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PT MUTUAGUNG LESTARI

ASSESSEMENT REPORT

Sustainable Palm Oil Certification

Stage I Stage II Surveillance Assessment Report

Plantation Manager/Owner : MINAMAS Plantation - SIME DARBY Group

Plantation Name : PT LANGGENG MUARAMAKMUR

Country : Indonesia

Location : Sub District of Pamukan Utara and Pamukan Selatan District of Kotabaru, Province of South Kalimantan

Certtificate Code : MUTU-RSPO/014

Date of certificate issue : March 16th, 2012

Date of expiry of certificate : March 16th, 2017

Assesssment Date Report Finalisation

Date PT Mutuagung Lestari

Auditor Checked By Approved By

ST1 04 – 08/ 04 / 2011 20/04/2011 Deni A. Novendi; Faruk Ahmad Nasir; Oktovianus Rusmin;

Marsudi Eko Santoso

Tony Arifiarachman

Tony Arifiarachman

ST2 29/05/2011 – 04/06/2011

14/07/2011 Taufik Margani; Faruk Ahmad Nasir; Oktovianus Rusmin;

Marsudi Eko Santoso

Reny Rustianingsih

Tony Arifiarachman

S1

S2

S3

S4

Mutuagung Lestari Jl Raya Bogor Km 33,5 No. 19 Cimanggis Depok 16953 Indonesia

Submitted to RSPO on: Reviewed by RSPO on: CB Responds on: Approved by RSPO on:

09/21/2011 01/05/2012 01/19/2012 03/13/2012

Telephone (+62) (21) 8740202 Fax (+62) (21) 87740745/6

Email : [email protected]; www.mutucertification.com

MUTU Certification Approved by RSPO Secretary on June 2008

√

mailto:[email protected]

http://www.mutucertification.com/


ASSESSEMENT REPORT

SPO – 4006a i Prepared by Mutuagung Lestari for Langgeng Muaramakmur

TABLE OF CONTENT

Page

1.0 SCOPE OF CERTIFICATION

1.1 Interpretasi Nasional yang digunakan 3

1.2 The National Interpretation used 3

1.3 Organization Information 3

1.4 Type of Assessment 3

1.5 Locations of Plantations, Mill and Hectare Statements 5

1.6 Description of Land Use 5

1.7 Cycles and Planting year 6

1.8 Approximate tonnage certified 6

1.9 Other Certifications 6

2.0 ASSESSMENT PROCESS

2.1 Certification Body 9

2.2 Lead Auditor and Auditor Team 9

2.3 Assessment Methodology, Progress, and Site Visit 10

2.4 Stakeholder Consultation and List of Stakeholder contacted 14

2.5 Next visit schedule 15

3.0 ASSESSMENT FINDING

3.1 Summary of Non Conformance, Correction Action Required and Observation 16

3.2 Summary of Arising issues from public, organization and auditor responds. 35

4.0 CERTIFIED ORGANIZATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Formal Sign-off of Assessment Findings 39

ANNEX

1 Checklist of Main Assessment Reports of the RSPO Certification 40

2 Checklist of Supply Chain Certification System 91

3 Checklist of Time Bound Plan Verification Results of the RSPO Certification (Only apply for

Surveillance Assessment Report) 96

4 Peer Review Report 97

5 Result of RSPO Panel Committee 99

6 List of Stakeholder Contacted in the RSPO Certification Process 100

7 Glossary 102

Gambar

1 Location Map of PT Langgeng Muaramakmur 1

2 Operational Map of PT Langgeng Muaramakmur 2


ASSESSEMENT REPORT

SPO – 4006a Page 1 of 103 Prepared by Mutuagung Lestari for Langgeng Muaramakmur

Figure 1. Sitemap of PT Langgeng Muaramakmur

PT LMR


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Figure 2. Sitemap of Working Area of PT Langgeng Muara Makmur

SCE

BBE

BKE

POM

Bebunga POM

Boundaries Pole

Devision Boundaries

River

Village


ASSESSEMENT REPORT


1.0 SCOPE OF CEERTIFICATION

1.1 National Interpretation Used National Interpretation, Principles and Criteria of RSPO for Sustainable Palm Oil Production, Republic of Indonesia - RSPO INA-NIWG, May 2008 and Supply Chain Sertification System.

1.2 Organization Information

1.2.1 Company Name MINAMAS Plantation – SIME DARBY Group

1.2.2 Contact person Mohamad Pirabaharan

1.2.3 Company Address The Plaza Office Tower Lantai 36 Jl MH Thamrin Kav. 28-30 Jakarta 10350

1.2.4 Telephone +62-21-29926000

1.2.5 Fax +62-21-29922686

1.2.6 E-mail [email protected]

1.2.7 Website www.simedarby.com

1.2.8 Company status Private

1.2.9 Management Representative who completed the application for certification

Mohamad Pirabaharan (Head of PSQM Minamas Plantation)

1.2.10 Date of Being Registered as RSPO member 08 December 2004

1.2.11 Number of employee 2,193 People

1.2.12 Contractor/Community/other workers

People

1.3 Type of Assessment

1.3.1 Scope of Assessment Palm Oil Mill and Estate

1.3.2 Type of certificate Single

1.3.3 Company names listed in the certificate PT Langgeng Muaramakmur

1.3.4 Number of management unit

1 (one) palm oil mill unit (POM Bebunga) with FFB from 3 (three) estate unit, i.e.: Bebunga Estae (BBE), Sungai Cengal Estate (SCE), and Bakau Estate (BKE)

1.4 Locations of Estate, Mill and Area Size

1.4.1 Estate Site

Name of Estate

Location GPS Coordinate Total Area (Ha)

Planted Area (Ha)

FFB Yield (ton/year) Latitude Longitude

Sungai Cengal Estate

Binturung Village, Pamukan Utara Sub-district, Kotabaru District, Province of South Kalimantan

20 24' 12" - 20 28' 14" S

1160 19' 39" - 1160 23' 30"E

4,974 4,294.53 72,153.31

Bebunga Estate


20 20' 00" - 20 24' 14" S

1160 19' 42" - 1160 23' 47"E

3,390 3,382.92 72,164.85

Bakau Estate

Balaimea Village, Pamukan Utara Sub-district, Kotabaru District, Province of South Kalimantan

20 19' 25" - 20 25' 14" S

1160 14' 47" - 1160 19' 42"E

5,350 3,274.91 82,375.94

http://www.simedarby.com/


ASSESSEMENT REPORT


Sekayu Estate

Pamukan Utara Sub-district, Kotabaru District, Province of South Kalimantan

23,366.52

Betung Estate


17,343.89

Rantau Estate


58.40

Matalok Estate


404.42

Binturung Estate


1,053.92

Pondok Labu Estate


123.91

Rampa Estate


21.49

Smallholder of KKPA Sungai Cengal


48 861.35

Total 14,214 11,000.36 269,928

*) Source of production data 2010/2011

1.4.2 Location of Mill

Mill Name Location GPS

Coordinate Capacity (ton/hr)

Annual Volume (ton)

CPO Output

PK Output

PKO Output

POM Bebunga

Binturung Village, Pamukan Utara Sub-district, Kotabaru District, South Kalimantan

020 22’25,8” S 116019’47,00” E

60 59,439.93

13,049.14

-

*) Source of production data 2010/2011

1.4.3 Map Figures 1. and 2.

1.4.4 Village/Sub-district/District/Province

Village of Lomu, Segendang, Pangguran, Mulyo harjo, Binturung, Wonorejo, Balamea, Pamukan Indah, Lintang, Tamiang, Kalian, Harapan Baru, Desa Sakadoyan / Batu Engau, Pamukan Utara, Pamukan Selatan/Paser, Kota Baru/Province of East Kalimantan and South Kalimantan.


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1.4.5 Country Indonesia

1.4.6 Region South East Asia

1.4.7 Land ownership

Private

State

HGU certificate No. 133/HGU/BPN 1997 Land Office of Kota Baru District, South Kalimantan Province = 15,533 Ha (included 3,249.27 Ha outside assessment scope of Lanting Estate wich supplied FFB out of Bebunga POM) HGU No. 77/HGU/BPN/97 Land Office of Paser District, East Kalimantan Province = 828.7741 Ha HGU is in process, as per the Introductory Letter of BPN East Kalimantan Province No. 17/II/2011 dated 2 February 2011 = 1,162.22 Ha

Community

1.5 Land Use Detail

1.5.1 Total area 17,523.99 Ha

1.5.2 Areas exclude of the scope of this certification process (Lanting Estate)

3,249.27 Ha

1.5.3 Mature area 10,410,11 Ha

1.5.4 Immature area 384 Ha

1.5.5 Mill 32.42 Ha

1.5.6 Infrastructure area 150.48 Ha

1.5.7 Occupation 387 Ha

1.5.8 High Conservation Value 958.28 Ha

1.5.9 Port 2.45 Ha

1.5.10 LC Plan 141 Ha

1.5.11 Road, Bridge and Ditch 358.44 Ha

1.5.12 Hill, River, Valley 794.53 Ha

1.5.13 Encalve (permanent occupation) 595.41 Ha

1.5.14 Product type: FFB/CPO/ PK

1.5.15 Annual production rate (2005-2010) 19.43 Ha/Year

1.5.16 Actual production rate (2010) 21.11 Ha/ Year

1.6 Cycle and plantin year

1.6.1 Age profile of planted plant

Planting Year Size (hectares) Age (year)

1992 192 19

1993 117.04 18

1994 457.36 17

1995 1147.8 16

1996 3,523.93 15


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1997 3,010 14

1998 327.81 13

1999 275.95 12

2000 348.14 11

2005 403.32 6

2006 180.52 5

2007 425.78 4

2008 256 3

2009 128 2

Total 10,794,11

Average age 13.37

1.6.2 Replanting area after 2005 - Ha

1.6.3 New planting area after 2005 1,393.62 Ha

1.6.4 Harvest cycle 9 Hari

1.7 Estimated tonnage of certified products*

CPO Production Recovery 23.50 %

PK Production Recovery 4.95 %

FFB 252,510.76 Ton/Year

Crude Palm Oil 58,708.76 Ton/Year

Palm Kernel 12,499.26 Ton/Year

Budget projections 2010/2011

1.8 Other certification applied

1.8.1 ISO 9001:2008/ISO 14001: 2004 N/A

1.8.2 OHSAS 18001:2007 N/A

1.8.3 HACCP N/A

1.8.4 Other N/A

1.9 Time Bound Plan

1.9.1 Time bound plan for other Management Units of SIME DARBY Group as per July 2011

MINAMAS Plantation-SIME DARBY Group is committed to prepare a time bound plan for all of other management units in order to adopt the P&C standard or to obtain RSPO certificate. And the audit team was of the opinion that this plan is consistent with the RSPO Certification System documents – June 2007 for Partial Certification. Progress and follow up of the plan will be verified and reported at the time of the annual routine visit.

Certification Status Number of Strategic Operating Units (SOUs)

Remark/Details

Malaysia Indonesia

Certified 28 8

EB Review 11 2 The RSPO Certification will be received within one month’s time.

2008 7 0

2009 / 2010 Audited 31 13 All Malaysian SOUs have undergone the RSPO External Audit.

2011 Audited 1 11

2011 Planed 0 1


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1.9.2 Time Bound Plan SIME DARBY in Indonesia Per July 2011

Management Unit Address Size (hectares)

*)

Status Time Bound Plan

PT. Indoturba Tengah Seruyan and Kotawaringin Barat Districts – Central Kalimantan Province

7,734.60 Certified 2010 2009

PT. Tunggal Mitra Plantations Rokan Hilir District – Riau 13,836.00 Certified 2010 2009

PT. Sime Indo Agro Sanggau District – Kalimantan Barat

11,652.00 Certified 2010 2009

PT. Aneka Inti Persada Pekanbaru and Siak Districts– Riau

11,134.00 Reviewed by RSPO 2010

PT. Bina Sains Cemerlang Musi Rawas District – South Sumatra

6,513.00 Audited 2010 2010

PT. Kridatama Lancar Seruyan and Kotawaringin Barat Districts – Central Kalimantan Province

14,779.92 Certified 2011 2010

PT. Teguh Sempurna Seruyan and Kotawaringin Barat Districts – Central Kalimantan Province

16,601.66 Certified 2011 2010

PT. Lahan Tani Sakti Rokan Hilir District – Riau 3,759.02 Audited 2010 2010

PT. Bhumireksa Nusa Sejati Indra Giri Hilir Distric – Riau 25,662.00 Reviewed by RSPO 2010

PT. Sajang Heulang Tanah Bumbu District – South Kalimantan

7,794.00 Certified 2011 2010

PT. Ladangrumpun Suburabadi Tanah Bumbu District – South Kalimantan

6,077.00 Certified 2011 2010

PT. Bersama Sejahtera Sakti Kotabaru District – South Kalimantan

12,704.54 Certified 2011 2010

PT. Bahari Gembira Ria Muaro Jambi District – Jambi 1,202.04 Audited 2010 2010

PT. Langgeng Muaramakmur Kotabaru District – South Kalimantan

16,361.77 Audited 2011 2011

PT. Paripurna Swakarsa Kotabaru District – South Kalimantan

14,892.00 Audited 2011 2011

PT. Swadaya Andika Kotabaru District – South Kalimantan

10,361.18 Audited 2011 2011

PT. Laguna Mandiri Kotabaru District – South Kalimantan

15,299.80 Audited 2011 2011

PT. Tamaco Graha Krida Morowali District – Central Sulawesi

4,145.00 Audited 2011 2011

PT. Sandika Natapalma Ketapang District – West Kalimantan

8,406.21 Audited 2011 2011

PT. Budidaya Agrolestari Ketapang District – West Kalimantan

1,002.21 (Other Area

Under developed)

Audited 2011 2011

PT. Mitra Austral Sejahtera Sanggau District – West Kalimantan

8,741.29 Audited 2011 2011


ASSESSEMENT REPORT


PT. Padang Palma Permai Aceh Tamiang and Aceh Timur Districts - Aceh

6,451.99 Audited 2011 2011

PT. Guthrie Pecconina Indonesia Musi Banyuasin District – South Sumatra

13,961 Audited 2011 2011

PT. Perusahaan Sri Kuala Aceh Tamiang and Aceh Timur Districts - Aceh

1,128.90 Audited 2011 2011

Smallholder of KKPA Sungai Cengal

Kotabaru District – South Kalimantan

48 Audited Plan 2014


ASSESSEMENT REPORT


2.0 AUDIT PROCESS

2.1 Certification Institute

PT Mutuagung Lestari

Jl. Raya Bogor Km 33,5 No. 19 Cimanggis - Depok 16953 Indonesia

Telp. +62-21-8740202

Fax +62-21-87740745/46

Website: www.mutucertification.com

Email : [email protected]

2.2 Lead Auditor and Audit Team

2.2.1 Audit Team

ST1 1) Deni A. Novendi (Lead auditor). A Bachelor of Forestry Science Majoring in Natural Resources Conservation. Ecological and Social Specialist. He was involved in socio-economic study of River Basin community - Citanduy - Cisanggarung in Ciamis District, West Java, and has over 13 years experience in the field of Planning and Conservation of Forests on forest concessions in Indonesia. Since 2003, he worked for an Independent Certification Institute as an Auditor of Forest Management Certification System (FSC and LEI systems); Chain of Custody, ISO 9001, and the RSPO. He has also conducted several audits for each of these certification systems. In this first assessment stage he assessed environmental, legal compliance, and OHS (Occupational Health and Safety) aspects.

ST1 and S T2

2) Faruk Ahmad Nasir (Auditor). A Bachelor of Agricultural Science Majoring in Soil Science. Specialist of soil and environmental conservation. He was involved in a number of study activities concerning environment, land suitability, and environmental impact analysis in palm oil and forestry development (both natural forests and plantations). In this assessment process, he assessed soil conservation, best practices, and environmental impacts. 3) Oktovianus Rusmin (Auditor). A Bachelor of Social & Political Sciences Majoring in Anthropology. Specialist of Social and Cultural (Social Impact & Conflict Resolution) and HCVF. He was attended Forest Management Auditor Training (FSC Standard) and Environmental Management System ISO 14001 & SVLK & SVLK Training auditor. He was involved in a number of audits of Sustainable Forest Management Certification (LEI Standard). He had worked with the Center for study of Anthropology of the University of Indonesia; and a Social Expert for the Tropical Forest Trust (TFT) Indonesia. He was involved in a number of Social Impact Analysis and HCFV Identification process in a number of Palm Oil Plantations and natural forest concessions. In this assessment activity, he assessed the social and legal aspects. 4) Marsudi Eko Santoso (Under Auditor Trainee), A Bachelor of Agricultural Science Majoring in Agro-technology. He had attended auditor training for ISO 9001-2008 System Management certification, HACCP certification, RSPO certification system understanding and RSPO Lead Auditor Training. He was also involved in RSPO assessment in several companies as an observer. Currently he has been working with an independent Certification Body. In this assessment process, he audited Best Practices, IPM, employment and environmental aspects.

ST2 5) Taufik Margani (Lead Auditor). A Bachelor of Forestry Majoring in Forest Management. Environmental Specialist. He had served as lead auditor of a number of audit processes on Forest Management in Indonesia (under LEI-Lembaga Ekolabel Indonesia and FSC-Forest Stewardship Council schemes) and Lead Auditor for Lacak balak FSC. His other experiences: A registered Lead auditor of IRCA for Environmental Management System and Quality Management System. Since 1999 he had been working with an independent certification agency and has conducted a number of audits of Environmental Management System, Quality Management System, and RSPO in Malaysia and Indonesia. Currently he is an Agriculture Food and Fisheries General Manager. In this assessment process, he assessed legal, environmental, Best Practices, employment, Occupational Health and Safety (OHS) and supply chain aspects in Palm Oil Mill.

http://www.mutucertification.com/


ASSESSEMENT REPORT


2.3 Assessment Methodology, Progress, and Field visit

2.3.1 Assessment Date

ST1 04 – 08 April 2011

ST2 29 Mei – 04 June 2011

2.3.2 Estimated person-days for this assessment process

ST1 Number of participated auditors: 4 persons Number of days for on-site assessment activity: 4 days number of person-days for on-site assessment activity: 16 days

ST2 Number of involved auditors: 4 persons Number of days for on-site assessment activity: Taufik (7 days), Faruk (6 days), Okto (7 days), and Eko (7 days) The number of person-days for on-site assessment activity: 27 days

2.3.3 Detailed Audit Process

ST1 Stage-1 (pre-assessment) process is aimed at measuring the extent of readiness of the organization in implementing the RSPO standards by assessing individual understanding on the RSPO standards process, location condition, methodology of process to certification aspects, identifying stakeholders, evaluating internal audits and management system in planning and performance of the implementation of the RSPO standards, and assessing the company's readiness in facing the Stage-2 audit. The assessment was conducted by measuring the adequacy of implementation that has been done by the company (LMR) to comply with the requirements of the National Interpretation of the Republic of Indonesia for the Roundtable on Sustainable Palm Oil Principles and Criteria (RSPO INA-NIWG, May 2008).

The assessment was conducted in three methods, i.e: (1) review of documents, to assess the adequacy of the type and substance of the required documents, (2) interview with management unit’s personnel, to obtain more detailed information and to cross check; and (3) field visit, to assess the adequacy of the actual implementation in the field comdpared to the data of review result and information specified in the document. A number of improvement recommendations resulted from the Stage-1 activities were submitted by MAL auditors to LMR management, and the improvement results would be taken as verification for the second assessment stage (Stage-2). All information obtained were recorded in the Checklist of PT Mutuagung Lestari and become the main attachment to the Assessment Report. In detail, the first stage assessment process is as follows:

April 4, 2011. The team went from Jakarta to the Estate

April 5, 2011. An opening meeting was held on the morning in the Meeting Room of Bebunga Estate attended by Pamukan General Manager, Plantation Service Quality Management Representative, BBE Estate Manager, SCE Estate Manager, BKE Estate Manager, Senior Assitant, Assistant, Head of Administration Function and other related personnel. Further, corporate document review was conducted focusing on plantation operation aspects. The audit team was divided into 3 groups according to their respective areas of expertise, as follows: Team I (Deni) - assessment of transparency, waste management, air emission and pollution management, and hazardous waste treatment; employment including the implementation of OHS, training, emergency response; and compliance with laws and regulations aspects. Team II (Faruk) – assessment of soil and water conservation; practices of maintaining and improving soil fertility; management of HCV and species; land clearing aspects. Tim III (Oktovianus) – assessment of legality of land tenure; conflict management; social, environmental and HCV management aspects. Eko – participating in assessment of employment; cultivation practices of cultivation and Integrated Pest Control aspects.

April 6, 2011. Team I (Deni) went to the Palm Oil Mill (Bebunga Factory), to verify the POM’s documents, including: information management, long-term planning, working procedures, waste management, air emission management, energy utilization, and employment. Meanwhile, Team II (Faruk and Eko) and Tim III (Oktovianus) continued the document review process in the Main Office of Bebunga Estate. Based on the results of the document review and interviews, the team determined locations of samples to be visited next day, and communicated to LMR management unit.


ASSESSEMENT REPORT


April 7, 2011. At the morning until the afternoon the Team visited the determined sample sites, both in estate and factory. Deni & Faruk visited locations of waste management and pollution in Bebunga Factory, HCV management sites, and locations where soil conservation measures are taken. Meanwhile, Oktavianus and Eko visited new planting areas, conflict areas, IPM and clinics areas, and areas where chemicals are applied. At noon until late afternoon, the audit team held internal discussion of the audit results, completed the checklist, and prepared CAR to be presented in the closing meeting.

April 8, 2011. A closing meeting was held in the Meeting Room of Bebunga Estate attended by GM Pamukan, Plantation Service Quality Management Representatives, BBE Estate Manager, SCE Estate Manager, BKE Estate Manager, Senior Assitant, Assistant, Head of Administration Function and other related personnel. The audit team leaved the working area of PT Langgeng Muaramakmur.

ST2 Stage-2 (Main assessment) is aimed at measuring the achievement reached by the company (LMR) in impelemnting the requirements of the National Interpretation of the Republic of Indonesia of the Principles and Criteria (P&C) of RSPO for the Sustainable Palm Oil Production (RSPO INA-NIWG, May 2008). The assessment was conducted in three methods, i.e: (1) review of documents, to assess the adequacy of the type and substance of the required documents, (2) interview with management unit’s personnel, to obtain more detailed information and to cross check; and (3) field visit, to assess the adequacy of the actual implementation in the field comdpared to the data of review result and information specified in the document. A number of improvement recommendations resulted from the Stage-2 activities were submitted by MUTU auditors to LMR management unit, and the improvement results would be taken as verification for the Surveillance (S-1). All information obtained were recorded in the Checklist of PT Mutuagung Lestari and become the main attachment to the Assessment Report. In detail, the second stage assessment process is as follows:

May 29, 2011. Auditors went from Jakarta to the project site.

May 30, 2011. An opening meeting was held on the morning in the Meeting Room of Bebunga Estate attended by Pamukan General Manager, Plantation Service Quality Management Representative, BBE Estate Manager, SCE Estate Manager, BKE Estate Manager, Senior Assistant, Assistant, Head of Administration Function and other related personnel. Further, corporate document review was conducted focusing on plantation operation aspects. The audit team was divided into 2 groups/teams according to their respective expertise, as follows: Team I - assessment of legality of land tenure; conflict management; social, environmental and HCV management aspects. Team II – assessment of employment; practices of cultivation and Integrated Pest Control aspects. One Auditor (Faruk) went from Jakarta to Kotabaru for preparation for public consultation with district and Provincial government agencies and NGOs.

31 May 2011. Public consultation conducted in parallel in two places since morning till noon. Okto, Eko, Taufik - public consultation at BBE Sport Center with local stakeholders including: Sub-district Chiefs, Sub-district Police Chiefs, Village Chiefs, and local community leaders, attended by 30 participants Faruk - public consultation at Hotel Kartika Kotabaru and direct visit to Agency Offices related to stakeholders from Provincial and District Governments and NGOs attended by 7 participants. Later, at afternoon until evening, the team continued the document review process.

June 1, 2011. Field visit and document review. Audit team was divided into 2 groups/teams. Team I (Faruk and Taufik) reviewed documents relevant to HCV management, soil and water conservation and environmental aspects. Team 2 (Okto and Eko) conducted a site visit to verify the identified social-related issues, public consultation results, employment, management of HCV and Best Practices.

June 2, 2011. Audit team conduct further document review and discussion regarding the audit results. Audit team was divided into 4 groups/teams. Team I (Taufik) conducted a review of documents related to the estate’s planning and financial, company legality, soil and water conservation, factory’s employment, factory’s Best Practices, Supply Chain Certification System and environmental management aspects. Team II (Faruk) conducted assessment of documents relevant to HCV management, soil and water conservation and environmental aspects. Tim III (Okto) assessed documents relevant to company’s land tenure legality; conflict management; social, environmental and HCV management aspects. Team IV (Eko) assessed documents relevant to estate’s employment management; cultivation practices, company economics and Integrated Pest Management aspects.


ASSESSEMENT REPORT


June 3, 2011. Field visit and verification of public consultation results. Auditor team was divided into 4 groups/teams. Team I (Taufik) conducted observations on factory’s employment management, factory’s OHS management system, factory’s emergency response, Supply Chain Certification System and environmental / waste treatment aspects. Team II (Faruk) conducted field observation relating to HCV management, soil and water conservation, and Best Practices. Tim III (Eko) conducted a field visit to verify a number of aspects relevant to Integrated Pest Management, Estate’s employment management system, OHS management system, Estate’s Emergency Response, and cultivation practices aspects. Team IV (Okto) verified public consultation results to the company then tailored to the verification results to the community.

June 4, 2011. At morning until noon the audit team discussed the assessment results and prepared non-conformances. At afternoon until evening the team held a Closing Meeting in Meeting Room of Bebunga Estate attended by GM Pamukan, BBE Estate Manager, SCE Estate Manager, BKE Estate Manager, Senior Assistant, PSD Staffs, Estate Assistant, Plantation Service Quality Management Assistant, Head of Administration Function and other related personnel. At afternoon the team went to PT Paripurna swakarsa.

At the Closing Meeting, the audit team presented the tentative audit findings allowing the management unit to have RSPO certification as no Major non conformance is found. The final report will be prepared by the audit team and reviewed by internal reviewers and RSPO’s reviewrs. Based on the reviewers’ review results, especially reviewers from RSPO including auditor recommendations, the RSPO Certification Committee will thereafter decide whether the RSPO certificate is issued or not.

2.3.4 Location Sample Assessment

ST1 Location 1 – POM’s Fuel Tank (Bebunga Factory), where efforts are made in respect of fuel contamination prevention, hazardous waste marks, and fire hazard prevention (availability of Portable Fire Fighting Tools (PFFT).

Location 2 – POM’s Genset Room. Observation and interviews related to emission and air pollution control, hazard marks, availability of PPE for operators (especially for noise control), operators’ routine medical check up, operators’ welfare, fire prevention / emergency response, and routine maintenance of machinery.

Location 3 – POM’s Boiler Station. Observation and interview related to emission and air pollution control, hazard marks, availability of PPE for operators (especially for noise control), operators’ routine medical check up, operators’ welfare, fire prevention / emergency response, and routine maintenance of Chimney.

Location 4 – POM’s Warehouse Fire Fighting Tools. Observation and interview related to routine maintenance of fire fighting equipment and availability of fire fighting team.

Location 5 – POM’s Warehouse Hazardous Waste. Observation of storage and treatment of hazardous waste in POM covering hazardous marks application, contamination prevention, and application of PPE of workers in hazardous waste storage places.

Location 6 – POM’s temporary storage place of non-hazardous waste. Observation of non-hazardous waste treatment such as metal waste, plastic wast, etc..

Location 7 – Lintang Buffer zone in Bebunga Estate (BBE). Observation of buffer zone management. This location is also one of sampling locations for water-quality testing prior to inlet to the estate and factory.

Location 8 - Block C051 SCE. It is crop area 2007 located at low area (flooding area). Strategic management / exploitation of garden is done through water setting in the form of a canal equipped with sluice gates.

Location 9 - Block B030 Bebunga Estate (BBE). Where there are conservation measures on sloping land (> 15%) in the form of terracing.

Location 10 - Block E27 BBE. Where there is a Land Application of mill liquid waste through a flatbed system, and monitoring wells.

Location 11 - Block F16 BBE. Observation on the application Empty Bunch system.

Location 12 – POM Bebunga’s WWTP facility. Observation on mill wastewater management.

Location 13 - Block B7 Division III BBE. Where there are Spring management activities (defined as HCV. 5 area). The spring is a source of water for Segendeng and Kladen villagers, especially in dry season.

Location 14 - Block C7 Division III BBE. Based on the pole map monument (and pole book) there are major Boundary Pole No. 16 and Small Pole (secondary boundary pole).


ASSESSEMENT REPORT


Location 15 - Block B. 1 Division III BBE. Based on the pole map monument there are major Boundary Pole No. 18 and Small Pole (secondary boundary pole).

Location 16 - Block DE. 1 BBE. Crop area 2008 within the management area that has not been equipped with HGU. At that location there is a land conflict between PT. Langgeng Muara Makmur and Segendang & Kladen villagers.

Location 17 – Segendang Village. Indepth interview with Village Chief of Segendang and a villager (Fahrun) related to the land dispute between Segendang villagers and PT. LMR.

Location 18 - 16 Block G SCE. Observation and interviews with fertilizing workers associated with the company’s policy on fertilization, fertilization technique, periodic inspection and application of PPE.

Location 19 - Block G17 SCE. Observation and interview with spraying (pest control) workers associated with the type of pesticide used, policies on spraying activities, protection of reproductive rights, periodical inspection and use of PPE.

Location 20 - Block G20 SCE. Observation and interview with harvesting workers associated with the criteria mature harvest, harvesting techniques, use of PPE and existing benefits and housing facilities for workers.

Location 21 - F23 Block BBE. There is construction of new housing facilities for employees.

ST2 Field visit conducted in a location that has issues related to the company operations. The locations are determined based on the results of public consultation and document review. Determination of sample location adopts a formula (x = 0.8 √ y). The locations visited during the Stage 2 activities are as follows:

Location 1 - KKPA of Cengal River at Bintung Village with a total area of 328 ha. Observation and interview with spraying workers and Manager of KKPA on techniques and policy on spraying activities in KKPA area and training that has been followed by KKPA workers.

Location 2 - Block F32 BBE (new housing facilities for employees). Observation and interview with contractor’s foreman (CV Heral Eranio) regarding the company’s compliance with PO requirements, OHS, welfare of contractor’s workers and target of construction of new employees’s housing facility.

Location 3 - Block A 008 (Tamiang Effluent Border). Observation and interview about the company’s measures and progress of HCV management. HCV management progress is indicated by policy on prohibition of spraying in buffer zone areas marked with yellow painted trees and planting of woody plants such as mahogany.

Location 4 - Block A 010 (Cavern). Observation and interviews with estate assistant on conditions, actions and progress of HCV 6 management. Based on the observation, the team found that PT LMR preserves cavern by manually cleaning the area, marking the limit use of chemicals, and planting of woody plants such as Mahogany.

Location 5 - Office of Division II BKE. Interview with harvesting foreman and fertilizing foreman concerning crop fertilization techniques, employee wages, harvesting techniques in accordance with the SOP, Training, Breafing given to each member, employee grievance submission mechanism.

Location 6 – BKE’s Block A 006. Observation on condition of Nest Boxes that are still in good condition and occupied.

Location 7 – BKE’s Block A034 and Block A035. Observation and interview with spraying foreman and Spraying Team concerning the company’s policy of application of chemicals at buffer zone areas, periodical medical check up, application and adequacy of PPE, spraying method training, OHS training, FIRST AID training, grievance submission mechanism specifically in respect of gender, well-being and remuneration issues.

Location 8 - Workshop and Traction of BKE. Observation and interview with the head of traction on HIRAC, SOP, Used Oil Waste treatment where the oil used is stored in Oil Trap, implementation of OHS (Use of PPE and availability PFFT), FIRST AID kits.

Location 9 – BKE’s hazardous waste storage place. Observation and interview about hazardous waste treatment, hazardous waste monitoring, and completeness of hazardous waste marks/signs.

Location 10 – BKE’s diesel fuel shelter. Where diesel fuel containers have been equipped with the appropriate symbol, PFFT, water hoses, water tank and diesel fuel contamination preventive measures by way floor cementing, diesel fuel waste channel, sewage tank, and covered containers.

Location 11 - Chemicals warehouse in BKE. Observation and interview with the warehouse head on chemicals management, PPE use, the presence of chemicals that are categorized as Type 1 A and 1 B WHO.

Location 12 - Block B028 BBE. Observation and interview about strategy of management of sloping area where terracering system is applied, the placement of palm midrib, Neprolephis cultivation that are considered effective in controlling erosion.


ASSESSEMENT REPORT


Location 13 - Block C055 SCE. Observation and interview on flooding area management strategy, where the water management system is applied (water gate and channel are in good condition) and crop growth is also good.

Location 14 - Block C19 SCE and Block A035 BKE. Observation and interview about the company’s measures and progress of HCV 4.2 area management (buffer zone area) where HCV area management actions have been conducted indicated by the existence of information boards and appeals boards.

Location 15 - Binturung Village. Interview with community leaders about the existence and progress of land claim settlement at Binturu Village. People of this village desire to get equal treatment as given by the company to villagers of Segendang and Kladen Villages in respect of land claim settlement process, namely in the form of equal opportunity to participate in smallholder scheme as PT. LMR’s management unit promised to the community of Segendang and Kladen Villages.

Location 16 – Kladen Village. Interview with Village Chief where the team found that Kladen villagers are currently waiting for a follow-up resolution of land disputes. The villagers hope that the disputed areas could be managed again with the proviso that the public demand for smallholder program as promised by the PT. LMR could be realized soon. The audit team also got information from the Village Chief that PT. LMR's management unit would actually agree to meet such requirement, which is known by the Village Chief from an informal meeting with PT. LMR's management unit in Bebunga Estate on 29 April 2011.

Location 17 - Block C8 SCE (spring). Observation on the company’s measures and progress of management of HCV 5 area (springs) which represents a source of clean water for villagers of Segendang & Kladen, especially during the dry season. In that area, the company has installed sign boards and did replanting of plant species designed to preserve the spring border function.

Location 18 – Muyoharjo Village. Based on interview with the village secretary, the audit team found that the existence of the company’s estate is very beneficial for villagers because it absorbs a great number of local workers which leads to the increased economic activities of the people. Other benefits that the villagers also feel are the existence of road infrastructure which facilitates transportation and the company’s assistances to the local people through its Community Development program / CSR.

Location 19 – Lintang Jaya Village. Based on interview with the community figures, the audit team found that some people of this village work as harvesting and maintaining workers with PT. LMR. Other benefits that the villagers also feel are the existence of road infrastructure which facilitates transportation and the company’s assistances to the local people through its Community Development program / CSR.

Location 20 – POM’s Boiler Station. Observation and interview related to the company’s control system of emission and air pollution hazard, hazard symbols, PPE for operators (especially for noise control), routine medical check up and welfare services for operators, emergency response, routine maintenance of Chimney.

Location 21 – POM Genset Station. Observation and interview related to the company’s control system of emission and air pollution hazard, hazard symbols, PPE for operators (especially for noise control), routine medical check up and welfare services for operators, emergency response, routine maintenance of machinery.

Location 22 – POM’s hazardous waste warehouse. Observation on storage and management of hazardous waste in POM covering the application of symbols, contamination prevention, and use of PPE for workers in the warehouse of Hazardous waste.

Location 23 – Bebunga POM’s WWTP facility. Observation on the the POM wastewater treatment and land application.

Location 24 – Bebunga Palm Oil Plant (POM). Observation on Fresh Fruit Signs (FFB) processing, mill drainage management, Occupational Health and Safety (OHS), condition and existence of FIRST AID kits, emergency response, acceptance process of FFB up to CPO dispatching, and Supply Chain Sertification System.

2.4 Public Consultation and List of Stakeholders contacted

2.4.1 Public Consultation Process Summary.

There were 54 stakeholders contacted to provide their inputs to the company. The company public consultation was done in the following ways: 1) Public Announcement at RSPO website. 2) Sending invitation for comments and Stakeholders Consultation and Feedback Form vial postal office and email to


ASSESSEMENT REPORT


stakeholders. 3) The public consultation meeting with stakeholders was held simultaneously at two locations on May 31, 2011. The first

location was Hotel Kartika Kotabaru attended by representatives of local government agencies and NGOs and the second location was Art Building of Teluk Bakau Estate attended by local community, subdistrict chiefs, and village chiefs together with stakeholders from PT Paripurna Swakarsa. From the the public consultation results, the company got oral inputs from the stakeholders to be further verified by the audit team to the company.

2.5 Next visit schedule

The time of the next activity (Surveillance) will be determined after this report has been approved by RSPO secretariat and / or 12 months after the certificate is issued.


ASSESSEMENT REPORT


3.0 ASSESSMENT FINDINGS 3.1 Detailed Non conformance, Corrective Actions, and Observation

No. Ref Std/ Indicator

Non Conformance Grade Location

Request for Corrective Actions

Deadline Observation and Date Status Closing Date

2011.01 1.1.1 6.2.1

Record of requests for information - LMR was unable to present records on requests for information from stakeholders; SOP on Request for Information is available, but does not set that all requests for information will be recorded.

NC Estate & POM

LMR should review the SOP of Request for Information to ensure that all requests for information are recorded.

Prior to Stage 2

There is revised SOP on Request for Information (050/LMR-INF/C11) that outlines that the Incoming and Outgoing Mails related to information requests sent via Operational Unit addressed to the Operational Unit Manager are maintained in the Main Office. And available records requests for information from each estate is recorded or recorded and controlled.

Closed 03/06/2011

2011.02 1.1.2 6.3.1

Response to requests for information – There is no records of company’s responses to information requests; SOP on Request for Information is available, but does not set that all responses to requests for information will be recorded according to the stipulated timeframe.

NC Estate & POM

LMR should review the SOP of Request for Information to ensure that all inquiries will be responded at a set time, and documented.

Prior to Stage 2

The company’s SOP for Information Request has been revised and outlines the responses to be recorded and deadline of response of 2 weeks. Records of responses to requests for information are available in both estate and POM in the form of information request response letter (outgoing mail).

Closed

04/06/2011


ASSESSEMENT REPORT






2011.03 1.1.3 1.2.2

Determination of retaining time of records – There no company’s procedure or policy on determination of retaining time of records of request for and response to information according to their importance.

NC Estate & POM

LMR should review the SOP of Request for Information to determine the retaining time of records of request for and response to information based on their importance.

Prior to Stage 2

In accordance with SOP for Request for Information (050/LMR-INF/C11), the retaining time of records of information request and response is 5 years.

Closed 03/06/2011

2011.04 1.2.1

Types of public information – There is no documented procedure or policy of classification of information that can be published, or excluded (treated confidential) which refers to the prevailing laws and regulations (eg: Law no. 14 of 2008 on Public Information Transparency).

NC To be CFA

Estate & POM

LMR should provide information management procedures that explicitly classify the types of information/data that can be published and those that should be kept confidential by referring to the Law no. 14 of 2008.

Prior to Stage 2

There is revised version of SOP for Request for Information (050/LMR-INF/C11) which specifies/classifies documents that may be notified to the stakeholders, but dod not yet specify / classify documents that are not allowed to be given to the stakeholders.

Open

2011.05 2.1.1

Legal requirement compliance - There are some rules that the company has not fully complied with, for example: 1. RKL / RPL Implementation

Report has not been submitted regularly and timely to the relevant agency in accordance Government Regulation No. 27 of 1999.

2. The company has not employed trained personnel according to regulations in the use of the paraquat herbicides (Regulation of Miniter of Agricultural No. 7/Permentan/SR- 140/2/2007).

NC Estate & POM

Company should review its level of compliance with all prevailing laws and regulations related to operations of palm oil plantations and mills

Prior to Stage 2

Company has complied with the prevailing laws and regulations in respect of its palm oil management operations. Evaluation of the compliance has been conducted by the Company and is updated (April 25, 2011)

Closed 03/06/2011


ASSESSEMENT REPORT






3. There are still hazardous waste stored in an unlicensed temporary storage place in the Estate (Government Regulation No. 18/1999 in conjunction with the Government Regulation No. 85/1999).

2011.06 2.1.3

Documented legal compliance information system - There is a matrix that contains information on laws and regulations that the company shall comply with. However, this document does not cover all related legal and regulatory requirements aspects (scope of regulatory review is limited to Employment and OHS aspects). This system has also not yet been implemented in the POM.

NC Estate & POM

LMR should provide a matrix of results of evaluation of its compliance with all prevailing laws and regulations in respect of the operations of palm oil plantation and mills.

Prior to Stage 2

Company can show documented proof of the legal requirements it has complied with in the form of a list of licenses and regulations the company refers. As evidence of the compliance has been updated lastly on 25 April 2011

Closed 03/07/2011

2011.07 2.1.4

The mechanism of evaluation – The matrix of evaluation of regulatory compliance should specify evidences of the compliance on the remark column.

CFA Estate & POM

Prior to Stage 2

In the regulatory compliance evaluation form for its POM and Estate, the company has completed the proof of compliance (dokumen / program) so that its regulatory compliance is obviously identified, ie Act No. 5 of 1960 Article 28 on HGU. The company has presented its own HGU evidences in the form of HGU HGU certificates No. 12 (15,533 ha), No. 4 (828,774 ha) with a total area of 16,361.77 ha

Closed 03/07/2011


ASSESSEMENT REPORT






2011.08 2.2.1

Legal land ownership documents – Of the total area of 17,464.22 ha managed by LMR, there are still 1,100 hectares in Bebunga Estate that have not been equipped with legal documents (HGU certificate). Some areas have been planted since 2008.

NC Estate Company must be able to complete the legal documents on land ownership for its entire work area.

Prior to Stage 2

Company has presented proof of HGU process with a total area of 1,162.22 Ha Ha instead of 1,100 ha, the status of the HGU stewardship is in the form of a letter No. 17/P-64/II/2011 of BPN (Land Service Office) of East Kalimantan Province.

Closed 03/07/2011

2011.09 2.2.2

Area Boundary Poles – With respect to the installed boundary poles, the company is encouraged to prepare a periodical maintenance program to ensure the existence of the Main Poles and Secondary Poles.

CFA Estate Prior to Stage 2

Documented SOP for BPN Poles Maintenance (057/LMR-PPBC/C13), BPN Poles Monitoring & BPN Poles Maintenance Follow up Plan are available. Maintenance of the BPN Poles has been done including cleaning of the area around the poles and painting of the poles, while the replacement of the lost poles will be carried out in June 2011.

Closed 03/07/2011

2011.10 2.2.3

Conflict Settlement Documents - There are still disputed lands that have not been resolved, for example by disputed land of Segendang and Kladen villagers covering 594 hectares at Division IV Bebungan Estate. LMR has suspended its plantation activities at the area since May 18, 2009 and has made efforts to settle it facilitated by Muspika (Task Force) of Batu Engau Sub-district on January 24, 2010.

NC Estate LMR must provide documented evidence of conflict resolution process acceptable to both parties.

Prior to Stage 2

Company can show proof of meeting of June 3, 2011 with settlement agreement follow up as follows: • Smallholder scheme issue will

be discussed again by involving all relevant parties.

• Implementation time is expected to be pursued immediately and completed in 2011.

Closed 03/06/2011


ASSESSEMENT REPORT






2011.11 2.2.5

Conflict resolution procedures – The company is strongly recommended to review the existing SOP for Conflict Resolution, thus it: (1) clearly defines the category of "conflict", (2) sets the timeframe of response at each stage of the process, (3) includes a policy to stop the activities at the disputed land until an agreement is reached, and (4) ensures resolution method acceptable to both parties.


There is the revised SOP for Conflict Resolution (056/LMR-PKC/C12). The procedure specifies the category of conflict (minor, medium & major) and termination of operational activities in the area of conflict according to the direction of authorities and the company management to the field workers. Company has revised its procedures for identifying and calculating land compensation. But see new non-conformance NC-2011.41

Closed 03/07/2011

2011.12 2.3.1 2.3.2

Traditional rights - Company is strongly encouraged to identify and map out an adequate scale of the existence of traditional rights in the work area of LMR. For example: land tenure, traditional fishing rights, traditional hunting rights, etc..


There are maps of identified High Conservation Value (HCV) areas and record of HCV socialization to stakeholders in the form of Estate Manager’s Notice to Village Chiefs, Attendance List of Participants and Photographs of HCV socialization meeting. Community involvement in traditional right use has been taken into account in HCV identification process, which further, the area will be managed by the company including by the relevant parties.

Closed 03/06/2011


ASSESSEMENT REPORT






2011.13 4.1.1

SOP Estate - There are several SOPs for Estate designed for similar activities but there is difference in substance and not yet approved by the competent authority. For example: SOP No. RA012 (Pesticide Container/Packaging Storage), RA012 (Management of Hazardous Waste and Non-hazardous waste); NO. 700/IK-TQEMESH/10 (Standardization of Hazardous Waste & Non-hazardous waste); No. 709/TQEM-ESH/10 (Hazardous Waste Treatment).

NC Estate All SOPs should be reviewed in order to determine which SOP should be used as a reference.

Prior to Stage 2

Company has a procedure of estate operations starting from the LC (Land Clearing) to harvesting activities. The document is incorporated in the Agricrultural Reference Manual, published in 2008, including: plant materials, seeding techniques, replanting, land preparation, crop maintenance, harvesting bunch tagging, general pest control of palm oil, etc.. In addition the company also has another documented procedure (approved by the authorized official) associated with the use of chemicals, handling of chemicals, including hazardous waste treatment.

Closed 03/07/2011

2011.14 4.1.2

SOP Factory – The company is encouraged to provide SOP for Supply Chain with reference to the prevailing requirements of RSPO supply chain.

CFA POM Prior to Stage 2

Company has a procedure (SOP) for Suply Chain which details traceability of product (SOP No. 058/LMR-KP/C13) issued on December 1, 2010.

Closed 03/06/2011

2011.15 4.3.5

Critical land management - There is a process of acid sulfate soil management at Field C-051 Cengal Estate by way of making the drainage channel that has water gate and sulfuric acid leaching. However, records and results of effectiveness evaluation of such activities are unavailable.

NC Estate LMR must provide records of management of lands that contain acid sulfate and its evaluation.

Prior to Stage 2

Company has a documented strategy of acid sulfate soil treatment and documented evaluation of the effectiveness of the strategy.

Closed 03/06/2011


ASSESSEMENT REPORT






2011.16 4.4.1

Water Protection – The company is highly recommended to post appropriate information board and warning signs to protect the river buffer zone function from interferences of human activity and chemicals aplication.


Company has added the number of sign board, boundary mark and warning/banning board and planting activities in order to avoid human activity disturbance and chemicals application.

Closed 03/06/2011

2011.17 4.5.2

IPM application - LMR has shown document IPM implementation, but has not been able to show the documented evaluation of effectiveness of the process.

NC Estate LMR should provide the documented output of IPM implementation evaluation.

Prior to Stage 2

Company has evaluated the effectiveness of the implementation of IPM, as indicated in a matrix of pest attack that details the types of pests; Threshold; average attack; analysis of attack level against the threshold; conclusions to determine control techniques; corrective and preventive actions.

Closed 03/06/2011

2011.18 4.6.3

Paraquat chemicals use - Based on the Central Warehouse Card, it is known that up to March 14, 2011, LMR still used paraquat pesticide which is classified as restricted under the Regulation of the Minister of Agriculture of the Republic of Indonesia No. 07/Permentan/SR.140/2/2007, and there no evidence indicating that LMR has provided appropriate training to the operators.

NC Estate LMR must provide documented evidence of training for operators applying limited chemicals.

Prior to Stage 2

Company has also provided training to the operators associated with the pesticide application technique, including paraquat pesticide. The training was conducted in Bebunga Estate on 21 April 2011 delivered by Pesticides Supplier (PT Dharma Guna Wibawa) followed by 52 participants. See the new observation CFA-2011.43

Closed 03/06/2011


ASSESSEMENT REPORT






2011.19 4.7.4

Periodic check up for operators of POM - Company has developed a matrix of periodic Health Examination Schedule 2010-2011 for employees who work at a particular station (eg, workshop and boiler), but not yet implemented.

NC POM LMR should consistently realize the periodical schedule of medical examination for operators who work at job sites at high risk.

Prior to Stage 2

Company has conducted medical examinations for employees working in high-risk places, such as mechanical operators and spraying (pest control) workers.

Closed 03/06/2011

2011.20 4.7.6

OHS training records - It is highly recommended to maintain a full documented trainngs done internally with the Attendance List. For example: training of firefighters on December 3, 2010.


Company has documented training conducted simultaneously in estate and POM. The training took place on May 13 and May 25, 2011 regarding the handling of fire and FIRST AID as evidenced by an attendance list of the participants.

Closed 03/07/2011

2011.21 4.7.7

Emergency response - Fire emergency response and first aid simulation has been held on May 8, 2010 in the POM, but only by 10 key personnel, while emergency conditions must be understood by all workers. Olehkarena, the company is highly recommended to do again the simulation by involving all employees.

CFA POM Prior to Stage 2

Company has conducted a simulation involving all workers held in GOR BBE on May 25, 2011.

Closed 03/07/2011

2011.22 4.7.10

Record of accidents – The company is encouraged to more accurately define 'Occupational Accident Causes' (in the Accident Monitoring form) so as appropriate corrective actions can be taken and the same event can be avoided. For example: an accident taking place

CFA POM Company must determine the causes of accident and corrective actions in order to avoid recurring of the accident in the record.

Prior to Stage 2

Company has record of occupational accidents and reported it in the montly Safety Officer report. For POM, no occupational accident takes place during 2011. Likewise, the occupational incidences in estates are also recorded, for

Open (CFA)


ASSESSEMENT REPORT






at the POM in January 2011, it is stated that the cause of the accident is "contact with the surface of hard object".

example: In Bakau Estates during 2011 (till April 2011), occupational accidents are recorded ranging from abrasion up stab wound totalling 14 incidents and lost work time incident of 16 days. These events are analyzed, but root of causes and corrective actions have not been set (safety officer monthly report)

2011.23 4.8.2

Record of training – The company is encouraged to provide training record that has been followed by all employees, including those followed by the foreman.

CFA Menjadi Minor

Estate Company must provide record of trainings that have been attended by its workers (certified or not certified)

Prior to Stage 2

Company has prepared records of training for structural level, but focusing on trainings with certification or trainings without certification are not recorded. For example, HCV training in the name of Hendri Nardes (Estate’s Senior Assistant).

Open (Minor)

2011.24 5.1.1

Documented environmental impact management - There is still a work area of 1,928.7741 hectares of total working area of LMR that has not been equipped with EIA document, namely the work area located at Batu Engau and Tanjung Aru Sub-districts of Paser District, East Kalimantan Province.

NC Estate LMR should prepare EIA (Environmental Impact Assessment) documents for the area located in East Kalimantan Province (1928.7741 ha).

Prior to Stage 2

Environmental impact analysis has been done as indicated in the Environmental Management Document and the Letter from the Head of Environmental Affairs Agency (BLH) of Paser District No. : 660.1 / 210 / DPLH / BLH 2011, dated May 24, 2011 on Recommendation for Environmental Management Document for Palm Oil Plantation Activities covering an area of 1,213 ha situated at Batu Engau and Tanjung Harapan Sub-districts, Paser District.

Closed 03/06/2011


ASSESSEMENT REPORT






2011.25 5.1.2 6.1.4

Records of environmental management report - LMR has presented RKL / RPL Report covering POM and estate areas (South Kalimantan), but has not been consistently communicated to the relevant agency. For example: Report II period 2010 whose documented delivery to relevant agency is not available.

NC menjadi CFA

Estate dan POM

LMR should review the policy of preparation and submission of RKL / RPL report that can be delivered to the relevant agency more timely.

Prior to Stage 2

Company has sent its RKL / RPL Report according to the internal PSD policy to the relevant agency, but it is still in formal submission process.

Open (CFA)

2011.26 5.1.3 6.1.3

Revised environmental management document - RKL / RPL Report has not been fully in accordance with EIA (Environmental Impact Analysis) results.

CFA Estate & POM

RKL / RPL records should be adjusted with the EIA results

Prior to Stage 2

Company has not fully followed up the adjustment of RKL / RPL document with EIA outputs.

Open

2011.27 5.2.2 5.2.3

Rare species management – HCV identification results indicate the existence of rare or endangered species in the working area of LMR (eg Ulin - Eusideroxylon zwageri; gaharu - Aquilaria malaccencis, pangolin - Manis javanicus, etc.), but has not been followed by appropriate protective measures of such species.

NC Estate LMR should review the species protection program that has been done so as to be in accordance with the species to be protected.

Prior to Stage 2

The company has made efforts to preserve the protected species and HCV by determining HCV areas and posting sign boards according to the existing type of HCV and conducting socialization of the presence of rare or threatened species or habitat to both employees and local community.

Closed 03/06/2011

2011.28 5.2.4

Warning board socialization - There is no sufficient evidence indicating that the company has conducted socialization of protected species.

NC Estate LMR should do socialization of the poster or warning board about the protected species.

Prior to Stage 2

Company has conducted socialization of the presence of rare and threatened species and HCV to the employees and local people as evidenced by the attendance list of the socialization meeting and a list of materials of the educaiton. For example, a socialization meeting

Closed 03/06/2011


ASSESSEMENT REPORT






held on May 21, 2011 concerning posting of warning signs of protected area for villagers from Segendang, Latitude Jaya, and Mulyoharjo Villages within BBE area.

2011.29 5.2.5

Trained personnel dealing with species protection – The company has appointed a dedicated supervisory officer of HCVA (Buffer Zone) for each estate, but there is no evidence of training for such personnel.

NC Estate LMR must show documented evidence of HCV management training attended by its dedicated officer dealing with HCV management.

Prior to Stage 2

Company was unable to demonstrate that the dedicated officer responsible for HCV management is a well-trained person, although the Company has planned to organize a HCV training in cooperation with BKSDA.

Open (Minor)

2011.30 5.3.1

Identification of waste and pollution sources – There is no documented identification waste and pollution sources for the estate.

NC Estate LMR should provide a matrix identifying the waste and pollution sources so that waste / pollution sources, type of waste / pollution, and main pollution could be determined clearly.

Prior to Stage 2

Company has conducted identification of waste and pollution sources and documented the outputs.

Closed 03/07/2011

2011.31 5.3.2

Waste management plan – There is Procedure (SOP) No. 700/IK-TQEMESH/10 Regarding Quality Standard of Hazardous Waste and Non-Hazardous Waste, but it has not been consistently implemented. For example: (1) waste marking, (2) labeling, (3) licensed temporary warehouse at the estate.

NC Estate & POM

Company should consistently implement the existing SOP for Quality Standard of Hazardous Waste & Non-hazardous Waste (No. 700/IK-TQEMESH/10).

Prior to Stage 2

The company’s wastewater treatment has been under control and documented based on the identification output, including the possession of Hazardous Waste Disposal Point Permit No. 188.45/125/KUM/2011 and permit to utilize wastewater originated from palm oil processing No. 188.45/412/KUM/2009 for land application.

Closed 03/07/2011


ASSESSEMENT REPORT






2011.32 5.3.3

Hazardous waste treatment and disposal – The company’s hazardous waste management practices are still not in accordance with the applicable regulations (Kep-01/Bapedal/09/1995 and Kep-05/Bapedal/09/1995; Government Regulation No. 18/1999 jo Government Regulation No. 85/1999) so that environmental direct contamination is vulnerable to occur. For example: (1) diesel fuel tank in the POM is not roofed and not equipped with oil trap, (2) Oil traps is open in hazardous waste storage facilities in POM, (3) mixture of metal, plastic and organic wastes in the POM.

NC Estate & POM

Company should review its policies and procedures for hazardous waste treatment, refer to the applicable regulations (Decree of Head of Bapedal No. Kep-01 and Kep-05/Bapedal/09/1995; Government Regulation No. 18/1999).

Prior to Stage 2

Hazardous waste management practices have been in accordance with the applicable regulations as indicated by the possession of permit of temporary disposal point of hazardous waste issued by the Regent of Kotabaru (Number 188.45/125/KUM/2011),corrective actions for compliance with Hazardous waste management requirements in the field (POM) have been done in the diesel fuel tank by amounting oil trap of tanks and storage of other types of hazardous waste such as cloth cotton waste, used batteries, used packaging chemicals that are placed in the licensed hazardous waste disposal point.

Closed 03/07/2011

2011.33 5.3.4

Waste monitoring records - Monitoring of hazardous waste, as recorded on the Card Warehouse in the POM, yet includes all the waste referred to in the SOP No. 700/IK-TQEMESH/10 regarding Quality Standard of Hazardous Waste & Non-hazardous Waste and Government Regulation No. 18/1999. In conjunction with Government Regulation No. 85/1999. For example: Record of Hazardous Waste in the POM just specifies used oil and batteries.

NC Menjadi CFA

POM Company shall review its documented policy of hazardous waste monitoring by including all types of hazardous waste.

Prior to Stage 2

Monitoring of waste is carried out in the POM with complete records, but an analysis should be conducted in order to ensure that the organization will reduce the volume of waste and more efficient use of materials

Open (CFA)


ASSESSEMENT REPORT






2011.34 5.6.1

Identification of emission and pollution sources – The company is highly encouraged to provide documented identification result of emission and pollution sources.

CFA Estate & POM

Prior to Stage 2

Identification of emission and pollution sources has been carried out and documented.

Closed 03/07/2011

2011.35 6.1.1

Social impact analysis - social impact assessment has been carried out in January 2010 covering both positive and negative impacts of the operation of the company. However, the company is encouraged to present quantitative data, for example, data related to contributions made by company to improve household incomes of local people.

CFA Estate & POM

Company must expolicitly specify the positive and negative impacts arising from its plantation operations in the Social Impact Analysis document.

Prior to Stage 2

The company’s social impact analysis report has not explicitly presented the positive and negative impacts arising from the estate operations.

Open (CFA)

2011.36 6.1.2

Public participation in environmental management - The social impact assessment results indicate the existence of community involvement as information giver. The company is encouraged that in the next monitoring process, the community is actively involved in the management and monitoring of social impacts.

CFA Estate & POM

Company must invite the local people to actively involve in the periodical management and monitoring of social impacts

Prior to Stage 2

Community has not actyively been involved in the management and periodic monitoring of social impacts.

Open (CFA)

2011.37 7.1 EIA of new developed estate - There are plantation areas in 2008 and 2009 located in Division IV Bebungan Estate - East Kalimantan province (HGU is in process).

NC Estate LMR must provide the EIA document.

Prior to Stage 2

PT. LMR has conducted environmental impact analysis for plantation area in East Kalimantan Province. This is evidenced by the existence of Environmental Management Documents (DPLH) and a Letter Number: 660.1/210/DPLH/BLH2011 from

Closed 03/07/2011


ASSESSEMENT REPORT






the Environmental Affairs Agency (BLH) of Paser District.

2011.38 7.2.1, 7.2.2; 7.4

Soil survey - Record of soil suitability for development of HGU land is unavailable.

NC Estate Company must provide record of soil suitability survey for the developed HGU areas.

Prior to Stage 2

There are still 594 hectares of land that has not been surveyed. But the company has a land survey program as indicated in a request letter addressed to the MRC for semi-detailed survey conducted in the Division IV of BBE.

Open (Minor)

2011.39 7.5.1 Social impact documents – Documented social impact analysis results are unavailable.

NC Estate Company must provide the documented outputs of social impact assessment activities for new developed land.

Prior to Stage 2

EIA document is available and and a revised version is available for land area of 1162.22 hectares in BBE

Closed 03/07/2011

2011.40 7.6 Compensation for land acquisition – There is no records of traditional rights identification.

NC Office and Estate

Company must identify traditional rights associated with land compensation.

Prior to Stage 2

Based on the letter of BPN (No.000/03/KP-10) dated September 2, 2010, no traditional / customary right on lands is found in Kotabaru District and the surrounding areas.

Closed 03/07/2011


ASSESSEMENT REPORT


Non conformance found in the Main Assesssment (Stage 2)



Recommended Corrective Actions

Deadline Observation and date Status Closing date

2011.41 2.2.5 6.3.1

Company was unable to present a prove that the Revised SOP for Conflict Resolution prepared in June 2011 is acceptable to the relevant parties

Minor Company must prove that the Revised SOP for Conflict Resolution drawn up in June 2011 can be accepted by the parties

Prior to S1

2011.42 4.4.2 Company was unable to present records of water treatment activities in the estate including water quality monitoring records. But the Company has prepared a monitoring plan in the second semester of 2011.

Minor Estate Company must be able to demonstrate documented record of POM’s water management activities including records of the water quality monitoring activities

Prior to S1

2011.43 4.6.5 Chemicals categorized as Type 1A or 1B WHO, among others, Pesticide with active ingredients of Delthametrin (Decis) and active ingredient Brodifakum (Klerat and Ratgon) are found but not applied by the company.

CFA Estate To ensure that the chemicals categorized as 1 A and 1 B WHO are not used, the company is recommended to have a commitment to reduce or eliminate their use.

Prior to S1

2011.44 4.7.8 Inspection of First Aid kits has not been fully carried out for several activities in the garden or in the POM. For example: FIRST AID kit available in FFB harvesting activities, all first aid kits in POM area.

CFA Mill and Estate

Company should complete its inspection of FIRST AID kits at the work site, eg: FIRST AID box in FFB harvesting activities and all first aid boxes in POM area.

Prior to S1


ASSESSEMENT REPORT






2011.45 4.8.1 7.1.3

Training for staff and contractors has been identified, including RSPO training program attended by the company in both estate and POM. But the audit team did not find the documented identification of training programs for KKPA or plasma farmers in which the KKPA and the Company (LMR) have interest in the activities undertaken by the farmers.

CFA Estate Company is recommended to identify and create training programs for the KKPA or plasma.

Prior to Stage 1

2011.46 5.2.2 5.2.3

Program created by the Company have not fully refer to the HCV management document. For example effort to enrich rare and protected flora species, such as Ulin, Gaharu.

CFA Office and Estate

Company is recommended to review the management program in accordance with the directives of HCV management set forth in the HCV documents.

2011.47 6.1.2 The company’s social impact analysis document has not explicitly specified more relevant quantitative data.

CFA Office and Estate

The company managmenet unit is recommended to establish a plan for Social Impact Analysis for the next period which presents more relevant quantitative data.

Prior to Stage 1

2011.48 6.1.5 Company has no sufficient evidence of identification of social impacts (positive and negaitf) on the smallholder scheme including management or actions to be taken.

Minor Estate Company must identify the social impacts (positive and negaitf) on the smallholder scheme including management or actions the company should perform.

Prior to Stage 1


ASSESSEMENT REPORT






2011.49 6.3.2 The handling of complaints in addition to the land claim, conducted in temporary because the complaint is not public submitted in writing so that the company has no record.

CFA Office The company is recommended to socialized the community complaint can be submitted in writing so the company can make record for the complaints

Prior to Stage 1

2011.50 6.11.1 CD / CSR programs already done by the company are not fully in accordance with the Basic Need of the local community.

CFA Kebun and Pabrik

Company is recommended to prepare CD/CSR Program in accordance with the Basic Need the surrounding community.

Prior to Stage 1

2011.51 7.5.2 The company should conduct socialization of its planting plan for land cleared in 2008 covering 141 Ha.

CFA Estate Company is advised to have documented socialization of plantation opening plan including the planting plan of land cleared in 2008 covering 141 Ha.

Prior to Stage 1

2011.52 8.1.1 Company has not fully made an action plan based on the outputs of evaluation of monitoring and assessment of environmental and social impacts such as the outputs of monitoring and assessment of reservoir water quality that exceeds the standard parameter of TSS, such as in Bakau Estate

Minor Estate Company/organization must establish an action plan based on evaluation of monitoring and assessment of environmental and social impacts such as results of monitoring and assessment of reservoir water quality that exceeds the quality standard for parameter of TSS for example in Bakau Estate

Prior to Stage 1


ASSESSEMENT REPORT






2011.53 SCCS 2.2

In practice, any documents inconsistent with the received or incoming FFB, LMR confirms it to the driver by verifying the garden (SPB maker). Mechanism or procedure to handle documents inconsistent with raw materials is unavailable.

Minor Mill Company must create a mechanism or procedure to address non conformance raw materials (documents)

Prior to Stage 1

2011.54 SCCS 3.1

There is no a procedure for sale and delivery of certified CPO which details category of raw material mentioned in the minutes and invoice of CPO to be dispatched.

Minor Mill Company must make arrangements by mentioning raw material category (Massbalance) on the minutes and invoice of CPO to be sent

Prior to Stage 1

2011.55 SCCS 5.2

The retaining period of records on the supply chain production of CPO for 5 years has not been fixed, for example of daily production report, monthly production statistic, grading recapitulation in Pondok Labu POM.

CFA Mill Organization is recommended to set the retaining time of records and reports of at least 5 years relevant to SCCS.

Prior to Stage 1

2011.56 SCCS 5.3.a 5.3.b

There is data or record of FFB accepted and CPO produced and sold and the remaining stock on a monthly basis, but still not in the form of a monthly balance sheet recapitulation.

CFA Mill The POM unit is recommended to prepare a monthly balance sheet of the acceptance and delivery of certified CPO and the remaining stock.

Prior to Stage 1


ASSESSEMENT REPORT






2011.57 SCCS 6.1 7.1

The company has implemented the SCCS implementation supporting system, in the form of Sime Weight System, SPB and related procedures, but a specific SCCS training has not been conducted, although the relevant training plan has been prepared to be held on the middle of June 2011.

Minor Mill POM should conduct a specific training on SCCS in accordance with the training plan.

Prior to Stage 1


ASSESSEMENT REPORT


3.2 Public Issues, Company Response and Auditor Response

Public Issues Company Response Auditor Response

Pamukan Sub-district Staff:

Company contributed in increasing the income of villagers, especially those working in the company’s oil palm plantation and provided assistance to the local community.

Company has provided contribution to the local community through its Comnuntiy Development / Corporate Social Responsibility programs. See 6.11.1

Company should keep or even improve the positive impacts of its operation on the surrounding community

There is an indication of clean water source deficit in dry season for local people due to the existence of the company plantation.

The company admitted the shortage of clean water source especially during long dry season. In responding this issue, the company provides clean water assistance to the villagers through the water dropping brought by tanker company. For example:

In Pondok Labu village, two reservoirs (size 10 x 10 meters) have been constructed.

There are records of Incoming Mail on Request for Clean Water Supply Assistance from Villagers of Dusun Separe of Pondok Labu Village on October 8, 2006. The request has been responded by PT. PSA by providing clean water supply on October 9, 2006.

In addition to the alternative method of clean water supply in dry season, the company should make other efforts, such as:

The restoration of water sources through replantation in areas of spring, reservoirs, rivers, etc.

Water debit monitoring in spring areas (reservoirs, rivers, etc.), in order to assess the annual decrease of water debit.

Mulyoharjo Village’s Community Leaders • The existence of the company has increased the

economic growth of local people due to employment. Company improves the economic growth of the

surrounding community by increasing employment opportunities for the local people. See 6.11.1

Company should keep or even improve the positive impacts of its operation on the surrounding community

• There are assistances from the company to the surrounding communities, among others: religious endowments, fund aid to the target villages, improvement of rural infrastructure of roads and bridges, livestock sacrifices assistance.

Company provides assistances to the surrounding community. See indicator 6.11.1

Company should always review and evaluate the programs that have been implemented to fit the needs of the community. Program planning should always be tailored to the basic need of local communities.


ASSESSEMENT REPORT



Wonorejo Village’s Community Leaders

A number of lands belonging to villagers were split by the plantation road leading to land certification problem as it redueces the original size of the land, namely 229 premises.

PT. LMR's management unit would make clarifications to the villagers.

Company is encouraged to help the community to facilitate this issue or request relevant parties to provide socialization & understanding to the surrounding community about the conditions of land certificate issuance.

Pamukan sub-district Police

Group Minamas’ assistances to the public in the form of construction of roads, clean water supply, schools and praying center facilities are less visible as no Sign Boards are installed.

Company’s apprehensive abount the installation of the sign board is the emergence of perception on the public that rural development is sole responsibility of the company.

Company should provide an explanation & socialization to the community that:

The community development is not just responsibility of the company but also of relevant parties (including other relevant agency & local government).

The company should provide understanding and socialization to the community about the company’s CD / CSR program to be implemented.

Pamukan Indah Village Chief

Regular fund aid to the target villages in the form of community development fund has ceased since two years ago.

1) Company has not received yet from the community the financial accountability report as a condition for the granting of subsequent fund aid, 2) The company never receives the proposal for periodical funding aid from the villagers.

Company is encouraged to conduct socialization on mechanism and conditions of aid granting, included in the information publicly accessible. See indicators 1.1.2 and 1.2.1

A gap in the nominal value of the fund aid between the original villages and transmigran villages.

For routine assistances, they are subject to PSD approval, if they are incidental assistances (eg for the Anniversary celebration of RI, etc.). The amount of allocated fund aid is equal (no difference) between the original villages and transmigrant ones.


ASSESSEMENT REPORT



Villagers’ proposal for culvert assistance has not been responded by the company.

There is no record in the Incoming Mail Register of BKE Office related to Pamukan Indah Village’s proposal for culvert assistance.

Lintang Jaja Village’s Community Leaders

There are no socialization and transparency of company’s CSR funds for the villages.

A discontinued information frequently occurs between village officials at the time of shifting of the officials so that information on company’s assistances are not received transparently among them.

Company is encouraged to conduct socialization on mechanism and conditions of aid granting, included in the information publicly accessible. See indicators 1.1.2 and 1.2.1

The company does not set which components that can be funded by the CSR program.

The routine fund aid would be provided by the company to the local community routinely, but the non-budgetary fund aid would be provided based on a proposal.

Information on recruitment for harvesting workers is always informed but that for staffs are less informed to the villagers.

For recruitment of field workers, the info is usually informed directly by the foreman to the community, but for recruitment of office staffs, the info and selection are handled directly by the head office.

Lintang Jaya Village never receives the periodical fund aid since 2006.

BBE management unit suspended the periodical fund aid since 2006 because at the time of Village Chief succession, no accountability report of fund aid submitted by the village to the company management and since 2006 there was no chief of the village, which has just been elected in March 2011.

Binturung Village Secretary

There is conservation of land in Cengal River (SCE) area that had been planted since 2005.

Company never does planting in buffer zone areas including Cengal River.

Based on the results of interview with the management unit, such areas have been determined as HCV-1 and based on the field observation result.


ASSESSEMENT REPORT



Binturung Village Secretary.

Plantation Office of Kotabaru District Company has made and submitted progress reports of its

plantation operations routinely but not in a timely manner The company will improve its acceptance system of public reports through the report receipt system

Mechanism of more timely reporting process.

Company must be more sensitive to any problems that arise in the surrounding communities.

Company has tried to be sensitive to community issues by providing assistance through its CD / CSR program.

Programs to be implemented by the company should be adjusted to the basic need of local people.

Environmental Affairs Agency

Company has made and submitted its RKL / RPL implementation report on a regular basis but not in timely manner.

The company will improve its acceptance system of public reports through the report receipt system

Mechanism of more timely reporting process.

Kotabaru’s BPN (Land Services Office) No violation of HGU is found Company has met the requirements regarding

HGU.

Company is deemed to have met the requirements concerning HGU.

In BPN theire is a field related to CSR, thus the company is recommended to cooperate / coordinate with BPN in the field.

Company will do coordination with BPN Kotabaru in respect of CSR program.

Company has planned a CD / CSR program accordidng to the company financial capability.

Forest Service Office The company never invites Forest Service Office

representatives in Public Consultation on HCV assessment. Coordination of public consultation in respect of HCV assessment was carried out by consultant.

At stage 2 the company has sent the documented result of HCV identification for response from the relevant agency.


ASSESSEMENT REPORT

SPO – 4006a Page 39 of 103

Prepared by Mutuagung Lestari for Langgeng Muara Makmur

4.0 CERTIFIED ORGANIZATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Official signature of assessment findings

The undersigned, Management Representative of the inspected company hereby acknowledges the assessment results and agrees to all contents of this assessment report, including non-conformance findings.

Signed on behalf of:

Head PSQM

Lead Auditor

Minamas Plantation

PT Mutuagung Lestari

Mohamad Pirabaharan

Taufik Margani


ASSESSEMENT REPORT

SPO – 4006a Page 40 of 103


Appendix 1. RSPO Certification Assessment Checklist

RSPO Ref.

MUTU VERIFICATION RESULTS-Certification

Status

PRINCIPLE #1 COMPANY’S COMMITMENT TO TRANSPARENCY

1.1 Palm Oil Estate and Mill should provide adequate information to other stakeholders in appropriate language and form, to allow for effective participation in decision making.

1.1.1 Record of requests for information

ST1 A number of incoming mails classified as requests for information are available on site, among others: (1) Mail from the Chief of the Pamukan Utara Sub-district dated October 17, 2009 concerning

Confirmation of Local Community Empowerment Issues - Budget Plan of CD / CSR Minamas Plantation and Land Size in the Pamukan Utara Sub-district.

(2) Mail from the Chief of Pamukan Utara Sub-district dated March 12, 2010, regarding the Residence Status.

(3) Mail from the Department of Social, Manpower and Transmigration of Kotabaru District dated 28 April 2009 on Mandatory Labor Report (Law no. 7 of 1981 Article 7 Paragraph (1)).

The incoming mails are only found in Bebunga Factory (BBF), but have not been recorded. The same were not found in the estate. Section Head of Sungai Cengal Estate (SCE) and Bakau Estate (BKE) explained that, the estate does not have records on requests for information from stakeholders. Although the SOP for Request for Information has been available, but it does not specify or ensure that all requests for information from stakeholders will be recorded. Non-conformance of this indicator is NC-2011.01

X

ST2 There is a revised version of SOP for Request for Information (050/LMR-INF/C11) outlining that all Incoming Mails and Outgoing Mails related to stakeholders’ information requests sent via the Operational Unit addressed to Operating Unit Manager are stored in the Main Office of LMR. There is data indicating that requests for information received by each estate are recorded and controlled. Non-conformance status of NC-2011.01 is closed.

√

1.1.2 Records of responses to information requests

ST1 There is no record of responses to requests for information in either estate or Palm OIL Male (POM). According to Bebungan Factory (BBF) Manager the Company has always responded each incoming mail but never be recorded.

X

ST2 SOP for Information Request has been revised, which details the recording system of response and company’s response deadline of 2 weeks. Records of responses to stakeholders’ requests for information can be shown in either estate or POM in the form of outgoing mail. Non-conformance status of NC-2011.02 is closed

√

1.1.3 Record of requests and responses to information are maintained for a retaining period determined by the Company by taking into account their importance.

ST1 There is no evidence that the company has set the retaining time of record of request for and response to information based on their importance. Non-conformance of this indicator is NC-2011.03

X

ST2 In accordance with SOP for Request for Information (050/LMR-INF/C11), the retaining time of the records of request for and response to information is 5 (five) years. Non-conformance status of NC-2011.03 is closed.

√


ASSESSEMENT REPORT

SPO – 4006a Page 41 of 103


1.2 Company’s documents are publicly available, unless those documents that are protected by commercial confidentiality or disclosure thereof would result in environmental or social negative impacts.

1.2.1 This type of information and responses given covers those documentations that are in accordance with the prevailing national regulations

ST1 This type of information in the form of legal document, environmental management document, social management document, labor management, and OHS implementation document are available on site. However, there is no procedure or policy that classifies documents that can be published to public, or those documents that must be treated confidential according to the prevailing laws and regulations (eg: Law no. 14 of 2008 on Public Information). Non-conformance of this indicator is NC-2011.04

X

ST2 SOP for Request for Information has been revised (050/LMR-INF/C11) and specifies a list of documents that may be given to the public but not specifies documents that must be treated confidential. Non-conformance status of NC-2011.04 is open with Comment for Action category.

X

1.2.2 Records of requests and responses to information maintained with a retaining time determined by the Company by taking into account their importance.

ST1 See explanation point 1.1.3. Non-conformance of this indicator is NC-2011.03

X

ST2 In accordance with the SOP for Request for Information (050/LMR-INF/C11), the retaining time of the records for request and response to information is 5 years. Non-conformance status of NC-2011.03 is closed.

√

PRINCIPLE #2 COMPLIANCE WITH THE PREVAILING LAWS AND REGULATIONS

2.1 Compliance with all applicable local, national and ratified international laws and regulations.

2.1.1 Data of the company’s compliance with the prevailing laws and regulations.

ST1 There are a number of regulations that the company has not fully complied with, for example: 1. Of the total area of 17,464.22 ha, there are still 1,213 ha of plantation area managed by LMR in Bebunga

Estate that have not been equipped with legal ownership documents (HGU certificate in accordance with Land Law No. 5 of 1960), which such areas have been planted since 2008. But the Company has conducted planting since 2007 in areas without HGU certificate. For example in the area of 1,213 ha in Bebunga Estate.

2. RKL / RPL report has not been submitted regularly and timely to the relevant agency in accordance Government Regulation No. 27 of 1999.

3. The company has not appointed trained personnel according to regulation in the use of the herbicide paraquat (Regulation of Minister of Agriculture No. 7/Permentan/SR- 140/2/2007).

4. There are hazardous waste stored in unlicensed temporary disposal point in Estate (Government Regulation No. 18/1999 in conjunction with Government Regulation No. 85/1999).

5. Mixing of waste with different characteristics (eg, plastic and metal waste with organic waste in the POM).

6. Determination of river boundary areas (rivers and springs) has not been in accordance with Law no. 41 of 1999.

Non conformance of this indicator is NC-2011.05

X

ST2 The company has conducted evaluation of its regulatory compliance as indicated by the updated form on 25 April 2011. The evaluation describes the company’s compliance with any regulations referred to and is equipped with a proof of its fulfillment. For example:

√


ASSESSEMENT REPORT

SPO – 4006a Page 42 of 103


1. Company has complied with Law No. 5 of 1960 as indicated by the possession of HGU certificates (HGU Certificate No. 12 covering 15,533 ha, No. 4 covering 828.774 ha, total of 16,361.77 ha, and an area of ± 1,100 ha has been equipped with concession legality evidence and documented process of HGU certificate

2. RKL and RPL implementation has been reported on semester basis according to Government Regulation No. 27 of 1999 despite delays. Company has made intensive efforts in order that internal communication could be done in timely manner. Proof of RKL and RPL Reporting can be seen in the Plantation Service Department (PSD) in Bajarbaru.

3. Parakuat herbicide has not been applied anymore since March 2011 in accordance with the Regulation of Minister of Agriculture No. 7/Permentan/SR-140/2/2007 and internal policy of Minamas Management Unit.

4. Types of chemicals Type IA or B WHO has not been applied anymore to the plantation practice, however, stock is still found.

5. Company has fulfilled the buffer zone size requirement of more than 50 meters in accordance with the Law No. No. 41 of 1999

In its palm oil operational activities, the company has documented and updated evidence of its compliance with relevant regulations. Non-conformance status of NC-2011.05 is closed.

2.1.2 Evidence of efforts to make adjustments to regulatory changes.

ST1 There is evidence of company adjustment to regulatory changes, for example: payment of wages to employees which is updated each year according to the minimum wage standard set by the Governor of South Kalimantan.

√

ST2 If there is any change in regulations, Company will make revisions or adjustments by performing periodical evaluation, ie at least once every six months (according to the Prevailing Laws and Regulations). The company’s latest evaluation of fulfillment of and adjustment to regulatory changes was conducted in April 25, 2011.

√

2.1.3 Evidence of documented system that contains information and legal requirements that plantation companies shall fulfill.

ST1 There is a documented matrix which contains information on legal and regulatory requirements the company must comply with. However, this document does not cover all aspects of legal and regulatory requirements; the evaluation scope is just limited to Employment and OHS aspects. The system is also not yet implemented in POM (Bebunga Factory). Non conformance of this indicator is NC-2011.06

X

ST2 Company can show documented proof of the requirements it has fulfilled in the form of a list of relevant licenses and regulations. The documented evidence of compliance has been updated lastly on April 25, 2011. Non-conformance status of NC-2011.06 is closed.

√

2.1.4 Mechanism of evaluation of compliance with prevailing and relevant laws and regulations.

ST1 Based on information from Section Head of Sungai Cengal Estate (SCE) and Bakau Estate (BKE), the company has sufficiently evaluated its regulatory compliance, i.e: comparing the prevailing laws and regulations to the documented evidences of the implementation in the company.

X


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SPO – 4006a Page 43 of 103


The evaluation result was set forth in the Regulatory Compliance Evaluation Matrix, which has been presented to the audit team. Evaluation materials include: Assessment Aspects, Basic Rules, P&C RSPO Reference, Articles of Regulations, Subject, Compliance Status, and Description. However, to finish the evaluation result above-mentioned, the company is strongly encouraged to detail evidences of its fulfillment that have been available in the Description column. See also the explanation of point 2.1.3 above. Non-conformance of this indicator is the CFA-2011.07

ST2 In the regulatory compliance evaluation form for POM and Estate, the company has completed the proof of compliance (document / program) as indicated by the company’s fulfillment with Act No. 5 of 1960 Article 28 on HGU, where the company has possessed HGU certificate No. 12 (15,533 ha) and HGU certificate No. 4 (828,774 ha) thus in total of 16361.77 ha. Non-conformance status of CFA-2011.07 is closed.

√

2.2 Rights to control and use the land can be proved and not legally claimed by the local community with provable rights.

2.2.1 Documents showing the company’s tenure of land according to the prevailing laws and regulations.

ST1 The total concession area of PT. Langgeng Muara Makmur is 17,461.77 ha, where HGU certificate for an area of 16,361.77 ha has been available and the remaining of 1,100 ha was still in process. In detail, the company’s land ownership legal documents, are as follows:

(1) HGU certificate No. 133/HGU/BPN 1997 issued by Land Service Office of Kota Baru District, South Kalimantan province for an area of 15,533 Ha.

(2) HGU certificate No. 77/HGU/BPN/97 issued Land Service Office of Paser District, East Kalimantan province for an area of 828.7741 hectares.

(3) HGU certificate which is still in process for an area of 1100 ha (based on the Letter of BPN of East Kalimantan Province No. 17/II/2011 dated February 2, 2011). This area represents the planting area in 1996 & 1997, located in Division II & III; and planting in 2008, located in Division IV Bebunga Estate. Non-conformance of this indicator is NC-2011.08

X

ST2 Company presented documented evidence of the procurement for Land Use Right (HGU) certificate for an area of 1,162.22 ha, instead of 1,100 (as per the results of stage 1 assessment), in the form of a Letter No. 17/P-64/II/20112 Feb. 2011 from BPN Office of East Kalimantan Province sent to the Central BPN Office Jakarta, it is known that PT. Langgeng Muara Makmur was waiting from the issuance of the HGU certificate. Other legal documents already possessed by PT LMR are TDP (Company Registration Certificate) No. 09.03.1.01.06054 dated October 11, 2005 and Permanent Business License number 15/T/PERTANIAN/INDUSTRI/2006 dated January 4, 2006 that are valid for palm oil operation permit of the company. Non-conformance status of NC-2011.08 is closed.

√

2.2.2 Evidence indicating that the company’s legal area boundary poles are demarcated clearly and maintained.

ST1 In the location there is a Tugu Book which indicates the company’s boundary poles management (installation of Boundary Poles) throughout estate area of PT Langgeng Muaramakmur, consisting of: (1) Bebunga Estate (currently is still in HGU certificate procurement process) = 1,100 ha (29 main poles and 145 secondary poles), (2) Sungai Cengal Estate = 4,974.20 Ha (23 Main Poles and 64 Secondary Poles), (3) Bakau Estate = 5,349.91 Ha (58 Main Poles and 234 Secondary Poles); and (4) Lanting Estate = 3,249.27 Ha (30 Main Poles and 73 Secondary Poles). The results of observation of 3 (three) main poles of boundary areas (namely Poles No. 16, 18, and 19) in Division III Bebunga Estate, all of the poles were in good condition and well maintained. However, Secondary

X


ASSESSEMENT REPORT

SPO – 4006a Page 44 of 103


Poles as listed in the Tugu Book can not be found. To maintain the presence of the boundary poles, the Company should have a periodical poles maintenance program. Non-conformance of this indicator is CFA-2011. 09

ST2 There is SOP No. 057/LMR-PPBC/C13 for maintenance of BPN Boundary Poles, BPN Boundary Poles Monitoring Results & BPN Boundary Poles Maintenance Action Plan. The maintenance that has been done includes cleaning of area around the poles and painting of the poles, while the replacement of lost poles will be done by June 2011. Non-conformance status of CFA 2011.09 is closed

√

2.2.3 Evidence of settlement or settlement progress of conflict (if any) under a method agreed upon by both parties.

ST1 Based on the 2010-2011 Statement Area data, there are still unsettled disputed lands in Bebunga Estate. Total area of the disputed land is ± 594 ha, involving a number of villagers from Kladen Village of Tanjung Baru Sub-district of & Segendang Village of Batu Engau Sub-district of Paser District, East Kalimantan Province. PT. Langgeng Muara Makmur’s management unit has suspended its operations in these disputed lands since May 18, 2009 There is evidence (Minutes) which indicates that PT. LMR’s management unit has held several meetings with Segendang villagers mediated by Muspika (Task Force) of Batu Engau sub-district on January 24, 2010 (Minutes of Meeting was signed by each of the the parties). Based on the Smallholder (Plasma Farmer) Issue Progress Chronology (KKPA) document of East Kalimantan Province, the conflict resolution process has been handled by the Plantation Service Department (PSD) of PT Langgeng Muara Makmur. Based on the explanation of Segendang Village Chief and interview with a villager, the prolonged conflict was caused the company’s delay in developing the smallholder scheme / KKPA as a compensation for the use of public land by the company. Another land conflict was found in Block K 31 SCE involving Mahmud Cs (7 persons) that conveyed their claim to Cengal Estate management on January 12, 2010. This claim has been followed up by the company by convening a meeting on 2 April 2010 attended by Members of Regional House Representatives (DPRD) Commission I of Kotabaru District, representatives of Mahmud Cs & PT. Langgeng Muara Makmur management (Minutes is available). This case was followed up by PT. LMR by providing documented evidence indicating that the company has made compensation for area Block K 31 SCE to the landowners. There are still unresolved land conflicts, for example: a disputed land with a total area of 594 ha situated in Division IV Bebungan Estate involving villagers from Segendang and Kladen Villages. LMR has suspended its operational activities at this site since May 18, 2009 and has made efforts to settle the dispute facilitated by Muspika of Batu Engau Sub-district on January 24, 2010. Non conformance status of this indicator is NC-2011.10

X

ST2 Based on information from PT. LMR's management unit at Bebunga Estate Office, the management unit has held a meeting with Segendang Village chief on 7 April 2011. In the meeting, both parties agreed to convene a meeting involving villagers from Segendang Village claiming the land in Division IV and will be mediated by the Muspika of Batu Engau Sub-district.

Based on the explanation of PT. LMR's management unit in Bebunga Estate office and interview with Kladen Village Chief on June 1, 2011, a meeting was held between the PT. LMR’s management unit and Kladen Village Chief & Tanjung Harapan Sub-district Chief in Bebunga Estate Office on April 29, 2011 discussing the follow-up of settlement of area claimed by Kladen villagers in Division IV Bebunga Estate.

On March 3, 2011 a meeting was held between PT. LMR's management unit and Segendang Village Chief & Kladen Village Chief. The meeting reached an agreement set out in the Minutes of Meeting, which principally the parties agreed to continue the discussion in order to resolve the disputed land located in Division IV Bebunga Estate by discussing again the plasma program involving the parties. PT. LMR’s management unit has scheduled to settle this conflict in this year.

Non-conformance status of NC-2011.10 is closed.

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2.2.4 Evidence of land dispute settlement with Free Prior and Informed Consent.

ST1 There is a Land Compensation Payment Report, which contains: a). Minutes of Land Compensation Settlement Meeting, b). Land Compensation Payment Receipt, c). Land Right Release Statement. For example: settlement of land dispute in Block K 31 SCE involving Mahmud Cs (7 persons) that conveyed their claim to Cengal Estate office on January 12, 2010. This claim has been followed up by the company by convening a meeting on 2 April 2010 attended by Members of Regional House Representatives (DPRD) Commission I of Kotabaru District, representatives of Mahmud Cs & PT. Langgeng Muara Makmur management (Minutes is available). The claim was settled by giving compensation to the land owners.

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ST2 Similar to the stage 1. At the stage 2, documented evidence of the latest land acquisition settlement with Free Prior and Informed Consent is shown by the company is the completion of land claim case in Block K 31 SCE involving Mahmud Cs (7 persons) that conveyed their claim to Cengal Estate office on January 12, 2010. This claim has been followed up by the company by convening a meeting on 2 April 2010 attended by Members of Regional House Representatives (DPRD) Commission I of Kotabaru District, representatives of Mahmud Cs & PT. Langgeng Muara Makmur management (Minutes is available). The claim was settled by giving compensation to the land owners.

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2.2.5 Availability of conflict resolution mechanism accepted by the involved parties.

ST1 SOP for Conflict Resolution is available but not clearly defines type and category of conflict (minor, medium & major) and conflict resolution phases. Non-conformance of this indicator is CFA-2011.11

X

ST2 Revised SOP for Conflict Resolution (SOP No. 056/LMR-PKC/C12) is available. This SOP details the type and category of conflict (minor, medium & major) and suspension of activities in the disputed area according to the directives of the competent authority and the company’s management. However, the revised SOP (No. 056/LMR-PKC/C12) has not been socialized by the company and accepted by the parties. Non-conformance status of CFA-2011.11 is closed, new non conformance emerges, see NC-2011.41

X

2.3 Use of Land for Palm Oil Plantation does not diminish rights under law and traditional rights of other users without their prior consent.

2.3.1 Records of negotiation process between the owners of traditional rights (if any) with palm oil company equipped with documented map in the scale.

ST1 In the location there is documented assessment report of HCV within the work area of PT. Langgeng Muaramakmur (LMR) in December 2009. The report was equipped with a sitemap of important resources for the community, such as springs, rivers, etc. The document shows participation of some villagers in the HCV identification process, among others those representatives from Lintang Jaya, Binturung, Wonorejo, Mulyoharjo, Harapan Baru, Balamia, Pamukan Indah, Sakadoyan, Lanting & Kalian Villages. However, there was no documented evidence that contains agreements for natural resource management between the owners of traditional rights and LMR. With regard to the foregoing, the company is strongly encouraged to review the HCV identification document and to prepare a map with a sufficient scale on the existence of traditional rights within the company’s work area. For example: land tenure, traditional fishing right, traditional hunting right, etc.. Non-conformance of this indicator is CFA-2011.12

X

ST2 There are High Conservation Value (HCV) Identification maps and documented evidence of HCV socialization to stakeholders in the form of a Written Notice from Estate Manager to Village Chiefs, Attendance List and Photographs of the HCV socialization meeting. Community involvement in respect of traditional right use has been taken into account in the HCV identification process which was followed up by the HCV area management, including by the parties. Non-conformance status of CFA-2011.12 is closed.

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2.3.2 There is a map with sufficient scale indicating areas under recognized traditional rights.

ST1 HCV sitemaps are available but not in a sufficient scale. See explanation of point 2.3.1 above-mentioned. Non-conformance of this indicator is CFA-2011.12

X

ST2 There are High Conservation Value (HCV) Identification maps and documented evidence of HCV socialization to stakeholders in the form of a Written Notice from Estate Manager to Village Chiefs, Attendance List and Photographs of the HCV socialization meeting. Community involvement in respect of traditional right use has been taken into account in the HCV identification process which was followed up by the HCV area management, including by the parties. Non-conformance status of CFA-2011.12 is closed.

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2.3.3 Records of negotiated agreements between land owners and the company supplemented with the documented process of agreement.

ST1 There is no record of negotiated agreements supplemented with documented agreement process. See explanation point 2.3.1. Non-conformance of this indicator is CFA-2011.12

X

ST2 Negotiated agreements in respect of traditional right are also specified in the documented HCV assessment process and output and there are also documented evidences of socialization of the result of High Conservation Value (HCV) identification by PT. LMR's management unit to stakeholders in the form of an attendance list, signatures and photographs of the socialization meeting. Non-conformance status of CFA - 2011.12 is closed.

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PRINCIPLE #3 COMPANY’S COMMITMENT TO ECONOMIC A LONG-TERM ECONOMIC AND FINANCIAL SECURITY

3.1 There is management plan that has been implemented by the company aimed at achieving the company’s long-term economic and financial security goal.

3.1.1 Company’s documented work plan for a minimum period of 3 years.

ST1 There is documented Blue Print 2005-2010 (estate and POM) containing 5 (five) Pilars of Strategic Goals, as follows:

(1) Maximize Crop Production (2) Optimize overal Operational Efficiency (1) Improve Palm Product and Work Quality (2) Low Operation Cost of Production (3) Competent and Competitive Human Capital

The Strategic goals were then translated into Budget Presentation 2010/2011 and Projection 2012/2014 containing (1) Areal Statement 2010/2011, (2) New Planting Status, (3) Nursery Status, (4) Projected production rate 2013/2014 (ton/ha) and production cost in Rp/kg, as well as the harvest profile.

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ST2 In addition to documents seen at ST1. In order to keep the imporovement of the company’s profit and performance, Minamas Plantation conducts monitoring by way of assessing company within its management scope including PT Langgeng Muaramakur. This assessment was conducted by clarifying every estate unit into evaluation classes. These evaluation classes can be seen in the Monthly Estate Performance Index (EPI) Document – New Scoring With Tonnes/Ha (Period 2010-2011). The things that underlie these assessments is a qualitative assessment with the following assessment parameters: achievement of Productions of FFB, OER, KER, Total Revenue Expenditure, FFB Production Cost, FFA Quality and Qualitative assessment based on PA Report, Audit Report and PSQM Report. Based on the assessment result of April, Estate units of PT LMR are classified

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as Blue Class (Good), which means that the company’s performance is over the prescribed parameter threshold meaning that the achieved profit of PT LMR is still over normal. But if the estate is categorized into red class (Poor), the management unit should prepare an Action Plant for improvement to be submitted to Minamas Central Office. In addition, in order to keep the company’s economic sound, Actualization of activities relevant to the company operational funding should always be monitored and fitted with the company’s budget plan. The monitoring is conducted at the time of preparation of the Managerial Report and be set forth in the Management Comitee Meeting Report. The report should details comments from management unit if there is operational actualization cost exceeding the target. It can be seen that any increase in operating cost should be followed by the increase of production capacity. PT LMR also has a production graphic 2006-2011 which illustrates Production Trend in each estate for the latest 4 years. The graphic shows that the production capacity of Bebunga Estate was 43.149 tonnes in 2006/2007 and increased by 65,677 tones in 2007/2008 and reduced by 51,495 tones in 2008/2009 and reduced again by 48.529 tones in 2009/2010 and increased by 60,179 tones in 2010/2011 up to April 2011. In addition the company’s turnover in the form of stocks of CPO, PK and materials in Warehouse (fertilizer and pesticide) are maintained by performing Stock Opname audit by an external and independent auditor PWC (Price Waterhouse Coopers (PWC). For example, stock opname audit which to be conducted on June 2, 2011 and June 3, 2011 based on a Memo No. 028/MP/ACCT/V/11 from the CFO (Chief Financial Officer). In order to maintain the production performance, the company uses certified of palm oil seed. The palm oil seed come from Guthrie Plantation and agricultural services and seed from Marihat. For example, certified palm oil seed from Guthrie with certificate no B (AH) 81/03.01/09 (376).

3.1.2 Annual replanting program plan for a minimum term of 5 years, which is reviewed on an annual basis.

ST1 The company has a Long Range Replanting Programme 2010-2030 detailing timeframe of replanting of each estate. Replanting criteria was stipulated based on, among other:

(1) Minimum 20 years old and yield per hectare (YPH) is under 14-16 tones/hectare. (2) Maximum opening 4% of the total plantation area or maximum 400 hectare per estate per year.

In general the company’s replanting plan in each estate, is as follows: (1) Bakau Estate (BKE) – planting year 1994-1998 with a total area of 3,275 hectares, replanting plan

2015 to 2026. (2) Sungai Cengal Estate (SCE) – planting year 1993-2006 with a total area of 3,869 ha, replanting plan

2015 to 2030. (3) Bebungan Estate (BBE) – planting year 1992-2006 wih a total area of 2.842 hectares, replanting

plan 2016 to 2030.

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ST2 Similar to Stage-1, the company has set a Long Range Replanting Programme 2010-2030 detailing the timeframe of replanting in each estate. In addition, the company also set out its annual replanting program into the budget plan (for each current year) and Budget Projection (3 years ahead). From the Final Budget document (2010/2011) and Budget Projection (2011/2012 – 2014/2015) approved in January 2011, it was found that PT LMR would not perform Replanting activities up to 2014/2015. The organization also conducted evaluation of the replanting plan carried out by MINAMAS’s Department of Plantation Operations. Based on the evaluation result in March 2011, the replanting activity was accelerated to be carried out in 2012/2013. This was found based on the Memo No. POP – UM – 074/III/2011 of the Head Plantation Operations. Based on the explanation from a manager of PT LMR, it was found that in order to follow up such replanting plan, PT LMR will include the replanting activities into the Budget (2011/2012) and Budget Projection (2012/2013 – 2015/2016), which to be prepared in January 2011.

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PRINCIPLE #4 ESTATE’S AND MILL’S APPLICATION OF BEST PRACTICES

4.1 Operating procedures are appropriately documented and consistently implemented and monitored.

4.1.1 SOPs for Estate ranging from LC (Land Clearing) to harvest activities are available.

ST1 There are a number of SOPs for estate with similar purpose, but there is difference in substance and not yet ratified by the competent authority. For example: SOP No. RA012 (Pesticide Packaging Storage); SOP No. RA012 (Hazardous waste and Non-hazardous waste Treatment); SOP No. 700/IK-TQEMESH/10 (Quality Standard of Hazardous waste & Non-hazardous waste); SOP No. 709/TQEM-ESH/10 (Hazardous waste management). Non conformance of this indicator is NC-2011.13

X

ST2 The company has a procedure on estate operation activities starting from LC to harvesting activities. This procedure was set forth in the Agricultural Reference Manual issued in 2008, which details, among others: raw material of palm oil crop, seedling technique, replanting, land preparation, crop cultivation, harvest bunch marking, general pest control of palm oil crop, etc. In addition, there is also a documented procedure that has been ratified by the authorized officer in respect of application of chemicals, chemicals management, including hazardous waste treatment. Non conformance status of NC-2011.13 is closed.

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4.1.2 SOPs for POM for various activities starting from FFB acceptance to CPO & PKO dispatching are available.

ST1 SOPs for POM for various activities starting from FFB acceptance, processing to dispatching of CPO are available, i.e: SOP No. 110/POD-FAC/07 (FFB Acceptance), SOP No. 110/POD-FAC/07 (FFB Sterilization), SOP No. 110/POD-FAC/07 (FFB striping), SOP No. 110/POD-FAC/07 (digesting), SOP No. 110/POD-FAC/07 (pressing), SOP No. 110/POD-FAC/07 (pressing), SOP No. 110/POD-FAC/07 (Separation of Core and shell), SOP No. 110/POD-FAC/07 (Kernel Station), SOP No. 110/POD-FAC/07 (CPO Collection). Based on the explanation from POM Manager (Bebungan Factory), other than receiving FFB from the company’s own estate (LMR), Bebungan Factory currently also receives FFB from Betung, Sekayu, and Binturung plantations. FFB source may be traced from the Goods Receipt Form (SPB) from the estate to POM; Further, the POM officer records the FFB source in the FFB Receipt form in the weighing station; and Daily Production Report. However, in roder to ensure that the products meet the RSPO standards, LMR is strongly encouraged to document its product supply chain in the form of a SOP Supply Chain, which details all prevailing RSPO supply chain standards. Non conformance of this indicator is NC-2011.14

X

ST2 Palm Oil Mill (POM) as controlled SOPs for various mill activities ranging from FFB acceptance to CPO dispatching (SOP No. 110/POD-FAC/07 (FFB Acceptance), SOP No. 110/POD-FAC/07 (FFB Sterilization), SOP No. 110/POD-FAC/07 (FFB striping), SOP No. 110/POD-FAC/07 (digesting), SOP No. 110/POD-FAC/07 (pressing), SOP No. 110/POD-FAC/07 (pressing), SOP No. 110/POD-FAC/07 (Separation of Core and shell), SOP No. 110/POD-FAC/07 (Kernel Station), SOP No. 110/POD-FAC/07 (CPO Collection)). With respect to the CPO supply chain, Company has SOP of Suply Chain No. 058/LMR-KP/C13, issued in December 1, 2010. This SOP is designed to identify raw material and final product so that a link between the raw material and the product quality could be traced easily. Non conformance status of NC-2011.14 is closed.

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4.1.3 There are data of inspection or monitoring of operational activities at least once a year.

ST1 There is evidence that the company has conducted periodical monitoring of operational activities (estate and POM) carried out by internal audit institution, as follows:

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(1) Quarterly internal audit 4 by internal auditor of Region Office, (2) Monthly safety audit, carried out by Safety Officer. (3) Monthly quality audit, carried out by PSQM. (4) Comprehensive audit on semester basis, carried out by Mill Advisory and Plantation Advisory from

Kualalumpur. In addition to quality, the audit and monitoring are also intended to assess the company’s compliance with the existing SOPs. The output of the audit/monitoring was set forth in a written report submitted to the management unit and Head Office for performance assessment purpose. Reporting is made on-line basis. Every non conformance is classified as either “Urgent” or “Immediately”, For example:

(1) POM audit result by PSQM in March 2011 concerning factory cleanliness. Reference of the audit is Working Guildeliness of TQEM Field Assistant No. 721/TQEM-PKA/08.

(2) Mill Visit Report No. SOU MINAMAS/BBF/01/09-10 carried out by Mill Advisory Department dated 27-28 April 2009.

Conclusion of the Audit for the Second Semester of 2010/2011 for plantation.

ST2 In addition to documents seen at ST1. In addition to quality, the audit and monitoring are also intended to assess the company’s compliance with the existing SOPs. The output of the audit/monitoring was set forth in a written report submitted to the management unit and Head Office for performance assessment purpose. Reporting is made on-line basis. Every non conformance is classified as either “Urgent” or “Immediately”, For example:

Safety Officer Audit Report covers the following activities: OHS Breafing, employee preparedness inspection, Field Inspection, PFFT Inspection, workers’ and contractors’ PPE inspection, BSS team medical examination, FIRST AID tools examination, camp hygienic checking (TPA, TK,SD, SMP, SMK, Mosque, Church, Genset House), orderliness of motor vehicle riding (light and safety helmet), FFB truck (Net and Light), Meeting/Training, weekly report, monthly report). For example: BKE Safety Officer Monitoring Report in April 2011 ratified in April 31, 2011

Plantation Adviser Report No. 2/10-11 prepared on 18 – 20 February 2011 in Bebunga Estate.

Performance SOU Bebunga May 2011 (FFB quality assessment) by PSQM Departement.

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4.1.4 Records of the operating activities are available.

ST1 All operating activities are recorded in both Estate and POM Manager Reports. Estate Manager Report covers: Block Harvesting System; Production; Field Condition; Fertilizing and Stock Godown; Planting oil palm seedlings and completing the program in blocks that are still not fully plant; Pest and Disease Control; Application by Product; Running Account; Estate Sosial Condition; CD and Land Security; Cost Control; and Declaration of FFB Production per month. There is also agronomic operational record, which details: (1) palm oil plantation size; (2) FFB harvest; (3) Chemical consumption; (4) pest attack and control; (5) record land application; and (6) fertilizing POM Manager Report covers FFB acceptance and rejected FFB; Processing Capacity; Production and Extraction; and CPO delivery.

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ST2 In addition to documents seen at ST1. There is also agronomic operational record, which details: (1) palm oil plantation size; (2) FFB harvest; (3) Chemical consumption; (4) pest attack and control; (5) record land application; and (6) fertilizing activities

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4.2 Best practices to maintain soil fertility, or, if practicable, improving the soil fertility, up to reach a level providing optimal and sustainable results.

4.2.1 Records of periodical soil and leaf analyzes and visual observation.

ST1 Company has documented Soil Survey Result 2008. Based on the explanation of MRC staff (Minamas Research Center), the soil survey is conducted once every 5 (five) years. While the leaf and visual analyzes are conducted on an annual basis as the basis of recommendation of fertilizing.

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ST2 There are documented Semi-Detail Soil Survey Final Reports in Cengal Estate (2008), Bebunga Estate (2009) and Bakau Estate (2009). Each of the reports is attached with the laboratory test result at each SPL; the tested parameter includes: Tekstur, acid (pH), Content of C, N, P, K, Mg, Ca, Na, BS, CEC, Al and H. Based on information from MRC staff, this semi-detail soil survey is conducted once every 5 years. There is record of leaf sample laboratory test result from Bebunga Estate, Sungai Cengal Estate and Bakau Estate conducted in June 2010. The record contains the following data: Block Code and planting year of the sample and the content of Ash, N, P, K, Mg, Ca. Based on information from MRC staff (Minamas Research Center), this leaf analysis is conducted on an annual basis.

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4.2.2 Records of maintenance and improvement of soil fertility (through fertilization, planting of beans, empty bunch application, land application) based on the analysis result in 4.2.1).

ST1 Practices to maintain and improve the soil fertility in working area of LMR are evidenced by the existence of monthly reports of fertilizing, empty bunch application, and land application activities. Determination of type and dosage of fertilizing (organic and inorganic) basically refers to the fertilizing recommendations based on the leaf analysis result. Records of application of empty bunch and effluent are available in both POM and estate, inter alia:

(1) Empty bunch daily report in POM, which contains delivery date, Block Code, and quantity of delivered empty bunch. For example: On 5 April 2011, the quantity of the empty bunch delivered to Block E421 (Babunga Estate) was 243,060 tones. In 2010, the volume of the applied empty bunch was 39,642.460 tons; while in 2011 (up to March 2011) the volume of applied empty bunch was 13,753.680 tons.

(2) Record of volume of effluent application in 2010 to Bakau Estate was 93,563 m3; while for 2011 (up to March) the volume of applied effluent to Bakau Estate was 19,928 m3; and to Bebunga Estate = 3,563 m3.

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ST2 LMR’s efforts in improving soil fertility are fertilization either inorganic, organic or with the application of wastewater. This is indicated by the availability of Fertilization Recommendation 2010 - 2011 Document to Bebunga Estate, Sungai Cengal Estate and Bakau Estate. These fertilizing recommendations were derived from MRC on the basis of soil and leaf analysis results. The recommendations are then used as the basis for the implementation of fertilization. There are records of inorganic fertilizing activities in each estate (Sungai Cengal Estate, Bebunga Estate and Bakau Estate). Data of application of fertilizer in 2010-2011 (up to May 2011) in Bebunga Estate (NK BLEND: 1,579,161 kg, 4,081 ha), Rock Phosphate (88,526 kg 610 ha), HGFB (11,627 kg 701 ha), Kieserite (28,386 kg, 2,812 ha), CCM 25 (175 kg, 2 ha), CCM 44 (13,973 kg, 30 ha). There are records of the empty bunch (EB) application activities in each estate (Cengal River Estate, Bakau Estate and Bebunga Estat). Application of EB in April 2011: Sungai Cengal Estate (area of application of 187 ha = 3,578 tons EB), Bakau Estate (area of application of 46 ha = 1,153 tons EB) and Bebunga Estate (area of application of 43 ha = 1,469 tons EB) LMR has a license to utilize and discharge effluent into the ground within the palm oil plantation under Decision of the Regent of Kotabaru District No.: 188.45/41/KUM.Year 2007. There is Flat Bad Eflluent Map and Summary of effluent application at Bakau Estate. Example of final effluent application record in April of 2011, the application of effluent to Bakau Estate was 6,846 m3 which covers an area of 64.6 Ha. Based on information from PSQM staff, effluents generated and transmitted to the WWTP are applied entirely.

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4.3 Soil erosion and degradation minimizing and control practices.

4.3.1 Marginal land map is available.

ST1 Based on the explanation of MRC staff, LMR has classified marginal land as N1 (currently unsuitable) and N2 (Permanently unsuitable), where both types of soil are not found in the work area of LMR. Nevertheless, based on a detailed soil survey, an area around 1500 hectares located in Sungai Cengal Estate contains acid sulfuric was

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found; some areas have been managed as a palm oil plantation area. The existence of acid sulfuric soil has been mapped in an appropriate scale. The maps are an integral part of the detailed soil survey document for each estate.

ST2 In addition to documents seen at ST1. √

4.3.2 Management strategy for planting in areas with certain slope (taking into account local soil and climate conditions) is available.

ST1 The company has established a Procedure Number 110/EST-ARM/08 for Land Preparation – lands with certain slope are treated by applying contour terrace system with the following conditions: (1) 6-12 degrees slope, terrace width is 5 meters, (2) 12-18 degrees slope, terrace width is 4.3 meters, and (3) 18-25 degree slope, terrace width is 3.6 meters. Based on the field visit to Block B030 Bebungan Estate, where there is area with slope degree of > 15%, the procedure has been implemented. On the site, countour terrace was found in a good physical condition. In addition to the terracing, LMR also implements other land conservation systems, namely: frond stacking, silt-pit, and U-shape. How far the effectiveness of the land treatment methods above mentioned in controlling the soil erosion will be verified farther in the Stage 2.

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ST2 The company’s strategy of treatment of land with certain slope for planting by taking into account the soil condition and local climate is similar to that described in the ST-1 audit process. Based on information from the Assistant Division II Bebunga Estate, the terracing program had been implemented since 1996 but only for a small area and was implemented again in the planted area since 2010. Based on the field observation in the Bebunga Estate (Block B 028, planting year 96), the treatment methods applied by the company are terracering, placement of palm sheath parallel to terraces / contour and cultivation of neprolephis species. The terrace was in good condition and quite effective in controlling erosion.

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4.3.3 Availability of road maintenance program.

ST1 Road maintenance program is set forth in the Manager Report, Annual Work Plan and Budget Presentation 2010-2011. Every year, LMR allocates and realizes fund for the maintenance and repair of existing roads within the estate.Priority is given to those roads where FFBs are transported. The realization of length and maintenance practices of the roads associated with erosion and sedimentation prevention efforts will be verified at the Stage 2.

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ST2 There are records of the implementation of road maintenance in each estate (Bebunga Estate, Sungai Cengal Estate and Bakau Estate). Period 2010 - 2011 (up to April 2011):

1. Bebunga Estate: 16,322 m planning, 17, 2011 m realization, 2. SCE: 80,147 m planning; 82,623 m realization, 3. Bakau Estate, 147,417 m planning, 308,199 m realization.

Based on the field visit to Bebunga Estate, Sungai Cengal Estate and Bakau Estate, condition of the roads are fairly well maintained in accordance with the planning.

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4.3.4 Peatland water level management program to minimize the subsidence of peat land surface is available.

ST1 Based on the land survey result, no peat land is found within LMR’s working area. N/A

ST2 Based on Land Map, the result of semi-detailed soil survey conducted by the MRC, no peat land is found within the working area of PT. LMR. Likewise, based on the field observation, no peat land is found on each estate thereby PT. LMR does not perform high-water management activities on peatlands.

N/A

4.3.5 Management strategy of marginal land and other critical lands (sandy soil, soil containing sulfuric acid, low organic content) is available.

ST1 Based on the Soil Analysis Report and field observation, there has been land covering around 1,500 hectares within LMR working area which is classified as critical land, i.e soil containing sulfuric acid.

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At the time of field observation in Field C 051 Cengal Estate, high management system of water level and sulfuric acid cleaning are applied by constructing canal equipped with water gate. Water level fluctuation is recorded every day by the foreman in the Water Level Log, but the company has not been able to show records and result of the effectiveness evaluation of the management system. Non-conformance of this indicator is NC-2011.15

ST2 Within the working area of PT. LMR there is a flooding area covering 1,500 hectares (Sungai Cengal Estate) which is indicated containing sulfuric acid with treatment system is similar to that described in stage ST-1. Based on the field visit to Sungai Cengal Estate, Block 55 planting year 2007, the conditions of canals, watergate, and palm oil crop growth are sufficiently good. Evaluation (records) of sulfuric acid land treatment has been initiated with Water Gate system. Non-conformance status of NC 2011.15 is closed.

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

4.4.1 Protection of waterways and wetlands, including caring and maintenance of river basin during or prior to replanting activities.

ST1 Based on the HCV identification record, it is found that all buffer zones and water sources within the working area of LMR have been recommended to be managed as HCV 4.1 (Important Area or Ecosystem As Water Source and Flood Control for Downstream Society), and HCV 4.2 (Important Area for Erosion and Sedimentation Control). Based on the field observations in Lintang River within Sungai Cengal Estate, a buffer zone mark was found in the form of a yellow circle on palm tree located on the third main line of riverbank. Bushes are found in the garden floor, which indicates that no chemical is applied in that area. However, information board and warning signs are very insufficient in that area so that in long term the buffer zone and/or water source area are vulnerably threatened by human activities. Non-conformance of this indicator is CFA-2011.16

X

ST2 Based on the field observation in Tamiang River of Bakau Estate, the company has made efforts to protect the water sources and buffer zone in the form of a white circle mark on palm oil trees (5 staple of the riverbasin), there are bufferzone information board and warning board to protect the buffer zone and planting of trees (mahogany and sungkai) on the riverbank was also done. The company has also added the number of the information boards, performed marking of border zones and warning boards or banning board and tree planting activities to avoid disturbance of human activities and chemical application. Non-conformance status of CFA-2011.16 is closed.

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4.4.2 Records of the implementation of water management program

ST1 There are documented results of river water quality test on the inlet and outlet locations in rivers and other water sources with the tested parameter covering pH, COD, BOD and suspended materials conducted by the Center for Industrial Research and Standards of Banjarbaru. Last monitoring took place on March 15, 2011. Example: water for domestic use from the reservoir, as follows:

(1) No. 0756-PU/CU/BPKIM/BRSBB/03/2011 Sample code: P.461 (river water – prior to the factory), test result: BOD 8.10 mg / l; pH 7.64; suspended solid 32 mg / lt.

(2) No. 0757-PU/CU/BPKIM/BRSBB/03/2011 Sample Code: P.462 (river water - after water treatment) test result: BOD 5.25 mg / l; pH 7.56; suspended solid 31 mg / lt.

Inlet and outlet water samples were taken from the Lintang River (a domestic water source for the community). The water quality and debit monitoring results will be verified further in Stage 2.

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ST2 Implementation of water management program is conducted in POM through the WWTP facility, which is utilized for land application. The waste water is processed using cooling pond, anearob pond and sedimentation pond systems. Wastewater in pond is measured every month in accordance with Land Application permit issued by Kotabaru Regent. Based on the result of recent testing dated 8 April 2011 the value of BOD (405 mg / l) still meets the quality standard of below 5000 mg per liter (Decision of Regent No.188.45/412/KUM/2009). Company has implemented the water management program in the estate through planning, planting and restriction systems in the form of buffer zone, spring and reservoir within the estate. To ensure the implementation of water management program, the Company has not been able to show evidence of monitoring and related test in river water management within the Estate, although the Company already has the monitoring and testing plan in the second semester of 2011. Non conformance status of this indicator is NC-2011.42.

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4.4.3 Records of mill’s wastewater BOD

ST1 Company has conducted wastewater BOD test every month carried out by the Center for Industrial Research and Standard of Banjarbaru District. This is evidenced by the availability of test result report attached to the Report of Actual Implementation of RKL / RPL. Last monitoring was done on March 15, 2011 with the following results:

(1) No. 0749-PU/CU/BPKIM/BRSBB/03/2011 Sample Code: P.454 (Pond 1), where BOD content was 59,850 mg / lt.

(2) No. 0750-PU/CU/BPKIM/BRSBB/03/2011 Sample Code : P.455 (Pond 10), where the BOD content was 720 mg / l; pH 7.26.

(3) No. 0751-PU/CU/BPKIM/BRSBB/03/2011 Sample Code: P.456 (Wastewater application in Block E26 BKE), where BOD content was 525 mg / l; pH 7.58

(4) No. 0754-PU/CU/BPKIM/BRSBB/03/2011 Sample Code: P.459 (Monitored Well Water), BOD content was 6.24 mg / l; pH 6.10.

The test result shows that the contents of BOD and PH of LMR plant effluent meet the criteria established under Decision of Kotabaru Regent No. 188.45/412/KUM/2009, where BOD5 should be less than 5000 mg / l and pH (6-9).

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ST2 The factory’s wastewater BOD monitoring and test are conducted on a monthly basis. The latest monitoring and test conducted on 8 April 2011 shows the value of BOD was 405 mg / l or below the BOD standard of 5000 mg per liter (pursuant to Decision No. 188.45/412/KUM/2009 of Kotabaru Regent) for land application use. The reporting of the monitoring and test results are made regularly and consistently every 3 months and attached to the RKL / RPL Report submitted to BLH.

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S1

S2

S3

S4

4.4.4 Records of monitoring of water use for plant per ton of FFB (Fresh Fruit Bunches)

ST1 There are daily and monthly records on plant and domestic consumption of water. Based on the record, the realization of water use in 2010 was 299.274 m3 per 194,445 tons of FFB, or average water consumption of 1.54 m3/ton FFB. This volume was in accordance with the 2010 budget in the amount of 1.50 m3/ton FFB.

Based on water consumption data to the TBS period January - March 2011 known average water usage 1.06 M3 (monthly water use data were January : FFB = 23,441 Ton; Water consumption = 23,970; water consumption rate = 1.02 M3, February : FFB = 18.464 Ton; Water consumption = 19,774; water consumption rate = 1.07 M3, March : FFB = 22,780 Ton; Water consumption = 24,881; water consumption rate = 1.09 M3)

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ST2 Company has monitored the use of water for processing of FFB every month. The result of the monitoring for the last 3 months (Feb - April 2011) still meets the target 1:50 M3 per tonne FFB. (The actual monitoring results are as follows: Feb 2011 - 1:07 (M3/Ton FFB), March 2011 - 1:09 (M3/Ton FFB), April 2011 - 1.02 (M3/Ton FFB).

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4.5 Invasive pests, diseases, weeds and introduction species are effectively controlled by applying the appropriate Integrated Pest Management (IPM) system.

4.5.1 IPM system is documented and updated

ST1 Integrated Pest Management Documents are available in every estate, including:

1. Integrated Pest Management Practices which detail the stages of activities comprised of: Census; implementation of BOB (Barn Owl Box), Benificial Plant, Pheromone; monthly implementation schedule of each year, and Evaluation.

2. There is also SOP Palm Plant Protection (Policy No.: 110/EST-ARM/08), which provides biological and chemical prevention and control of pests. For example: a. Prevent attacks of oryctes rhinoceros with baculovirus oryctes, planting legumes Mucuna SP along

the sides of the trunk / stump of palm oil (ex-old plants), and surgery of trunk / stump of putrefied old plants.

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b. Caterpillar control by means of monitoring and supervision of attack signs, and the cultivation of Beneficial Plants for natural pest control of leaves to encourage populations of natural enemies (predators and parasites) of caterpillars.

c. Rat control by means of detection and Census of rat attack with an interval of 3 months; and Control by using owl.

ST2 In addition to documents seen at ST1. Based on the field visit, it is found that PT LMR has implemented IPM programs including:

Planting of Beneficial Plants in each division and based on the evaluation result, it is found that the

beneficial plant system is effective to control caterpillar pests so as to minimize the use of insecticides.

There is a beneficial plant nursery as a source of plant in each estate, such as done in Block Aoo4 Field

14 of BKE.

There are Nest Boxes that are still inhabited by Owl for instance in Block A006.

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4.5.2 Records of IPM monitoring including its training

ST1 There are records of Palm Oil Plant Pest and Diseases Observation describing the scope of Observation; Number of principal census; type of pests (Caterpillar, Silkworm, ulat Rats, Squirrels, Termites, Oryctes, ganoderma, and pig), and control efforts through the Nest Boxes and Benificial Plant planting systems. In every estate, one Foreman of pest control work with two members from maintenance workers has been appointed. For example in Bakau Estate, Togu Hopusan Tambunan was appointed as foreman of Palm Oil Pest Control by virtue of an Appointment Letter No. SK / RSPO - BKE / 02/12/2010. Based on interview with a staff, it was found that the foreman always perform a breafing before performing IPM activities. However, the Company has not been able to show evidence of evaluation of the effectiveness of the implementation of IPM it has carried out. Non-conformance of this indicator is NC-2011.17

X

ST2 In addition to documents seen at ST1. the company has documented Palm Plant Pests and Diseases Observation. In addition the company has also been able to show evidence of evaluation of the effectiveness of the implementation of IPM that has been done by the Estate Manager. The documented evaluation is in the form of a matrix that provides the type of pests; Threshold; average attack; analysis of pest attack against the threshold level; conclusions to determine control techniques; corrective and preventive actions against attack; Then Recommendations from management. For example, the evaluation result of Sungai Cengal Estate which shows that the pest attack against the threshold is still below the economic treshhold. So it was concluded that the control is not necessary but the census and monitoring of pests should be continued, preventive and corrective actons may be done by adding benificial plants and immediately repairing damaged Born Owl Boxes. Based on the interview with IPM Foreman of Bebunga Estate, Mr. Sabitun, it is found that the foreman is assisted by three workers. The census is conducted every 6 months and for census of sample with high level of attack, the census is carried out every month. IPM foreman has also received training in GOR Bebunga Estate and explanation from the estate’s assistant.

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4.5.3 Records of monitoring of pesticide toxicity (active/LD50 material per ton of FFB or per Hectare)

ST1 Record of monitoring of toxicity of pesticides and active ingredient per hectare and per ton FFB production is presented in the form of Documented Monitoring of Pesticide Usage per hectare and per ton FFB Production, which specifies among other, volume of pesticide used and the applied area.

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ST2 Similar to the Stage 1 where the company has a record of monitoring the toxicity of pesticides and active ingredient per hectare and per ton FFB production is presented in the form of Documented Monitoring of Pesticide Usage per hectare and per ton FFB Production, which specifies among other, volume of pesticide used and the applied area within a period of one year (pesticide volule/hectare/year).

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4.6 Agrochemicals are used in a way that does not endanger health and environment. There is no prophylactic use of pesticides, except under special conditions as stipulated in the best practices. If the agricultural chemicals used are classified as WHO Type 1A or 1B or those materials included in the list of the Stockholm or Rotterdam Convention, the plantation company actively look for alternatives and the process is documented.

4.6.1 The evidences indicating that the company just uses agro-chemicals that are listed and permitted by the competent authority.

ST1 The company has a List of Chemicals, which details among other, trademark, active material, active ingredient, LD - 50, pesticide nature, targeted pests and MSDS (Material Safety Data Sheet) of each of type of chemical used. There are also records of chemical usage 2011 which details Brand of Pesticide, active material, and Registration Number of chemical from from the competent authority. Based on the two documents mentioned above, it is proven that LMR just uses agro chemicals registered and authorized by the competent authority. For instant:

Starene 200 EC active ingredient Flurokpir 2009 / L No reg. RI. 854/5-2004/T

Prima UP, active ingredient Isopropyl anime Glyphosate, No. RI Reg. 1779/11-2007/T

Dejavu, active ingredient Fluroksipir 288 Nuptil 200 g / l no. Reg. 010130120103827

Decis 215 EC, active ingredient Deltamethrin 259 / L, No. Reg. RI.387/11-2002/

Based on observation and interview with Pest Control (Spraying) team in Block G17 SCE, they said that the types of pesticides the company uses are as specified in the List of Chemicals so that the types of chemicals above-mentioned are certainly used by LMR.

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ST2 In addition to agro-chemical as listed in the stage 1, PT LMR also uses other agro-chemicals that are registered and permitted by the competent authority including:

Basta 15, active ingredient Amonium Glufosinat, No reg. RI 1113/12-2008/T

Meta Prima 20 WDG, active ingredient Methyl Metsufuron, no, Reg RI. 1897/8-2003/T

Kenlon 480 EC, active ingredient Triklopir Butoksi Etilester, no. Reg. RI. 2433/5-2006/T

Supremo 480 SL, active ingredient Isopropilamina Glyphosate, no. Reg RI. 1712/1-2008/2008

Azodrin 15 WSC, active ingredient Monokrotopos, No. Reg RI 336/1-91/T

Klerat RM-B, active ingredient Brodifacum No. Reg RI. 666/1-2004/T

Dithane, active ingredient Mankozep, No Reg RI. 59/4-2001/T

Ratgone, active ingredient Brodifakum, No Reg RI. 1212/8-2007/T Based on observation and interview with Pest Control (Spraying) team in Block A034 and A035, they said that the types of pesticides the company uses are as specified in the List of Chemicals so that the types of chemicals above-mentioned are certainly used by LMR.

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4.6.2 Records of pesticide use (including active ingredients used, the area is applied, the amount of use per hectare and the number of times the application).

ST1 LMR has a documented Plan and Realization of Chemical Use that details the type of activities (Eradication of Spot Weeding, Chemical Maintenance of Weeding, Chemical Maintenance of Circle and strip weeding, control of fire caterpillar and silkworm), dosage of chemical used, and frequency of application. Based on the above document, it is known that the frequency plan of weeding, Circle, and strip weeding activities are done every 3 months; Manual spot weeding is performed once every 1 year; and weeding and spot weeding activities are conducted once every four months. LMR has policy not to make use of chemicals during the rainy season, this causes the frequency of application is inconsistent with the plan. Evaluation of chemical use from year to year will be evaluated at the time of assessment.

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ST2 Similar to the Stage 1, LMR has a documented Plan and Realization of Chemical Use that details the type of activities (Eradication of Spot Weeding, Chemical Maintenance of Weeding, Chemical Maintenance of Circle and strip weeding, control of fire caterpillar and silkworm), dosage of chemical used, and frequency of application.

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Evaluation of pesticide use from year to year is presented in the form of a Chart which details each type of pesticide used during the latest three years (2008/2009 - 2010/2011). The chart shows that the company’s volume of pesticide usage tends to decrease, especially insecticide.

4.6.3 Documented evidence agrochemical use in accordance with the target of species, the appropriate dosage, and applied by trained personnel in accordance with instructions of use as specified in the label and storage instructions.

ST1 There is a list of chemicals used in each estate, which details brand, active material, active ingredient, LD - 50, nature of pesticide, and target of pest (see also point 4.6.2 above). MSDS is also available that has been translated into Indonesian as a reference for the workers involving in the use, storage, and aid measures to others exposed by the chemicals. There are evidences in the form of training materials and Attendance List indicating that spraying workers of PT LMR have received pesticide application training by internal trainer of PT Lasting Muaramakmur on March 25, 2011. The training was held in Bebunga Estate, at 07:00 to 11:30 AM with speaker Mr. Dwi Tresna Rusdiansyah (a general OHS expert of PT Langgeng Muaramakmur). The training was attended by BSS supervisory team members, Block Spraying System employees, truck operators of BSS team from BBE, BKE and SCE. Based on Central Warehouse Card, it is found that since 2008 until March 14, 2011 the company still used Gramoxone pesticide type with item code 31202014 (1600003374). However, the company was unable to prove that its operators have possessed the limited pesticide use certificate as required by Article 7 paragraph (1) of the Regulation of the Minister of Agriculture of the Republic of Indonesia No. 07/Permentan/SR.140/2/2007. Non-conformance of this indicator is NC-2011.18

X

ST2 Similar to the stage 1, PT. LMR has a list of chemicals used in each estate, which details brand, active material, active ingredient, LD - 50, nature of pesticide, and target of pest (see also point 4.6.2 above). MSDS is also available that has been translated into Indonesian as a reference for the workers involving in the use, storage, and aid measures to others exposed by the chemicals. There is evidence in the form of training materials and Attendance List which indicates that the company has done training on spraying techniques in Gor Bebunga Estate on April 21, 2011 which was attended by 52 participants including Spraying Team of PT LMR. The training was delivered by Pesticide Supliyer (PT Dharma Guna Wibawa). The company has also provided training to the spraying operators/workers concerning pesticide spraying techniques, including paraquat pesticide. The training was conducted in Bebunga Estate on 21 April 2011 delivered by Pesticide Supplier (PT Dharma Guna Wibawa) followed by 52 participants. Non-conformance status of NC-2011.18 is closed

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4.6.4 Disposal of agrochemical waste and pesticide packaging waste in accordance with the applicable laws and regulations.

ST1 LMR has SOP for pesticide packaging waste storage (Document RA 012) where point 5.7 provides that empty containers of pesticide should be returned to estate’s warehouse for safekeeping. LMR also has Working Instructions Number: 701/IK-TSA-ESH/10 for Empty Containers of Pesticide Handling that details the all empty containers of pesticide should be sent the flushing point for washing/cleaning (at least 3 times rinsing) and rinsing water must be contained in a specific container to be used again for spraying. Once the pesticide containers have been completely clean, they should be sent to the temporary storage facility of hazardous waste.

Licensed hazardous waste storage facility (Decision of Kotabaru Regent No. 188.45 / 125 / KUM / 2011 dated March 8, 2011) is located within the POM (Bebunga Factory). Consistency of implementation of the procedures above-mentioned will be verified further in the Stage 2.

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ST2 Based on the field visit to the hazardous waste warehouse of BBE, it was found that the management of unused containers of pesticide has been in accordance with the SOP Working Instructions Number: 701/IK-TSA-ESH/10 for Empty Containers of Pesticide Handling where the empty containers are sent to the flushing point (BSS home) and then be washed (at least 3x flusing) and rinsing water is stored in tanks for reuse in the spraying activities. Once the pesticide containers have been completely clean, they should be sent to the temporary storage facility of hazardous waste.

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There are records of unused pesticide containers that are sent to the licensed storage facility of hazardous waste in the POM pursuant to the Decision of Kotabaru Regent No. 188.45 / 125 / KUM / 2011 dated March 8, 2011.

4.6.5 Documented data indicating that the company’s use of chemicals categorized as Type 1A or 1B WHO ingredients as listed in the Stockholm and Rotterdam Conventions, and paraquat are reduced or eliminated.

ST1 See explanation of point 4.6.1 above. Based on the records of the Use of Chemicals, it is evident that all types of pesticides used by LMR (including paraquat active substance) are those types registered and authorized by the competent authority. There are still chemicals categorized as Type 1A or 1B, i.e pesticide with paraquat active substance used in LMR. In using the paraquat pesticides (eg Gramoxone), LMR has a policy in the form of a Memorandum of Operations No. POD-UM-124/X/2008 dated November 4, 2008 from the Head Plantation Operations concerning Recommendation of change in the application of Paraquat active substance - Gromuxone within Minamas Plantation. The policy, among others, provides that estate unit having stock of paraquat active substance must conduct recommended research properly (ie replacing herbicide containing paraquat active substance with Ally and Basta) and spent the stock as quickly as possible.

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ST2 Based on explanation of PT LMR staff and field visit to chemical warehouse at Bakau estate there were not found Gramoxone and supported by material use data which informed the Gramoxone pesticide at the end of March 2011 were no longer used . In the Stage 2 audit process, the audit team still found but not be used chemicals that are categorized as Type 1A or 1B WHO, among others, Pesticide with Delthametrin (Decis) active ingredient and the Brodifakum active ingredient (Klerat and Ratgon) whose use is limited by WHO, although pesticides are not banned and restricted in Indonesia. Based on observations in the Agro-chemical Warehouse, it is found that LMR has not used these pesticides anymore for its garden but stocks of Klerat, Ratgone and Decis were still found in the Agrochemical Warehouse. For example, in BKE Agrochemical Warehouse, the audit team still found stock of Decis pesticides (101.03 Liters) and klerat (1,615 kg), Klerat in BBE (580 Kg) and Ratgone (110 Kg). To ensure that the chemicals categorized as 1 A and 1 B WHO are not used anymore, the company is recommended to make a commitment of reducing and eliminating the use of such pesticides. Non-conformance of this indicator is CFA-2011.43 is issued with Comment For Action category.

X

4.6.6 Documented results of medical examination for the spraying operators/workers.

ST1 Records of spraying and fertilizing workers’ medical examination results are available in each estate carried out every two months, including physical examination (blood pressure, pulse, eye, THT and Respiratory). For example, medical examination result conducted on January 14, 2011 and March 29, 2011 by Dr. Setyo S (an estate doctor) and Siti Khodijah (a Polyclinic Paramedic) in the name of Mrs. Fatimah (a spraying/pest control worker); the health condition of this worker was declared good, with the following conditions: blood pressure : 120/90 mmHg, pulse : 90x/minute, temperature : 360C; View is Normal, THT is normal, head and neck are normal, chest (heart and lungs) is normal, Abdomen (Inspection, Palpation, Percussion, Auscultation) is normal.

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ST2 Records of spraying and fertilizing workers’ medical examination results are available in each estate carried out every two months, including physical examination (blood pressure, pulse, eye, THT and Respiratory). This is in accordance with the results of field visit to blocks A34 and A35 as well as interview with Tumini and Suryatin (spraying workers) where the company has routinely conducted medical examination once every 2 months. Last medical screening was conducted on April 21, 2011 by the estate midwife. The screening result shows that no health problem is found on the spraying workers.

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4.6.7 Records indicating that the company does not employ female spraying workers who are under pregnant or breastfeeding.

ST1 LMR has a policy of not employing pregnant and breastfeeding women in the chemical-related works. The company’s Central Polyclinic will provide recommendations to female spraying workers under pregnant and

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breastfeeding not to perform their dutries or to be assigned to another job. The existence of this policy was also justified by Mrs. Tuminah (spray workers with 14 years service term) who said that any female spraying worker who is under pregnant and breastfeeding will be assigned to another function, such as maintenance function. Example: The certificate of pregnancy dated August 16, 2010 in the name of Mrs. Sumrati (spraying team member) 28 years old, Division II, was recommended not to work involving chemicals.

ST2 There are records indicating that the company has implemented the policy of no pregnant and breastfeeding women allowed to work involving chemicals where they are assigned to perform maintenance tasks. This is according to the Foreman Log in the name of Sumrati (spraying worker) No. Gang Transfer 0206 who was then transferred to Gang Mandoran (0208) maintenance foremen job since 10/01/2010. And for August and September, based on the testimony of the Estate Assistant, he said that Mrs. Sumrati was still in mandoran 0206 but her job was transferred to gang mandoran 0208. Based on the interview with Mr. Amin (Spraying Foreman) of Division III BKE, his subordinate whose name is Sugini job code 0305 (spray) was transferred to job code 0307 (maintenance) or no pregnant nor breastfeeding workers employed in the spraying activities.

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4.7 Health and safety plan is documented, disseminated and implemented effectively.

4.7.1 The company has presented the documented health and safety program and implemented it.

ST1 Occupational Safety and Health (OHS) Policy, is among other, contained in the documented Guidelines for Sustainable Plantation Management No. Policy 724/TQEM-SPMS/09 dated 08/27/2010, as follows:

(1) To formulate, establish and implement the Occupational Health and Safety System. (2) Staffs are trained in accordance with their competence / expertise of work. (3) To implement the prevailing Laws, Government Regulations and Regulations established by the

Indonesian Upstream in respect of the Occupational Health and Safety, as well as code of conduct applicable in Indonesian plantation upstream operations.

(4) Continuously inprove OHS performance. Evidence of implementation, such as:

(1) There is a Occupational Health and Safety Development Committee (P2K3) for Bebunga Factory ratified by the Head of Social, Manpower and Transmigration Offices of Kotabaru District under Decision No. KEP-54/P2K3 / Disosnakertrans dated November 13, 2009, with the management composition as follows: Patron (Juharuddin Nasution), Chairman (Veri Lesnarno Personal), Secretary (Hidayatullah), and Clerk (Gil Suherno). The composition of the management board of the Occupational Health and Safety Development Committee (P2K3) of each estate is based on the Ratification of the Head of Social, Manpower and Transmigration Offices of Kotabaru District under Decision No.. KEP-084/P2K3 / Disosnakertrans on April 4, 2011.

(2) OHS training program for estate’s employees and contractors, such as firefighting training, FIRST AID training, and OHS chemicals training.

(3) Proof of training is in the form of the training certificate. Example: (a) Gusti Erwin Sagita (Boiler Operator), the type of training attended was boiler operator training dated 07/12/2000 provided by the Directorate General for Industrial Relations Development & Employment Supervision; (b) Gito Suherno (Production Clerk), the training attended was Lotus Note 8 User Essential training dated 06/09/2008 provided by Andalan Nusantara Technology (c) Ikrom (Electric) the training attended was Fire Fighting training dated 18/05/2010 by the Depnakertrans of Kotabaru District, (d) Iskandar (crane operator), training attended was lifting tools and crane operation dated 16-19/10/2010 by Directorate General of Development and Supervision of Employment Affairs of RI..

(4) Minutes and Attendance List of P2K3 Meeting dated January 13, 2011, with the meeting agenda: OHS Audit Report; OHS Implementation Evaluation; and MA Visit Preparation; The meeting was attended by 16 participants including Factory Manager (Coach), M&E Assistant (General Chairman).

(5) Evidence of OHS internal audit dated January 13, 2011. The material of the audit includes, materials,

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labor and working method, machinery, and work environment. There is also a Monthly Safety Officer Report covering the following activities: OHS Breafing, employee preparedness inspection, Field Inspection, PFFT Inspection, workers’ and contractors’ PPE inspection, BSS team medical examination, FIRST AID tools examination, camp hygienic checking (TPA, TK,SD, SMP, SMK, Mosque, Church, Genset House), orderliness of motor vehicle riding (light and safety helmet), FFB truck (Net and Light), Meeting/Training, weekly report, monthly report).

ST2 Same as Stage-1 activity in which the Company has a documented Occupational Health and Safety program for PT LMR (Estate and POM), which contains the documented Guidelines for Sustainable Plantation Management No. Policy 724/TQEM-SPMS/09 dated 27.08.2010. Implementation of the policy is set forth in the monthly report, namely Safety Officer Report which details the following work program: safety briefing, checklists of field application of OHS, fire, PPE Inspection, health and environment, training, weekly and monthly meetings, and follow up of the OHS work program activities.

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4.7.2 Officers responsible for health and safety program must be identified and minutes of periodical meeting discussing occupational health, safety, and welfare of workers issues should be made available.

ST1 Based on the Organizational Structure of the Company and Organizational Structure of P2K3 POM and Estate, it is found that all personnel who are responsible for OHS program are still active on the site. Based on OHS program documents, a regular meeting on a trimested basis has been schedulled to discuss OHS, as evidenced by the Minutes of OHS Meeting and Attendance List. Example:

(1) Minutes of meetings held in POM in January 2011 and November 2010 (November 8, 2010). Meeting Agenda, among others, are: the use of standard helmets for motorcycle riders; prevention of accidents; manadatory use of PPE for POM visitors; mandatory use of PPE for contracted workers;

(2) Record of P2K3 meeting in Bebunga Estate (BBE) on April 1, 2011 regarding the registration and legalization of P2K3.

(3) Working minutes of P2K3 Sungai Cengal Estate (SCE) on 26 November 2010 regarding the Restructuring of P2K3, Fire Prevention, traffic signs, speed bumps evaluation, and modification of spraying truck;

Please see also point 4.7.1 above.

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ST2 Similar to the stage 1, where based on the Organizational Structure of the Company and Organizational Structure of P2K3 POM and Estate, it is found that all personnel who are responsible for OHS program are still active on the site. Based on interview with Assistent and document review of estate OHS program, periodical meeting was scheduled to discuss OHS issues implemented every 2-3 months, as evidenced by the Minutes of OHS Meeting and Attendance List. Example:

Minutes of Meeting of P2K3 BKE held on January 3, 2011 regarding the socialization of OHS, Organizational Structure of the Company’s P2K3, Occupational Accident and Diseases Report, Secretariat of P2K3, Shedule of Meetings of P2K3, PPE and OHS Tools.

Minutes of Meeting of P2K3 BKE held on March 23, 2011 regarding the PPE use discipline, daytime

lighting motorcycle, housing environmental hygiene, FFB net control, new PFFT addition.

Factory P2K3 Meeting was conducted each month according to the Safety Officer report form and other P2K3 agenda. For example: Meeting held on May 7, 2011 discussing OHS audit report, OHS Implementation Evaluation and OHS Evaluation Improvement.

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4.7.3 Availability of accident insurance for workers.

ST1 The company has registered its workers with JAMSOSTEK program. Based on data of January 2011, there have been 2,434 workers of all estate units that the company has registered with the JAMSOSTEK program, while based on the explanation of PT LMR KRU Staff, for the Period March 2011 there have been 2,193 persons registered with the JAMSOSTEK program.

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For POM, based on the payment slip of employee’s Jamsostek premium in February 2011, there were 119 employees who have been registered with the JAMSOSTEK program (according to the number of employees registered on the List of Employee of the month).

ST2 Company has registered its workers with the JAMSOSTEK program. Based on JAMSOSTEK premium payment data in April 2011, it was found that there have been 2,178 workers who are registered with JAMSOSTEK Program by the company. Jamsostek premium has been paid by the Company for all employees totaling 2178 persons (POM and Estate). Based on the sampling of 3 workers, namely spraying worker (NIK 14 902), Maintenance Worker (NIK 67 944) and Harvesting Worker (NIK 15 207), they have got Accident Insurance payment in the form of JAMSOSTEK (data of May 2011)

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4.7.4 Periodical medical check up for employees who work in stations or jobs with high-risk.

ST1 The Company has developed a matrix of periodical Health Examination Schedule 2010-2011 for employees who work at particular stations in the POM. For example, for Workshop employees (January, April, July and October) and Boiler employees (February, April, June, August, October, and December), but there has been no evidence that it has been realized. Non-conformance of this indicator is NC-2011.19

X

ST2 There are records of medical screening results for 22 employees in POM Bebunga on May 11, 2011 by Dr. Felix Budi Setiawan, drg. Ratna Dwi Astuti, Susrini AM Keb. The medical screening includes mental, physical, and dental examinations. This medical screening program was designed for 26 workers. But it has just followed by 22 workers. In this regard, BBF has conducted the medical screening program evaluation in May. Based on the evaluation, it was found that four workers, i.e.: Sugeng Hariyadi, Imam Rofi'i, Sutrisno, and Gunanto have not been screened due to the absence of them, and will be included in the medical examination next month.

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Company also has a documented schedule and realization of medical screening in 2011 for every employee who works at the stations with high risk provided by a physician, including those spraying workers in the estate. Example: in May 2011, medical screening was given to mechanical workers, maintenance workers, mill foreman, and electrical workers in POM. Non-conformance status of NC-2011.19 is closed

4.7.5 Records of risk analysis for health and safety programs.

ST1 Documented risk analysis for OHS program has been available in both estate and POM in the form of HIRAC (Hazard Identification Risk Assessment and Control) document, which details the hazard identification for each work station. In POM, these job stations are, among others: Loading Ramp, Boiling, Beating, Pressing, Clarification, Kernel, CPO and kernel Dispatching, Boiler, Water treatment, engine rooms, empty bunch, waste application, laboratories, and workshops. Example: hazardous risk for waste application activities at the time of taking sample of waste water is drowning, fatal impact; preventive effort is life jacket use. Documented HIRAC for estate covers Harvesting, Seedling, Fertilization, Spraying, and Road Maintenance activities. Example: Hazards of spraying activities are in the form of pouring chemical into the dose, being exposed by chemicals; preventive efforts: wearing gloves, protective clothing (suits), and masks and goggles.

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ST2 Same as Stage-1 activity. Documented HIRAC (Hazard Identification Or Risk Assessment And Control) has been implemented in each estate and POM. This document details each phase of activities identified hazard, impact of hazards, risk category, risk control and person in charge of the risk control.

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4.7.6 Records of training of health and safety programs (OHS).

ST1 LMR has records of training activities in the form of certificates, training materials, and attendance list (for inhouse training). Example:

(1) Certificate of OHS implementation seminar for POM employees organized by Disosnakertrans (Social, Labor & Transmigration) Agency of Kotabaru District on February 15, 2010 in the name of Juharuddin Nasution; and fire prevention training on 3-4 August 2010, followed by 12 personnel, among other, Ikrom, Sungep Riyadi , and Arbani Surya.=

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(2) Certificate of training on implementation of SOP Occupational Health and Safety on October 28, 2010 in SCE traction, training topics: mandatory use of FFB nets and the correct installation and maximum load of FFB, which was attended by 17 participants equipped with an attendance list, Fire Prevention Training on December 3, 2010.

However, the audit team still found a number of inhouse training activities without evidence of attendance list. For example, Fire Prevention Training on December 3, 2010. Non-conformance of this indicator is the CFA-2011.20

ST2 Same as Stage 1, LMR has records of training activities in the form of certificates, training materials, and attendance list of participants The company has also completed a number of training attendance lists that were not found at the time of stage 1. For example the attendance list of Fire Prevention Training on December 3, 2010 in POM Bebunga attended by 14 participants. Based on the explanation of a staff, it was found that such attendance list is not unavailable, but because of poor administration of documentation at the time of Stage 1, such document could not be demonstrated. But at the time of Stage 2, the document could be presented. Company also has documented the training conducted simultaneously between the estate and POM. The training was held on May 13 and May 25, 2011 regarding the handling of fire and FIRST AID as evidenced by an attendance list. Non-conformance status of CFA-2011.20 is closed.

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4.7.7 The process of preparedness and emergency response.

ST1 Fre emergency response and FIRST AID simulation was held on May 8, 2010 in POM, but it was just followed by 10 core personnel (consisting of two coordinators, two hydrant station workers, four hydrant nozlemen, two hose connecting officers), while the emergency response must be understood and may be performed by all workers. Therefore, the company is highly recommended to perform the simulation again by involving all employees.

X

On the site the audit team also found SOP Emergency Response, which details hazar management through potential hazards identification process, establishment of emergency response structure of the Company, reporting / notification of emergencies, evacuation activities, and Recovery Phase. In detail, the emergency response process can be seen in the Emergency Response Flowchart. Non-conformance of this indicator is CFA-2011.21

ST2 The emergency response simulation was held by the company through a training combined with OHS condition (see point 4.7.6), e.e.: simulation held on May 13 and May 25, 2011 on fire and FIRST AID handling as evidenced by the attendance list. Non-conformance status of the CFA-2011.21 is closed.

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4.7.8 Evidence of fulfillment of occupational health and safety program and first-aid equipment at worksite.

ST1 The company has fulfilled OHS program equipment as evidenced by the PPE (Personal Protective Equipment) Delivery Minutes attached with the list of PPE provided. Type of PPE is given in accordance with HIRAC. Example: PPE Delivery Minutes dated May 30, 2008 for delivery of safety helmet of Laboratory Division (12 employees), Safety Helmet to Processing Division (64 employees), workshop division (21 employees). Based on field visit to a number of work locations, such as workshop, genset room, boiler, offices and guest house, the audit team found that LMR has made available FIRST AID kits in such areas. The evidence of the delivery of FIRST AID kits is available in the form of Safety Officer Report available in each estate. The report details the position / place of the FIRST AID kits, Quantity, and person in charge. Example: FIRST AID kit No. 9 in SCE: the FIRST AID kit is posted in the Office of Division III, quantity: 1 unit, and person in charge : Nanang.

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ST2 The company has fulfilled OHS program equipment as evidenced by the PPE (Personal Protective Equipment) Delivery Minutes attached with the list of PPE provided. Based on field visit to a number of work locations, such as workshop, genset room, boiler, offices and guest house, the audit team found that LMR has made available FIRST AID kits in such areas. For example, First Aid Kit available in BBE workshop which contains wound healing medicine, alcohol and gauze. Based on the field visit to the spraying team Division III BKE in Block A034 and A035, the spraying team members have worn Personal Protective Equipment covering safety eye glasses, safety shoes, masks and Apron. Based on

X


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the field visit to BBE office, the audit team found that the delivery of such PPE to employees was held on Monday, 30/05/2011 for spray team Division III in the form of safety gloves, apron and masks for 20 workers. Evaluation of the fulfillment of the OHS program equipment was conducted by the POM and FIRST AID kits have been available in the field, such as in spraying division, mechanical division, workshop division of the POM, but the company has not fully implemented such inspection of the FIRST AID kits for several activities in the estate or POM, for example: FIRST AID kits in the harvesting function, all FIRST AID kits in POM area. New non conformance of this indicator is CFA 2011.44

4.7.9 Workers who have got First aid training should be assigned in the field and factory activities.

ST1 There is evidence in the form of Attendance List showing that LMR has conducted FIRST AID training. Example: FIRST AID training held in POM Bebunga on 3-4 August 2010 together with fire emergency response simulation; FIRST AID training held in Sungai Cengal Estate on March 30, 2011 with speaker Mrs. Miros F (Clinic Paramedic) attended by 14 participants, among others Division Clerk, Warehouse Clerk, Personnel, HR dept, Foreman I Division III, Mechanic Helper, Teacher, and Assistant of Sungai Cengal Estate. Based on the list of employees and Company Organizational Structure of POM and Estate units March 2011, it was found that those personnel having attended the FIRST AID training are still listed as employee of LMR and be on site.

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ST2 FIRST AID Training in Mill and Estates for field workers has been conducted, such as the training held on May 13, 2011 with agenda of education on FIRST AID and Accident and was attended by each personnel who is responsible in each field. Based on the interview with the foreman of fertilizer Division I BKE (Mr Iwan), he stated that he had attended FIRST AID training held in GOR Bebunga. According to the foreman, training material is about first aid to be given to his members (fertilizing workers) suffering from accident. Up to now, therefore, every foreman has been equipped with first aid materials , scuh as Betadin and gauze. In addition, according to this fertilizing foreman of Division I BKE, he had also once attended Fire Fighting training in POM Bebunga.

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4.7.10 Records of accidents must be maintained properly and periodically reviewed.

ST1 LMR has a record of Monthly Accident Monitoring for Estate and POM. The record details date, name of victim, type of accident, category of accident, and causes of accident, and lost workdays. However, the Company has not been sufficiently careful in setting “Cause of Accident” (in the form Work Accident Monitoring), so that it is difficult to recommend corrective actions in order to prevent similar incidents. Example:

(1) During the period of July 2010 to June 2011 an occupational accident took place in POM, namely in January 2011 in the name of Sutrisno; this accident took place in solid conveyor; type of accident is minor; third category where the victim is recommended by doctor to take a rest for more than 5 days; accident cause was a contact with a hard object, and lost workdays was 18 days.

(2) An accident case in Bebunga Estate on February 14, 2011. Victim was Kasno, an employee of Division I; scene of the accident was in front of the Main Office; type of accident was an exposed machete; lost workday was 2 days; accident category was seventh category accident where the victim gets first aid and is not recommended by doctor to take a rest; cause of the accident : when the victim was exposed by his grass machete on his right thigh when he was chopping down grass.

Non-conformance of this indicator is CFA-2011.22

X

ST2 Every occupational accident was recorded and reported in the monthly Safety Officer Report. During 2001, no accident takes place in POM. Likewise, any accident in the estate is also recorded, for example: in Bakau Estate during 2011 (till April 2011) there have been 14 occupational accidents ranging from skin abrasion to stab wound with a total lost time of 16 days. These events were analyzed, but not causes determination and corrective

actions are found (monthly safety officer report). Non conformance status of CFA-2011.22 is declared open with Comment For Action category.

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4.8 All staffs, workers, farmers and contractors are appropriately trained.

4.8.1 Documented continuous training programs for staffs, employees and farmers, according to their respective competence

ST1 POM Bebunga has a record of "Detailed Budgets for Education and Training" for 2010-2011, which details Month Training, Training Type, and trainee candidates. This training program was designed for managers and staffs and planned according to the need. Example:

(a) Training Plan for POM managerial level: (1) in July to August 2010: the type of training: "Proactive Management", held in Jakarta (external training). (2) September-October 2010, the type of training : "Leadership", held in Jakarta, and (3) April 2011, the type of training: OHS expert training, held in Jakarta.

(b) Training Plan for POM Staff: October 2010, the type of training : "Steam power operators". (c) Training plan for Estate’s managerial and staffs: February-June 2011, the type of training "Supervisory

Management"; "Leadership-effectiveness" and "Conselling and Coaching Techniques for Managers". (d) Training plan for employees covers harvesting workers, foremen, Labtoratory employees, Fertilizing

Workers, Spraying Workers and contractors. For example:

Harvesting workers are programmed to be get training on harvesting, sorting FFB, General

OHS, OHS Chemical Substances, and RSPO training.

Harvesting foremen are programmed to get training on harvesting, sorting of FFB, general

OHS, First aid and RSPO training.

Warehouse employees are programmed to get training on Fire Fighting, pollution prevention, general OHS, FIRST AID and RSPO training.

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ST2 Trainings for staff and contractors have been identified following the training programs related to RSPO by the Company for both estate and POM. But the company has not identified training programs for KKPA or plasma farmers in which the KKPA and the Company (LMR) have insterests in the activities undertaken by farmers. However, based on the field visit to KKPA Plasma Garden in Sungai Cengal Estate and interview with spraying workers of KKPA Plasma Garden in Sungai Cengal Esate (Mrs. Idah), the workers working in such plasma gardens have indirectly received training related to the technical work they perform. For example, spraying team, before performing their dutes, always attend a briefing provided by KKPA Assistant aimed at explaining the techniques of work they will perform, for example: spraying should not be on palm leaves, spraying of circle should be done by spraying circling around the palm trees; in addition, workers must wear PPE already provided. New non conformance of this indicator is CFA-2011.45

X

4.8.2 Records of training for each employee are available.

ST1 LMR has a record of training for managerial and staffs level, but does not include workers (for example: foreman, harvesting workers, fertilizing workers, etc.). Record of training for Managers, ADM, Assistant Manger, Section Head, Supervisior is known as "Employee Training History", while the training records for the employee / officer is known as Conference / Seminar / Workshop / Training. Please see also point 4.7.6 above. Non-conformance of this indicator is CFA-2011.23

X

ST2 PT LMR has records on training for employees, among others:

Materials and minutes of driver safety training held on February 8, 2011 at GOR Bebunga Estate,

followed by 98 participants (company drivers and contractor) provided by Indosafe Pratama about

Defensive Safety Driving Level I

Materials and minutes of training for harvesters held on March 2, 2011 at SCE followed by 20

participants (Harvesting Team) presented by Estate Assistant regarding the use of personal protective

equipment and procedures for harvesting activities.

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Materials and Minutes of technical training for spraying workers held on March 25, 2011 at BBE

presented by Dwi Tresna Rusdiansyah (Assistant GM), followed by supervisors, BSS team, BSS

employees, and Operator team.

Record of training has been made by the Company for the structural level, but it just focuses on training with certificate or training without certificate is not recorded, for example: training with certificate in the name of Hendri Nardes (Estate Senior Assistant) for HCV. Non-conformance status of NC-2011.23 is declared open with minor category.

4.8.3 Documented evidence indicating that the company uses well-trained contractors

ST1 Bebunga Estate Manager explained that LMR has a mechanism to select and assign contractors, among others, requiring a contractor to have sufficient work experience, and appropriate quotation. Track records of contractor is identified from the contractor work supervision by EMS (Engenering Mill Services). For local contractors, trainings on OHS General, FIRST AID and RSPO are given. For example, in the site, there is a matrix of records on training for contractors, as follows:

PPE Safety Breafing for Batu Ciping Contractor Unit on March 12, 2011 at Division I Block F 19 Poros,

attended by six contractor representatives as driver.

PPE Safety Breafing for construction contractors on March 25, 2011 at BBE, attended by 13 participants

as a Junior Construction contractor.

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ST2 Based on the explanation of the manager is known that the mechanism for selecting contractors and establish, among others, require adequate work experience, and offer an appropriate price. Track records contractor, known from the works supervision kontarktor by EMS (Engenering Mill Services). As for the local contractors are given training on OHS General, FIRST AID and the RSPO. For example, on the site there is a matrix of records on training for contractors, as follows: in the site, there is a training record matrix for contractors, as follows:

PPE Safety Breafing for Batu Ciping Contractor Unit on March 12, 2011 at Division I Block F 19 Poros, attended by six contractor representatives as driver.

PPE Safety Breafing for construction contractors on March 25, 2011 at BBE, attended by 13 participants as a Junior Construction contractor.

driver safety training that was held on February 8, 2011 at GOR Bebunga Estate attended by 98 participants (company’s and contractor’s drivers) submitted by Indosafe Pratama concerning Defensive Safety Driving Level I

Based on the Job Order (SPK) in BKE (Sand/ Stone / Soil / FFB transport Job Order) No. EST/BKE/SPK-LKL/II/2011/0099, point 3.1 states that the trucks used to perform the work must be roadworthy, have a valid vehicle registration (STNK), equipped with KIR certificate, and drivers must be physically fit and have valid driving license.

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PRINCIPLE #5 ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY

5.1 Estate and mill management aspects, including replanting raising impact environmental impacts are identified, plans to reduce negative impacts and to encourage positive impacts have also been prepared, implemented and monitored in order to demonstrate continual progress

5.1.1 Documentation of impact analysis.

In the site, the audit team found documented Environmental Impact Assessment (EIA) of Palm Oil Plantation and Factory (collectively) in the name of PT. Laguna Mandiri, PT. Langgeng Muara Makmur, PT. Paripurna Swakarsa and PT. Swadaya Andika that have been ratified by the Head of Planning Bureau, Secretary of the


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Central Committee, Ministry of Agriculture under approval letter no. 008/ANDAL/BA/II/1995 dated February 27, 1995. The document covers the managed area of 21,840 hectares located in the Province of South Kalimantan with installed factory capacity of 60 tons FFB / hr, but did not include an area of 1,928.7741 hectares located in the Batu Engau and Tanjung Aru Sub-districts, Paser District, East Kalimantan Province. The EIA document presents 9 types of estimated impacts (positive and negative), namely: Impact on Air Quality, Impact on Soil Physical and Chemical Properties, Impact on Erosion and Sedimentation, Impact on Water Debit and Flood, Impact on Water Quality, Impact on Vegetation and Wildlife Wild, Impact on Social Issues, Increased Impact on Employment and Increased Revenue of Local Community and Employees. There are also documented results of High Conservation Value (HCV) Identification and documented Social Impact Assessment in 2010 that will be used as a reference by LMR in managing the environment to reduce negative environmental and social impacts caused by the company’s operations. Non-conformance of this indicator is NC-2011.24

ST2 PT. LMR has conducted environmental impact analysis for area located in East Kalimantan Province. This is evidenced by the Environmental Management Document (DPLH) and the issuance of Letter from the Head of the Environmental Affairs Agency (BLH) of Paser District, No. : 660.1/210/DPLH/BLH2011, dated May 24, 2011 on Recommendation for DPLH of Palm Oil Plantation Activities covering an area of 1,213 ha situated at Batu Engau and Tanjung Harapan Subdistrict, Paser District, East Kalimantan Province. In the DPLH Document, there are 11 types of management and monitoring activities: 1) Impact on Space and Land, 2) Impacts on soil, 3) Impact on Hydrology, 4) Impacts on Water Quality, 5) Impacts on Transportation, 6) Impacts on Terrestrial Flora, 7) Impacts on Terrestrial Fauna, 8) Impacts on Water Biota, 9) Impacts on the Socio-Economy, 10) Impacts on Attitudes and Perceptions of Community, 11) Impacts on Public Health. Non-conformance status of NC-2011.24 is closed

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5.1.2 Records of periodic environmental management reporting in accordance with applicable regulations.

ST1 There is no sufficient data that LMR has submitted its RKL / RPL Report regularly to the relevant authority. Example: on-site there is evidence of submission of RKL / RPL report period I (January 2010 - June 2010) to the Head of the Environmental Affairs Agency of Kota Baru District in the form of an Introductory Letter No. 102/LMR/UM/PSD/XI/10 dated November 10, 2010. However, evidence of submission of the RKL / RPL Report for Semester II (July-December) of 2010 is unavailable. Non-conformance of this indicator is NC-2011.25

X

ST2 Since 2009 PT. LMR has routinely prepared RKL / RPL report and submitted it to the BLH of Kota Baru District. However, the company has sent the RKL / RPL report to PSD according to the internal policy to be forwarded to the relevant agency, the status of which is currently still in the process to obtain formal submission. Non-conformance status of NC-2011.25 declared open with Comment For Action category.

X

5.1.3 Revision of the environmental management documents if there is change in operational areas or activities of the company.

ST1 Based on the analysis of the RKL Report Period I (January-June 2010), the audit team found seven types of impacts already managed and monitored by the company, namely: management of groundwater in the flooding area (acid sulfate), Air Quality and Noise, Water Quality, Quality of River Water and Outlet Canal Water, Quality of Liquid and Solid Waste, Potential Fire, Disruption Flora and Fauna and Society Unrest. There are a number of differences in types of impacts managed and monitored, compared to the kind of impacts specified in the approved EIA document (see Criteria 5.1.1 above), without any revisions to the environmental management document. Non-conformance of this indicator is CFA-2011.26

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ST2 There is discrepancy in the type of activities that are managed and monitored in the Recommended EIA Document contained in the RKL / RPL Report first period of 2010 (as described at criteria 5.1.1), however there is no explanation of the changes in such activity types. In addition, there is also a type of environmental management and monitoring activity that has been conducted but not yet included in the RKL / RPL Report, such as erosion management and monitoring activity. Non-conformance status of CFA-2011.26 is declared Open with Commnt For Action category.

X

5.2 Status of rare and protected species and habitats with high conservation value, if they are available within the estate area or affected by the plantation or mill operations, should be identified and their conservation should be taken into account in the work plan and operation management.

5.2.1 Documented identification of rare and protected species and habitats with high conservation value.

ST1 There are the documented outputs of identification of species and habitats with High Conservation Value contained in the EIA document (ratified in 1994) and HCV / HCV Identification Document (December 2009). Based on the document, 5 (five) species of flora categorized as LR on the IUCN Register, namely large leaf binuang (Octomeles sp), forest kedondong (Spondias pinnata), pelantan, rambutan (Nephelium spp), and mendarahan (Myristica spp); 2 (two) species of flora categorized as VU / V or sensitive, namely gaharu (Aquilaria spp) and ulin (Eusideroxylon zwagery) and 1 (one) flora species classified as CR or threatened, i.e.: meranti batu (Hopea mengarawan). The identified fauna species are, among others: trenggiling/pangolin (Manis javanicus), Bekantan (Nasalis sp), coconut squirrel (Callosciurus notatus), honey bear (Helarctos malayanus), Sigung, Root Tiger (Felis bengalensis), Pelanduk kancil/mouse Deer (Tragulus javanicus), Munja Deer (Cervus spp), Malaya lemur. The data are listed in Appendix 12 to the HCV Document.

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ST2 PT. LMR has conducted the identification of protected, rare, or threatened species and habitat with high conservation value whose process involved YASBI (Foundation for Sustainable Palm Oil Production of Indonesia). There are records of the identification result of the protected, uncommon, rare or threatened species and habitats with High Conservation Value as outlined in the ST-1 audit process. Based on the HCVA study result, there are habitates with High Conservation Value (HCV) within the working area of PT. LMR as follows: - HCV 1: Bakau Estate (26.84 ha), Bebunga Estate (54.20 ha) and Sungai Cengal Estate (236.76 ha) - HCV 2: Sungai Cengal Estate (222.66 ha) - HCV3: Bakau Estate (26.84 ha), Bebunga Estate (29.00) and Sungai Cengal Estate (233.27 ha) - HCV 4: Bebunga Estate (51.17 ha) and Sungai Cengal Estate (225.76 ha) - HCV 5: Bebunga Estate (25.20 ha) and Sungai Cengal Estate (3.10) - HCV 6: Sungai Cengal Estate (3.40 ha

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5.2.2 If there are rare and protected species or habitats with high conservation value, appropriate measures to preserve them should be made available.

ST1 See the criteria 5.2.1 above. A number of rare and threatened species or habitats with High Conservation Value are identified within the working area of LMR. Some activities to preserve the species and HCV have been performed, among others, the determination of the HCV area and installation of information board in accordance with the existing types of HCV. The company has not performed real action to preserve the species in the form of socialization of the existence of such species to the employees and local community. Non-conformance of this indicator is NC-2011.27

X

ST2 Company has the following SOPs: 1) SOP No. 033/LMR-4-PSL/C7 dated dated December 1, 2010 on Wildlife Management that has been approved by the Chairman of SOU; 2) SOP No. 031/LMR-DAS/C7, dated December 1, 2010 on River Basin Protection that has been approved by the Chairman of SOU.

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PT. LMR has the documented Monitoring of HCV in Bebunga Estate, Sungai Cengal Estate and Bakau Estate areas. The document provides the types of activities related to the management of HCV that is equipped with timeframe. Activities to protect the species and HCV have been performed, among others, the determination of HCV area and installation of information boards in accordance with the type of the existing HCV. There are also documented attendance list, photographs and materials indicating that the Company has conducted socialization activities related to the presence of the rare or threatened species or habitat with high conservation value to the company’s employees and local people. But the program already made by the Company has not been fully referred to the HCV management document. For example efforts to enrich rare and protected flora species such as Ulin, Gaharu. Non-conformance status of NC-2011.27 is closed, but new observation of CFA-2011.46 is published with Comment For Action category.

5.2.3 The steps taken to preserve rare, threatened and protected species and their habitats must be in accordance with relevant regulations and cover the measures to control any illegal or improper hunting, fishing or harvesting activities.

ST1 See explanation 5.2.2 above. Company has not shown proof of having taken steps to protect species including the control of illegal and improper hunting, fishing, or harvesting activities. Non-conformance of this indicator is NC-2011.27

X

ST2 In controlling the illegal and improper hunting, fishing or harvesting activities, the company has made and posted banning boards that contain the relevant laws and regulations. In addition, the company has also possessed SOP No. 033/LMR4-PSL/C7, dated December 1, 2010 on Handling and Conservation of Protected Flora and Fauna, which has been approved by the Chairman of SOU. The SOP refers to the prevailing laws and regulations. The relevant laws and regulations are as follows:

1. Law No. 5 of 1990, on Conservation of Natural Resources and Ecosystems 2. Law No. 41 of 1999; on Forestry 3. Government Regulation Number 13 of 1994 on Wild Animal Hunting 4. Government Regulation No. 7 of 1999 on Preservation of Plants and Animals 5. Law no. 9 of 1985 on Fisheries

But the program already prepared by the Company has not been fully referred to the HCV management document. For example, efforts to enrich rare and protected flora species such as Ulin, Gaharu. Non-conformance status of NC-2011.27 is closed, but new observation of CFA-2011.46 is published with Comment For Action category.

X

5.2.4 The existence of posters, warning signs, publications, circulars and socialization of rare and protected species towards all employees and community and information handling

ST1 Company has shown some locations where information boards of HCV are installed, e.g: in Sungai Cengal Buffer Zone, Sungai Lintang Buffer Zone and springs in Block B7. But no evidence is found indicating that the company has prepared posters, warning signs, publications, circulars and socialization of the presence of the HCV to all employees and local community. Non-conformance of this indicator is NC-2011.28

X

ST2 Company has conducted socialization of HCV toward employees and surrounding communities, as evidenced by the existence of attendance list and materials of the socialization meeting. For example: a socialization held on May 21, 2011 regarding the installation of warning signs in the protected area for the people from Segendang, Latitude Jaya, and Mulyoharjo Villages within BBE. Based on the field observation, the Company has put up signs, posters and warning signs associated with the protected species, such as those installed at Sungai Cengal Estate (Block C 19) and in Bakau Estate (Block A035). Non-conformance status of NC-2011.28 is closed.

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5.2.5 The existence of dedicated and trained personnel within the company’s organizational structure to control the plan and activities above-mentioned.

ST1 Company has appointed dedicated officers to oversee the implementation of the HCV management process, namely: Tadik Hariyanto for SCE with Appointment Letter No. 02/SCE-int/XII/10/S dated December 1, 2010; Sabitun for BBE with Appointment Letter No. 216/BBE-sk/03/2011/S dated March 1, 2011; and Togu Hopusan Tambunan for BKE with Appointment Letter NO. SK/RSPO-BKE/02/12/2010. However, the Company has not been able to show evidence of competence of each of the officers in the field of HCV management. Non-conformance of this indicator is NC-2011.29

X

ST2 Company has appointed dedicated officers to oversee the implementation of the HCV management process as presented in the ST-1. Company was unable to present evidence that such officers are well trained in HCV management, but the Company already has a HCV training plan for the officers in cooperation with BKSDA. This is evidenced by a letter from PT. LMR to BKSDA concerning Application for the 2nd HCVA Supervisory Training Services to BKSDA (Letter No. SOU-Bebunga, RSPO Chairman, dated May 21, 2011). In addition, there is a written proposal for cooperation in HCV inhouse training. Non-conformance status of NC-2011.29 is declared open with minor category.

X

5.3 Waste is reduced, recycled, reused and disposed in an environmentally and socially accountable manner.

5.3.1 Identification of waste and pollution sources, and its documentation.

ST1 Documented identification of waste and pollution sources is available for POM, which details type and source of waste (station). But the same has not been made available in the estate. The volume of waste generated from the POM is recorded on the Warehouse Card, which contains the following information: item name, date of receipt, number of Goods Shipment (SPB), waste sources, and waste volume. Based on the Warehouse Card, up to April 2011, the volume of hazardous waste is as follows:

(1) Used Oil – 2,767 liters; (2) Used Battery 60 A - 14 pcs; (3) Used Battery 75 A - 2 pcs; (4) Used Battery 100A - 1 pcs; (5) Used Battery 120A - 1 pcs.

Non-conformance of this indicator is NC-2011.30

X

ST2 Similar to the Stage 1 assessment, records identifying the waste and pollution sources are available in POM, which details the type and source of the waste. At the Stage 2, the company has presented the documented identification of waste and pollution sources in every estate in the form of a Matrix of Identification of Waste Sources and Their Treatment, which details Waste Source; Waste Name; Waste Type: Waste Classification (Hazardous Waste and Non-hazardous waste); Frequency; Unit; Monthly Volume; Reuse / Recycle / Disposal: Temporary Storage Facility; Objectives; and Notes. Example: In Bakau Estate, hazardous waste and non-hazardous waste from Warehouse Material activitries are collected and delivered to a licensed collector; hazardous waste and non-hazardous waste from generator activities are collected and disposed properly by a licensed collector. Any waste arising from any activity is recorded and managed by the organization. Non-conformance status of NC-2011.30 is closed.

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5.3.2 Waste management plan is documented and implemented based on the results of identification to prevent and reduce pollution.

ST1 Company has SOP No. RA 012 dated December 1, 2010 on Hazardous Waste and Non-Hazardous Waste Treatment and SOP No. 700/IK-TQEMESH/10 on Non-Hazardous Waste & Non Hazardous Waste Quality

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Standards, but has not been consistently implemented. For example: (1) no waste symbol is found on the waste temporary storage facility, (2) no labeling was found on the waste, (3) fabric cotton waste was burned in the boiler, (4) waste temporary storage facility in the estate has no licenses. Non-conformance of this indicator is NC-2011.31

ST2 The company’s waste management plan is set forth in a sheet or matrix which details the waste sources, waste name (liquid, solid, emissions), waste classification (hazardous waste and non-hazardous waste), frequency of waste generated, management of nature of waste for reuse, recycling and disposal and hazardous waste temporary storage facility (Permit No. 188.45/125/KUM/2011 dated March 8, 2011). Based on the field visit, hazardous waste (eg fabric cotton waste, used oil, used batteries, used chemical containers) produced in the POM have been labeled in the Temporary Storage Facility and would be delivered to a licensed collector. (Proposal dated 25 April 2011 from the Chairman of SOU Bebunga Estate to CV Nazar on Hazardous Waste Collection Proposal). Based on the field observation in the POM Hazardous Waste Warehouse, it was found that unused chemical containers have been treated by destroying them. All types of hazardous waste are collected in a space (Temporary Storage Facility of Hazardous Waste) and recorded to be delivered to a licensed collector, despite it is still in the process of proposal sent to the licensed collector on April 25, 2011. While the wastewater originating from fresh fruit bunches (FFB) processing unit is treated in the WWTP facility (Palm Oil Mill Effluent) to be used for land application according to the Permit No. 188.45/412/KUM/2009 issued by Kotabaru Regent. Non-conformance status of NC-2011.31 is closed

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5.3.3 Hazardous waste treatment plan and directives of disposal of agro-chemical waste and its container as per the directions contained in the label and prevailing regulations.

ST1 The audit team found hazardous waste treatment practices inconsistent with the prevailing regulations (Decrees of BAPEDAL Head No. Kep-01/Bapedal/09/1995 and No. Kep-05/Bapedal/09/1995; Government Regulation No. 18/1999 in conjunction with Government Regulation No. 85/1999) where environmental pollution is potential. Example: (1) Diesel fuel tanks in the POM are not roofed and not equipped with oil trap, (2) Oil traps are open in the hazardous waste storage facility, POM, (3) mixture of metal waste with plastic and organic waste in the POM. Non-conformance of this indicator is NC-2011.32

X

ST2 Hazardous waste management practices have been consistent wth the prevailing regulations. Company has also owned permit No. 188.45/125/KUM/2011 dated March 8, 2011 for the hazardous waste temporary storage facility issued by Kotabaru Regent, valid for 5 (five) years. This warehouse is located in the POM with size 18 x 8 x 5 meters accommodating waste from all estates of PT LMR. Corrective actions for fulfillment of Hazardous waste management requirements in the field (POM) have been taken. Diesel fuel tanks have been equipped with oil trap to accommodate fuel oil leakage from the tank and other hazardous waste such as cotton waste, used batteries, used chemical containers have been posted in the licensed hazardous waste temporary disposal facility. Non-conformance status of NC-2011.32 is closed.

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5.3.4 Availability of waste monitoring / analysis records

ST1 Company has record of hazardous waste monitoring, in the form of a Warehouse Card in both estate and mill. However, the record does not include all waste as listed in the SOP No. 700/IK-TQEMESH/10 on Quality Standards of Hazardous Waste & Non Hazardous Waste and PP. No. 18/1999. Jo. PP No. 85/1999. The types of waste as referred to in the SOP are used oil, used batteries, fabric cotton waste, used gloves, used tires, scrap metal, etc. The Warehouse Card just records used oil and used batteries. Non-conformance of this indicator is NC-2011.33

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ST2 Waste resulted from operational activities are recorded in accordance with their monitoring period: a. Palm Oil Mill Effluent (POME) for land application are monitored and analyzed every month. b. Hazardous waste is recorded every day and summarized every month, for example: used oil, used

batteries, used oil filters, used cotton, etc. c. Non-hazardous waste is recorded and summarized every month, for example scrap metal, scrap

tires. Waste monitoring has been conducted in the POM with complete records, but need to be analyzed in order to ensure that the organization would reduce the volume of waste and be more efficient in use of material. Non-conformance status of NC-2011.33 is declared open with Comment For Action category.

X

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

5.4.1 Availability of records of renewable energy use and its efficiency analysis (energy / tone of CPO).

ST1 There are records indicating that the Company has monitored the use of renewable energy, in the form of a matrix of Fiber Fuel Monitoring. Example: The volume of fiber usage in 2010 was 24,459.257 tons and the volume of processed FFB was 194,445.160 tons, or the fiber use rate was 0.13 ton / one ton of processed FFB.

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ST2 The boiler fuel for turbine is palm oil fiber and shell with unit of kWh per Ton FFB (from fiber and shell fuels) which is monitored and analyzed every month. Example: the monthly production rate of shell fuel is 16 kwh per ton of FFB, while that of fiber fuel is 16.30 Kwh per ton of FFB. The use of fuel fiber 15 KWh per ton FFB and fuel shell of 15 KWH per ton FFB is still consistent with the budget plan.

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5.4.2 Availability of records of fossil fuel use monitoring for operations and the efficiency analysis.

ST1 Based on the Use of Solar Diesel Genset Monitoring 2010-2011, the average of diesel fuel use from July 2010 until March 2011 at 0.65 l / ton FFB still under the company Budget = 0.64 lt / ton FFB.

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ST2 The use of diesel fuel for generator with unit of liters per ton FFB per month is recorded on a monthly basis, for example in March 2011 diesel fuel used was 0.57 liters per ton of FFB, in April 2011 was 0.42 liters per ton of FFB, while the budget of March 2011 was 0.62 liters per ton of FFB and in April 2011 was 0.55 liters per ton FFB. Based on the record and analysis result, the use of fossil fuel or diesel fuel is still in accordance with the budget or the standard established.

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5.5 Burning system for waste destruction and land preparation for replanting is avoided, except in specific situations, as identified in the ASEAN guidelines or other regional best practices.

5.5.1 Documented analysis where burning system is applied in land opening for replanting activities.

ST1 Company has Agricultural Reference Manual No. 110/EST-ARM/08, which Section 4 - Land Preparation- clause 3.1 (b) states that any land clearing must be conducted in accordance with the Decision of the Directorate General of Plantation No. KB.110/SK/DJ BUN/05.95 dated May 30, 1995. Based on the field observation to Block DE 1 Bebunga Estate (area opening 2008), no burning was found in land clearing process.

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ST2 PT LMR has not conducted replanting activity during the Stage 2. Replanting plan will be conducted in 2012/2013. This is identified from a Memo No. POP - UM - 074/III/2011 from the Plantation Operation Head. Company has Agricultural Reference Manual No. 110/EST-ARM/08, which Section 4 - Land Preparation- clause 3.1 (b) states that any land clearing must be conducted in accordance with the Decision of the Directorate General of Plantation No. KB.110/SK/DJ BUN/05.95 dated May 30, 1995. Based on the field observation to Block DE 1 Bebunga Estate (area opening 2008), no burning was found in land clearing process.

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Based on interview with the Estate Assistant, each of the company’s land clearing activities is done in accordance with SOP (Agricultural Reference Manual No. 110/EST-ARM/08). Up to the audit process, no data is found indicating that the company has applied burning system in its land preparation process.

5.5.2 The company has documented implementation of zero burning policy.

ST1 See the criteria 5.5.1 above. The company adopts a zero burning policy in land clearing and replanting activities as per the SOP No. 110/EST-ARM/08. Based on field observation, in bold old and new plantation areas (planting years 2008 and 2009 situated at Bebunga Estate), the audit team did not found remnants of burning for land clearing.

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ST2 The company adopts a zero burning policy in land clearing and replanting activities as per the SOP No. 110/EST-ARM/08. Company has documented policy of zero burning set forth in the Monthly Manager Report. For example : BBE Manager Report in January 2008, which details the following types of activities: Blocking; cutting small trees logs diameter < 15 cm; Tree Cutting; Cleaning up; collecting the tree trimmings; Soil Compaction and Plant Path Creation.

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5.5.3 Procedures and records of Land Fire Emergency Response.

ST1 Company has a documented Minamas Plantation Memorandum No. POD-UM-010/I/2009 dated January 22, 2009 issued by the Jakarta Head Office concerning garden fires and drought prevention.

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ST2 Company has a documented Minamas Plantation Memorandum No. POD-UM-010/I/2009 dated January 22, 2009 issued by the Jakarta Head Office concerning garden fires and drought prevention. Company has also presented a documented Forest Fire Emergency Response in the form of Estate Fire Report 2011 taking place in Pamukan Area (Form A-2 GM Estate), which was presented in a matrix indicating that no fire has occurred in PT LMR up to June 1, 2011.

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5.5.4 Facilities and infrastructure designed for forest fire prevention according to their vulnerability level.

ST1 Company has made available a number of forest fire fighting tools in both estate and mill consisting for portable fire extinguishing tools, large fire extinguishing tools and water pump. The number, type and adequacy analysis of these tools according to the vulnerability level will be verified at the time of Stage 2.

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ST2 Company has presented documented Fire Prevention Readiness Analysis of PT Langgeng Muara Makmur which details the volume and condition of the fire fighting tools in both mill and estate covering sirens, Hydrant equipment, water pumps (robin machine), water tanks, and PFFT. This document is equipped with the documented evaluation of adequacy of the tools in the form of inspection result, conclusion and action plan. From the document, the audit team found that the company’s fire fighting tools are still inadequate as per the analysis result so that the company should add the number of its fire fighting tools including 3 units of Robin Machine and 3 units of Nozzle that have been planned to be met in August 2011.

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5.6 Plans to reduce pollution and emissions, including greenhouse gases, developed, implemented and monitored.

5.6.1 Evidence of identification of pollution and emission sources in the Palm Oil Mill (POM).

ST1 Company has a documented quality monitoring system of pollution and emission in the palm oil mill from a number of stations considered as emission sources (e.g.: boiler chimney, generator room, pressing room, etc.). However, to further ensure that the monitoring was done from all sources of emissions and pollution, the company is strongly encouraged in present records of the Emission Source Identification Result. Non-conformance of this indicator is CFA-2011.34

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ST2 The company has conducted and presented the documented pollution and emission source identification. Pollution and emission sources resulted from Bebunga POM and Estate have been identified including their management. For example: the types of hazardous and non hazardous waste from the workshop activities have been identified. The management of the waste has been in accordance with the prevailing regulations, where hazardous waste are collected and delivered to the licensed collector. Then, for example, for emission generated from the generator, routine treatment, monitoring and assessment have been conducted. Air emission in the estate in the form of gas emission and noise from generator station in every garden has been identified and recorded in the matrix of identification of waste for 1st and 2nd Semesters of 2011. Non-conformance status of CFA-2011.34 is closed.

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5.6.2 Monitoring of emission quality from the pollution and emission sources.

ST1 In the site, there is documented quality analysis of air and emission from generator and boiler (by the Center for Hiperkes and Safety of Banjarmasin), which includes assessment of: ammonia, chlorine gas, hydrogen chloride, hydrogen fluoride, nitrogen dioxide, opacity, particulates, sulfur dioxide, and total reduced sulfur. Based on such test result, the air and emission quality is expressed below the BME (Emission Quality Standard). Noise test was performed in front of the office, st. Loading ramp, engine station and boiler station. The test result expresses that the noise level is below the NAB as per the Decision No. 51/MEN/1999, except in the engine and boiler stations. Ambient air quality testing was performed in the housing settlement within the factory near the boiler station, and in the front of company office. Environmental parameters being tested are: Nitrogen Dioxide, Sulfur dioxide, carbon monoxide, TSP (dust), noise, temperature, RH, and wind speed.

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ST2 The monitoring of emission from boiler and generator stations is conducted by POM Bebunga. Recent monitoring was conducted on December 17, 2010 and was planned to be conducted in July 2011. The monitoring result indicates that the emission level is, according to the KEP 13/MENLH/3/1995, in accordance with the Environmental Quality Standard, analyzed and followed-up. Generator and Boiler, according to Decree No. Minister of Environmental Affairs of RI No. 13/MENLH/3/1995, are still within the quality standard. While the air ambient quality, compared to the standard stipulated in the Circular of the Minister of Manpower No. SE-01/MEN/1997 on air chemical factors and Circular of Minister of Manpower No. 51/Men 1999 on air physic factor also still meets the environmental quality standard. The noise analysis result, unless noise in area near the machine stations, is over the threshold and there is a follow up in the form of the use of Ear Plugs (job site), while for around the mill and settlement, the same has met the environmental quality standard.

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5.6.3 Records of the company’s efforts and plans to reduce pollution and emission levels.

ST1 The pollution and emission test result shows that all pollution and emission quality are under the prescribed Threshold, unless the noise level in the engine room and boiler that exceeds the NAB according to the Kep. 51/MEN/1999. To overcome this, the Company has required the operators to wear earplug. The need to use the earplug is also determined based on risk analysis (HIRAC - Identification Hazard Risk Assessment and Control) which has been conducted by the company.

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ST2 Efforts and plans to reduce pollution and emissions in boiler and generator stations are ensured by monitoring periodically (every six months). Then the POM sets annual maintenance of boiler and generator engines. POM can show records of maintenance performed for Boiler unit, i.e: Cleaning up of boiler steam and boiler engine checking card per two months (data as of July, September, November, January 2011, March 2011, and May 2011). The company also does the same for generator engine maintenance record. Schedul and records of the units are available in both mill and estates.

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5.6.4 Records of identification, monitoring, and methodologies of POME management.

ST1 POME is managed by using 10 treatment ponds. The effluent quality is evaluated every month and tested by Baristan (Center for Industrial Research and Standardization) Banjarbaru.

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ST2 Identification POME (WWTP) in POM Bebunga has been done using a matrix of POME identification in the POM and monitored on a monthly basis for liquid waste at the final pond (No. 10) before being used for land application (land liquid fertilizer). POM wastewater management is in the form of WWTP (10 ponds of wastewater) consisting of raw effluent, cooling, (sludge oil if oil is still found), mixing pond, aerobic, anaerobic, application to land application. The latest monitoring output in April 2011 shows that the BOD parameter still meets the established quality standards under land application permit No. 188.45/412/KUM / 2009 issued by Kotabaru Regent, which is still less than 5,000 mg per liter and acidity (pH) is around 6-9. These monitoring and test results are recorded daily and pH at each pond is analysis; and on a monthly basis for the test conducted by third party, namely: Baristan - Banjarbaru.

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PRINCIPLE #6 COMPANY’S RESPONSIBILITIES TO WORKERS, INDIVIDUALS AND COMMUNITY OF ESTATE AND MILL

6.1 Plantation and mill management aspects including replanting that give raise impacts are identified in a participatory manner, negative and positive impacts are planned implemented and monitored to demonstrate continuous improvement.

6.1.1 Documentation of environmental and social impact analysis that includes positive and negative social impacts of plantation and mill activities, and documentation of affected stakeholders and local people.

ST1 There is documented Social Impact Analysis Report of Palm Oil Plantation operations of PT. Langgeng Muara Makmur, January 2010. The document contains positive impacts that arise during the opening of palm oil plantation by PT. Langgeng Muara Makmur. This document does not state clearly quantitative indicators that indicate the company’s contribution to the increased revenue local people (e.g sampling for farmer, artisan, services, and other groups) according to the existing types of professions. Negative impacts of the plantation operations also have not been illustrated explicitly. Non-conformance of this indicator is CFA-2011.35

X

ST2 Same with the Stage-1 audit, LMR has Social Impact Study Analysis Report of Palm oil Plantation prepared in January 2010. The document illustrates the Company’s contributions to the local peole with respect to its plantation operations. The social impact study report has not explicitely presented positive and negative impacts arising from the plantation operations. PT. LMR management unit is recommended to establish a plan for Social Impact Analysis in the next period which provides more relevant quantitative data, for example company’s positive contribution towards the increased income and employment of local people, and also negative impacts of the company’s plantation business activities. Non-conformance status of CFA 2011.35 is declared open with Comment For Action category.

X

6.1.2 Records of periodical social impacts management and monitoring plan with community participation.

ST1 There is documented Social Impact Analysis Report of Palm Oil Plantation of PT. Langgeng Muara Makmur in January 2010 the process of which has involved the local community as a source of information. While the social impact management and monitoring plan which is outlined in the Envronmental Management Plan and Environmental Monitoring Plan (RKL/RPL) Document does not sufficiently proves the involvement of the community. In the next preparation of the social impact monitoring and management plan, the involvement of local company is recommendated. Non-conformance of this indicator is CFA-2011.36

X

ST2 Up to Stage 2, the company has not actively involved local people in the regular social impacts management and monitoring plan

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PT. LMR’s management unit has not decided and prepared the regular social social impact monitoring plan which actively involves the local community in the next period. Non-conformance status of CFA -2011.36 is declared open with Comment For Action category. Although the company has prepared the social impact analysis document in January 2010, which specifies the negative and positive impacts of the plantation operations, but such document did not explicitly present more relevant quantitative data thereby a new non conformance with CFA-2011.47 indicator is issed

6.1.3 The revised environment management document which covers social aspects, if any change in scope of operations of the company as per the applicable regulations.

ST1 See point 5.1.3 above Non conformance of this indicator is CFA-2011.26

X

ST2 There is a discrepancy in the type of activities managed and the Recommended EIA Document contained in the RKL / RPL Report for first period of 2010 (as described at point 5.1.1) and no explanation of the changes in such activity types. In addition, there is also another kind of management and monitoring activity that has been conducted but not yet included in the RKL / RPL Report, for example conflict and perception of public. Non-conformance status of CFA-2011.26 is declared open with Comment For Action category.

X

6.1.4 Regular and scheduled environmental management and monitoring report.

ST1 There are periodical RKL and RPL Reports for Period I of 2010 (January-July) and for the Period II (July-December 2010) that have been sent to the PSD on March 29, 2011. The types of environmental management & monitoring activities have not been fully carried out in accordance with the Environmental Management and Monitoring Plan (RKL & RPL) as listed in the EIA document. See also the explanation in 5.1.2 above. Non-conformance of this indicator is NC-2011.25

X

ST2 Since 2009 PT. LMR has routinely prepared the RKL / RPL Report and submitted to the BLH of Kota Baru District. However, Company has sent the RKL / RPL Report according to internal policies of the Plantation Service Department (PSD) to be forwarded to the relevant agency and is still in the process to obtain formal submission.Non-conformance status of NC-2011.25 is declared open with Comment For Action category.

X

6.1.5 Specific attention paid to the impacts on smallholder scheme (if this scheme is available in the Estate).

ST1 Company did not implement the smallholder scheme, however, the Company implemented another cooperation scheme in the form of Primary Cooperative Credit Members (KKPA) located in Binturung Vilage Pamukan Sub-District with a total area of 328 hectares; Sakadoyan village of 123 hectares and Pondok Labu Village of 260 hectares in Pamukan Selatan Sub-district; Sungai Durian of 653 hectares; and Bakau Village of 38 hectares. Thus currently in total of 1402 hectares. The role of each party and the impacts of such cooperation will be further verified at the time of Stage 2.

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ST2 PT. LMR's management unit served as operational fund provider as per the appointment letter of Minamas Group. KKPA Manager of Sungai Cengal was under the coordination of the General Manager of KKPA Sebamban, Sungai Cengal Area and Ungkaya. The farmers served as land and worker provider. The company has no sufficient evidence indicating that it has identified the social impacts (positive and negative) on the smallholder scheme or actions to be performed. New non conformance of this indicator is NC-2011.48 with Minor category.

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6.2 There is an open and transparent method for communication and consultation between the estate and/or mill management and local community and other affected stakeholders.

6.2.1 Procedures and records of public communication and consultation

ST1 Company has a SOP for Public Communication and Consultation that describes a flowchart of communication and consultation with the community. Based on the information from the Administration Function Chief of Bebunga Estate, the Company has made several public consultations, but the relevant documents have not been made. Please see also point 1.1.1 above. Non conformance of this indicator is NC-2011.01

X

ST2 Company has a SOP for Public Communication and Consultation that describes a flowchart of public communication and consultation process and the relevant documents have been prepared. For example, a public communication and consultation between the company represented by the Manager and Staff of PSD and Segendang and Kladen Villages prepresented by their respective village chiefs held on June 3, 2011 concerning land dispute located at division IV of Bebunga estate. Please see also indicator 1.1.1 above. Non-conformance status of NC-2011.01 is closed.

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6.2.2 The company has a list of stakeholders.

ST1 Company has a list of stakeholders as outlined in the matrix that details name and address of stakeholders at Village and Sub-district, District, and Province levels. The stakeholders include community leaders, officers from village to provincial governments, related government agencies, and NGOs.

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ST2 At the stage 2, the company presented a list of stakeholders as presented in the stage 1, which details name and address of stakeholders at Village and Sub-district, District, and Province levels. The stakeholders include community leaders, officers from village to provincial governments, related government agencies, and NGOs.

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6.2.3 The company has recorded the community's aspirations and the company’s response / follow-up.

ST1 There are no people's aspiration records and procedures to ensure that every community's aspirations would be recorded and responded. Please see also point 1.1.2 above. Non conformance of this indicator is NC-2011.02

X

ST2 The company has presented records of public aspirations (incoming mail register) and the company’s response to such aspiration (outgoing mail register) in both estate and factory. For example, requests for assistances for clean water and road repair from Mulyoharjo villagers that have been followed up by giving the clean water assistance supplied via tank truck. Non-conformance status of NC-2011.02 is closed.

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6.2.4 The company has appointed a dedicated officer who is responsible for public consultation and communication activities.

ST1 Reflected in the SOP for Public Communication and Consultation (flowchart of process), that the person in charge for the public consultation and communication was the Administration Function Head.

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ST2 Similar to Stage 1 where the person in charge of the public consultation is the Administration Function Head in accordance with the SOP for Public Communication and Consultation. And based on the interview with the Administration Function Head of BBE, the Administration Function Head understands well his duty and responsibility in resepcy of the public consultation and communication process.

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6.3 The company provides facilities and open mechanism to receive complaints and resolve disputes according to the prevailing rules and regulations.

6.3.1 An open mechanism, which is accepted by all affected parties, to receive complaints and resolve disputes in an effective, timely and correct manner.

ST1 There are several procedures for acceptance of and response to public complaints, namely: SOP for Public Complaints Handling, SOP for Request for Information (response to stakeholders’ information requests), and SOP for Conflict Resolution. However, no SOP explicitly ensuring that all complaints and disputes would be resolved effectively, timely, and correctly. Please see also 2.2.5 above. Non-conformance of this indicator is the CFA-2011.11

X

ST2 There are revised versions of SOP for Request for Information (SOP No. 050/LMR-INF/C11), SOP Public Complaints Handling (SOP No. 053/LMR-PKM/C11) and SOP for Conflict Resolution (SOP No. 056/LMR-PKC/C12).

The SOP for Information Request provides that all responses to stakeholders’ requests for information

will be recorded and responded within a period of no later than one week if they do not require approval

from Department Head and one month if they require approval from the Department Head.

The SOP for Public Complaints Handling provides that the the complaint-handling will be done within no

later than 2 weeks (14 days) as from the date the letter / complaint is received by the operational unit.

The Revised SOP for Conflict Resolution in June 2011 provides conflict handling mechanisms according

to the category of the conflict (minor, medium & major) and the termination of operations, if deemed

necessary as ordered by the competent authority and the company management unit, but the company

was unable to prove that this Revised SOP is accepted by the parties concerned.

Non-conformance status of CFA-2011.11 is closed but new non conformance NC-2011.41 with Minor category is published.

X

6.3.2 Availability of recorded complaints / objections handling system.

ST1 There is record (including photograph & sitemap) on Land Claim raised by people from Segendang & Kladen Villages (Number: GM-sgm/PAM/117/VI/2009/S, dated June 11, 2009) There are records on Settlement of Land Claim raised by Mahmud Cs (No. 0013/SCE-psd/VIII/2010, dated August 25, 2010 & SCE-PSD/002/IV/2010). The records are also equipped with: 1). Certificate of BPN Kotabaru District, 2). Minutes of Clarification Meeting held in June 30, 2004, 3). Visit Appointment Letter of the Commission I of DPRD Kotabaru District No. 171.5/130/ST/DPRD and 4). Attendance List of Meeting between the Commission I DPRD Kab.Kotabaru and management unit of PT. Langgeng Muara Makmur.

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ST2 In addition to documents seen at ST1. However the handling of complaints in addition to the land claim, conducted in temporary because the complaint is not public submitted in writing so that the company has no record. The company is recommended to socialized the community complaint can be submitted in writing so the company can make record for the complaints. New non conformance of this indicator is CFA-2011.49

X

6.3.3 Procedures for identification and fair calculation of compensation for legal and traditional rights on land by involving local community representatives and relevant agency and made available to public.

ST1 Company was unable to present documented procedure for identification and calculation of compensation for lost legal or traditional rights to land, which involves local community representatives and relevant agencies and is publictly available.

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This will be further verified in Stage 2 Please see also point 2.2.5 above. Non-conformance of this indicator is CFA-2011.11

ST2 There is SOP on Identification of Indemnified Parties and Land Compensation Standard (SOP No. 001/PSD-L & AS) dated June 3, 2011 that includes compensation installment and computation according to the standard issued by the District Government of Kota Baru. Non-conformance status of CFA-2011.11 is closed.

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6.4 Every negotiation on compensation for legal or traditional rights on land is conducted referring to a documented system that enables indigenous people, local communities and other stakeholders to give their views through their own representative institutions.

6.4.1 Mechanism of identification, calculation and compensation for legal and traditional rights by involving community representatives and relevant agency.

ST1 Company has no procedure for identification of indemnified parties and calculation of compensation for lost legal and traditional rights by involving community representatives and relevant agencies. This will be further verified in Stage 2 Please see also 2.2.5 above. Non-conformance of this indicator is CFA-2011.11

X

ST2 There is SOP on Identification of Indemnified Parties and Land Compensation Standard (SOP No. 001/PSD-L & AS) dated June 3, 2011 that includes compensation installment and computation according to the standard issued by the District Government of Kota Baru. Non-conformance status of CFA-2011.11 is closed.

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6.4.2 Records of identification of compensated parties.

ST1 Indemnified parties are recorded in the Compensation Payment Report, which contains: a). indemnified parties, b) Minutes of Compensation Settlement Meeting, c). Compensation Payment Receipt, and d). Statement Letter of Land Rights Release.

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ST2 Similar to stage 1 where indemnified parties are recorded in the Compensation Payment Report, which contains: a). indemnified parties, b) Minutes of Compensation Settlement Meeting, c). Compensation Payment Receipt, and d). Statement Letter of Land Rights Release.

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6.4.3 Records of negotiation process and / or general compensation agreement are available.

ST1 Records on Compensation agreement are set out in the Compensation Payment Report, which contains: a). indemnified parties, b) Minutes of Compensation Settlement Meeting, c). Compensation Payment Receipt, and d). Statement Letter of Land Rights Release.

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ST2 Records on indemnity agreement are set out in the Indemnity Payments Report being the Minutes of Indemnity Settlement Meeting.

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6.4.4 Records of the implementation of compensation payment.

ST1 There is documented Indemnity Payment Report, which contains: a). Minutes of Compensation Settlement Meeting, b). Compensation Payment Receipt, and c). Statement Letter of Land Rights Release.

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ST2 Record of compensation payment process can be seen in the compensation payment receipts between the company as the indemnifying party and the indemnified parties. √


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6.5 Wages and employment conditions for the company’s employees and contractors’ employees must always meet at least minimum industry standards or laws, and meet reasonable needs of living.

6.5.1 Worker Payroll

ST1 A worker payroll of PT LMR is available, which details basic salary, number of worker’s absence, premiums, in kind salaries, small salary, Jamsostek (Social Security) expenses, and deductions for benefits. The amount of wages paid to the employees is in accordance with the Memorandum of Minamas Plantation Human Resource Management No. 037/HRM-13/I/2011 on Revised Daily SKU Wage and Monthly SKU Wage Structure for Plantation Workers in 2011 in South Kalimantan Region in accordance with the Decree of South Kalimantan Governor No. 188.44/0441/KUM/2010 regarding the determination of UMP (Plantation Worker Minimum Wage) of South Kalimantan in 2011 amounting to Rp. 1,126,000/month. The memorandum also confirmed that the lowest monthly wage of the company employee is Rp. 1,153,505 and the highest monthly wage is Rp 1,591,005, while the lowest basic salary for daily workers is Rp 1,126,000.-. Deduction amount if an employee is absent is Rp. 45,040. The memorandum has been implemented, for example: an employee in the name of Harianto with basic salary of Rp 1,126,000.- and was absent for 1 day. After his basic salary was added by harvest premium, non-harvest premium, wages in kind (rice), and deducted by small salary (deduction), Jamsostek premium, and Allowances, the amount he receives is Rp. 1,020,200,-.

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ST2 Similar to the stage 1, where the company’s mechanism for payment of wages is in aaccordance with the The amount of wages paid to the employees is in accordance with the Memorandum of Minamas Plantation Human Resource Management No. 037/HRM-13/I/2011 on Revised Daily SKU Wage and Monthly SKU Wage Structure for Plantation Workers in 2011 in South Kalimantan Region in accordance with the Decree of South Kalimantan Governor No. 188.44/0441/KUM/2010 regarding the determination of UMP (Plantation Worker Minimum Wage) of South Kalimantan in 2011 amounting to Rp. 1,126,000/month where the lowest wage is Rp. 1.126,000.- plus salary in kind such as rice of 15 Kg / month. And based on the Observation and interview with workers, they said that the wage they received is in accordance with the company policy and the Minimum Wage applicable in South Kalimantan Province.

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6.5.2 The existence of Collective Labor Agreement in accordance with applicable regulations

ST1 The Company has a Collective Labor Agreement (CLA) which has been expired in 2009. This will be further verified at the time of Stage 2 audit process.

X

ST2 The company’s Collective Labour Agreement (CLA) for 2011 has been socialized including its amendment on March 10, 2011 held at BBE, attended by 102 participants. Physically the documented CLA that has been socialized will be produced and distributed to each Unit in July 2011, including to employees working with the Company.

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6.5.3 In a condition where public facilities are not available and can not be accessed by employees, the employer provides adequate housing, education, clean water, health, and public facilities.

ST1 There is a Documented Inventory of Housing, Buildings, Facilities and Infrastructure, which contains a matrix of group of Mess and Housing, and their Type (general mess, Pamukan Resort, management mess, Club House, GM House, Manager House, Estate Assistant House, Assistant / Section Head / KTU Houses, G1 House, G2 House, G3 House); General Building and Type (GM Office, Large Office, Division Office, Warehouse, Workshop, meeting room, Buildings of kindergarten, elementary school, junior high school, vocational school, Junior High School Boarding, Polyclinic, library, Laboratory, Employees Hall, Mosque, Baby Care, Church, foot outlet/canteen, Security guard post, tennis yard. Clean water sources come from reservoirs and springs that have been inspected by the Center for Environmental Health and Eradication of Communicable Diseases of Banjar Baru based on sample received by the company from that office. But the test results are not yet available.

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Based on field visit it was found that employee houses are semi-permanent, but there is a documented employee housing development program in the 2010/2011 Capital Budget document. Further, there is also data of realization of the construction of permanent housing in Block F 23 with G2 type totaling 13 units. There are also records of weekly progress of Housing Project, staff’ housing construction layout and G2 housing layout in EMS (Engineering Mill Services) department

ST2 There is a Documented Inventory of Housing, Buildings, Facilities and Infrastructure, which contains a matrix of group of Mess and Housing, and their Type (general mess, Pamukan Resort, management mess, Club House, GM House, Manager House, Estate Assistant House, Assistant / Section Head / KTU Houses, G1 House, G2 House, G3 House); General Building and Type (GM Office, Large Office, Division Office, Warehouse, Workshop, meeting room, Buildings of kindergarten, elementary school, junior high school, vocational school, Junior High School Boarding, Polyclinic, library, Laboratory, Employees Hall, Mosque, Baby Care, Church, foot outlet/canteen, Security guard post, tennis yard. Based on field visit it was found that employee houses are semi-permanent, but there is a documented employee housing development program in the 2010/2011 Capital Budget document. And based on document of Employees Permanent Housing Project Plan period 2010-2015, it was found that: For BBE and BBF, the company planned to build houses, i.e: 22 units type G1 and 213 units type G2. For BKE, the company has planned to build houses, i.e: 14 units type G1 and 156 units type G2 and for SCE, the company has programmed to build built houses, i.e: 15 units type G1 and 168 units type G2. And up to the stage 2, the company has realized its housing program as follows: 13 unit type G2 in BBE and 21 units Type G2 in the SCE. Based on the field visit to housing complex in Division I BKE, the audit team found that water source of housing comes from reservoir. Visually the water used as drinking water looks cloudy. However, based on the explanation of the Assistant Division I BKE water sample has been sent to the Health Agency of Kota Baru District for quality test the output of which is still fit for consumption.

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6.5.4 Work agreement / contract with external contractors requiring the contractors to comply with applicable employment laws and regulations.

ST1 There is SOP Contractor Work Regulations which contains the contractor work requirements, among others: contractor’s employees must wear the PPE, contractor’s employees, especially drivers must have valid Driving License, the driver must turn on the lights, all employees must follow all applicable safety regulations.

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ST2 Similar to the Stage I where the Company has Contractors Work Regulations which contains the contractor work requirements, among others: contractor’s employees must wear the PPE. Based on a field visit to the new housing area of BBE and interview with a foreman of contractor CV Heral Eranio from Purwodadi (Mr. Munir), the audit team found that the contractor’s employees must wear full PPE when doing the work. This obligation was communicated by Mr. Hermanto (CV Heral Eranio Leader). This is done to meet the requirements of PT LMR. Also, according to Mr. Munir, each of the contractor’s workers obtains appropriate wages and health allowances.

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6.6 The company respects rights of all employees to form and join with trade union they choice and to bargain collectively. Where the rights to freedom of association and collective bargaining are restricted by law, the employer facilitates impartial counselor, free of charge, and performs bargaining for all employees.

6.6.1 Documented company policy on workers’ freedom of association

ST1 There is a documented policy on Affirmation of Freedom of Association and Protection of Rights of Association of PT Langgeng Muaramakmur endorsed by the Chairman of SOU Bebunga, which stated that: "The Company respects and does not preclude the workers’ rights to join Trade Union pursuant to the Decree of the President of the Republic of Indonesia No. 83 of 1998 on the Ratification of ILO Convention No. 87

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concerning Freedom of Association and Protection of the Right of Association (State Gazette of the Republic of Indonesia No. 98 of 1998) ". Based on the Letter from Head of the Manpower and Transmigration Office of Kotabaru District No. 568/1404/Disnakertrans dated December 13, 2007 on Registration of Management Board of Trade Union of PT Langgeng Muaramakmur (POM and Estate) and PT Paripurna Swakarsa (Binturung Estate), it was found that the Organizational Structure of the Trade Union has been registered with the Manpower and Transmigration Office of Kotabaru District under Registration Number: 568/67/Disnakertrans dated December 13, 2007 with the composition of the management board as follows:

1. Chairman : Bahrian Noor 2. Vice Chairman : Waluyo 3. Secretary : Slamet Haryawan 4. Deputy Secretary : Yofi F 5. Treasurer : Sugianto 6. Treasurer II : Slamet HS.

In addition, there is also evidence of the register No. 560 568 / / 32/Disnakertrans at the Labor and Transmigration Office of Kotabaru District dated 27 November 2008 which sets the Organizational Structure of Trade Union of Bebunga POM, as follows:

1. Chairman : Rinto Sianipar 2. Secretary : Hormansyah 3. Treasurer : Iswahyudi 4. Deputy for Employee Assistance and Protection: Arbani Surya 5. Deputy for Human Resource Development: Nelson P. Hutahayean 6. Deputy for Company Business Development: Dahriansyah 7. Deputy for Public Relations: Sugeng Pamuji

ST2 Based on the explanation from the Head of Administration in accordance with the result of socialization of the new CLB on March 10, 2011, he said that no change in clause of freedom of association where Article 8 paragraph 1 of the CLA concerning Employers' recognition of Trade Union states that the Employer recognizes that the Trade Union is a legitimate association of workers in representing and acting for and on behalf of all workers being its member and has a relationship with employers as an equal partner. And Chapter II, Article 6, paragraph 2 regarding the obligations of Employer to Trade Union states that the company provides an opportunity to managers and / or members of the Trade Union to carry out the trade union activities as agreed by both parties and / or as set out in legislation and regulations. Based on the Letter from Head of the Manpower and Transmigration Office of Kotabaru District No. 568/1404/Disnakertrans dated December 13, 2007 on Registration of Management Board of Trade Union of PT Langgeng Muaramakmur (POM and Estate) and PT Paripurna Swakarsa (Binturung Estate), it was found that the Organizational Structure of the Trade Union has been registered with the Manpower and Transmigration Office of Kotabaru District under Registration Number: 568/67/Disnakertrans dated December 13, 2007.

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6.6.2 The existence of records of meeting with trade union, if any

ST1 Record of meeting with trade union for the estate unit has not been presented. This will be clarified in the stage-2

ST2 No regular meeting between the company’s management unit and the trade union is held but the company’s workers are consistently aware to the status of the presence of the Trade Union (SPSI). Based on interview with the Chairman of the Trade Union, it was found that the Trade Union Organization, up to now, is still active and has held a meeting with the company management unit at the time of formation of the Trade Union’s organizational structure.

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6.7 Children are not employed and exploited. Children are only allowed to work in their family garden, under supervision of adults and not interfering with their educational activities. Children should not be exposed to dangerous working conditions.

6.7.1 Company policy regarding workers' age requirements in accordance with the applicable national regulations and is documented

ST1 The company’s policy on worker's age requirements is set out in the Memorandum of Head Office-Jakarta (No. POD-UM-052/III/2010), point 3, which provides children worker prohibition pursuant to the prevailing employment Law.

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ST2 Same as the Stage-1. The company’s policy on worker's age requirements is set out in the Memorandum of Head Office-Jakarta (No. POD-UM-052/III/2010), which provides children worker prohibition pursuant to the prevailing employment Law, where no worker with under 18 years old employed by the company.

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6.7.2 Records of implementation of company policies regarding worker's age requirement

ST1 There is a list of workers based on the date of recruitment and date of birth of worker, which indicates that no workers under 18 (eighteen) years employed by the company. Based on the document, the audit team found that the youngest employee of the company is Soiman (Daily SKU worker) as an harvesting worker with H degree, who was recruited by PT LMR on 01/10/2010 and was born on 10/03/1992.

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ST2 Same as Stage 1, company has a list of workers based on the date of recruitment and date of birth of worker, which indicates that no workers under 18 (eighteen) years employed by the company. Based on the document, the audit team found that the youngest employee of the company is Soiman (Daily SKU worker) as an harvesting worker with H degree, who was recruited by PT LMR on 01/10/2010 and was born on 10/03/1992.

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6.8 Any type of discrimination based on race, ethnic, nationality, religion, disability, gender, sexual orientation, union membership, political affiliation or age, is prohibited.

6.8.1 Company's documented policy on equal opportunities and treatment in employment

ST1 There is a documented Social Policy from Executive Vice President dated April 2011 poin 1 states that: All employees should be treated fairly in term of recruitment, progression, terms and conditions of work and representation, irrespective af race, caste, national origin, gender, colour,disability,sexsual orientation, unionmembership, politicial opinion, religion and/or age.

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ST2 There is SOP for Sustainable Plantation Management Guidelines issued by the Minamas Plantation Indonesia (Policy No.: 724/TQEM-SPMS/09) dated August 27, 2010, page 3, which covers, among other: Company policy on equal opportunity and treatment in imployment as set forth at point 1 which specifies that: All Staff / Employees should be treated fairly in term of recruitment, progression, terms and conditions of work and representation, irrespective af race, caste, national origin, gender, colour,disability,sexsual orientation, unionmembership, politicial opinion, religion and/or age.

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6.8.2 Records of equal treatment in working opportunities for workers

ST1 PT LMR has a mechanism for career development of every employee through an assessment of performance of the employee concerned. Employees who are assessed as having good performance will be proposed to follow the career development training to occupy a higher position and get the rights according to the standard position. Record of the implementation of the evaluation in order to increase the career of several employees has been presented by the Company to the auditors. The assessment form details criteria and performance achieved by each employee.

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ST2 Same as stage 1, PT LMR has a mechanism for career development of every employee through an assessment of performance of the employee concerned. Employees who are assessed as having good performance will be proposed to follow the career development training to occupy a higher position and get the rights according to the standard position. Record of the implementation of the evaluation in order to increase the career of several employees has been presented by the Company to the auditors. The assessment form details criteria and performance achieved by each employee.

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6.9 Policy to prevent sexual harassment and other forms of violence against women and to protect the reproductive rights has been developed and applied

6.9.1 Company's documented policy on sexual harassment and violence prevention

ST1 The company has established a gender committee through the Gender Policy which was signed by Executive Vice President (April 2008). This policy aims to ensure the rights, prevent sexual harassment and violence against women, workers, and community.

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Guidelines for Implementation of Gender Policy (Policy No.: 700/PD-KG/10) are available, including: Establishment of Gender Committee, Gender Committee’s Organizational Structure, Activity and Program of the Gender Committee (mostly women's rights and violence against women), and tasks of each caretaker of the Gender Committee.

ST2 Same as stage 1, the company has established a gender committee through the Gender Policy which was signed by Executive Vice President (April 2008). This policy aims to ensure the rights, prevent sexual harassment and violence against women, workers, and community.

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6.9.2 Company’s documented policy on protection of reproductive rights

ST1 The company has a policy on the protection of women’s reproductive rights such as policy on pregnancy and miscarriage leave with full pay for 1.5 months before birth and 1.5 months after giving birth as recommended by an obstetrician or a midwife are entitled to obtain 1.5 months of leave after experiencing miscarriage in accordance with doctor's or midwife’s certificate. For female workers who are still breastfeeding her child, the company gives reasonable time dispensation to breastfeed their child in the office subject to approval of the superior. Policy of leave with pay for female workers who are under menstruation. These policies are contained in the Collective Labor Agreement Article 33 and 34.

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ST2 Based on the Observation and interview with women workers, it was found that the company has a policy on protection of women reproductive rights by providing them with 3 months maternity leave and 2 days menstruation leave.

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6.9.3 Documented evidence of implementation of sexual harassment prevention policy

ST1 There are documented Organizational Structure and Appointment Letter of Members of the Gender Committee of PT Langgeng Muaramakmur, as follows: Chairwoman – Binti Laila (Appointment Letter No. 001/SP-PT.LMR/III/11); Secretary - Hadijah (Appointment Letter No. 002/SP-PT .LMR/III/11) and Eka Suci Utami (Appointment Letter No. 003/SP-PT.LMR/III/11).

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ST2 Same as Stage-1, there is the documented establishment of Gender Committee of PT Langgeng Muaramakmur, which is aimed at accommodating women's roles in the Company. Based on interview with female workers, they said that no sexual harassment takes place during the operations of the Company.

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6.9.4 Recording evidence of the implementation of protection policies on reproductive rights and documented

ST1 There is documented certificate of pregnancy and H2 Leave Recommendation Certificate in the name of Mrs. Sumiati (spraying team), 28 years old, working in Division II, who was recommended not to work in jobs involving chemicals. The H2 Leave Recommendation Certificate for Mrs. Sumiati recommended her to take

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leave from March 28, 2011 to June 2011. And based on the Foreman Log Book, it was found that Mrs. Sumiati took her maternity leave starting from March 28, 2011. Based on the Foreman Log Book Afdeling II in April, the company provides each female worker with 2 days H1 leave (Menstruation Leave).

ST2 Same as stage 1, the audit team found documented certificate of pregnancy and H2 Leave Recommendation Certificate in the name of Mrs. Sumiati (spraying team), 28 years old, working in Division II, who was recommended not to work in jobs involving chemicals. The H2 Leave Recommendation Certificate for Mrs. Sumiati recommended her to take leave from March 28, 2011 to June 2011. Based on the Foreman Log Book, it was found that Mrs. Sumiati took her maternity leave starting from March 28, 2011 Based on the Foreman Log Book Afdeling II in April, the company provides each female worker with 2 days H1 leave (Menstruation Leave).

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6.9.5 Specific complaints handling mechanism is available

ST1 There is a documented Complaint Handling Procedure in respect of gender issues set forth in the SOP for Implementation of Gender Policy of Minamas Plantation (No. Policy : 700/PD-KG/10), which details as follows: reporting or completion of complaint form by the victim to be delivered to the Gender Committee Member, the gender committee member receiving the complaint should forward the complaint to the chairperson of the Gender Committee and the relevant unit manager; upon receiving such complaint, the chairperson will form an internal investigation team, the process of investigation should not exceed two days following the receipt of the complaint from the reporter/victim; the investigation result is sent to the chairperson with a copy to the relevant manager; the investigation report should contain the following topics: detailed data of incident, background and chronology of the incident, fact-finding, if the objective evidences of the breach are sufficient, the unit manager will take disciplinary action against the perpetrator.

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ST2 There is a documented Complaint Handling Procedure specifically in respect of gender issues set forth in the SOP for Implementation of Gender Policy of Minamas Plantation (No. Policy : 700/PD-KG/10), which details as follows: reporting or completion of complaint form by the victim to be delivered to the Gender Committee Member, the gender committee member receiving the complaint should forward the complaint to the chairperson of the Gender Committee and the relevant unit manager; upon receiving such complaint, the chairperson will form an internal investigation team, the process of investigation should not exceed two days following the receipt of the complaint from the reporter/victim; the investigation result is sent to the chairperson with a copy to the relevant manager; the investigation report should contain the following topics: detailed data of incident, background and chronology of the incident, fact-finding, if the objective evidences of the breach are sufficient, the unit manager will take disciplinary action against the perpetrator.

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6.10 The company’s estate and mill units deal fairly and transparently with smallholders and other local businesses.

6.10.1 FFB Price is valid and should be publicly available

ST1 There is a standard price of FFB issued on a monthly basis by the Province Plantation Office based the output of monthly meeting of the relevant parties consisting of: Province and District Plantation Office Heads, GAPKI, Representative of each KUD, Representatives of the Core Plasma Farmers and Representatives of each POM unit of the company. The FFB standard price is accessible to all parties, including farmers / KUD (cooperatives).

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ST2 Same as Stage 1, where the FFB price is based on the FFB Standard Price issued on a monthly basis by the Province Plantation Office based the output of monthly meeting of the relevant parties consisting of: Province and District Plantation Office Heads, GAPKI, Representative of each KUD, Representatives of the Core Plasma Farmers and Representatives of each POM unit of the company. The FFB standard price is accessible to all parties, including farmers / KUD (cooperatives).

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6.10.2 Mechanism of FFB Pricing and inputs / services shall be documented (if the same is under the power of the company’s plantation and mill units)

ST1 FFB price is set by the Province Plantation Office based the output of monthly meeting of the relevant parties consisting of: Province and District Plantation Office Heads, GAPKI, Representative of each KUD, Representatives of the Core Plasma Farmers and Representatives of each POM unit of the company.

N/A

ST2 Same with Stage 1, given the FFB price is set by the Province Plantation Office based the output of monthly meeting of the relevant parties consisting of: Province and District Plantation Office Heads, GAPKI, Representative of each KUD, Representatives of the Core Plasma Farmers and Representatives of each POM unit of the company, no pricing mechanism is available in the company.

N/A

6.10.3 Evidence that all parties understand the contractual agreements they do, and that such contracts are fair, legal and transparent.

ST1 N / A. See explanation point 6.10.2 above. √

ST2 Same with Stage 1, The agreement between the farmer and the company stated in the letter agreement. The letter is stored in the office of the plasma. There are also a letter of agreement between the contractor with the company. For example: SPK contractor Transport Sirtu / Stone / Land / TBS No. EST / BKE / SPK - LKL / II/2011/0099

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6.10.4 Agreed payments must be made on time.

ST1 To be verified in the stage 2 audit process

ST2 The company has a payment mechanism without delay to farmers, and based on field visit, no complaint information is found from smallholders related to the agreed payment.

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6.11 The company’s estate and mill units contribute to sustainable local development where it is considered appropriate.

6.11.1 Records of the company's contribution to regional development.

ST1 A comprehensive type of the company contribution will be verified at the time of Stage 2.

ST2 Most of company contributions are in the form of assistance, including those proposals for assistance/aid addressed to the company. For example: the auditors found bill from Plantation Agency of South Kalimantan Province to PT. LMR for Third Party Contributions from CPO production for period of April to June 2010 (No. 900/2383/TU-1 dated June 20, 2010). The company has paid such bill as evidenced by a payment slip dated August 12, 2010 from PT. Langgeng Muara Makmur through BRI Banjarmasin to Bank Account No.: 011.00.04.00261.7 of BPD Banjarbaru Branch Office in favor of the Revenue Treasurer of Plantation Office of South Kalimantan Province. There are records of planning and reports of the Company’s Corporate Social Responsibility Program (CSR), among others: schoolchildren transportation assistance, Scholarship Assistance, RI Anniversary Celebration Assistance, Regular Assistance to all Village Chiefs, Village Road Repair Assistance, Rice for Poor Assistance, and livestock sacrifice (kurban) assistance as indicated in photographs. But the CSR program has been implemented by the company has not fully in accordance with the Basic Need the local community. New non conformance of this indicator is CFA-2011.50

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PRINCIPLE #7 NEW PLANTATION AREA DEVELOPMENT IN ACCOUNTABLE MANNER

7.1 A comprehensive and participatory Environmental and Social Impact analysis was conducted prior to developing new Estate or operations or enlarging the existing one, and the results are incorporated in planning, management and operation plan.

7.1.1 The company has an environmental management document which details both positives and negatives social and environmental impacts, and participation of the affected parties (local communities).

ST1 Environmental management document for new development areas located in Division IV Bebungan Estate of East Kalimantan Province (HGU certificate is still in process), is not yet available. Non-conformance of this indicator is NC-2011.37 Please see also point 5.1.1 above.

X

ST2 PT. LMR has conducted environmental management document for new development area located in Division IV Bebungan Estate of East Kalimantan Province in total area of 1,162 hectares, which has been equipped with TDP (Company Register Certificate) PT LMR No. 09.03.1.01.06054 dated October 11, 2005 and Permanent Business License number 15/T/PERTANIAN/INDUSTRI/2006 dated January 4, 2006, which land has not been managed and to be planned further. The documented evidence indicating that the company has conducted the environmental impact analysis for the new development area is Environmental Management Document (DPLH) that has been approved by the Head of Environmental Affairs Agency (BLH) of Paser District under Approval Letter No. : 660.1/210/DPLH/BLH2011, dated May 24, 2011 on Recommended DPLH Document of Palm Oil Plantation Activities, which also covers a plantation area of 1,162 ha located in Batu Engau and Tanjung Harapan Sub-districts, Paser District, East Kalimantan Province. The DPLH document contains 11 types of environmental impact management and monitoring activities:

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1) Impact on Space and Land, 2) Impacts on soil, 3) Impact on Hydrology, 4) Impacts on Water Quality, 5) Impacts on Transportation, 6) Impacts on Terrestrial Flora, 7) Impacts on Terrestrial Fauna, 8) Impacts on Water Biota, 9) Impacts on the Socio-Economy, 10) Impacts on Attitudes and Perceptions of Community, 11) Impacts on Public Health. Non-conformance status of NC-2011.37 is closed

7.1.2 Sufficient Environmental Management and Monitoring Plan (RKL / RPL).

ST1 N/A. See point 7.1.1 above X

ST2 There is evidence that the environmental management and monitoring plan document has been in accordance with the directives contained in the Environmental Management Document (DPLH) that has been approved by BLH Office of Paser District (Approval Letter No. 660.1/210/DPLH/BLH/2011)

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7.1.3 Availability of documented implementation of smallholder development program according to the scheme and the applicable legislation (where smallholder scheme is applied).

ST1 N/A

ST2 The company has not identified and prepared training programs for KKPA or plasma farmers in which the KKPA and Company (LMR) have interests in the activities conducted by the farmers. New non conformance of this indicator is CFA-2011.45

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7.2 Using soil surveys and topographic information for site planning of new estates and the results incorporated into plans and operations.

7.2.1 Record of soil suitability as a result of soil survey that details topography, climate, soil type, soil fertility, soil depth and drainage water.

ST1 There is no record of soil suitability for HGU development land (in total area of 1,162 hectares located in Batu Engau and Tanjung Aru Sub-districts, Paser District, East Kalimantan Province). Non-conformance of this indicator is NC-2011.38

X

ST2 From the total area new development area of 1,162 hectares, thare are 594 hectares that the soil survey has not been conducted. But the company has a soil survey program as evidenced by a proposal letter for semi-detailed survey of land in Division IV of BBE addressed to Minamas Research Centre (MRC). Non-conformance status of NC-2011.38 es declared open with Minor category.

X

7.2.2 Documented implementation of plantation development based on soil suitability.

ST1 See point 7.2.1 above. Non-conformance of this indicator is NC-2011.38

X

ST2 Thare are 594 hectares of new development land that the soil survey has not been conducted covering soil suitability so that the company was unable to present record of plantation development based on the soil suitability survey result. However, the company has a soil survey program as evidenced by a proposal letter for semi-detailed survey of land in Division IV of BBE addressed to Minamas Research Centre (MRC). Non-conformance status of NC-2011.38 es declared open with Minor category.

X

7.3 Since November 2005, the company did not perform new plantation program in primary forest or any area for which one or more High Conservation value must be preserved or improved.

7.3.1 New planting program for period of November 2005 to November 2007 must meet the applicable laws and regulations and includes management of the social and environmental impacts, and in accordance with the legal spatial plan.

ST1 There is documented HCV identification result covering all management areas. Company has consistently done delineation of areas identified as HCV.

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ST2 Same as Stage 1. There is documented HCV identification result covering all management areas. Company has consistently done delineation of areas identified as HCV.

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7.3.2 Records of Site Map and realization of land opening in accordance with the identification of HCV

ST1 See explanation point 7.3.1 above. All areas identified as HCV have been mapped.

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ST2 See explanation point 7.3.1 above. Same as stage 1. All areas identified as HCV have been mapped in appropriate scale. Based on field observation in Division IV of BBE, which is new development area, HCV is not found.

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7.4 Excessive planting on steep land, and or marginal and fragile soils (potential landslide) should be avoided.

7.4.1 See explanation of point 7.2. Non-conformance of this indicator is NC-2011.38 This will be further verified in the Stage-2

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ST1 There is an area covering 594 hectares of the new development area that land survey has not been conducted so that the existence and extent of marginal land in that area have not been identified. However, the company has a soil survey program as evidenced by a proposal letter for semi-detailed survey of land in Division IV of BBE addressed to Minamas Research Centre (MRC). Non-conformance status of NC-2011.38 es declared open with Minor category.

X

7.4.2 Where a limited planting is planned on fragile and marginal soils, a documented plan should be made and implemented in order to protect these soils without causing adverse effects.

ST1 See point 7.2.1 above Non-conformance status of this indicator is NC-2011.38

X

ST2 There is an area covering 594 hectares of the new development area that land survey has not been conducted so that the existence and extent of marginal land in that area have not been identified and limited planting in fragile and marginal land has not been planned. However, the company has a soil survey program as evidenced by a proposal letter for semi-detailed survey of land in Division IV of BBE addressed to Minamas Research Centre (MRC). Non-conformance status of NC-2011.38 is declared open with Minor category

X

7.5 No new plantings are established on local peoples' land without prior approval from them, which is done through a documented system that enables indigenous people, local community and other stakeholders to spend their views through their respective representative institution.

7.5.1 The company has the social and environmental impacts analysis documents that contain the details of either positive and negative social and environmental impacts, as well as the participation of the parties affected (local community).

ST1 New planting area within the Division IV BBE has not been equipped with EIA document. PT. LMR’s Social Impact Analysis 2010 did not cover Segendang & Kladen Villages as sampling, while the land which is currently the Division VI is land formerly owned by both villages the compensation of which has been made by PT. LMR. Please see also 7.1.1 above. Non-conformance of this indicator is NC-2011.39

X

ST2 There is EIA document and its revised version in the form of Environmental Management Document (DPLH) that has been approved by the Head of Environmental Affairs Agency (BLH) of Paser District under Approval Letter No. : 660.1/210/DPLH/BLH2011, dated May 24, 2011 on Recommended DPLH Document of Palm Oil Plantation Activities, which also covers a plantation area of 1,213 ha located in Batu Engau and Tanjung Harapan Sub-districts, Paser District, East Kalimantan Province. The DPLH document contains 11 types of environmental impact management and monitoring activities: 1) Impact on Space and Land, 2) Impacts on soil, 3) Impact on Hydrology, 4) Impacts on Water Quality, 5) Impacts on Transportation, 6) Impacts on Terrestrial Flora, 7) Impacts on Terrestrial Fauna, 8) Impacts on Water Biota, 9) Impacts on the Socio-Economy, 10) Impacts on Attitudes and Perceptions of Community, 11) Impacts on Public Health. Non-conformance status of NC-2011.39 is closed

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7.5.2 Records of socialization plan for new plantation opening.

ST1 There is no records of socialization of new land clearing plan Non-conformance of this indicator is NC-2011.39

X

ST2 There is EIA document and its revised version in the form of Environmental Management Document (DPLH) that has been approved by the Head of Environmental Affairs Agency (BLH) of Paser District under Approval

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Letter No. : 660.1/210/DPLH/BLH2011, dated May 24, 2011 on Recommended DPLH Document of Palm Oil Plantation Activities, which also covers a plantation area of 1,213 ha located in Batu Engau and Tanjung Harapan Sub-districts, Paser District, East Kalimantan Province. The DPLH document contains 11 types of environmental impact management and monitoring activities: 1) Impact on Space and Land, 2) Impacts on soil, 3) Impact on Hydrology, 4) Impacts on Water Quality, 5)

Impacts on Transportation, 6) Impacts on Terrestrial Flora, 7) Impacts on Terrestrial Fauna, 8) Impacts on

Water Biota, 9) Impacts on the Socio-Economy, 10) Impacts on Attitudes and Perceptions of Community, 11)

Impacts on Public Health.

There is documented agreement on land compensation that has been done based on Indemnity Payment Report document which contains: a). indemnified parties, b) Minutes of Compensation Settlement Meeting, c). Compensation Payment Receipt, and d). Statement Letter of Land Rights Release. Socialization of new land development is implied in the process of land compensation. Company is advised to have documented socialization of plantation opening plan including the planting plan of land cleared in 2008 covering 141 Ha. New non conformance of this indicator is CFA-2011.51.

7.5.3 Records of the compensation agreement / transfer of land from landowners for the plantation area opening.

ST1 N/A X

ST2 There is documented agreement on land compensation that has been done based on Indemnity Payment Report document which contains: a). indemnified parties, b) Minutes of Compensation Settlement Meeting, c). Compensation Payment Receipt, and d). Statement Letter of Land Rights Release.

√

7.6 Local people obtain compensation from the company for the transfer of their land and release of rights based on voluntary agreement that has been informed in advance and an agreement that has been negotiated

7.6.1 Records of identification and assessment of legal and traditional rights on land by involving relevant government agencies and local communities.

ST1 Will be verified at the time of assessment. Non-conformance of this indicator is NC-2011.40 X

ST2 Based on the letter of BPN (No.000/03/KP-10) dated September 2, 2010, no traditional/customary right on land within the region of Kotabaru District. Non-conformance status of NC-2011.40 is closed.

√

7.6.2 Procedure of identification of compensated parties.

ST1 Documented procedure of identification of indemnified parties is unavailable. Non conformance of this indicator is NC-2011.40

X

ST2 There is SOP for Identification of Indemnified Parties and Land Compensation Standard (SOP No. 001/PSD-L & AS) dated June 3, 2011 that includes compensation installment and computation according to the standard issued by the District Government of Kota Baru. Non-conformance status of NC-2011.40 is closed.

√

7.6.3 Records of process of negotiation and/or agreement of land compensation in general are available

ST1 This will be verified at the time of Stage 2 X

ST2 There is a documented process of negotiation and/or agreement on compensation in general for land clearing set forth in the Indemnity Payment Report document which contains: a) Minutes of Compensation Settlement Meeting, b). Compensation Payment Receipt, and c). Statement Letter of Land Rights Release.

√


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7.6.4 Records of calculation and implementation of compensation payment.

ST1 This will be verified at the time of Stage 2

ST2 There is a documented calculation and process of payment for land compensation set forth in the Indemnity Payment Report document, which contains: a) Minutes of Compensation Settlement Meeting, b). Compensation Payment Receipt, and c). Statement Letter of Land Rights Release.

√

7.6.5 Communities whose access and rights to land have been transferred to the company for plantation expansion are given the opportunity to obtain benefits from the plantation development project.

ST1 Local people are given employment opportunity by the company as per their respective skill (maintenance workers, harvesting workers & office staff). Based on data from the personnel of each estate and factory, the audit team found that the total employee of PT. Langgeng Muara Makmur as per March 2011 was 2,105 persons. Of the total 2,105 persons, 488 persons (23%) or them are local people coming from villages around the plantation area of PT. Langgeng Muara Makmur

√

ST2 Similar to the stage 1, Local people are given employment opportunity by the company as per their respective skill (maintenance workers, harvesting workers & office staff). Based on data from the personnel of each estate and factory, the audit team found that the total employee of PT. Langgeng Muara Makmur as per March 2011 was 2,105 persons. Of the total 2,105 persons, 488 persons (23%) or them are local people coming from villages around the plantation area of PT. Langgeng Muara Makmur

√

7.6.6 Process and outputs of the land compensation claim should be documented and publicly available.

ST1 There is documented Indemnity Payment Report, which contains: a) Minutes of Compensation Settlement Meeting, b). Compensation Payment Receipt, and c). Statement Letter of Land Rights Release. Realization for the new development area will be verified at the time of Stage 2. Non-conformance of this indicator is NC-2011.40

X

ST2 Process and result of the land claim compensation are recorded in the documented Indemnity Payment Report, which contains: a) Minutes of Compensation Settlement Meeting, b). Compensation Payment Receipt, and c). Statement Letter of Land Rights Release. Non-conformance status of NC-2011.40 is closed.

√

7.7 Application of burning system for land preparation for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practices.

7.7.1 Documented analysis where burning system is applied in land opening for replanting activities.

ST1 No burning system is applied by the company in land clearing activities NA

ST2 Based on the field observation, the audit team did not find trace of burning in land clearing and the company has Agricultural Reference Manual No. 110/EST-ARM/08, which Section 4 - Land Preparation- clause 3.1 (b) states that any land clearing must be conducted in accordance with the Decision of the Directorate General of Plantation No. KB.110/SK/DJ BUN/05.95 dated May 30, 1995 as guidelines for land clearing activities.

N/A

7.7.2 The company must have records of zero burning policy implementation.

ST1 Based on the field visit to Division IV BBE Block DE.1 (new cleared area in 2008), no trace of burning is found √

ST2 Same as Stage 1, Based on the field visit to Division IV BBE Block DE.1 (new cleared area in 2008), no trace of burning is found. Company has the documented policy of zero burning set forth in the Monthly Manager Report. For example : BBE Manager Report in January 2009, which details the following types of activities: Blocking; cutting small trees logs diameter < 15; Tree Cutting; Cleaning up; collecting the tree trimmings; Soil Compaction and Plant Path Creation.

√


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7.7.3 Procedures and records of Forest Fire Emergency Response.

ST1 Documented procedure for Forest Fire Emergency Response is unavailable. X

ST2 Company has SOP Fire Prevention whose scope covers Palm Oil Estate and the surrounding area (Document No. PM 0800).

√

7.7.4 Facilities and infrastructure designed for forest fire prevention.

ST1 Facilities and infrastructure of forest fire prevention are unavailable. X

ST2 Company has presented documented Fire Prevention Readiness Analysis of PT Langgeng Muara Makmur which details the volume and condition of the fire fighting tools in both mill and estate covering sirens, Hydrant equipment, water pumps (robin machine), water tanks, and PFFT. This document is equipped with the documented evaluation of adequacy of the tools in the form of inspection result, conclusion and action plan. From the document, the audit team found that the company’s fire fighting tools are still inadequate as per the analysis result so that the company should add the number of its fire fighting tools including 3 units of Robin Machine and 3 units of Nozzle that have been planned to be met in August 2011 and the plan has realized .

√

PRINCIPLES #8 COMPANY’S COMMITMENT TO CONTINUAL IMPROVEMENT OF MAIN OPERATION AREAS

8.1 The company’s oil palm estate and mill units regularly monitor and review their activities and develop and implement action plans that allow for continuous real improvement on the primary operations.

8.1.1 The company has prepared monitoring action plan based on environmental and social impact analysis and routine evaluation of estate and mill activities. The action plan should include, but not limited to the following: - Reduction of the use of certain chemicals (criterion 4.6). - Environmental impacts (criterion 5.1). - Waste reduction (criterion 5.3). - Pollution and emissions (criterion 5.6). - Social impacts (criterion 6.1).

ST1 This will be verified at the time of assessment

ST2 Company has not prepared action plan based on evaluation of monitoring and assessmet of environmental and social impacts such as monitoring and assessment results of reservoir water quality that exceeds the quality standards for TSS parameter, as found in Bakau Estate. Non-conformance of this indicator is NC-2011.52 with Minor category.

X

8.1.2 Records of follow-up on the RSPO audit findings, if any

ST1 This will be verified at the time of assessment

ST2 Based on the results of the field visit at stage-1, the company has made follow up as indicated in the checklist of RSPO certification assessment presented by the company. In the checklist, the Company determined person in charge, location, corrective actions, and follow up it has prepared, fulfillment status compared to the reference or RSPO standard.

√


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Annex 2. Checklist Supply Chain (ref. RSPO SCCS, November 2009, Approved by RSPO Executive Board 5 November 2009, Final version Rev 1 approved by RSPO Executive Board, ANNEX: Overview Supply Chain certification requirements for different supply chain models)

Clause Requirements Supply Chain Model

IP SG MB

1 Documented Procedures

1.1 The organization should have procedures and / or written work instructions to ensure that all elements set forth in these requirements are implemented accordingly. The procedures should at least be in the form of the following:

a) A complete and updated procedure covering implementation of all elements of these standards.

Yes Yes Yes

ST2 There is SOP No. 058/LMR-KP/C13 for Supply Chain of product aimed at identifying raw materials and finished products so that relationship between raw material and product quality can easily be traced. The scope of this SOP ranges from receipt of the (FFB), production process, finished product warehouse, bulking station to the product delivery to the buyer. Received FFB is recorded in the SPB detailing origin of the fruit (garden), department, date of delivery, SPB code, Truck Plate Number, No. Trip, time of in and out of the factory. When receiving the FFB in loading ramp, Serial Number, Factory Site, Manager of the origin of estate, No Block, planting year are recorded (recording associated with the grading for the percentage of CPO production recovery). In principle between the two forms, the origin of the fruit can be traced and becomes comparison for Mass Balance claim. Company also has working instructions for grading related to quality and CPO production recovery determination.

√

b) Complete and update record and report indicating the consistency with this standard (See point 5 for more detail) and are 100% verifiable by auditors.

Yes Yes Yes

ST2 b) Recording is made every day associated with the processed fruit (origin of the fruit can be identified at the time of initial receipt). CPO processing is recorded in the daily report that contains the following information: FFB origin and volume (TON), total production of CPO and Kernel (Ton), quality (percent). In the calculation results can be calculated from the yield of CPO (from core plantation grading or or KKPA), so that the FFB origin can be traced

√

c) Person in charge of the application and having authority in respect of this supply chain requirements and meeting all prevailing requirements. This person should be able to demonstrate his care to procedures for the supply chain standard implementation.

Yes Yes Yes

ST2 Mr. Juharuddin Nasution (Mill Manager POM Bebunga PT Langgeng Muaramakmur) √

2 Purchasing and acceptance of materials

2.1 The company has to ensure that the RSPO certified palm oil products are identified. At least, the following matters must be included in the procedure:

a) Purchase order for RSPO certified palm oil or palm oil products shall specify the raw material class (Identity Preserved, Segregated or Mass Balance)

Yes Yes Yes


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ST2 NA: Purchase Order is not applicable if it is issued for the type of material specified. POM does not buy FFB source as it is in one group of LMR, but in the form of daily assessed information and monthly and yearly forecasts. Material category is not mentioned because it comes from the same business group of PT LMR. For example: Trimester forecast report, June 2011 (BBE 5400 TONS, SCE 5875 Tons, and BKE 5250 Tons), July 2011 (BBE 4531 Tons, SCE 6285 Tons, and BKE 5100 Tons). Daily report, dated May 28, 2011, BBE 250.61 Tons, SCE 247.840 tons, and BKE 239.920 Tons. For KKPA (non certified) P/O is not used, but in the form of Forecast and budget report one year and broken down each month, and studied every day.

√

b) Upon receiving certified CPO, Company must check and ensure that type of raw material (material category) / or supply chain model (Identity Preserved, Segregated or Mass Balance, see requirement 5.4) is clearly stated and shall mention in the document of transportation and supply chain certificate number from the supplier

Yes Yes Yes

ST2 NA; because the company does not receive this category of certified CPO. Recording of receipt uses SPB (CPO Receipt Letter) which is always attached to each shipment of fruit.

√

c) Company’s receipt of sustainable palm oil or other palm oil products have to ensure the validity of the accompanying trade and shipping documents, and to do verification before receiving a certified palm oil. For the company required to notify and confirm trades in the traceability of RSPO / / UTZ Certified system (all processes of facility and above and up to the refinery) has to be included in making the notification and confirmation of shipment in the UTZ Certified system at the delivery level. For the company required to notify and confirm trade in the traceability of RSPO / / UTZ Certified system (all facilities after the refinery), should include checking the validity of Supply Chain certification from the supplier at the time of delivery. It should be checked from the list of companies with certified RSPO that is available on the website www.rspo.org or RSPO traceability system / UTZ Certified system. The validity of the certification of supply chain from the supplier at the time shipment. This should be checked from the list of companies with certified RSPO that is available on the website www.rspo.org or RSPO traceability system / UTZ Certified system.

Yes Yes Yes

ST2 Company can not accept the RSPO certified palm oil other than from core garden. The mechanism the company uses is SPB document to be attached to the incoming FFB and clarification when FFB is received for processing. Then the validation will run when the input in Sime Weigh program where fruit garden not listed in the SPB will be rejected within one year (SPB code has been programmed one year before). This applies to the core estate and KKPA (KKPA Cengal River). There is a Memorandum for Sime Wiegh program associated with the validation of SPB.

√

2.2. Company must have a mechanism to handle the discrepancy between raw materials and documents. This mechanism should be used also to re-classify the RSPO material, when certified supply chain from the supplier is found not valid, see requirement 4.1

Yes Yes Yes


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ST2 In practice, if there is document which is inconsistent with the incoming or received FFB, LMR has to confirm it to the driver by verifying the garden (SPB maker). Mechanism or procedure to handle the discrepancy between document and raw materials is unavailable. Non-conformance of this indicator is NC-2011.53 with minor category.

X

3 Sales and expenditure materials

3.1 RSPO certified palm oil shipment shall cover the following information:

a) Name and address of the buyer b) The date of the invoice issued c) A description of products including category of material: Identity Preserved, Segregated

or Mass Balance. See also the requirements 5.4. d) The quantity of the delivered product e) Reference to the documentation of transportation.

Yes Yes Yes

ST2 There is invoice issued by POM (logistic forwarded to Marketing) by specifying name and address of the buyer, invoice date, product description (but no set category of materials according to the scope), the amount of product shipped.

X

Logistic section sends it to Jakarta (and for the Wilmar or buyer) by preparing Minutes of the Product Delivery, eg: May 30, 2011 to PT Wilmar Bio Indonesia, totaling 250 tons to be delivered on 30 May 2011, DO No.: 00093/00085 / 05/11/L-LMR/IKS. CPO BA was sent to the Marketing on May 29, 2011 Avg. DO. 00162/00141/05/11/L-LMR-MKS totaling 1250.249 Tons. The materials category needs to be prepared and mentioned in the Minutes and Invoice of CPO to be shipped. Non-conformance of this indicator is NC 2011.54 with a minor category.

4 Process

4.1 The organization must only use supply chain model similar to that used by seller or another system under it. Reclassification should be made in respect of : Identity Preserved -> Segregated -> Mass Balance -> Non RSPO Certified Palm Oil.

Yes Yes Yes

ST2 There is daily production report which details the amount and origin of the FFB, CPO and kernel and their quality, the results of grading (quality) of each garden. Further, calculation of distribution in each estate should be made. (OER - Oil Extraction Ratio – CPO production recovery) uses the Penalty System program. LMR also has the Monthly Crop Report for Bebunga Factory (prepared monthly), examples BKE FFB 5.839,45 Tons – CPO 1.342,51 Tons – OER 22.99 Percent The counting result can be calculated for the core estate and KKPA.

√

4.2 Company should ensure that certified palm oil is uniquely identified to the mill and the FFB source is identified and stored physically isolated from all types of palm oil sources within its facilities.

Yes No No

ST2 Not applicable NA

4.3 Company shall ensure and verify through clear procedures and recording that the RSPO certified palm oil is stored separately from another certified materials during transportation and storage and can demonstrate that it has taken all reasonable and necessary actions to ensure that the separation of material is 100%. The system must guarantee a minimum standard of 95% of materials physically separate

Yes, Lihat 4.2

Yes No

ST2 N/A NA


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5 Record Retaining Time

5.1 Company shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of this standard

Yes Yes Yes

ST2 Record is prepared daily, weekly and monthly (production activity report) out parameters: the number of FFB, FFB origin, the quality of FFB; number of CPO and Kernel (TON) and quality (%).

√

5.2 The retaining time of all records and reports must be at least 5 (five) years Yes Yes Yes

ST2 The retaining time of records related to traceable CPO production has not been fixed 5 years. Non-conformance of this indicator is CFA-2011.55 with Comment For Action category.

X

5.3 a) The Company shall record and balance all received and dispatched RSPO certified palm oil on a trimester basis.

Yes Yes Yes

ST2 There is data or records of FFB received and CPO produced per month and sold and the remaining stock, but still not in the form of a monthly balance sheet. Non-conformance of this indicator is CFA-2011.56 with Comment For Action category

X

b) When the Mass Balance model is used, the Company can only provide sales Mass Balance from positive stock. However, the company is allowed to sell in a short time.

NA NA Yes

ST2 There has not been a balance sheet covering Mass Balance which describes the stock of the Mass Balance. Non-conformance of this indicator is the CFA-2011.56 with Comment For Action category

X

5.4 The following are trademarks should be used and specified in the purchase order and sales contracts:

Produk Name /IP

Produk Name /SG

Produk Name /MB

ST2 Has not been done at this time. Not to date NA

5.5 Company must provide documents proving that certified palm oil can be traced back to the mills.

Yes No No

ST2 NA NA

5.6 Company must provide documented proof that the certified palm oil can be traced back from the only raw materials that are separated.

No Yes No

ST2 N/A NA

6 Training

6.1 Company should establish and provide training for all staff needed to implement the requirements of Supply Chain Certification System

Yes Yes Yes

ST2 Systems that support the implementation of SCCS has been applied by the Company, namely Sime Weight System, SPB and related procedures, but has not been carried out specifically by the Company, although training plan for SCCS has been planned in the middle of June 2011. Non-conformance of this indicator is NC.2011.57 with Minor category.

X

6.2 Company must keep records of training provided to staff in relation to the implementation of this requirement.

Yes Yes Yes


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ST2 Record of training has not been available because still waiting for the training plan to be obtained in mid-June 2011 (see point 6.1. NC-2011.2011.57)

X

7 Claim

7.1 Company shall only make a statement regarding the use of certified CPO according to RSPO guidelines for communication and Claims (see Annex 10)

Yes Yes Yes

ST2 Training will be conducted as planned for the mechanism of RSPO Guidelines for Communication and Claims (see Annex 10). Non conformance of this indicator is NC-2011.57 with Minor category.

X


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Annex 3. Checklist of Verification of Time Bound Plan of RSPO Standards (not applicable for Stage-1 activity. This will be verified at the time of Surveillance activity) Total Companies Visited: (0.8 √Y) where Y is number of company joined in one same holding company. Company Name: 1. 2. 3. Visit Date:

RSPO Ref.

CERTIFICATION Status

PRINCIPLE #2 COMPLIANCE WITH THE PREVAILING LAWS AND REGULATIONS

PRINCIPLE #5 ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY

PRINCIPLE #6 RESPONSIBILITY TO WORKERS, INDIVIDUALS AND COMMUNITY OF ESTATE AND FACTORY

PRINCIPLE #7 NEW PLANTATION DEVELOPMENT IN AN ACCOUNTABLE MANNER


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Appendix 4. Expert Evaluation Report

Reviewer: Reny Rustianingsih

I. General comments for evaluation

No Isu dan komentar Clarification To be filled in by MUTU

1. The assessment has been comprehensive but the audit sensitivity for social aspect should be improved as the social aspects have more complicated impacts on the plantation operation.

In the next audit, sensitivity of all aspects, particularly social one would be improved.

2. Accuracy and competency should be improved in order to maximize the audit output.

Mutuagung will improve and develop its human resources and the existing Programs.

II. General comments on assessment report

No Issues and comments

Clarification To be completed by MUTU

1. Indicator 3.1.1. ST-2 (Page 54) Paragraph 6: PT LMR also has a production graph 2006-2011, which indicates Production Trend in each Estate for the latest 4 four years. Based on the graph, it was found that the production capacity of Bebunga Estate in 2006/2007 was 43,149 (unit?) and increased by 65,677 tons in 2007/2008, decreased to 51,495 (unit?) in 2008/2009, decreased again to 48,529 (unit?) in 2009/2010 and increased to 60. 179 (unit?) in 2010/2011 up to April 2011. Paragraph 7: ... ... ... For example, audit inventory to be conducted on June 2, 2011 and June 3, 2011 based on the memo from the CFO (What is CFO) No. 028/MP/ACCT/V/11

Have been revised into: Paragraph 6: PT LMR also has a production graph 2006-2011, which indicates Production Trend in each Estate for the latest 4 four years. Based on the graph, it was found that the production capacity of Bebunga Estate in 2006/2007 was 43,149 tons and increased by 65,677 tons in 2007/2008, decreased to 51,495 tons in 2008/2009, decreased again to 48,529 tons in 2009/2010 and increased to 60. 179 tons in 2010/2011 up to April 2011. Paragraph 7: ... ... ... For example, audit inventory to be conducted on June 2, 2011 and June 3, 2011 based on the memo from the CFO (Chief Financial Officer) No. 028/MP/ACCT/V/11

2. NCR closed date, has not been completed NCR closed date has been completed


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3. • The size and type of font are set • The color of fonts are uniformed

Font size, type and color have been uniformed (Arial Narrow font type, size 11, black color).

4. Editorial comment is uniformed if it has been closed or not, for example: Non-conformance status of CFA-2011.35 is declared open with Comment For Action category, etc.

Editorial comments have been made uniform. For example: Non-conformance status of CFA-2011.35 is declared open with Comment For Action category, Non-conformance status of NC-2011.29 is declared open with Minor Category and Non-conformance status of NC-2011.17 is closed.

5. Criteria 7.1 (page 108) is supplemented with explanation of status or condition of field 1,162 hectares

It has been completed and explained in the indicator 7.1.1 ....... The new development area in East Kalimantan province covering an area of 1,162 hectares which has been equipped with PT LMR’s TDP (Company Registration Certificate) No. 09.03.1.01.06054 dated October 11, 2005 and Permanent Business License number 15/T/PERTANIAN/INDUSTRI/2006 dated January 4, 2006, which land has not been managed and will be planned further.

6. The terms KKPA should be put in the Appendix 7 – Glossary.

The terms KKPA ((Primary Cooperative Credit Member) has been included in Appendix 7 - Glossary.

III. Specific comments on the certification decision making, which cover a number of improvements, conditions or recommendations.

No Issues and comments

1. Internal Committee of PT Mutuagung Lestari agreed to recommend PT LMR for obtaining RSPO certification.

2. The audit report will be submitted to RSPO Secretariat for review and to be announced in RSPO Website for comment from public prior to final approval.


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Appendix 5. Output from Panel Committee of RSPO – RSPO Certification

No Recommendations and responses


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Appendix 6. List of Stakeholders Contacted in the RSPO Certification Process

No Institution/Department No Institution/Department

1 Governor of South Kalimantan Province

28 Kalian Village Chief

2 1st Plantation Office of Banjar Masin 29 Harapan Baru Village Chief

3 Head of Forestry Agency of South Kalimantan Province

30 Tamiang Village Chief

4 Labor Agency of Banjarmasin, Jl. Pramuka Komplek MAN 2 - Banjarmasin – South Kalimantan Province

31 Kepala Binturung Village Chief

5 Head of Health Agency of South Kalimantan Province 32 Lintang Jaya Village Chief

6 Branch GAPKI of South Kalimantan 33 Mulyo Harjo/Sebangau Village Chief

7 Executive Director of Regional WALHI Office of South Kalimantan

34 Wonorejo/Pukung Village Chief

8 Sumpit community 35 Pamukan Indah / SP Village Chief

9 Head of Regional Investment Coordinating Agency (BKPMD) of South Kalimantan Province

36 Sakadoyan Village Chief

10 Head of Center for Natural Resources Conservation of South Kalimantan

37 Balamea Village Chief

11 Head of Regional Land Agency of South Kalimantan 38 Kapospol Pamukan Utara

12 Hea of 1st Level BAPEDALDA of South Kalimantan Province

39 Kepala Sekolah SMU Neg. 01 Pamukan

13 Lambung Mangkurat University 40 Sesulung Village Chief

14 Labor Agency of Kotabaru District 41 Community Figure (Mr. Rusnang)

15 Jamsostek Office of Kotabaru Distrct 42 Pondok Labu Village Chief

16 Plantation Agency of Kotabaru District District 43 Head of BPD Pondok Labu

17 Forestry Agency of Kotabaru District 44 Community Figure (Mr Yunus)

18 Regional House of Representatives (DPRD) of Kotabaru District

45 Kepala Binturung Village

19 Kotabaru District Police Office Chief 46 Community Figure (Mr nyurun)

20 Regent of Kota Baru District 47 Community Figure (Mr. Jafriady)


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21 Regional Secretary of Kota Baru District 48 Rampa Village Chief

22 Head of Regional Revenue, Financial & Asset Management Office of Kota Baru District

49 Head of BPD Desa Rampa

23 Head of Forestry Agency of Kota Baru District. Address: Jln. Pangeran Kesuma Negara

50 Community Figures

24 Head of Labor Agency of Kota Baru District, Jl Veteran No. 223 Kota Baru

51 Pamukan Selatan Sub-district Police Chief

25 Head of Regional Environmental Affairs Agency

52 Danramil Pamukan

26 Head of Land Agency of Banjar Masin 53 Chairman of BPD Sesulung

27 Pamukan Utara Sub-district Chief 54 Pamukan Selatan Sub-district Chief


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Appendix 7. Glossary

EIA : Environmental Impact Analysis

PPE : Personal Protective Equipment

PFFT : Portable Fire Fighting Tools

B3 : Hazardous Waste

BAPEDALDA : Regional Environmental Impact Management Agency

BBE : Bebunga Estate

BBF : Bebunga Factory

BBM : Fuel Oil

BKE : Bakau Estate

BLH : Environmental Affairs Agency

BOD : Biological Oxygen Demand

BPN : National Land Agency

BSS : Block Spraying System

CITES : Confention On International Trade Endanger Species

COD : Chemical Oxygen Demand

CPO : Crude Palm Oil

CSR/CD : Corporate Social Responsibility/ Community Development

HCV/HCV : High Conservation Value

HGU : Land Exploitation Rights

HIRAC : Hazard Identification Risk Assessment Control

WWTP : Waste Water Treatment Point

JAMSOSTEK : Jaminan Sosial Tenaga Kerja (Social Security Plan for Workers)

OHS : Occupational Health & Safety

KAN : Komite Akreditasi Nasional (National Accreditation Committee)

KKPA : Kredit Koperasi Primer Anggota (Primary Cooperatives Credit Members)

LC : Land Clearing

LD50 : Lethal Dosage (Certain dosage that can kill 50% of total population)

LMR : Langgeng Muara Makmur

NGO : Non-Governmental Organization

MSDS : Material Safety Data Sheet

P2K3 : Committee for Occupational Health and Safety Development


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NAE : Napal Estate

FIRST AID : First Aid

PBB : Land and Building Taxes

Permentan : Regulation of Minister for Agriculture

IPM : Integrated Pest Management

PK : Palm Kernel

CLA : Collective Labor Agreement

POM : Palm Oil Mill

POME : Palm Oil Mill Effluent

PP : Government Regulation

PSD : Plantation Service departement

PUK : Working Unit Head

PSQM : Plantation Sustainablity Quality Management

RKL : Environmental Management Plan

RPL : Environmental Monitoring Plan

RSPO P&C : Roundtable on Sustainable Palm Oil Principle and Criterion

SCE : Sungai Cengal Estate

SKU : Business Unit

SOP : Standard Operating Procedures

SPSI : Indonesian Trade Union

ST1 : Stage 1 (Pre-Assesssment)

ST2 : Stage 2 (Main Assesssment)

FFB : Fresh Fruit Bunches

UMR : Regional Minimum Wage

UU : Laws