rats, termites, ganoderma, rhinoceros beetles and wild boars. Census records for each month of 2010 and 2009 show no attacks of termites, ganoderma, rhinoceros beetles and wild boars, and low infestations of bagworms and nettle caterpillars each month (less than 5 per frond, if any), so no chemical control for these pests have been used for more than 2 years (it was verified through checks of chemical issuance records that no chemicals for control of nettle caterpillars/ bagworms was issued). However, rat attacks are more common, so the rat bait Petrokum is applied to reduce rat infestations but applications are carried out only based on census results showing high levels of rat attacks, and not as prophylactic applications. The company has a plan to reduce usage of Petrokum as it contains the active ingredient brodifacoum (a WHO Type


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1A chemical) through the use of barn owls, and the plan shall be implemented in 2011. All estates have records of IPM Trainings conducted for relevant staff. The training agenda includes methods of conducting census for rats, bagworms & nettle caterpillars and termites, programme for planting of beneficial plants. The training records include attendance lists, some records includes photos of the trainings and training materials used. All estates conducts monitoring of pesticide toxicity units (a.i. per tonnes of FFB as well as a.i. per hectare) for all chemicals used in the document Agrochemical Usage Analysis. Analysis data is available for year 2008 to 2010. Compliance status: Full compliance

Criterion 4.6: Agrochemicals are used in a way that does not endanger health or the environ-ment. There is no prophylactic use of pesticides, except in specific situations identified in na-tional Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

Findings: The company uses only agrochemicals which are registered under the Department of Agriculture Indonesia (Indonesia Commission of Pesticides). The company has a list of all agrochemical used and their active ingredients, including herbicides, fungicides, insecticides, rodenticides and surfactants. This list of agrochemicals used is in accordance to the list of approved agrochemicals issued by the Seruyan Government Office of Manpower and Transmigration. However the letter does not include Benlox 50 WP (a fungicide) and Agrimec 18 EC (an insecticide), which is included in the company’s list of agrochemicals used. As explained by PT KSI staff, Benlox 50 WP has the same active ingredients as Benlate SP and Agrimec 18EC is no longer used in 2010. The company has submitted their applica-tion letter for registration of their chemicals to the Seruyan Government Office of Manpower and Transmigration, and an approval letter was received from the Office of Manpower on 24 May 2010, for 11 types of agrochemicals. Data and analysis on usage of all agrochemicals is available for each estates and the company has documented justification for agrochemals used. The analysis include data on active ingredients used, area treated, amount applied per ha and number of applications. The recommended chemical dosage is described on the label of packaging chemicals. Chemical appli-cations are carried out according to recommended applications as per the label, as well as in line with company guidance on Wilmar International Ltd. Agriculture Manual & Standard for immature and Ma-ture Plant. For example, for recommended dosage for Glisat as per the product label is 1.5 to 6 l/ha depending on the type of weeds, while the company’s manual states a mixing dosage of 100-120 ml/15 liters of water for plants 4-5 years. The company also has a standard dosage for use of herbicides for circle & path spraying, which is 0.41 litres / ha. From these data, it can be seen that the PT Kerry Sawit’s usage of chemicals is less than the recommendations as per Wilmar’s manual and product la-bel, as part of the company’s efforts to reduce chemical usage. Chemical mixing is carried at a warehouse by trained personnel, using standard measuring equipment. Spraying is done by trained sprayers who have already received relevant training. Identified agrochemical wastes include empty chemical containers, used PPE and clothing contami-nated with agrochemicals. General management of agrochemical waste is based on the company’s SOP on the management of hazardous wastes, SOP for washing of used chemical and fertilizer con-tainers, and management of water used for washing PPE. According to the SOP, empty chemical con-tainers are washed as much as 3 times before being stored in temporary store for hazardous wastes before being collected by a licensed contractor for hazardous waste collection. Some empty containers are triple rinsed and reused to store water used for chemical mixing while in the field while some are used as waste rubbish bins in the housing area. PPE and recycled chemical containers are stored in


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PPE warehouse. Waste water generated from PPE washing are collected, and reused for agrochemical mixing in the filed. The company provides a shower room for all workers, especially for sprayers. For example there are three female shower rooms, 2 shower rooms for men and 1 toilet in the east bunk-house of KSI 1. Information on the amount of agrochemical containers collected by contractors or re-used in the field is described in the monthly report of hazardous waste production for PT. Kerry Sawit Indonesia. The estates are no longer using chemicals containing paraquat, but are using Petrokum (rat bait) which contains the active ingredient Brodifacoum, which is a WHO Type 1A chemical. However, after a rec-ommendation from KSI management was issued, the usage of this chemical is now very limited. Petro-kum is only used in incidences of high rat attack, and not routinely applied. The company has efforts to enhance biological control of rats in order to reduce chemical usage, such as use of barn owls. As de-scribed under CR4.5 findings, the company plans to use barn owls from the beginning of 2011 on-wards.

Medical check ups for the sprayer and fertilizer carried out routinely every 6 months starting since July 2009, e.g. Medical check records are stored at the clinic of KSI and as seen from records of medical treatment of four workers at KSI II, the last medical check took place on 22 December 2009. 2. Medical checks only cover physical checks of eyes, heart rate and skin condition, but does not include blood tests and urine tests. Blood tests (to measure cholinesterase in blood) are planned to be conducted for next pe-riod of medical check ups. Currently the company’s clinic at CKP (Central Kalimantan Plantation) has just obtained new equipment to measure blood cholinesterase levels and company paramedics/nurses are being trained to use the tool kit. At KSI 1 there are 204 sprayers and manurers, and sample medical re-cords of 8 people who have undergone medical checks were viewed on-site. Records show that medical checks were performed in July 2008, then December 2009, April 2010. The company does not employ pregnant and breastfeeding women to conduct agrochemicals applica-tion work such as spraying. Female workers involved in chemical application who are pregnant and breastfeeding are transferred to other types of work. Evidence of this was seen from records of a preg-nant female worker in KSI 2 estate who was transferred to perform slashing work based on company the letter no. SK / KSI 2/0310/2332 dated 01/05/2010. Compliance status: Compliance with observations

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

Findings: PT Kerry Sawit Indonesia has a documented policy for occupational health and safety that was signed by Mr. Goh Ing Sing as Group Plantation Head and last reviewed on September 2010. The policy has been communicated to all employees, e.g. through posters, company regulations book, etc. The policy is also applicable to all contractors performing work for the company. The company assigned a person who is responsible for health and safety programmes for the estate, as required by the Head of the Social Service Manpower and Transmigration Seruyan District. The company assigned the secretary of the OSH committee as their OSH expert and this appointment was approved by the Director General of Manpower Development and Monitoring. Each estate and the mill has its own OSH comittee. The company holds regular meetings regarding OSH every 3 months and this is reported to the head of manpower institution, as seen from records of OSH meetings held for period of June to March 2010 and the report for 1st quarter of 2010. The company provides Social Security insurance (JAMSOSTEK) for permanent daily workers, both at the estate and mill, which covers accidents and annuity. The company also provides accident insur-ance for temporary workers under JAMSOSTEK, with evidence in the form of a valid Jamsostek card for all existing employees and workers. Insured workers involved in accidents are treated for free. For example, a worker who suffered a knee injury during work-related accident during the 1st quarter of 2010 obtained free treatment form Jamsostek.


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Regular health examinations of workers are conducted once every six months. There are records of medical check ups conducted for sprayers and mill workers. Audiometric tests have also been conducted for mill workers who work at noisy areas of the mill. The last audiometric test was conducted on October 2010 by an external party, i.e. the Samarinda Manpower Training Department (East Kalimantan). An occupational safety risk assessment for all work related activities was conducted by the company, documented and dated January 5, 2010. It was found that the risk of working on rainy days (harvesting) has not included in the risk assessment, however company has provided a procedure for carrying out work during rainy days as stated in company SOP 39/HRD / (0) / 0409. Appropriate controls have been identified for all risk-related activities, such as for spraying, manuring, welding, agrochemical mixing, and preventive maintenance. The company also provides first aid equipment, and free milk is given to all workers handling chemicals (milk serves as a binding agent for chemicals and reduces the effects of chemical absorbed in the body). OSH training is conducted regularly for all employees and contractors. An OSH training schedule for employees is available in each estate. For example, for KSI 2 estate, OSH training is conducted rou-tinely for spraying, manuring, harvesting and slashing workers. Records of training conducted are available and are stored in the office estate, e.g. OSH training in division E KSI 2 estate sprayers was done on April 2010. An accident and emergency preparedness procedure is available in each estate, and covers land burn-ing and fires in the office and housing areas. There is also a procedure for dealing with chemical and oil spills. The mill also has an emergency response team and emergency response procedure (ERP), however records show that ERP simulations are not conducted on a regular basis. To ensure that the procedure is effective, the company should conducted periodic simulations for emergency response and preparedness. This was raised as an observation. Personal Protective Equipment is provided by the company to be used by workers according to the type of work done by the workers and identified risks. For example, all sprayers are required to wear rubber boots, goggles, aprons, masks and rubber gloves, manurers are required to wear aprons, masks and rubber gloves and harvestors are provided with PPE such as helmets, boots and gloves by the company. The PPE is provided free by the company, as confirmed through on-site interviews with the workers. The company also provides a first aid room, safety shower, and eye wash facilityin the mill as required by a decree from the Minister of Manpower and Transmigration no. Per-15/MEN/VIII/2008 regarding first aid facilities. First aid kits are available throughout the estates and mill i.e. for KSI1, first aid kits were available at the estate office, chemical store, and genset, while at the mill, first aid kits were available at the workshop, near the sterilizers and oil room, and FFB tranport truck drivers are also required to carry a first aid kit. Most of first kits equipment are well maintained. During field visits to the housing area of the contracted workers from the contractor CV. Sabindo, which carries out sand mining work at the sandy areas of the estate, it was found that the contracted workers do not equip their trucks with first aid kits, fire extinguishers or safety triangles. No PPE is provided for these contracted workers. Compliance status: Non conformance no. 4 of 7 The sand mining contractor for the company, CV. Sabindo, does not equip the trucks of contracted workers with first aid kits, fire extinguishers or safety triangles. No PPE is provided for these contracted workers.

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

Findings: Training programmes for the whole year are available at each estate. For examples, training records were viewed for KSI 2 estates so far in 2010 for topics such as: • Harvesting Best Practices Training conducted for the harvesting workers • FFB loading training • Training for sprayers (spraying techniques


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• Introduction to Common Plant Pests • Induction trainings for new employees The company provides Best Practice Agriculture trainings for all new employees as seen from training records for 12 Sept 2010 and refresher training for existing employees, e.g. training on 09-11-2010. Records of training such as a training attendance lists are stored at each estate, including the training history for each worker. The mill also conducts training programmes for year 2010 as recorded in a Matrix Training Programme, and includes trainings programmes such as trainings on SOPS, environmental management and OSH. It was seen from sample training records that KSI mill management provided a training on April 19, 2010 on the mill SOPs for certain processes (e.g. SOP for operation of the loading ramp, FFB sorta-tion, sterilizer, thresher, digester, press, vibrating screen, decanter, ripple claybath mill, etc) and this training was attended by 30 participants. Another training on the mill’s SOP for sterilizer operation was held on 12 April 2010 and attended by 4 participants. The company hires contractors for land clearing and housing construction and provides training for these contractors in RSPO and OSH requirements. There is evidence of training conducted at PT KSI office on 24 May 2010 for at least 3 contractor companies. The contractors are also required to abide by the company’s RSPO, environment protection and OSH requirements as stated in the letter of commitment provided to all contractors and contract between the contractors and the company. Evi-dence of this was seen from a sample contract between PT KSI and a contractor, CV Handika, dated August 2, 2010. In clause 8.6 of the contract, it is stated that contractors shall follow all regulations / re-quirements related to RSPO, JAMSOSTEK, OSH and environment protection. However, it was ob-served through field visits that these terms were not followed consistently by some contractor, such as failure to provide appropriate PPE to workers (described further under CR4.7) and improper waste management (described further under CR5.3). The company should constantly remind contractors to ensure they meet these requirements. Compliance status: Compliance with observations.

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

Findings: PT. Kerry Sawit Indonesia has an approved environmental impact assessment (EIA) or AMDAL docu-ment based on the approval from the Minister of Agriculture and permit no. 86 / 2003 approved for an area of 19,200 ha of approval of Location Decision and for a mill capacity of either 45 or 90 tonnes on 28 June 2008. The company also has an environmental management and monitoring plan (‘Rencana Pemantauan Lingkungan’ - RPL / ‘Rencana Pengelolaan Lingkungan’ - RKL) prepared based on the AMDAL document as required by Indonesian law. Reports on implementation of the RKL and RPL documents are prepared and reported to Environmental Body of Central Kalimantan once every 6 months as required by law. As seen on-site, reports on implementation of the RKL and RPL were avail-able for Semester I 2009 (January to June 2009) and Semester II 2009 (July to December 2009) and both reports were sent to the environmental department, with evidence of receipt of the reports. At the time of the audit, the most recent RKL & RPL Report and Environmental Monitoring Program for Se-mester I of year 2010 (January to June 2010) was made in July 2010. In addition to the EIA, the company has also identified and evaluated the environmental aspects and impacts for all plantation activities (e.g. spraying of herbicides, fertilizer application, EFB applications, receiving and storing chemicals, workshop activities, sand mining and clinic). It was found that chemical parameters analysis for soil quality monitoring are not monitored and ana-lysed by the company as required in the approved environmental monitoring plan. The last soil quality montoring was conducted on June 2009. The company’s management explained that the management decided that soil quality analysis would only be conducted once every 5 years, due to high cost of soil


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survey. However, as this is a requirement under the company’s RKL/RPL document, this was raised as a non-conformity under CR4.2. It was also found from test results from the Banjarmasin Laboratory dated March 4, 2010 on environ-mental parameters monitoring result for Semester 1, 2010 that analysis results for ambient air quality (for location in front of the estate mosque) was 190.8 microgr/Nm3, which exceeded the defined stan-dard of 160 microgr/Nm3. Analysis results for dust levels at the workshop area were above 236.47 ppm, which was also above the defined standard of 230 ppm. However, after the company conducted re-monitoring for all environmental parameter on October 2010, it was found that these parameters were within the defined government standard. There has been no revision of the company’s AMDAL or environmental management and monitoring plan (RKL/RPL) at the moment since there has been no change in the company’s operating areas or activities. Compliance status: Compliance with observations

Criterion 5.2: The status of rare, threatened or endangered species (ERTs) and high conserva-tion 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.

Findings: Identification of protected, rare and endangered species flora and fauna including their habitat and High Conservation Value areas in PT Kerry Sawit Indonesia’s area was conducted by a Malaysian environ-mental consultant. The assessment was conducted in 2008 and integrated with the assessment of other plantations in the Central Kalimantan Project. However as some information that was used by consultant was old data, some information is no longer valid and the company decided to perform a reidentification and reassessment by the company’s staff. The results of this assessment is that 3 types of HCVs were identified in 3 estates, and some protected mammal and bird species were found , as well as some unprotected bird species. Another wildlife survey in PT KSI’s area was performed in con-junction with preparation of the company bi-annual environmental monitoring report, hence the wildlife assessment results could be seen in the company’s RKL & RPL report for the second half of 2009. Here it was reported that several species of mammals and 32 species of birds were also identified, in-cluding 3 endangered species which are included in Appendix II of CITES. At least 12 rare species of plants were also identified within the working area of PT KSI. These tree species grow in the forested areas of PT KSI land with generally consist of secondary forest and also under the traditional rights of the communities. Hence the company enclaves these areas for conservation purposes. Based on the assessment results, some HCV areas and potential HCV areas were identified in all com-pany estate areas, as follows: - HCV 3, HCV 4.2 , HCV 4.3 , and HCV 5 areas were identified in KSI 1 - HCV1.3, HCV 3, HCV 4 areas were identified in KSI 2 - Only a HCV 4 (riparian zone) area was identified in KSI 3 All of the remaining forested areas located within PT KSI’s land (as defined in the company’s location permit) do not fully belong to PT KSI as local communities also have traditional rights and ownership over these forested areas, which include most of the identified HCV areas. Only a small part of the company’s area are, which is not owned by any local communities, was identified as a HCV areas and can be fully managed by PT KSI. These include KSI 2 block 059 and block 069 which will are water catchment areas and wetland areas of Pukun river, as well as block A20 of KSI 1. A management and monitoring programme for locations that have been identified as HCV areas has been made for each of identified HCV areas. Measures taken for protecting species and their habitats were defined for identified HCV areas, and steps for implementation was reported in the company’s HCV Monitoring report KSI DIA/001/032/008 dated March 8, 2010. However, measures have not been


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taken to protect species of fauna / flora as well as habitats categorized as rare/endanger/protected that were found in some remaining forest areas of PT KSI. The company’s management plan should be im-proved to include further details on the company’s plan to protect these additional HCV areas. As found through interviews with some harvesters at KSI 1 and female sprayers at KSI 2, it was in-formed that management prohibits hunting of animals, while fishing is allowed but not using poison. Posters and sign boards prohibiting hunting of animals and fishing using poison are available and lo-cated at strategic locations, such as river boundary and at defined HCV areas. PT KSI has appointed several personnel responsible to conduct HCV monitoring activities at each es-tate, and there is evidence that these personnel were trained in HCV monitoring, as seen from Minutes of the Implementation, Monitoring, and Training on HCV and sample training certificates. Compliance status: Compliance with observations

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

Findings: Wastes produced as part of the company’s activities are identified as part of the company "Environmental Aspects and Impacts Identification” document. Domestic wastes from housing and offices are separated into recyclables wastes and non-recyclable/organic materials. Non-recyclables and organic waste are sent to landfills which are available in each estate, while recyclables and hazardous wastes are collected by contractor and the company maintains records of amounts collected. The landfills are located at least 300m from housing, at least 200m from waterways (rivers or streams), and are dug at least 1.5m deep with 2x9m dimensions as stated in their SOP for domestic waste management. Once full, the landfills are closed. The mill has a proper store for hazardous wastes, while palm oil mill effluent (POME) is utilized for land application and not discharged to any river or water sources. The company only commence their land application in 2009 on a trial basis ,and have applied for the approval of their license for land application on a permanent basis l (explained under CR2.1). The company has performed the required steps to meet the requirements for obtaining license for land application of POME. A feasibility study for land application was carried out by the Seruyan Government and report on the study was documented. In addition, soil analysis has been conducted to ensure that soil is not contaminated by mill effluent, conducted by the Banjarbaru Technical Department of Environmental Health and Prevention of Contagious Dieseases, South Kalimantan PT Kerry Sawit Indonesia has a licence for temporary storage of hazardous wastes which was issued by the Seruyan Government and is valid for 5 years. The company also sends reports on their hazard-ous waste inventories to the Seruyan Environmental Department once every three months, and sam-ples reports for April 2010, July 2010 and October 2010 were sighted. Hazardous wastes are collected by a licensed contractor, CV Nazar, and the company has a copy of the contractor’s waste collection permit no. 122 year of 2010 issued by the Minister of Environment. Hazardous wastes collected by the contractor include used oil and lubricants as well as empty agrochemical containers, as seen from waste collection records dated 12 October 2010, the contractor collected agrochemical containers amounting to 3875 used containers of various types of agrochemicals. However, it was stated in CV Nazar’s permit for waste collection that the company is permitted to collect only used oil and residues, but not any other types of hazardous wastes such as agrochemical containers. There were also no official manifest records of of the hazardous wastes collected by the contractor on 12 October 2010. It was also found that the mill only maintains inventories of used oil, but not for other types of hazardous wastes produced. From site visits to housing, poor management of hazardous wastes was observed. At the waste collection area of the east bunkhouse housing area of KSI 2, hazardous wastes were placed at uncemented area (high risk of soil contamination). At the housing for contracted workers from CV Handika located at the east bunkhouse of KSI 2 estate, it was also observed that workers dispose all wastes, without segregation, behind the construction area instead of at the proper garbage disposal


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area. This is against the company’s SOP regarding segregation of waste and disposal in the proper disposal area. At housing for CV. Sabindo area, the sand mining contractor for KSI 1, evidence of oil spills contaminating soil was also found at the generator located near the housing. Compliance status: Non-conformance no. 5 of 7 1. The company’s contactor for collection of hazardous wastes is collecting empty agrochemical containers but only has a permit allowing collection of used oil and residues, not collection of other types of hazardous wastes. 2.There is evidence that the company does not properly maintain manifests of hazardous wastes collected, i.e. there is no manifest of the hazardous wastes collected by the contractor on 12 October 2010 3. The mill does not record input and output of all hazardous wastes produced, except used oil. 4. There is evidence of poor management of domestic and hazardous wastes at housing areas, with evidence as follows: - At the waste collection area of the east bunkhouse housing area of KSI 2, hazardous wastes were placed at uncemented area (high risk of soil contamination). - At the housing for contracted workers from CV Handika located at the east bunkhouse of KSI 2 estate, workers dispose all wastes, without segregation, behind the construction area instead of at the proper garbage disposal area. This is against the company’s SOP regarding segregation of waste and disposal in the proper disposal area. - At housing for CV. Sabindo area, the sand mining contractor for KSI 1, evidence of oil spills contaminating soil was also found at the generator located near the housing.

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

Findings: PT KSI mill utilizes shell and fibre to fuel the boiler as a source of renewable energy. Boiler will produce heat as energy resource to operating mill machines as required. The mill maintains records of calculati-ins of renewable energy produced from shell and fibre. Calorific value calculation to date in PT KSI mill for 1 kg of fibre is 2,305.87 kcal while calorific value from 1 kg of shell is 3,475.36 kcal. For a production capacity of 45 tonnes / hour of steam, the amount of steam required to produce one tonnes of CPO is 15 steam / hour (using a boiler capacity of 30 tonnes / hour) and the amount of renewable required to produce this was 1,358,300 kcal (816,625 kcal from shell and 541,675 kcal of fibre). To produce one tonnes of kernels, 274,550 kcal is needed (165,062 kcal from shell and 109,487.5 kcal of fibre). The average monthly usage of shell for 4 months production was 1,003,678 kg and average monthly fibre usage was 3,763,796 kg. The estate maintains records of fossil fuel usage for analysis and utilizes Petro 4 as fuels for vehicles and heavy machinery. Every estate maintains reports on monthly usage of Petro 4 and FFB generated. PT KSI mill also maintains records of fossil fuel usage for analysis. From records, the average fossil fuel usage per month is 3555 litres per month or a total of 39,107 litres from January until November 2010. The fossil fuel used is diesel fuel, which is used for start up of mill machines or for maintenance activities. The mill maintains calculations of estimated cost of fossil fuel purchases and estimated price of renewable energy used, and mill data shows that renewable energy usage is estimated to comprise about 80% of the mill’s total energy usage, as part of efforts to maximize usage of renewable energy as opposed to fossil fuels. Compliance status: Full compliance

Criterion 5.5: Use 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 practice.

Findings: The company has a zero burning policy as documented in the company's Environmental Management


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Policy dated August 2008. Therefore the company has not used fire in preparing land for replanting. SOP for Land Clearing is also available which states that burning of felled trees and other biomass, as well as land clearing of areas adjacent to rivers is not permitted. The SOP states that land clearing is to be done through felling, pruning and stacking followed by development of proper drains and roads and development of nursery as well as locations for offices, housing and other buildings. The company hired a contractor, CV Maju Bersama to conduct land clearing activities for the company e.g. documented work contract for KSI 1 dated 11 March 2010 for work until 31 December 2010, including activities such as underbrushing, felling, stacking, drainage, and road formation. It is also stated in the contract that land burning is prohibited and the contractor must use machines to conduct land clearing activities as required by KSI management. Records of land clearing activities carried out in each estate are documented monthly in 'Flash Report - Status of land Clearing', e.g. in November 2010, 19.35ha of land area was cleared. Harvesters interviewed at KSI1 were informed by KSI management that land burning and burning of wastes is prohibited by the company. There are also signs put up around various areas stating that land burning is not permitted. The company has a documented emergency procedure for land and forest fires, dated April 2009. The procedure states that any incidents of fire must be reported immediately to management, with full description on the intensity and threat of the fire. The Group Manager will then decide on the appropriate mesasures to address the problem, while small fires can be attempted to be put out by beating the fire or moving away flammable objects. An emergency response team for each estate has been established. Records of training on emergency response procedures are available, e.g. at KSI 3 a fire drill and training on usage of fire extinguishers was held on 25 Nov 2010 for 24 staff as well as on 18 May 2010 for 14 staff. It was recorded in an official report dated July 21, 2009, that there was an oc-currence of a fire in area of less than 10 ha on one side of block PTKSI 2T29 (nursery area) on July 18, 2009. This was an area of enclaved land which is owned by one of the local communities. The fire started at approximately 6:30pm and was successfully put out by the emergency response team by 11:30pm, with no reports of serious injuries or fatalities. The company has fire extinguishers are distributed at strategic locations throughout the plantation. For example, at KSI 1 estate, eg. 3 fire extinguisher units were located at the worker's housing, 2 units were located at the workshop, and 1 at the genset room, while at KSI2, at least 3 fire extinguisher units were located at the worker's housing, one at genset room and one at the office. Fire extinguishers are also located at several locations throughout the mill, including the security post, workshop, mill stations, and chemical store. Monthly checks of the fire extinguishers are conducted and records of checks are maintained at each unit. However, one fire extinguisher at workshop of KSI 1 estate was observed to be at higher pressure than optimal level. Pressure of the fire extinguishers should be maintained at optimum level to ensure that it functions correctly, and this was noted as an observation. Records shows that last checks of the fire extinguishers were conducted on November 2010. Compliance status: Compliance with observations

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

Findings: Sources of pollution and emissions of the mill are identified in the company’s Environmental and OSH Aspects and Impacts, and include pollutants / emissions such used oil, air emissions, decanter cake, empty shell, liquid waste, used chemical containers (for laboratory chemicals such as phenolphathalein indicator, oxalic acid, sodium hydroxide, hexane, isopropyl alcohol, ethanol, etc.). As required by law, monitoring and analysis or identified sources of pollution is performed once every 6 months and analysis results are reported to the environmental department as evidence of implementa-tion of the company’s environmental management and monitoring (RKL/RPL) document. As the mill began operations in January 2010, the first monitoring for ambient air quality in surrounding the mill, workshop and housing area was conducted on March 4, 2010 by the Hyperkes and Safety Department of Banjarmasin. Monitoring was also conducted for emissions from the boilers and generators, noise levels and quality of POME used for land application.


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POME is managed and treated at the mill’s effluent treatment plant, which consists of a fat pit, mixing pond, anaerobic ponds, aerobic ponds, and facultative ponds. The mill’s methodology for management and treatment of POME is as per SOP 14/EHS/(0)/0409 (April 2009) regarding ‘Utilization of POME for Application to Oil Palm Estates’, which states that daily reports of land application data shall be pre-pared, including debit, pH, locations of land application and POME pond that was pumped, and that sampling of soil quality where application is carried out shall be conducted annually, while POME sam-ples from sampling (sumur pantau) are to be analysed once every 6 months. The mill maintains daily records of pH, BOD, debit and temperature of POME samples. The requirements for land application of POME are defined as per letter no. 660.020/BLH/I/2010 from the Environmental Department, where it is stated the company shall monitor influence of POME appli-cation on the cultivation of fish, animals and plants, impact on soil and ground water quality, potential impacts on public health, biological oxygen demand (BOD) of applied POME shall not exceed 5000 mg / l, pH of POME shall be within a range of pH 6-9, application shall be done only on non-peat soil with permeability of 15 cm / hour, should not be on land with underground water depth of less than 2 me-ters, and monitoring wells shall be in place. As viewed on-site and from the company’s reports on im-plementation of their RPL/RKL document, the company carries out land application in accordance with these minimum requirements. The biannual RPL/RKL documents includes results of POME sampling and analysis (as described under CR4.4) for BOD as well as other chemical parameters such as pH, chemical oxygen demand (COD), NO3, NH3, SO4, Cd, Cu, and Pb. There was a complaint received from a stakeholder that effluent being applied to fields 075 and 076 in KSI 2 estate where land application is carried out was being discharged to estate canals. From visits to the land application site, it was observed that the level of POME in one of the application trenches shows signs of overflow, and there are small drains built adjacent to the trenches to allow rainwater to flow though, hence, there is a high risk of contamination of the drain water due to overflow of the trenches. The mill has records of monitoring POME application levels, but should ensure that monitoring of POME levels is conducted more strictly to prevent overflow. The mill should also conduct sampling and analysis of the discharge point of field drains at land applications sites to ensure water quality does not exceed legal standards. From checks of the land application field drains, the rainwater discharged from these fields is contained in the estate drains and would not enter any main waterways. This was raised as an observation. Compliance status: Compliance with observations Criterion 6.1: Aspects 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 improvement. Findings: A social impact assessment (SIA) was conducted and report prepared by a consultant (Indri) in March 2010 for PT KSI. This assessment had been conducted in a participatory manner and included villagers of Sembuluh I Village, Sembuluh II Village and Tabiku Village. The document includes feedback and requests made by local communities which were obtained through focus group discussions. In these meetings, the communities discussed regarding the company impacts on the daily lives of the commu-nities as well as activities done by the company to manage and monitor these impacts. Record of community’s requests also can found in the form of letters, such as donation requests. The company also maintains records of responses made to these requests. The company has also developed a documented action plan for regular monitoring and management of social impacts with the participation of local communities from all of the 3 villages for year 2010-2015. The company has a report on their implementation of social impact management plan and monitoring for activities carried out in the first half of year 2010 (January-June 2010) which focused primarily on providing work opportunities for local people. Beside, there are also reports of social impact manage-ment plan for the first semester 2010. The company also has a social and environmental impact assessment document (AMDAL), but as the


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company is still new, there have been no revisions made to the document as there have been no changes made to the operational scope of the company. There social impact assessment document does not includes any identified social impact from smallholder because there are no smallholder schemes in PT KSI’s area. The company also prepares a regular and scheduled environmental management and monitoring re-port (RKL/RPL report) once every 6 months, in accordance with government requirements. The docu-ment includes a report on community development activities and implementation progress of the com-pany’s RKL/RPL. Compliance status: Full compliance

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

Findings: The company has documented procedure for communications and consultations with the communities and other company stakeholders, both internal and external. The company also has a procedure regarding the process of reporting to applicable external parties, as well as an SOP for appointment of officers for communication and consultation with local communities. The company has a documented stakeholders list in document no 001/BM.PR/LS/2010 which consists of names and contact numbers of stakeholders such as government department and institutions, NGOs, community representatives, suppliers, and contractors. In the SIA report there is a more de-tailed explanation about stakeholders including community profiles. Local communities’ requests to the company and responses by the company are recorded in a log book. Examples of types of requests from stakeholders recorded in the log book are as follows:

1. A letter from the Dayak Cultural Board (Dewan Adat Dayak) of Seruyan Regency no: 11/DAD-

KAB/SER/X/2010 dated 4 October 2010 requesting a donation for it’s 3rd national level meeting held in Palangkaraya on October 18-31, 2010.

2. A letter no. 011/poktan-DP/1/2010, dated 8 January 2010 from Delondong Permai, a farmer asso-ciation from Desa Sembuluh I requesting for fertilizer donations for their rubber tree plots.

3. A letter number 421.5/095/SMK.K/DS/I/2010, dated 13 January 2010 from the Director of Ker-tapati vocational high school about requesting for solid wastes such as empty fruit bunches or empty shell to be used as experimental materials for the students.

4. A letter dated 3 February, 2010 from a committee of Tabiku Danau Sembulu village requesting for donations to fund the celebration of Prophet Muhammad’s birthday

5. A letter no. 021/KUA-DS/II/2010 dated 15 February 2010 from the Religious Affairs government institution of Danau Sembuluh district requesting donations for personal computers and motorcy-cles.

6. A letter dated 5 on August 2009 from the Manpower and Transmigration Institution of Kotawar-ingin Timur Government providing information and a schedule of training to be held for pressure gauge operators, and a request for list of participants.

7. A letter dated 14 May 2010 from PT Liu San Indofire with information on prices of hose reel noz-zles supplies.

8. A letter dated 29 May 2010 from Maju Bersama Cooperative requesting for approval for purchase of empty fruit bunches.

The company also maintains records of these responses to stakeholder requests as per examples be-low:

1. A response letter number 006/BM.PR/X/10, dated 29 October 2010 from the Public Relation Man-

ager that the company agreed to pay a donation of Rp. 500,000 to the Dayak Cultural Board. There is a payment slip for this donation on 29 October 2010.

2. The company has records of fertilizer and herbicide donations made under the corporate social


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responsibility programme for the Delondong Permai farmer association from Desa Sembuluh I consist of on 12 February 2010 signed by company representative, Director of farmer association and Head of Desa Sembuluh I Vilage.

3. A response letter dated on 11 February 2010 from company to the Director of Kertapati Vocational High School in which the company agreed to deliver solid waste as experimental materials for students

4. There is certificate dated on 24 February 2010 as evidence of the company’s donation of Rp. 1,000,000 for the Prophet Muhammad’s birthday celebration for Desa Tabiku villagers.

5. There is payment slip dated on 22 May 2010 as an evidence of delivered donation amount of Rp. 3,000,000 signed by the Director of Religious Matters Office.

6. There is a letter dated on 27 August 2009 listing the company’s participants for training in re-sponse to the letter dated on 5 August 2009 from the Department of Manpower and Transmigra-tion

7. There is purchase request no. 2010 no PR 4110000468 dated 21 May 2010 and Purchase Order dated on 21 May 2010 as a respondse to PT Liu San.

8. There is a letter dated on 4 June 2010 in response to Maju Bersama Cooperative’s request to purchase empty fruit bunches.

However during field verification it was found that there were requests made by the local communities that have not been delivered to the company officer such as donation requests from Tabiku village. The community representatives said that they have already forwarded the request to company’s officer since July 2009 but the officer claimed that he had never received the request. Another example of un-delivered information was a query from one of the villagers regarding the latest status of an ongoing land dispute because the relevant company officer did not inform on whether the company agreed to the asking price of compensation. The company should have a system for recording results of visits made to the local communities, and this was raised as an observation. It was also found that the com-pany did not conduct regular meetings with the local communities although this was agreed upon be-tween the communities and the company that meetings would be held once every six months, and this was raised as a non-conformity. The company appoints one ‘Bina Mitra’ officer who is responsible for communications and consulta-tions with the community, as well as public relations matter, community development, and land and se-curity issues. However, in practice the community makes their requests to any representative of PT KSI and will request this to be brough up PT KSI management. Compliance status: Non-conformance no. 6 of 7 The company did not conduct regular meetings with the local communities although this was agreed upon between the communities and the company that meetings would be held once every six months. Criterion 6.3: There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. Findings: The company has an open system to receive complaints and to resolve disputes, which is accepted by affected parties. The system is described in SOP no. 34/PR/0/0409/ rev. 0 and was valid since April 2009. The company also has a mutual agreement with villagers of Tabiku village, Sembuluh I village and Sembuluh II village regarding management of traditional rights, HCV areas and community development between PT KSI and, signed on 9 April 2010. All evidence of meetings and negotiations held to make agreement such as meeting minutes, attendance lists and photographs are maintained by a PT KSI appointed officer. The company also has an open system to accommodate grievances and complaints from company’s internal stakeholders such employees, as explained in the company’s SOP no 42/HRD / (0) / 0609 rev 0 effective date on June 2009. There is evidence of meetings held on May 19, 2010 to explain the pro-cedure, and the 254 employees of PT KSI I signed off to indicate receipt of the SOP. In addition to this document, it was also stated in the company regulations manual for 2009-2010, chapter XI regarding the company’s procedure for receiving complaints and grievances from employees. These company regulations were signed by the Bipartite Cooperative Institute (similar to a labour union) and approved


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by the head of the manpower institution of Seruyan District on December 1, 2009. From January 2010 until the time of the audit, the company has records of 52 grievances made by em-ployees and workers through a grievance forum, such as complaints regarding no suitable schools nearby company’s location available for children that are at Junior High Level school level, delays in pick up transport for employees to take them to work areas, manuring workers being made to perform slashing work without additional allowance, and bad road conditions. Responses for all incoming griev-ance were directly provided by the company. The company maintains a log book of the complaints or grievances to record all complaints placed in the company’s suggestion box as well as verbal com-plaints, i.e. in January 2010 = 6 cases, February = 6 cases, March = 6 cases, and April = 6 cases, May = 6 cases. The company also records responses made by the company to these complaints.

There is decree No. 316 issued by the Head of Kotawaringin Timur government dated 5 April 2007 stat-ing the basic compensation rates for land and crops in the region. The company adopted these pub-lished rates for compensating the communities. There was a documented appointment letter from the lo-cal government of East Kotawaringin which appoints the village representatives of the local community to identify and calculate fair compensation amounts for each village. This is evidence to show that the deci-sion on fair compensation amounts was made with the participation of the local communities. The company has a procedure for the identification and calculation of fair compensation for the loss of legal or customary right of the land as explained on SOP for technical guide land acquisition / land ac-quisition, i.e. document no. SOP 29/BM / (0) 0409, rev. 0, dated April 13, 2009. There is evidence of agreements between traditional land owners within the company’s, and the agreements include infor-mation on the amount of compensation paid for the land and any crops planted by the traditional owner previously. Compliance status: Full compliance Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communi-ties and other stakeholders to express their views through their own representative institutions. Findings: The company has a procedure for the identification, calculation and compensation for the loss of legal or customary rights of the land, and identification of people entitled to receive compensation, dated April 13, 2009, which was made with the involvement of local community representatives and relevant agencies. As explain in the procedure, the summarized steps for land compensation are as follows:

1. The company receives reports from villagers or the public regarding land ownership claims; 2. The company reports this claim to the government and request the land department (BPN) of the

subdistrict to conduct a land survey. The village involved is also informed of this. 3. Surveys and measurement of land area and crops grown in the area are carried out by BPN 4. BPN issues a land certificate (‘Sertificat Hak Milik’) for village based on land survey results; 5. The land certificate is announced and approved by the district and BPN; 6. The village sends an invoice to the company for the payment of compensation; 7. The date of payment is determined and payment is made; 10. The company shall maintain documentation of the process on file.

As the basis of land compensation and compensation for destroyed crops, PT KSI refers to the Ko-tawaringin Timur Decision no. 316 of 2007 regarding the compensation rates of land and crops in the district of Kotawaringin Timur. The actual payment of compensation will differ slightly from these pub-lished rates depending on the agreed price negotiated between the two parties.. The duration of the negotiations to arrive at a common decision varies. As seen in the case of a land claimant, Mr. Indra, the case began in 2007 but was not resolved until recently as the land price was not agreed upon by both parties. Both parties eventually decided to enclave the land. Negotiations regarding land dis-putes/compensation are made between the company and designated village representatives. The company maintains records of negotiations and the process of resolution for all land disputes, in-cluding compensation payments. Evidence seen include maps showing land conflict areas, enclaved land areas and traditional rights areas of indigenous peoples, documented action plans for conflict


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resolution of disputes; documented memorandums of understanding (MoU) for enclaved areas and tra-ditional rights areas, land release documents (with description on the process of land identification, owner identification, a statement of land ownership, a statement that the dispute is resolved, and pho-tos of compensation beneficiaries) photos of events when compensation payments were made, and payment receipts. Records showed that the company made land compensation payments amounting to Rp 5,784,555,075 between June 2003 to May 2010 for a total 9779.12 hectares. There is an area of 622.57 hectares which is still under ongoing land disputes and being claimed by 7 land claimants. The company has regular communications with the communities to maintain good relationship even though the land disputes are still not yet resolved yet. 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 sufficient to provide decent living wages.

Findings: Employee’s wages are paid in accordance to the type of worker category and the company has records of wages paid e.g. wage payment records were viewed for November 2010 for KSI 2 workers. There are 3 types of workers at PT KSI, i.e. staff level, permanent daily workers (‘Pekerja Harian Tetap’ - PHT) and temporary daily workers (‘Pekerja Harian Lepas/PHL). Permanent staff are employees who have a working agreement with the company and are paid on a monthly basis with payroll system ac-cording to their position, have access to company’s facilities and get company benefits. Permanent daily workers (PHT) are paid daily according to the government minimum wage standard, and are given housing facilities, health allowance, annual paid leave and are also provided a pension insurance scheme. Temporary workers (PHL) are workers who are paid on a daily basis, and paid wages are in accordance with government minimum wage standard, given housing and medical health facilities (but not included in the insurance or pension scheme). The company has an internal memorandum no. 003/WIP-HRD/Int-I/2010, dated January 4, 2010 concerning of the sectoral minimum wage of Central Kalimantan Province which stated that the daily minimum wage employee is Rp 1,059 million per month or Rp 42,360 per day. Samples of salary payment slips were viewed for KSI 2 permanent daily workers e.g. Rp 988,500 was paid to a worker, Rusdiena, in November 2010, Rp 1,106,893 was paid to Mr. Sukenti in November 2010 and Rp 895,493 was paid to Mr. Syahruni. The gross salary does meet minimum wage requirements, although some of the net salary stated in the payments slips were lower than the minimum wage due to salary deductions for the worker’s Jamsostek pension program (Indo-nesian government social security). These are 2% of of the workers salary (another 3.7% is contributed by the company) as per Indonesian legal requirements, and is an optional program only for permanent staff who can opt to withdraw from the pension program. Sample wage payment slips for KSI mill work-ers were also viewed, i.e. payments in November 2010 for Mr. Ukik Ardianto for an amount of Rp 2,533,600, and payment of Rp 2,961,670 made to Mr. Mulyanto. Pay slips are given to workers in the Indonesian language so that employees understand the amount of wages and conditions. The company has working regulations and work contracts prepared in accordance with government and international regulations. The company’s working regulations are dated December 3, 2010 to De-cember 3, 2011 and are endorsed by Head Office of manpower and transmigration of Seruyan District, Central Kalimantan through decree letter no 560/1419/Naktran/XII / 2010 dated December 3, 2010. The company provides facilities for all workers such as: housing facilities, electricity, clean water, poli-clinic, elementary school, mosque, church, sport facilities, and transportation to and from work sites. There are two kinds of company’s housing provided for workers, which are permanent houses and non-permanent housing (for contracted workers). Permanent housing is new and has 2 bedrooms, a kitchen, and a bathroom. Asides from this, housing areas have 2 public toilets and bathrooms, sepa-rated for males and females. However, it was informed by the workers at housing area in KSI 2, that clean water is not sufficient for daily consumption. Even though the company provides a water tank with a capacity of 1,200 liter to be shared between 2 homes, the tank is only refilled once every 3 days. As explained by KSI management and verified on-site, the company has now installed a water purifier to purify water supply from a nearby stream and help to fulfill clean water needs in the housing area. Company agreements entered into with contractors specify that contractors are to abide by labor laws, as viewed from a sample agreement between PT KSI estate 1 and their contractor, CV Maju Bersama


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dated March 11, 2010 regarding appointment to carry out land clearing activities. On article no. 3 clause 6 of the agreement stated that CV Maju Bersama shall follow any relevant regulations pertaining to workers employment, land clearing regulations and other relevant regulations. Compliance status: Compliance with observations Criterion 6.6: The 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 collec-tive bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. Findings: The company has a documented policy recognizing freedom of association. There is an internal memo no: 002/WGP-HRD/I/2007 dated on 2 January, 2007 which informs employees regarding the com-pany’s freedom of association policy. The company also has a documented company regulation allow-ing all workers to form bipartite or labour unions. PT KSI has a labour organization, named the Bipartite Cooperative Agency (‘Lembaga Kerjasama Bi-partiet’ – LKS Bipartiet) for employees. The LKS Bipartiet institution for Kerry Sawit Indonesia estate is legally approved by the head of manpower and transmigration, government of Seruyan District. LKS Bipartiet has regular meetings with the PT KSI management and employees to discuss workers issues and support the rights of workers to organize and have collective bargaining, All records of regular meetings held with the labour union are well maintained and properly kept at the labour union office and the company’s regional office. There are records of meetings held between the company and bipartite institution, for example, minutes for a meeting held on 12 November 2010 at KSI 3 estate with 16 participants (list of attendees for this event was available). This meeting was to discuss regarding declining crop yields, damaged roads, and insufficient kindergarten school teachers. There are also other records demonstrating the working relationship between the company and the bi-partite oragnization, e.g. records of a meeting at the mill, records of event held to inform workers re-garding the LKS Bipartite and documented organization structure of the LKS Bipartiet. Compliance status: Full compliance Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions. Findings: As stated in Chapter III, article 3.2 of the company regulations, the company will not employ children under the age of 18 years. There is record of an internal company notice regarding restrictions of hiring children under the age of 18 years for work in PT KSI. This notice was posted at the housing area and head of village office as seen at the housing unit II of KSI 3, block B174, and office of Sembuluh 3 vil-lage. The Human Resources Department also released an Internal Memo dated 12 August 2009 which states under point 2 that children are not to be employed. All contracted labour is subject to the same requirements and these requirements are stated in the contracts of employees. During the time of the audit, there was no evidence that the company employs children under 18 years old to work at either the estates or the mill, including contractors. According to records, the youngest worker employed by the company currently is 19 years old. This was confirmed through interviews with workers and checks of records of mill, and KSI 1, 2 and 3 workers. Compliance status: Full compliance


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Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, disabil-ity, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

Findings: The company has an internal memo no. 026/WIP-HRD/Int-VIII/2009 August 12, 2009, regarding a revi-sion to the conditions of employment, which states freedom of association for employees, prohibition of child labour, equal opportunity for employees, and prevention of sexual violence and oppression against women. During the audit, no evidence of discrimination was found. There is evidence of equal treatment in working opportunities for workers in the company, for example, 25% of all KSI workers are female, female workers have equal opportunities to become higher ranking staff, such as Senior Officers, and equal working opportunities are provided workers of different ethnicities and religions, including Muslims, Catholics, Christians, and Hindu Kaharingans. There is evidence that the company does not discriminate between hiring locals and foreigner, as the company has an MOU between the company and community representatives from Tabiku Village, Sembuluh I Village and Sembuluh II Village. In point 10 of the agreement, it is stated that the company provides employment opportunities and business opportunities to the community in accordance with defined terms and requirements by company. Evidence of implementation was in the form of an an-nouncement of vacancies dated March 27, 2009 to the village heads of Sembuluh I, II and Tabiku vil-lages for daily and monthly workers. Compliance status: Full compliance

Criterion 6.9: A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Findings: The management of Kerry Sawit Indonesia has a written policy regarding prevention of sexual harass-ment and all other forms of violence against women, as well protection of their reproductive rights The policy was signed by Group Head Plantation (Goh Ing Sing) and Jeremy Goon Group CSR head in September 2010. Policy on prevention of sexual harassment has also been stated clearly in the com-pany’s regulation 2009-2010, Article 3.3 of Section II. This policy is also stated in the current company’s regulation chapter IV Article 10 regarding maternity leave, and article 11 regarding menstruation leave. There is evidence of implementation of the reproductive rights policy, for example, the company has copies and records of menstruation leave and maternity leave forms applied by workers and these re-cords are kept by the PT KSI clinic and estate office. For example, viewed on-site were sample re-cords of menstruation leave taken by a female worker for 2 days (1 to 3 May 2010), and letter of ma-ternity leave request by a female worker of PT KSI, taken from October 1, 2010 to December 31, 2010 (1.5 months before and after childbirth) The company has a grievance mechanism defined in the company’s SOP for female workers or em-ployees to make complaints and grievances. The company established a gender committee as a facili-tator for specific grievances or complaints from woman workers with representatives from KSI 1,2 and 3, housing, mill, human resource department, and accounting department. Events to inform workers regarding the gender committee were conducted on 1 April 2010 and 15 April 2010. No evidence of sexual harassment was found during the time of the audit. Besides the gender committee, complaints can also be issued through a suggestion box that is available at strategic locations such as estate of-fices and housing and. Compliance status: Full compliance


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

Findings: As the company does not receive crops from smallholders, they are not required to display FFB prices or document pricing mechanism for FFB. There is evidence that others parties dealing with the company, such as contractors, understand the contractual agreements they enter into, and that contracts are fair, legal and transparent, and payments are made in a timely manner. Based on interviews with the head of Sembuluh village, which runs a local business in cooperation with PT KSI, the village head stated that there is no delay in the payment process from PT KSI, and working agreements are clearly understood. Compliance status: Full compliance

Criterion 6.11: Growers and millers contribute to local sustainable development wherever appro-priate.

Findings: The list of company’s contribution to local communities is clearly stated in the company’s Social impact Assessment document issued on March 2010. From records of community development donations, the total amount of donations made by the company from year 2006-2009 was Rp 4,402,846,428. The company also pays retribution to the local government, which indirectly contributes to local devel-opment. Taxes paid from January to September 2010 was total of Rp 10,181,076,051 (including VAT, Income Tax, third party contributions, land and building tax, import taxes, and duties). However, it was found that there is no evidence that the company has paid the retribution for laterite sand mining (or ‘Galian C’ type tax) even though the company carries out sand and soil mining for use at landfills and road repairs. Payment of this retribution is important as a form of contribution to local development. The company conducted a survey of traders surrounding its area to find out the potential for these traders to receive contributions from PT Kerry Sawit Indonesia in order to increase the local community economic viability. Compliance status: Non-conformance no. 7 of 7 There is no evidence that the company has paid retribution to the local government for laterite sand mining (or ‘Galian C’ type tax) even though the company carries out sand and soil mining for use at landfills and road repairs. Criterion 7.1: A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expand-ing existing ones, and the results incorporated into planning, management and operations. Findings: The company has already conducted an environmental impact assessment as documented in the company’s ANDAL document. The new revised ANDAL was issued in year 2008. The company also has a social impact assessment document which covers information about the company’s positive and negative social impacts, the assessment was conducted together by PT KSI staff and the consultant, Indri. The company’s ANDAL document was not established with the participation and feedback from local communities and hence is not recognized by the communities, as explained in the methodology of the ANDAL document. However, the company involved communities during the assessment of impacts carried out as part of the Social Impact Assessment (SIA) in March 2010 As a resut, the SIA document is recognized by communities from the three villages. The SIA document describes the positive and negative impact resulting from from KSI’s operation.


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The company also has a documented management and monitoring plan for environmental and social impacts as per the company’s RKL and RPL documents that were made in 2008 and approved by the local environmental department. The company conducts monitoring of environmental aspects in accor-dance with the RKL and RPL documents to minimize their negative impacts and optimize the positive impacts, and implementation results of the RKL and RPL is reports once every 6 months to the local environmental department as required by law, with sample biannual reports viewed on site. As the company does not have any schemed smallholders, there are no records of development pro-grammes for smallholders. Compliance status: Full compliance

Criterion 7.2: Soil surveys and topographic information are used for site planning in the estab-lishment of new plantings, and the results are incorporated into plans and operations.

Findings: Land surveys were conducted by a consultant, Param Agricultural Soil Surveys (M) Sdn. Bhd. together with soil survey activities for other locations of PT KSI location which are already planted. The results of soil surveys for the company’s land area are as described in Criteria 4.3 above. Based on soil evaluation results and recommendations from the company’s agronomist, plantation de-velopment is only carried out on suitable land. The company has not planted on marginal soil types such as sandy soils of the Serai series or deep peat soil of the Gali series. Limited planting is allowed on sandy areas of the Buso series and shallow peat in KSI 1 and KSI 3 estates. Most of the planted ar-eas of the estate are those areas which are of low fertility, and the estate's soil analysis report includes recommendations to have a good fertilizer programme, monitor and mitigate soil degradation through cover crop establishment, fertilizer and application of EFB. The estate has implemented all these best practices in the management of their planted areas. The estate conducts annual leaf analysis and de-velops fertilizer application plans based on leaf analysis results, and has carried out plantings of LCC in the estate. This was confirmed through observations of the field made during site visits. Compliance status: Full compliance

Criterion 7.3: New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

Findings: New planting in KSI since November 205 does not replace primary forest or HCV area. New plantings have not been carried out at areas derived from forest conversion, but new plantings were only carried out at land areas that previously belonged to local communities and compensation has been made by the company to these relevant parties. Locations are still covered by large trees were not opened but have been retained as HCV areas, such as those areas identified in the company’s maps of distribution of HCV area and also included in HCV management plans. Based on information from the company’s HCV assessent report prepared in 2008, it was found that there is 82 ha of area which previously was a potential HCV area, although not a primary forest (be-cause the company obtained the land from an ex-logging company) but the area was cleared in 2005. But now the company no longer opens land that was previously forested area or even land from the lo-cal community’s cultivation field. All remaining forests have already been identified and allocated as conservation area. These areas are excluded from the company’s productive area. Compliance status: Full compliance

Criterion 7.4: Extensive planting on steep terrain, and/or on marginal and fragile soils, is avoided.


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Findings: The company has a detailed soil map showing gradients and all soil types within all 3 estates, done by Param Agricultural Soil Surveys (M) Sdn. Bhd., dated June 2007 (refer to CR4.3 for more information). The marginal soils identified present within the company area include sandy soil and peat soil areas. The company also has a topography map for all three Kerry Sawit estates, which shows that all the estate area are predominantly flat to undulating (0-6°). Soils are classified as level (0-4%) or undulating (4-12%) or rolling (12-24% slope, approximately 1% of estate area only) The company follows a Standard Operating Procedure for planting on sandy soils and an SOP for planting on peat soil. The SOP for planting on sandy soil describes methods to ensure soil fertility is maintained such as application of 3 rings of EFB around seedlings or application of one bag of decanter next to seedlings, creating sufficient drainages between palm rows, and establishment of leguminous cover crops (LCC) at sandy planted areas and avoiding planting during rainy seasons. Procedures for planting on peat soils as per the SOP includes having a compaction prior to planting, no felling of trees next to river banks, maintenance of peat soil water levels between 50 to 75cm with use of watergates, and following fertilizer recommendations. According to Annual Agronomic Report 2009 for KSI1, EFB application on sandy areas in KSI 1 was dismal at only 229 tonnes, and this was due to insufficient supply of EFB from the mill and incorrect application to other non-sandy soils. To ensure sufficient application of EFB to sandy soil, KSI 1 has developed a plan for 2011 Fertilizer Recommendations for Oil Palm Plantings, which lists specific blocks with sandy areas where EFB should be applied either selectively or wholly. KSI 1 also has targets to carry out plantings of LCC in 2010 for 78.60 ha of block no. 220 (fields 5B41, 5B42, and 5B43) which is a sandy area where replanting was carried out in year 2010, however actual area planted with LCC so far is only 29.70 ha and remainder is planned for completion in Jan 2011. KSI 2 estate has records of weekly reports from the estate manager on progress of LCC plantings carried out at each block containing sandy areas. KSI 2 estate also has a programme for application of EFB at all sandy areas for the year of 2010 and also maintains records of application of EFB at sandy areas as well as other estates areas as stated in the EFB Reception and Application report Summary for year 2008 to 2010. For areas planted with peat, the water level of the peat area is measured and recorded on a daily basis with four water sampling points taken from the river located near the peat planted area. Data for April and May 2010 shows that distance between the water levels and soil surface is more than 40cm, showing a high water level in the peat area (recommended water level is to be maintained between 35 and 70 cm) Compliance status: Compliance with observations Criterion 7.5: No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peo-ples, local communities and other stakeholders to express their views through their own repre-sentative institutions. Findings: As described under CR6.1 and CR7.1, the company has an SIA document which includes analysis of positive and negative environmental and social impacts of the company. The document was developed with the participation of the local communities. The company has records of events held to inform the surrounding local communities surrounding of planned new planting activities before these are carried out. This activity was conducted to prevent conflicts in the future. The company is open to any villagers who make claims to the company’s land send letters to the company requesting for land compensation or any other type of action ot be agreed between the two parties. Any areas under conflict within PT KSI’s area will not planted and that area is enclaved. The company maintains records of compensation payments made for community land between the pe-


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riod of 2003 to 2010, as well as administrative records of land released to local communities. These in-cluded records of the process of identifying the area of claimed land, identification of the traditional rights owner, official approval letter of owner, statement on resolution of conflict or dispute, photo documentation of compensation payments made to land claimants, and payment receipts. There are records of payment slips for every receiver of land compensation. Compliance status: Full compliance

Criterion 7.6: Local people are compensated for any agreed land acquisitions and relinquish-ment of rights, subject to their free, prior and informed consent and negotiated agreement

Findings: The company has conducted an assessment of customary and legal rights with the involvement of local communities and produced a map indicating areas where indigenous people have traditional rights. The map was made to a scale of 1: 97,000, dated April 7, 2010 and signed by the village chief and chairman of Sembuluh I, II Villages and Tabiku Village. The company has developed procedures to identify people entitled to receive compensation, and records of all negotiations and compensation payments made are documented, as explained under CR6.4 findings. Negotiation process records are maintained at the Partnership Development (‘Bina Mitra’) office, including records of calculation and implementation of compensation payment. Communities that have lost access and rights to land for plantation expansions are given opportunities to benefit from plantation development through provision of compensation as well as through provision of work opportunities. The company will announce to local communities if there is a vacancy for either-daily paid workers or permanent staff, announcements will be made to the village heads or put posted on the notice boards around the village head office. The process and outcome of any compensation claims have been documented and made publicly available, with examples viewed as follows: - There is a record of an internal memo dated May 6, 2010 from company’s land acquisition man-

ager to PT KSI’s General Manager regarding arequest for land compensation made by Mr. Rah-man, a villager of Sembuluh I village. The company has is an official report dated on May 12, 2010 which describes the process of resolution of a land dispute for a land area claimed by Mr. Rahman. The report explains the process of measurement of the land area claimed (which was witnessed by Mr. Rahman) and has maps of land measured and to be compensated to Mr. Rahman, which is acknowledged and signed by Mr. Rahman, the village head, the GPS operator who prepared the map, and company management representatives on May 12, 2010. The report also includes de-tails of the amount of compensation of Rp 17,502 million for land and crops covering an area of 9.51 ha given by the company, payment receipts. Mr. Rahman has also signed a statement ac-knowledging that the dispute has been resolved, and a statement agreeing to release of his land rights and interests include all previous crops planted within that area.

- The company has records of resolution of a land dispute involving three individuals, Mr. Murah, Ili and Neneng from Sembuluh I Village in the area of KSI 2, where the agreed compensation price is Rp. 10 million for the area of 8 hectares and paid on June 10, 2010.

Compliance status: Full compliance

Criterion 7.7: Use of fire in the preparation of new plantings is avoided other than in specific situations, as identified in the ASEAN guidelines or other regional best practice.

Findings: The company has a zero burning policy documented in the company's Environmental Management Policy dated August 2008. Therefore the company has not used fire in preparing land for new plantings. Refer to CR 5.6 for further information on records of implementation, emergency response procedures to land burning and presence of appropriate fire extinguishers and facilities.


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The company has a documented emergency procedure for land and forest burning with records of trainings conducted for the procedure, and fire extinguishers and facilities are available at strategic locations although a fire extinguisher was observed to be at inappropriate pressure. This is further described under findings for CR5.5. Compliance status: Compliance with observations

Criterion 8.1: Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

Findings: The company has a monitoring action plan (Rencana Pemantauan Lingkungan Hidup - RPL) for all estates and mill dated 2008, which was developed based on the AMDAL document and approved by the local government as per approval letter 'Berita Acara no. 41/Komisi-Kotim/VI/2004'. The company prepares annual report to the Seruyan Government on the progress of implementation of the RKL every 6 months as required by law. Analysis or monitoring results in the report as required in the RKL/RPL document include those pertaining to quality of ambient air, quality of air emissions, noise levels, soil chemical composition, river water quality, soil water quality, erosion, fire risk potential, status of wildlife and water biota, management of land clearing, potential fire, soil erosion, water biota, protected animals, negative perceptions and concerns from the community, and community health. Last report was prepared for Semester 1 for year 2010 (January - June 2010). In addition, the company is developing their SIA report which is estimated to be completed in June 2010, from which a social monitoring plan will be developed. All estates also have an Environmental Management Program and Activities Plan for year 2010 based on the environmental aspects and impacts analysis, which includes plans for reduction of use of herbicides (glyphosate), reduction of domestic wastes, management of chemical containers, reduction of water used for spraying and management plan for clean water to meet the needs of workers. The programme was developed in January 2010, and monitoring of implementation has yet to be conducted (to be carried out once every 6 months). There is evidence from on-site observations and documentation that the plan is being implemented. The company maintains records of follow-up actions taken against RSPO audit findings found during the gap assessment done by the audit team in May 2010. The mill has no Environmental Management Program and Activities Plan for year 2010 based on the environmental aspects and impacts analysis. However, they have a monitoring action plan as per the RPL document as mentioned above. Compliance status: Full compliance

3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions A total of 7 nonconformances were identified during the main certification assessment. These consisted of only minor non-conformities. For these 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 clo-sure 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:

Criterion: 4.1.1: Records of checking or monitoring of operations. Minimum requirement: once a year.


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Non-conformance 1 of 7 (Minor non-conformity): The mill has no records of internal audits to ensure that the mill's SOPs are followed. Corrective Action Plan: PT KSI Mill shall conduct internal audits throughout all operational activities, regularly every six months based on available SOP. Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit

Criterion: 4.2.1: Records of regular soil, leaf, and visual analysis.m

Non-conformance 2 of 7 (Minor non-conformity): Regular soil analysis still not conducted as required by approved environmental management and monitoring plan (RKL & RPL), since there is no evidence that measurement of soil chemical parameters have been conducted and reported in 2010 as required yearly by RKL & RPL. Corrective Action Plan: The company shall conduct soil analysis based on parameters required as per the RPL once a year. Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit Criterion: 4.3.4: Subsidence of peat soils should be minimised under an effective and docu-mented water management programme. Non-conformance 3 of 7 (Minor non-conformity): PT KSI has not measured other parameters of the peat soil area as required by Government Regula-tion No. 150, 2000 which states a requirement that the pH, pyrite content, electrical conductivity and other chemical parameters of the peat are also monitored. Corrective Action Plan: PT KSI shall conduct peat soil analysis based on parameters required in regulation no. 150 year 2000, and conduct water level monitoring of the land through establishing monitoring wells. Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit

Criterion: 4.7.6 Evidence of OHS and first aid equipments available at worksites

Non-conformance 4 of 7 (Minor non-conformity): The sand mining contractor for the company, CV. Sabindo, does not equip the trucks of contracted workers with first aid kits, fire extinguishers or safety triangles. No PPE is provided for these contracted workers. Corrective Action Plan: The company shall conduct an internal audit activity regularly for contractors to check for availability of safety equipment. The audits will be executed by the sustainability team. The company will impose a penalty for indisciplined contractors which do not comply with this requirement. Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit


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Criterion: 5.3.1: Management plan of hazardous waste and instruction of disposal of agro-chemicals and their containers waste in accordance with the product label and existing regula-tions. Non-conformance 5 of 7 (Minor non-conformity): 1. The company’s contactor for collection of hazardous wastes is collecting empty agrochemical containers but only has a permit allowing collection of used oil and residues, not collection of other types of hazardous wastes. 2.There is evidence that the company does not properly maintain manifests of hazardous wastes collected, i.e. there is no manifest of the hazardous wastes collected by the contractor on 12 October 2010 3. The mill does not record input and output of all hazardous wastes produced, except used oil. 4. There is evidence of poor management of domestic and hazardous wastes at housing areas, with evidence as follows: - At the waste collection area of the east bunkhouse housing area of KSI 2, hazardous wastes were placed at uncemented area (high risk of soil contamination). - At the housing for contracted workers from CV Handika located at the east bunkhouse of KSI 2 estate, workers dispose all wastes, without segregation, behind the construction area instead of at the proper garbage disposal area. This is against the company’s SOP regarding segregation of waste and disposal in the proper disposal area. - At housing for CV. Sabindo area, the sand mining contractor for KSI 1, evidence of oil spills contaminating soil was also found at the generator located near the housing. Corrective Action: 1. The company shall ensure that all contractors for collecting waste are holding any licenses required by law and applicable regulations. 2. The company shall provide bins at KSI 2 for collection of hazardous waste and train workers on proper disposal of hazardous wastes. 3. Records of input and output of hazardous waste shall be maintained in a specific format Auditor Conclusions: Evidence and plan for corrective action accepted, effectiveness of imple-mentation to be verified during next audit The company has a copy of a letter from PT Nazar dated August 19, 2009 to the Environmental Health Department of East Kotawaringin regarding application for approval as a collector of agrochemical con-tainers. The license of the contractor and implementation of corrective actions will be verified at the next surveillance audit. Criterion 6.2.2: Records of local communities’ aspiration and responses or followup actions by companies to these requirements Non-conformance 6 of 7 (Minor non-conformity): The company did not conduct regular meetings with the local communities although this was agreed upon between the communities and the company that meetings would be held once every six months. Corrective Action Plan: The company shall conduct regular meetings with the communities of Sembuluh I Village, Sembuluh II Village and Tabiku Village. Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit

Criterion 6.11.1: Records of company contributions to the local development.

Non-conformance 7 of 7 (Minor non-conformity): There is no evidence that the company has paid retribution to the local government for laterite sand mining (or ‘Galian C’ type tax) even though the company carries out sand and soil mining for use at


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landfills and road repairs. Corrective Action Plan: The company is going to follow up on their request for approval of license for laterite sand mining (Ga-lian) with the relevant government institution and also pay for sand mining retribution Auditor Conclusions: Plan for corrective action accepted, effectiveness of implementation to be verified during next audit

3.3 Noteworthy Positive Components

Criterion 4.1: Operating procedures are appropriately documented and consistently imple-mented and monitored.

The company’s effort into preparation and maintenance of relevant documentation is very good.

Criterio: 4.4: Practices maintain the quality and availability of surface and ground water.

The company has developed a very detailed riparian belt programme for short, medium and long term management. The company should ensure consistency of its implementation.

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

The estates have made positive efforts towards segregation and recycling of wastes.

3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues A) Issues Raised during Stakeholder Consultation Meeting

No. Issues Raised Management Response Audit Verification

1. The Regional Land Use Plan (Rencana Tata Ruang Wilayah Propinsi - RTRWP) of Central Kaliman-tan is almost completed, and based on this plan, PT KSI’s area will within the coverage area defined as area for other use (Areal penggunaan lain - APL). The issuance of land use right certificates is cur-rently only waiting for approval of the RTRWP from national representative body

We will monitor the progress of application through the relevant department in the central government.

Based on the draft of the regional land use plan, most of PT KSI’s area are non-forested area, and only a part of PT KSI area (700 ha) is still of forest producton area status. PT KSI has already excluded this area from their operational area.

2. PT KSI should apply to Ministry of Forestry Indonesia for the change of company name from PT Salawati Makmur to PT Kerry Sawit Indonesia for their forest land release permit

We will proceed to inform the Ministry of Forestry on the change of name so that the forest release permit granted to PT Salawati Makmur is applicable to PT Kerry Sawit Indonesia.

As explained under criteria 2.2, progress to change the company’s name from PT Salawati to PT Kerry sawit Indonesia is ongoing.


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3. • The old company name is PT Salawati Makmur, there is no information when the company’s name changed to PT Kerry Sawit and it not made publicly known.

• Kerry Sawit has no HGU certificate. The company should obtain their HGU soon.

• There is an issue of over-lapping boundaries be-tween PT Mustika Sembu-luh’s area (another com-pany under Wilmar Inter-national located near PT Kerry Sawit) and an out-side company, PT Selonok, which has yet to be solved.

Based on available document, the change of name from PT Salawati Makmur to PT Kerry Sawit Indonesia took place in 1996 Ref: Letter from President dated 25 July 1996 Ref: 541/1/PMA/1996. This letter was copied to 16 government ministries and departments including the District Head of Capital Investment Coordina-tion Board (Badan Ko-ordinasi Penanaman Modal Daerah - BKPMD) in Central Kalimantan. The HGU application for PT Kerry Sawit was submitted in Sept 2006. We will monitor the progress accordingly. There is already a map that shows the boundary demarcation and this has been accepted by both parties of PT Mustika Sembuluh and PT Selonok. Therefore this issue is now resolved.

Explaination accepted, and granting of HGU approval is still pending. It was verified that there is a signed agreement between PT Selonok and PT Mustika Sembuluh’s management where it is stated that the company’s have agreed to a common boundary with attached map indicating the agreed boundary.

4. • Is there any guarantee that after KSI obtain RSPO certificate, this will improve the company’s performance, especially with regards to relationship with the local communities? The company should not only give contributions before certification but not after certification.

• There is information that PT KSI will build schools in their location, it will be bet-ter if PT KSI build the school building at the vil-lage; it can also used by local communities for their children.

• What about PT KSI’s re-sponsbility to prepare plasma (smallholders) land as much as 20% of the plantation’s area?

PT KSI is committed to provide community development to the surrounding community in line with the company financial capability. Based on the regulation, the school is obliged to accept anyone who wanted to enroll in that school. PT KSI will have to prioritize the needs of their own employee’s children first. Charity begins at home. Land permit for PT KSI was issued in 2003 and this regulation to develop 20% of the HGU for plasma was non-existent then. Nevertheless PT KSI is still committed to develop the plasma as part of its sustainable community development as long as the community can identify the area suitable for plasma outside our HGU with a clear legal status.

Management response was accepted

5. Relevant to the principle of tranparency, until now there is no information from the company regarding their permits/license. What if the company’s license contradicts with the communities traditional rights? When PT KSI gets their RSPO certificate, how about local communities’ welfare around PT KSI’s area, will this improve? Local communities do not understand about RSPO. It is

As an on going process PT KSI is committed towards improving the livelihood of the surrounding community through our community development, job opportunity through direct employment and business opportunity for those willing to take up the challenge. In all offices of PT KSI, the permits such as IMB, IUP and SITU are displayed for public information. When PT Kerry Sawit was preparing for its RSPO certification, we have invited villagers from Sembuluh 1,2 and Tabiku

Management response was accepted


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very important that the company gives information about RSPO to local communities.

for discussion and exposure to RSPO concepts. Many came but probably not all from the villagers attended. If the villagers wanted PT KSI to train them they can always write in to PT KSI for more information. PT KSI can include retraining on RSPO matters to the communities as part of its extension programme on good practices.

6. A lot of people from Bengkal village were not accepted by KSI as workers. Also, the company should ap-preciate the customs of local communities in Central Kali-mantan, such as customs for land compensation process, and not open the land for planting before compensation is paid. The company takes a long time to settle a land compensation process. Fur-thermore there is an area of land for which land compen-sation payment has yet to be made.

The company has an equal opportunity policy to recruit as long as the candidate qualifies and there is a vacancy for the post. We always conduct our interviews and selection in a fair and transparent manner. For land acquisition we always go through the concept of free prior and informed consent. We also always respect the customary rights of local community. PT KSI, is willing to resolve all outstanding land claim promptly as long as the nature of the conflict is clear and straightforward. Otherwise we need to make sufficient verification to ensure that the rightful claimant will receive the compensation. This may take time.

Management response was accepted and was verified during audit that the company has records and evidence of land compensation and resolution process for land dispute cases as described under Section 3.1, CR2.2 and CR6.4.

7. Communities that carry out land burning are punished, but not the company.

We have no issue of burning in PT KSI. We also have zero burning policy and a trained fire fighting team in PT KSI.

The company has a zero burning policy, there is no evidence found that the company use fire for land preparation activities.

8. PT KSI still does not prioritize worker safety. There is no harmonious relationship between the company and local communities.

In line with the Wilmar Group’s health and safety policy, PT KSI always en-forces their health and safety procedure in line with the applicable regulations. The company has an OSH management plan, conducts training for workforce and contractors, medical check ups, and statutory reporting to relevant depart-ment, and ensures the workforce is in-sured under JAMSOSTEK. PT KSI has and will continue to cultivate good relationship with the surrounding local communities. This is a long term process .

From evidence viewed, the company itself complies with OSH regulations, however certain contractors working for the company do not comply with OSH require-ments, and this was raised under NC 4 of 7. The company records all worker accidents and occur-rences of sicknesses.

9. Public consultation should be held in Seruyan city not in Sampit, because for people located at Seruyan, Sampit is too far. Land problems in Indonesia are very difficult to resolve. The company should comply and follow government regula-tions. The company should have a representative office in Seru-yan.

We conducted the Public consultation in Hotel Wella, Sampit because it is easily accessible and a neutral place. If we were to conduct it in Kuala Pembuang, it is too far and Kuala Pembuang (city of Seruyan) does not have the facility to hold such a function effectively. More-over most of the local communties/ stakeholders are near to Sampit rather than Kuala Pembuang. PT KSI will consider this suggestion in the near future.

Management response was accepted.


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10. There is no obstacle for the company to get a HGU certifi-cate if PT KSI has their land forest license.

The forest release permit was granted to PT Salawati Makmur. There is a need to get the Ministry of Forestry to recognize that the permit for PT Salawati Makmur is also applicable to PT Kerry Sawit.

Explained in detail under CR 2.2 in the report above.

11. PT KSI has complied with en-vironmental conservation regulations However the company should also protect riparian river banks, and con-duct reforestration inside their area.

PT KSI have started restoring the ripar-ian belt along natural waterways : 1. There is an SOP in place on the man-agement of riparian river belts 2. The company has a management plan for the riparian belt restoration from 2010 – 2020. 3. There is an ongoing monitoring exer-cise along the riparian river belt on a monthly basis. 4. We have also planted vetiver grasses along river bank with high erosion poten-tial in order to reduce erosion at these areas.

The company has already identified all HCV areas, and has a management plan to protect the species accord-ing to Indonesia environ-mental regulations. The company has manage-ment plan to rehabilitate ri-parian river banks to be car-ried out on the short term, medium term and long term.

12. Plantations that opened after year 2007 are required to have a smallholder scheme (plasma) but plantations opened before 2007 can open smallholder schemes outside of the company’s area.

The land permit for PT KSI was issued in 2003 and this regulation to develop 20% of the HGU for plasma was non-existence then. Nevertheless PT KSI is still committed to develop the plasma as part of its sustainable community development as long as the community can identify the area suitable for plasma outside our HGU with a clear legal status


13. The relationship between PT KSI, local institutions and lo-cal communities is not good enough. For example, there were no accidents reported by the company to police offi-cers, although the last acci-dent at KSI mill which resulted in the death of a worker was not reported. The police found out about the case on their own, not based on a report from the company. However, the company has compensated the worker’s family and this was accepted by the family.

Based on the national regulations, acci-dent reports should be submitted to Dis-naker (Labour Department) and Jam-sostek institute. There is no need to make accident reports to the police unless there is some element of criminal activity or death involved. In this particular incident on 14 March 2010 at the PT KSI mill, the matter was reported to the police station at Bangkal, Telaga Pulang and Kuala Pembuang.

Management response was accepted and verified on-site.

14. There were big demonstrations held at PT KSI in 2009 regarding complaints of the company’s system for wages. After the police officers helped to resolve the problem, then a memorandum of agreement was signed by between the company and involved parties.

In 2007, the two organizations, PPB Oil Palms Bhd and Wilmar International merged into one company. In accor-dance to the local law, since this is not a form of takeover, there is no need to make severance payment. Unfortunately, some sectors of the workforce cannot accept this reasoning and resorted to vio-lence. So to maintain peace and har-mony, we have refered the matter to the local regent (Bupati) and labour depart-ment (Disnaker). For those workers who wanted to leave the company, severance payment was paid even though there is no such provision under the applicable law.

Management response was accepted and verified on-site. Based on interviews with workers in the field, there are no longer any disagreements on the workers wages.


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15. The company’s recruitment process always give priority to outsiders rather than local communities, there should be no differentiation and discrimination during the recruitment process.

PT KSI subscribes to an equal oppor-tunities policy for both local and in-digenous communities. The basis of selection is always based on candi-date’s merits and qualifications in line with our internal procedures and re-quirements. PT KSI regularly informs through official letter to the surround-ing communities and advertise in the local newspaper on any available va-cancies.


16. PT KSI has a conservation area, however the area that was designated as a conser-vation area are communities’s area which is not compen-sated yet. The company has no right to claim communities area as their own conserva-tion area. Actually KSI has no conservation area in which the land owned by the company.

In PT KSI, there are only 3 different types of HCV. Most of the HCV is in the form of 5 and 6 which is comprised of natural areas critical for meeting basic needs of local people and their cultural identities Hence these areas are enclaved and will not be planted with oil palm. These areas are under the control of the lo-cal community and we need to co-manage the area together with the company. The company only has the legal right over the HCV 4 areas which com-prises of riparian belt, wetlands and water bodies.

Not all remaining forests of the designated conser-vation areas belong to lo-cal communities. There are some remaining for-ests which belong to PT KSI, which include HCV 1.3 area near Sungai Balai (Block 47) and for-ests dedicated for water-catchments located at blocks 059 and 060 with total of 80 ha.

17. How is the condition of re-maining forest areas along the river within the com-pany’s area, since now all trees have been felled, and there is no forest rehabilita-tion, since that area is the remaining forest areas in PT KSI’s area?

PT KSI has got a Management plan for riparian belts in place that spreads over a 10 year period of 2010 – 2020. 1. Short term (0- 3 years) April 2010 – 2013 2. Mid term (Year 4) – 2013 to April 2014.

3. Long term ( Year 5 - 10) April 2014 – April 2020

For the mid term plan, the manage-ment plan is restricted to no agro-chemical activities along the riparian belt. There is no planting of trees at this point. We only allow natural re-generation to take place. For the long term plan, after 5 years, we will plant suitable riparian species in areas where natural regenerations are poor. Any palm trees planted within 2.5 m of a water bodies or streams will be felled to minimize any potential agro-chemical contamination.

The company carries out felling of their oil palm trees, not forest trees, ad-jacent to river bank and replants these areas with woody plant species to protect the riparian river banks from erosion in the long term and no chemi-cal application is done in these areas. This is de-scribed further under CR4.4.

18. Budget allocation for local district leaders (MUSPIKA Musawarah Pimpinan Ke-camatan) was never

As part of PT KSI Community devel-opment, we will provide contributions both in kind and cash as and when the need arises.

Management response was accepted and verified on-site. It not compulsory for the company to


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realized, even through it has been allocated by WILMAR head office.

.

provide this allocation as it is based on community needs and not meant to be an allowance for local district leaders.

19. The existence of the company at this time would be detrimental to the local people's welfare rather than enhance it. The company has to be fair, for example there is no incentive for sub district leaders.

As part of PT KSI Community develop-ment, we will provide contributions both in kind and cash as and when the need arises. The company has an equal opportunity policy to at in a fair and transparent manner in all aspect of its business.

Management response was accepted and verified on-site. It not compulsory for the company to provide any incentive as contributions are made based on community needs and not meant to be an allowance for local district leaders.

20. Transportation for workers who are leaving to the work site is not humane, because it is transported by trucks like transporting animals, the company should provide a better and safer transportation facility for workers.

Generally estate roads are not easily ac-cessible by other modes of public type of transport such as buses without a four wheel drive capability. So the best form of compromise is to use tractor-trailers and trucks that can handle the road con-dition. Nevertheless, we trained both drivers and workers on the safety aspect of riding in these vehicles to avoid and minimize risks of accidents.


21. Most of the company’s daily paid workers have no Jam-sostek insurance even they have been working since 2004. Jamsostek insurance was only recently provided in 2007. PT KSI should not be certified before their management im-proves.

PT KSI has complied with the local regu-lations. We have registered all workers as members of Jamsostek. For the first 3 months of employment, the worker is un-der probation and therefore is not entitled to full benefits. But once they have been confirmed they will receive the full bene-fit. PT KSI is not in control of the issuance of the Jamsostek card which people might perceived as proof that they have been registered under JAMSOSTEK. This is not the case.

Management response was accepted and verified on-site that all workers are insured under Jamsostek (refer to CR4.7 findings under Section 3.1).

22. Handling of health issues among workers has been slow because there are inadequate facilitaties such as ambulance and paramedics, therefore there are many workers who go to the village head to request a letter of recommendation to local government clinics to provide free medical service to these workers.

In PT KSI, we have 1 full time doctor, 3 nurses and 1 midwife. We also have 1 unit of ambulance and 1 clinic in each of the estates/division.


23. Hopefully all plantation com-panies in Seruyan district be-came RSPO member. The existence of PT KSI currently is very profitable for local communities that were formerly isolated but now has access to the outside because of new road facility. Hope RSPO will result in companies improving on positive aspects and minimize negative ones.

There are a number of RSPO members operating in Seruyan. They are Triputra group (PT Salonok ), Agro Indomas, Mi-namas (Sime Darby Group) dan Sinar Mas Group

No verification required as it was a positive comment.


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24. Administratively PT Kerry Sawit is running well, and it was observed that monitoring wells used for land application were planted with vegetation that can absorb heavy metals, which helps to protect the environment. Collection of water samples should also be witnessed by the Environmental Bureau (Biro Lingkungan Hidup – BLH), not left to consultants alone

We have planted vetiver grasses towards the end of the trenches to stabilize the bank. Planting of broad leaves is not ad-visable as it will spoil the structure of the embankment. We never detect heavy metal in our sample. The sampling of effluent is done on a routine monthly basis and it is diffi-cult to get BLH to witness this exercise. But if BLH wants to come, they are wel-come. The result of the analysis is submitted to BLH as per regulations. In addition to this BLH also conducts bi-yearly visits to the mill to check on the land application.

Vetiver grass has been planted in some area of land application, however, there is no evidence that any evaluation was conducted to evaluate the vetiver grass’s absorption of heavy metals.

25. In order to obtain the RSPO certificate, the company shall fulfill relevant regulations, such as using an accredited laboratory for water quality sampling and analysis. As there is no accredited labora-tory in Central Kalimantan, the company should bring the sample to Jakarta until the Central Kalimantan govern-ment has established an ac-credited laboratory.

All this while we have been sending the water sample to Unilabs in Jakarta. Unilabs is the recommended laborato-rium to conduct testing of water quality by BLH (Department of Natural Resources)


26. Hazardous wastes cannot be disposed in Central Kaliman-tan because there is no ap-proved transporter that has a license for hazardous waste collection, only one approved waste collector in South Kali-mantan, but the license for operation of that collector does not include permission to collect in Central Kaliman-tan. BLH is making a recom-mendation for that company to extend their operation until Central Kalimantan.

CV Nazar, the waste oil collector for PT Kerry Sawit, has already drafted the letter (55/PR/NZR/VIII/09) of application to the Provincial BLH for Central Kalimantan to seek the recommendation from the rele-vant department to store, collect, trans-port and treat the hazardous wastes. The letter will be submitted next week.

Management response was accepted and verified on-site. Further details under Section 3.1, CR5.3.

27. PT KSI should be consistent in their conservation activities of their riparian buffer zones because other surrounding forest areas belong to the lo-cal communities. There was a land fire in year 2009 near PT Selonok (a plantation near di-vision 14), and the PT Selonok team has worked hard to extinguish fire with fire fighting good facilities but because of PT KSI’s bureaucracy, the PT Selonok team could not go inside the company’s land boundaries so that it was very difficult to stop the fire, and PT KSI lost

PT KSI, has a riparian river management plan in place. There was no official complaint from PT Selonok on this matter. In fact PT KSI has been helping PT Selonok to monitor and put off any fires that occur within the common boundary. After all it is in the best interest of both parties that any fire outbreak must be addressed because both share a common boundary.

It was verified that the com-pany has a management plan to protect and rehabili-tate all river riparian belts in-side company’s area. Management response re-garding matter with PT Selonok was accepted.


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20 ha of their land. 28. • Why is the local regulation to

allocate 20% from total area dedicated for plasma plantation is not required for KSI?

• Where we can report any problems after the RSPO certificate is issued?

The land permit for PT KSI was issued in 2003 and this regulation to develop 20% of the HGU for plasma was non-existent than. Nevertheless PT KSI is still committed to develop the plasma as part of its sustainable community development as long as the community can identify the area suitable for plasma outside our HGU with a clear legal status Problem regarding RSPO related matters can be reported to TUV.

Management response was accepted. It was verified that PT KSI obtained their li-cense in 2002, while this re-quirement applies only to companies that get license approval after year 2007.

29. • What if we found a problem regarding the permits of the company? What is the follow up action? And what about community economic development?

• There are some positive impacts from the company’s operation, however the livelihood of communities in Sembuluh village still not has not improved

If there are issues with regard to legal compliance we will make good the nec-essary non-compliance. PT KSI have paid the taxes in line with the national and local regulations. This is the revenue for the country and can be used to develop the community. PT KSI have provided employment and business opportunities to the Sembuluh villagers. It is up to them to seize the op-portunity. We cannot live up to every-one’s expectations.

Management response was accepted. Further explana-tion on contribution made to communities was explained under Section 3.1, CR 6.11.

30. • There is a MoU on donations from third parties for companies in Seruyan. If the company has a palm oil mill, donation is Rp5/kg of FFB. Has the company paid this contribution?

• The company should have a representaive office in Seruyan to make communications easier

• The company’s CSR programmes should be continued.

We have not signed any MoU but we have complied with the national and local regulations. We have paid the tax on CPO but we cannot pay the tax on FFB. Double taxation legally is not allowed.

We will bear in mind and consider in the near future. PT KSI community development is done based on the social impact study conducted by an independent team from INDRI. The result of the social impact study will be used to draw the community development plan with the concept of sustainable development


31. The community’s land which has not been compensated and has been enclaved should be used to develop plasma schemes as a kind of Community Development programme.

Plasma cannot be established inside the company’s HGU area. Local communities can continue to manage the enclaves as long as he complies with the MoU between PT KSI and the land owner and does not go against the local regulations (no burning).


32. Company liabilities for all taxes such property taxes (pajak bumi dan bangunan - PBB), added value tax (pajak pertambahan nilai - PPN), personnel (especially for executive level), fuel

Payment of the tax is made through the bank and not to the local govern-ment institution. Seruyan district does not have tax office. Payments need to be done in Sampit.



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consumption, etc shall be paid on time at the right place (Seruyan government).

33. The company should provide accurate data regarding workers according to the place of origin and address employee, since prior to this the background of these employees, especially casual workers, are not clear. The company should report all foreign workers to the ministry of manpower, to prevent misuse of permit . How many foreign workers are there at PT KSI? Foreign workers that stay overnight in PT KSI’s area should have a permit from the local police department.

PT KSI has reported their employee data to the relevant department which in this case is the manpower ministry at district level and police station at subdistrict level (Polsek) PT KSI has reported the matter on foreign employment to the police sta-tion at regency level (Polres), man-power ministry at district level and Immigration office. It is up to the dis-trict level police station to send rele-vant information to the police station at subdistrict level. The police department and manpower institution at district level and Immigra-tion department has already given their letter/permit to foreign employ-ees.

Management response was accepted. Management response was accepted. Management response was accepted.

34. Does the company have to pay taxes for Category C mineral mining activities since it carries out sand mining activities for road maintenance?. Does the company also have permission to construct buildings as factories, homes and offices?

PT KSI will comply with the national and local regulations with regards to mining activities. The relevant de-partment needs to raise the invoice before we can make payment. PT KSI has the official permit for buld-ing construction (izin mendirikan ban-gunan-IMB) for its mill, houses and of-fice.

It was verified during the audit this the company has not paid taxes for sand mining activities and this was raised as NC 7 of 7. It was verified that the company has the relevant license for building construction.

35. • There is no Worker Union in KSI as required under the regulation UU No. 21 tahun 2000 regarding worker unions in Indonesia.

• The company should report to the local government regarding payment of ‘Hari Raya’ (local festival) Allowance, to the labour department

By law, PT KSI cannot be directly in-volved in the formation of a Labour Un-ion. But PT KSI has and will continue to support/facilitate the formation of a La-bour Union. PT KSI has complied in accordance to the national/local regulations.

There is a Bipartite Coop-erative Agency (‘Lembaga Kerjasama Bipartiet’ – LKS Bipartiet) formed to repre-sent employees of PT Kerry Sawit, which is simi-lar to a Labour Union, Fur-ther explanation under Section 3.1, CR6.6.

36. The company has not developed any smallholder schemes. If company has no plasma programme, the company can develop a partnership programme with communi-ties similar to a smallholder scheme. The company can provide inftastructure and the communities can share the benefits with the com-pany.

The land permit for PT KSI was issued in 2003 and the regulation to develop 20% of the HGU for plasma was non-existent than. Nevertheless PT KSI is still committed to develop the plasma as part of its sustainable community development as long as the community can identify the area suitable for plasma outside our HGU with a clear legal status


37. PT KSI is not tranparent regarding the CSR programmes for local communities. This is very important for communities

PT KSI’s community development is done based on the social impact study conducted by an independent team from INDRI. The study involved the participation from local communities.



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to participate in planning of community programmes, and CSR programmes can be a substitute for Plasma programmes.

The result of the social impact study will be used to draw the community development plan with the concept of sustainable development.

38. There is no programme for

economic improvement from PT KSI which is very much needed by the local comunities.

PT KSI has done some income generat-ing programmes such as petty contracts for building construction, supply of seeds, fertilizer, agrochemicals and also busi-ness opportunities such as transportation of CPO. We also provide employment opportunity for the villagers as and when there is a vacancy.


39. 1. There is a problem with regards to land compensation because the price proposed by company is very low, only 1 million rupiah per ha.

2. The contract price for oil palm seedlings, FFB and CPO transportation is very low

3. Discussions on land compensation is always conducted at PT KSI’s regional office, which is located very far from communities villages, around 40 km. Sometimes the company’s officer is not available at the office. It is suggested to conduct land compensation discussion at a location nearby the village location.

4. It is very difficult to meet the company manager and public relations officer.

PT KSI complies with local regulations (peraturan daerah - PERDA) on the rates of compensation. PT KSI will look into the matter of review-ing their rates for FFB transport. PT KSI never issues out contracts for seedling transport. The contract rate for CPO transport can be referred directly from PT MDP (PT KSI’s main FFB transporter). PT KSI has always obtain the consent of both parties to decide for the venue for the negotiation to take place. PT KSI never insisted that the venue should be in their regional office except for the payment of the compensation for safety reasons. PT KSI will look into this matter.

Management response was accepted and it was verified that the company maintains records of all negotiation process to resolve ongoing land disputes and also main-tains records of compensa-tions made. Compensation amounts are at the discre-tion of company as agreed by the claimant, but there is no evidence of coercion.

40. Local workers in the company are very few and not given priority.

At PT KSI, local workers refer to those from the whole of Central Kalimantan and are not confined to the surrounding vil-lages. Todate we have 40 % local em-ployment. Communities from the surround-ing villages are very selective and only want to work in certain position where there are no vacancies.


41. 1. The company should give free medical treatment of temporary workers.

2. There is a land problem since 2004 in PT KSI for 12 ha of land which was already planted with no compensation given.

PT KSI provides free medical treat-ment in the company’s clinic within the estate. It is difficult to provide a valid re-sponse because the question is very vague with no proper map to support this particular claim. All land claims are very site specific. According to our record the entire land in PT KSI have been compensated accordingly.

Management response was accepted. It was verified that the company provides free medical treatment for all workers, including temporary workers. There was no further infor-mation in the land issue raised.

42. There is no land compensation payment for

Upon confirmation with the village headman, this land have already been



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community land belonging to Mr. H. Nurmansyah by PT KSI even though he has received a recommendation from the Land Aquisition team of Seruyan District in year 2006 for claim of total area of 160 Ha.

compensated before. What Hj Nur-mansyah is expecting is to be given a kind of goodwill compensation for opening a road in that area.

43. PT KSI still not responded to a proposal from the “Maju Bersama” cooperative of Sembuluh 1 Village to carry out construction work for PT KSI.

PT KSI has already awarded the con-tract to this co-operative in the form of construction of 2 blocks of G-10 (la-bour housing). We have also awarded 4 blocks of G-10 (labour housing) and office construction in other Wilmar companies outside PT KSI to the same co-operatives. The total contract awarded to this co-operative was Rp 2.5 billion.


44. 1. Proposed to PT KSI to help communities by providing literature or books on agriculture and plantation management.

2. Proposed that PT KSI provides scholarships for clever students.

3. Proposed that the company provides incentives for teacher in village schools

PT KSI will consider.

We have already provided honorarium payment to 13 teachers


B) Issues Raised during Stakeholder Interviews On-site

No. Issues Raised Management Response Audit Verification

1 1. Road accsess constructed by PT KSI is good enough. 2. There is no community members who are given work as CPO transporters for the company. The company should prioritize local people as CPO transporters. 3. The company should provide donation for old people up to 50 year olds, even though they cannot apply as temporary worker. 4. AMDAL and document should be made available to communities for transparency.

The management of the mill has organ-ized a meeting with the village head of Sembuluh 1 and 2 on Dec 4 2010. Dur-ing the meeting the villagers were in-formed that they can form a co-operative and PT MDP (Wilmar’s main CPO trans-porter) can consider giving them the CPO transport contract. There is no legal provision to get com-pany to pay non-employment benefit to community members more than 50 years old. PT KSI has a transparent policy to allow concern communities to visit their docu-mentation room and to access the AMDAL and HGU if they wanted to.

Management response was accepted and verified during audit.

2 Clean water facilities in employee housing is very poor and not sufficient for daily purposes.

Upon confirmation by auditors there is no complaint by the workforce. Nevertheless PT KSI will continue to monitor the water quality and needs of the workforce to en-sure that sufficient clean water is pro-vided for their daily needs. PT KSI has already budgeted a water treatment plant to ensure that this matter will be suffi-

This was checked on-site and explanation is as de-scribed in Section 3.1 un-der CR6.5.


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ciently addressed by next year.

3 There is no MoU between PT KSI and community land own-ers of land areas that claimed by KSI as conservation areas. The MoU shall be signed and witnessed by the local gov-ernment, village heads, and police officers. Agreement can be made as reference to sue the company if they do not conduct reforestation.

There is an MoU dated March and April 2010 between Sembuluh 1, 2 and Tabiku villages that manage these HCV areas. Both the Village headmen of respective villages and the village elders also par-ticipated.

Management response was accepted and verified during audit.

4 There was an email received from an NGO (Save Our Bor-neo) dated December 4, 2010 - Please check waste water from KSI mill especially in block no. 74 and 75.

There is no sign of the KSI mill discharging the effluent directly into the waterways in block 74 and 75. But during inclement weather there is a possibility that they could have been some overflow. To address this we have increased an extra holding pond with a capacity of 4,000 cu m that can contain about 134 days of effluent production.

The company’s land application programme is under review by the local government for one year, PT KSI has no appproval yet for land application programme but has conducted all necessary procedures to obtain the license which is currently just pending approval from the local environmental department. The audit team visited block no 74 and 75, and found signs of overflow but this is contained within the estate area (none flows to rivers), as explained under Section 3.1, CR5.6


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3.5 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 Wilmar International

Group …………………………………………. Simon Siburat Group Sustainability Controller Date: 7 April 2011

Signed on behalf of TUV Rheinland Malaysia

……………………………………….. Dian Susanty Soeminta Lead Auditor Date: 14 February 2011


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APPENDICES Appendix 1: Details of Certificate

Standard: RSPO Principles & Criteria for Sustainable Palm Oil Production; Indonesian

National Interpretation: 2008

Certificate Registr. No.: 01 100 117292

TUV Rheinland Malaysia Sdn. Bhd. certifies:

Certificate Holder: PT Kerry Sawit Indonesia Palm Oil Mill Subsidiary of Wilmar International Limited, Danau Sembuluh I Village, Danau Sembuluh subdistrict, Seruyan district, Central Kalimantan, Indonesia

and its company owned estates according to the annex.

Scope: Palm Oil Production and Plantation Management System

An audit was performed, Report No. 117292. Proof has been furnished that the requirements according to RSPO Principles & Criteria for Sustainable Palm Oil; Indonesian National Interpretation: 2008 are ful-filled.

The due date for all future audits is 18-04 (dd.mm).

Validity: The certificate is valid from 2011-06-18 to 2016-06-17.

The palm oil mill and supply base covered in certification scope are:

CPO Tonnage Total Productions*: PK Tonnage Total Productions*: Company Estates FFB Tonnages*: FFB Tonnages from other sources*: CPO Tonnage claimed for certification**: PK Tonnage claimed for certification**:

48,633 tonnes 8,489 tonnes 265,589 tonnes 105,377 tonnes 51,656 tonnes 9,392 tonnes

* Production data for year 2010 ** Based on projected increased production in year 2011

GPS locations Name of mill/

estate Location Latitude

Longitude

PT KSI Mill Danau Sembuluh I Village, Danau Sembuluh subdistrict, Seruyan district, Central Kalimantan, Indonesia

02° 47’ 06.2”S

112° 30’ 32.2”E


02° 43’ 27.4”S

112° 43’ 27.4”E


02° 45’ 35.7”S

112° 29’ 32.2”E


02° 48’ 40.1”S

112° 31’ 0.3”E


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Appendix 2: Certification Audit Plan

Date / Time Organizational Unit and Proc-esses

Auditor / Abbrev. Interviewee Procedure - EM/QM Element -

Standard Chapter Monday Decem-ber 06, 2010

Traveling from Jakarta to Palangkaraya and KSI Site

15.00 • Opening Meeting • Introduction by team leader. • Presentation of estates by re-spective managers. • Presentation of Oil Mills • Source of FFB by respective managers

Auditor and Manager

16.00 HGU legal requirement , all re-lated legal requirement & docu-mentation checking

All Audi-tors

Top Manage-ment & Related Manager

16.00 Environment, Economic and Legal Issues • Field operations. • Worker interviews. • Riparian zones. • HCV

All Audi-tors

Plantation and Palm Oil man-ager

Principle 1 Criteria 1.1; 1.2; Principle 2 Criteria 2.1;2.2;2.3; Principle 3 Criteria 3.1;

18.00 End of 1 st day audit Tuesday December 07, 2010 KSI 1 Office Location 08.00- 09.30

Environment and Legal Issues • Chemical stores • Workshops. • Legal Aspect

DSS (Dian S. Soeminat)

09.30-12.00

Social issues • Housing. • Medical. • Schools. • Local communities • HCV

FA (Fadli) Plantation Manager

Principle 4 Criteria 4.1; 4.2;4;3 Principle 2 Criteria Principle 3 Principle 5 Criteria 5.1 to 5.6 Principle 8

12.00-13.00

Break and Lunch All Audi-tors

13.00-17.00

Environment and Legal Issues • Chemical stores • Workshops. • Legal Aspect

DSS


FA Plantation Manager


Environment, OHS and Legal Issues

CN (Carol

Plantation Manager

Principle 2 Criteria 2.1


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Standard Chapter • Chemical stores • Workshops. • Legal Aspect

Ng) & RA (Rah-mawati)

Principle 4 Criteria 4.6,4.7, 4.8 Principle 8


IK (Ir-pan Kadir)

Plantation Manager

Principle 2 Criteria 2.2, 2.3 Principle 6 Criteria 6.1 to 6.11 Principle 8

17.00 End of 1st day audit Wednesday, December 08, 2010 KSI Office or Sampit 08.00-12.00

Open Stakeholder Consultation All Audi-tors

Invited stake-holder

12.00 End of Open Stakeholder Con-sultation

12.00-13.00

Break and lunch

13.30 Traveling to KSI Site KSI estate 2

Environment, Economic and Legal • Field operations. • Worker interviews. • Riparian zones. • HCV

DSS Plantation Manager


Environment, OHS and Legal Issues • Chemical stores • Workshops. • Legal Aspect

RA & CN

Principle 2 Criteria 2.1 Principle 4 Criteria 4.6,4.7, 4.8 Principle 8

14.00-17.00

Social issues. • Housing. • Medical. • Schools. • Local communities • HCV

FA & IK


End of 2nd day audit Thursday, 09 December 2010, KSI Estate 3

Environment, Economic and Legal Issues • Field operations. • Worker interviews. • Riparian zones. • HCV

DSS & RA

Plantation Manager


08.00-12.00

Environment and Legal Issues • Chemical stores

CN Plantation Manager

Principle 2 Criteria 2.1


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Standard Chapter • Workshops. • Legal Aspect

Principle 4 Criteria 4.6,4.7, 4.8 Principle 8


FA Plantation Manager


12.00-13.00

Lunch & break

13.00 to 17.00

Economic Issue & Process Compliance • Management Plan • HCV • Environment Issue • Legal compliance & Process compliance

DSS Manager Principle 1 Principle 3 Principle 4 Principle 8 Principle 5 Principle 2

Social issues • Labour Union (if any) • Contractors (if any) • Workers facilities (house, scholl, transport, sports, etc) • Female workers • Sexual harassment policy • Health & Clinic • Land used • Local communities

IK & FA Manager Principle 2 Criteria 2.1; 2.2; 2.3; Principle 4. Criteria 4.7; 4.8 Principle 6 Criteria 6.1 to 6.11 Principle 8 Principle 2 Principle 1 Criteria 1.1; 1.2;

OSHAS, Enviroenmental Issue CN & RA

Principle 4 Principle 5

17.00 End of 3rd day audit Friday,10 December 2010, Mill 08.00-10.00

Economic Issue & Legal Issue • Management Plan • Environmental impact • Energy efficiency

DSS Manager Principle 3 Principle 4 Principle 7 Principle 2

08.00-12.00

Social issues • Labour Union (if any) • Contractors (if any) • Workers facilities (house, scholl, transport, sports, etc) • Female workers • Sexual harassment policy • Health & Clinic • Land used • Local communities

Fadli & IK

Manager Principle 1 Criteria 1.1; 1.2; Principle 2 Criteria 2.1; 2.2; 2.3; Principle 4. Criteria 4.7; 4.8 Principle 6 Criteria 6.1 to 6.11 Principle 7 Principle 8

08.00-12.00

OSHAS, legal and Environ-mental Issue

CN & RA

Principle 4 Principle 5

13.30-15.30

Preparation for Closing Meet-ing

16.30-17.30

Closing meeting and present findings

17.30 End of Main Assessment


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Standard Chapter Saturday 11 December 2010 09.00 Travelng to Jakarta

Appendix 3: List of Abbreviations

ANDAL Analisa Dampak Lingkungan (Environmental Impacts Assessment) AMDAL Analisis Mengenai Dampak Lingkungan

(Assessment of Environmental Impacts, comprised of ANDAL, RKL & RPL) AGM Asistan General Manager BKPM Badan Koordinasi Penanaman Modal (Capital Investment Coordination Board) BLH Biro Lingkungan Hidup (Environmental Bureau) BM-LO Bina Mitra Local Office BM-RO Bina Mitra Regional Office BOD Biological Oxygen Demand BPD Badan Penasihat Desa (Village Advisory Body) BPN Badan Pertanahan Nasional (National Land Institution) CKP Central Kalimantan Project (a project managed by Wilmar International) COD Chemical Oxygen Demand CPO Crude Palm Oil CSR Corporate Social Responsibility DISNAKER Dinas Tenaga Kerja (Labour Department) EIA Environmental Impact Assessment EM Estate Manager ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health FFB Fresh Fruit Bunches EFB Empty Fruit Bunches EMU Environmental Management Unit GM General Manager GEM General Estate Manager GPS Global Positioning System HCV High Conservation Value HGU Hak Guna Usaha-Lang Use Right HRD Human Resources Department HYPERKES Hygiene Perusahaan & Kesehatan Kerja (Company Hygiene & Occupational Health) IDR Indonesian Rupiah IMB Ijin Bendirikan Bangunan (License for Building Construction ) IPM Integrated Pest Management IUP Ijin Usaha Perkebunan (Plantation Business License) JAMSOSTEK Jaminan Sosial Tenaga Kerja (Social Security Insurance) KER Kernel Extraction Rate KSI Kerry Sawit Indonesia LCC Leguminous cover crops LTA Lost Time Accident MCU Medical Check Up MoU Memorandum of Understanding MSDS Material Safety Data Sheets MT Metric Ton NGO Non-Government Organization OER Oil Extraction Rate OSH Occupational Safety & Health PERDA Perundangan Daerah (Regional Regulations) PBB Pajak Bumi dan Bangunan (Land and Building Taxes)


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PK Palm Kernel PKO Palm Kernel Oil POLSEK Polisi Sektor (police at sub-district level) POLRES Polisi Resort (police at district level) POME Palm Oil Mill Effluent PPE Personal Protective Equipment RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) Sdn. Bhd Sendirian Berhad (Private Limited) SIA Social Impact Assessment SOP Standard Operating Procedure SMPN 3 Sekolah Menengah Pertama Negeri 3 (District 3 Junior High School STP Sarana Titian Permai, PT (name of another plantation under Wilmar) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UU Undang Undang (Regulations)

Appendix 4: List of Stakeholders Interviewed and Contacted

No. Name of Stakeholder Position / Institution Stakeholders Interviewed during Public Consultation Meeting

1 Abdul Khaidir Head of Desa Sembuluh I 2 Jaliansyah The youth leader of desa Sembuluh I 3 Safrudin The yout leader of desa Sembuluh II 4 Irwan S. Sos the director of koperasi maju bersama 5 Tonolyonsah Community of desa Tabiku 6 Didi Supriadi Head of desa Tabiku 7 Tony CV. Gemilang Raya (contractor) 8 Suhadi Subur (contractor) 9 Hin Siong PT Mega Engineering system (contractor)

10 Ahmad Syukur SMK Kertapati 11 Saderi Hajazi Village secretari of desa Sembuluh I 12 Anton Holly (contractor) 13 Hendra PT Petro Andalan (contractor) 14 M. Nasir Secretary of BPD Sembuluh I 15 M. Durja Head of BPD Sembuluh I 16 Supriadi SMK Kertapati 17 Juansayah Teacher of SDN Sembuluh I 18 Syamsurijal Koperasi maju bersama desa Sembuluh I 19 Juanda Koperasi maju berasma desa Sembuluh I 20 Rufly Iman PT Agro Indomas 21 Yosi Wicaksono PT Agro Indomas 22 A. Syarifudin Contractor 23 H. Norman Community member 24 A. Supian Koperasi Kertapati 25 Kasuma Yuda Community member 26 Subhan Community member 27 Bambang W. Community member 28 Dedi Ansyah Secretary of Kecamatan Seruyan Hilir 29 Nasrun BPD desa Sembuluh I 30 Jaliansyah HD Head of desa Sembuluh I 31 Tri Prasetyo Kapolsek Seruyan Hilir District 32 Kantet Sri Waluyo Assistant of Regency economic development 33 Wicaksono National Land Institution of Seruyan Regency 34 Priyo Widagdo Institution of Forestry and Plantation (Dishutbun)


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35 F. Santoso Seruyan representative member (DPRD). 36 Mansyur Ibrahim Seruyan Disnakertrans 37 Heru S. Head of police office 38 Saduarjono SH. Seruyan Raya District 39 Titok Kurdias Seruyan Raya District Head 40 Albidinam SP Seruyan regency 41 Budi Purwanto Seruyan Regency 42 Maryoso SP Kepala Bidang Usaha Perkebunan 43 A. Tri G. Community head of desa Sembuluh I 44 W. Santoso Danramil 45 Benhard National land Institution of Seruyan Regency 46 Hadimi BLH Seruyan 47 Syamsuri Government institution 48 Sukardinata SMPN 3 Danau Sembuluh 49 Bambang Head of Danau Sembuluh Dsitrict 50 Gufron STP

Stakeholders Interviewed On-Site 1 Simon Siburat Sustainability controller 2 Kang Ka, Yee Senior Res Manager 3 Tan Tong Sing GM 4 Eka Amana Sustainability Coordinator 5 Lee Kok Seng AGM 6 Asrif Mahmud GEM 7 Gusfi EM 8 Rusdin RSPO Group KSI 9 Denie Arifianto Safety officer CKP

10 Clement Z. A. Wilmar Singapore CSR 11 Robby A. BM-RO 12 Riswantoro BM-LO 13 Low K H KAA- RO 14 Amantoharjono BM-RO 15 Irianto Ginting Technical Head 16 S. Kadir Security 17 Benny Rosa BM-CD 18 Melissa Tolley HCV research manager 19 John R HRD Manager 20 Andi Ayub BM-Land 21 Amin H HRD 22 Hendra K CD 23 Krismawan AR GIS 24 Yunus painer RSPO- RO 25 Mus Karabet EMU 26 Nur Ali E EMU 27 Tri Haryo Sagoro GIS 28 Budi C KSI 3

Appendix 5: Observations and Opportunities for Improvement

No. Observations / Opportunities for Improvement Criteria 1 The company should provide more transparent information about calculation of pay-

ment for permanent or non-permanent workers as well as stated in appointment let-ters for workers.

1.1

2 The company should have a procedure to specify the maximum duration within 1.1


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which they will give response for incoming requests of information from stake-holders.

3 The permanent licence for Kerry Sawit Mill Indonesia as required by the Modal In-vestment Coordination Body (Badan Koordinasi Penanaman Modal – BKPM) letter is still not available at PT KSI mill. The license is only available at the head office at Medan

2.1

4 The company must ensure that use of vehicles for all operational activities com-ply with applicable rules such as speed limits and have vehicle license plate numbers.

2.1

5 The company must continuously monitor the progress of changes of the com-pany’s name in their license of forest area release from PT Salawati Makmur to PT Kerry Sawit Indonesia to accelerate issuance of their land use right certificate (HGU). The company should make an action plan to follow up on the process of their HGU issuance.

2.2

6 All estates should enhance their efforts to comply with the company’s internal standard for application of EFB, which is at least 24,000 MT of EFB at sandy ar-eas for KSI 1 and 38,000 MT of EFB at sandy areas at KSI 2 and KSI 3.

4.2

7 The mill conducts water sampling and analysis of the mill monsoon drain water against parameters for clean water as per the Health Ministry’s Regulation No: 416/MENKES/PER/IX/1990. Based on last analysis results for 19 May 2010, opacity of water samples taken from the monsoon drain was 27.2, which is over the legal limit of 5. The mill should continually monitor the quality of the water dis-charge from the monsoon drain to ensure it meets legal standards for all parame-ters.

4.4

8 Mill water usage for June, July and November in 2010 exceeded the mill’s target for water usage, which is 1.5 tonnes of water per tonnes FFB. The mill should monitor water usage and take necessary steps to ensure the target for water us-age is not exceeded.

4.4

9 The company has not yet established a maintenance and protection programme for riparian wetlands, such as a wetland area at block 23/4 KSI 1, a wetland area in Sungai Pukun KSI 2, and riparian river at Simpang Balai block 097 KSI 3.

4.4.

10 There was a fire extinguisher at Bedeng Timur estate found to be at low pressure condition and one fire extinguisher at workshop of KSI 1 was observed to be at higher pressure than it standard. Pressure of the fire extinguishers should be maintained at optimum level to ensure these function correctly

4.7

11 Simulations of emergency situations to verify understanding and readiness of workers to meet emergency situationa should be conducted periodically

4.7

12 KSI mill should improve their system for maintaining detailed records of working accidents.

4.7

13 There is first aid room at the mill which shared with the processing supervisor’s room who is also responsible for first aid room. It is suggested to the company to provide first aid training to the processing supervisor as there is no evidence of his last training.

4.7.

14 It is recommended to preserve water samples for analysis purpose, since it needs 2-4 days for samples reach the laboratory. 5.1

15 KSI should continuously update their list of flora and fauna including environ-mental status for each identified species, especially for those which are available in HCV area.

5.2

16 The company should conduct ongoing identification of any protected, rare, threat-ened or endangered species in the remaining protected forest that is already defined as HCV 1.4/3 in Sungai Pukun block and block 059 & 060 of KSI 2.

5.2

17 The company should provide secondary containment in chemical stores to pre-vent oil spillage and leaks from oil drum which may contaminate public water sources or land.

5.3


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18 It is recommended that the mill identify other sources of green house gas emis-sions apart from empty fruit bunches.

5.6

19 The company should report on implementation of community health programmes in their RKL and RPL report.

6.1

20 The company should improve their system for maintaining records of requests or queries made, as well as records of resolved complaints.

6.2

21 It is recommended that suggestion box is placed in neutral area rather than at se-curity post.

6.2

22 The company’s officer responsible for community relations, especially at KSI 1, 2 and 3, is only from HR division and has no clear schedule for visits to be con-ducted to the village. The officer is responsible for the whole Central Kalimantan Project area of Wilmar, which is a wide area, and as such visits to villages made by the officer are very rare except when there is any ongoing land compensation process. Even then the officer only corresponds with the village head.

6.2

23 Hazardous waste bins at worker’s housing areas should be covered in order and ensure there are no holes at the bottom of the bins to prevent wastes from spilling or leaking out, i.e. as viewed at the East Bunkhouse at KSI 3.

6.5

24 It is recommended that the used well at the East Bunkhouse (Bedeng Timur) of KSI 3 housing area is closed and covered to prevent accidents and minimize the risks.

6.5

25 A training programme on the company’s procedure for prevention of violence againat women should be conducted for all workers and related parties.

6.9

26 It is recommended that mill has a programme for minimizing green house gas from empty fruit bunch stacking, and overstacking of EFB should be prevented to reduce buildup of greenhouse gases.

8.1

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