Draft Laporan PT Perkebunan Milano - ASA11 Report

Roundtable on Sustainable Palm Oil Annual Surveillance Audit Report

Report no.: ASA11-14010

1st Surveillance assessment against the

RSPO Principles & Criteria – Generic 2013 &

RSPO Supply Chain Certification Standard year 2014

Name of client Wilmar International Limited

PT Perkebunan Milano - Pinang Awan Palm Oil Mill

Site location : Pengarungan village, Torgamba Sub District, Labuhan Batu Selatan District,

North Sumatera Province

Date of surveillance audit : May 23-27, 2016

Report prepared by:

Naik Monang Parlindungan Lingga (RSPO Lead Auditor)

Certification decision by:

Abdul Qohar (Director of TUV Rheinland Indonesia)

Certification Body: PT TUV Rheinland Indonesia

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

Setiabudi, Jakarta, Indonesia 12950 Tel: +62 21 579 44 579 Fax: +62 21 579 44 575

www.tuv.com

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT ............. ................................................ 3

1.1 National Interpretation Used .................................................................................................................. 3

1.2 Type of Assessment ............................................................................................................................... 3

1.3 Certification Details ................................................................................................................................ 3

1.4 Location and Maps ................................................................................................................................. 3

1.5 Organisational Information / Contact Person ......................................................................................... 5

1.6 Description of Supply Base .................................................................................................................... 6

1.7 Actual production volumes, tonnages and projected outputs. ............................................................... 6

1.8 Dates of Plantings and Replanting Cycles ............................................................................................. 7

1.9 Area of Plantation (Total, Planted and Mature) ..................................................................................... 8

1.10 Progress against Time Bound Plan ..................................................................................................... 9

1.11 Progress of associated smallholders or outgrowers towards RSPO compliance ............................. 11

1.12 Compliance to Rules for Partial Certification ..................................................................................... 11

1.13 Approximate Tonnages Certified ....................................................................................................... 12

2.0 ASSESSMENT PROCESS ........................................................................................ 13

2.1 Certification Body ................................................................................................................................. 13

2.2 Qualifications of Lead Assessor and Assessment Team .................................................................... 13

2.3 Assessment Methodology & Agenda ................................................................................................... 14

3.0 ASSESSMENT FINDINGS ......................................................................................... 17

3.1 Summary of Findings ........................................................................................................................... 17

3.2 Status of Previously Identified Non-conformities ................................................................................. 49

3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions.......................... 50

3.4 Noteworthy Positive Components ........................................................................................................ 51

3.5 Conclusion and Recommendation for RSPO P&C & RSPO Supply Chain Certification ................... 51

3.6. Issues Raised by Stakeholders and Findings Pertaining to Issues.................................................... 51

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL

RESPONSIBILITY..................................... ....................................................................... 52

4.1 Date of Next Surveillance Visit ............................................................................................................. 52

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client .................................... 52

APPENDICES .................................................................................................................. 53

Appendix 1: Detail of certificate .................................................................................................................. 53

Appendix 2: List of Abbreviations ............................................................................................................... 54

Appendix 3: List of Stakeholders Interviewed and Contacted ................................................................... 55

Appendix 4: Observations and Opportunities for Improvement ................................................................. 56

RSPO 1st Surveillance Assessment Report

- Pinang Awan Palm Oil Mill & PT Perkebunan Milano –

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1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the RSPO Generic Prin-ciples & Criteria 2013 and the RSPO Supply Chain Certification Standard, November 2014.

1.2 Type of Assessment

The annual surveillance certification assessment was carried out on 1 mill and 3 estates under PT Perkebunan Milano owned by Willmar International. The date of certification of this unit was 2015-08-24 valid until 2020-08-23.

1.3 Certification Details The details of RSPO certification of Pinang Awan Palm Oil Mill and PT Perkebunan Milano are as per the table below Table 1: RSPO Certification details of Awan Palm Oil Mill and PT Perkebunan Milano

1.4 Location and Maps PT Perkebunan Milano, PKS Pinang Awan location is in Pinang Damai Village, Torgamba Sub-district, South Labuhanbatu District, and North Sumatera. This location is 320 km or 8 hours by drive from Medan City the capital of North Sumatera. Table 2: GPS locations for all estates and mills in cluded in annual surveillance assessment

RSPO Membership no.: 2-0017-05-000-00.

RSPO Certificate no.: 824 502 14010

Date of first RSPO certificate & validity: August 2 4, 2010 valid until August 23, 2015

Date of recertification audit: July 29 to August 03 , 2015

Date of previous surveillance audit: -

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

August 24, 2015 valid until August 23, 2020

CPO tonnages claimed: 28,292 tonnes

PK tonnages claimed: 6,430 tonnes

Name of mill / es-tate

Location GPS locations

Latitude Longtitude Pinang Awan Mill Desa Pinang Damai, Kec.

Torgamba, Kab.Labuhan Batu 1°50’34.175” 100°12’11.296”

PT Perkebunan Milano – Sungai Daun Estate

Desa Pengarungan, Kec. Torgamba, Kab. Labuhan Batu Selatan

1°52”25.93” 100°14”02.29”

PT Perkebunan Milano – Batang Saponggol Estate

Desa Batang Saponggol, Kec. Kampung Rakyat, Kab. Labuhan Batu Selatan

1°58”17.61” 100°13”20.34”

PT Perkebunan Milano – Merbau Estate

Desa Milano, Kec. Merbau, Kab. Labuhan Batu Utara

2°13”28.58” 99°52”06.43”



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Figure 1: Location of PT Perkebunan Milano’s esta tes on map of North Sumatera, Indonesia

Merbau Estate

Batang Saponggol Estate

Sei Daun Estate

Labuhan Batu

Riau Province

Straits of Malacca

Simalungun

North Sumatera

PKS Pinang Awan



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Figure 2: Location of PT Perkebunan Milano’s Pinang Awan Mill and 3 company estates (Sei Daun Es-tate, Batang Saponggol Estate, and Merbau Estate) w ithin the Labuhan Batu, North Sumatera, Indonesia.

1.5 Organisational Information / Contact Person

Contacts details of the company are as follows:

Company Name: PT Perkebunan Milano - Pinang Awan POM (Wimar International Group)

Address: Head Office : Multivision Tower Lantai 15, Jl. Kuningan Mulia Blok X-B, Se-tiabudi - Jakarta Pusat 12960

Site : Pengarungan village, Torgamba Sub District, Labuhan Batu Selatan District, North Sumatera Province

Contact Person: Mr. Khairul Anuar

Telephone: 0811-757-9901

Email: [email protected]



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1.6 Description of Supply Base

Pinang Awan mill is one of the palm oil mills owned by Wilmar International in North Sumatera. Pinang Awan Mill was established in 1996 with a production capacity of 60 tons/hours. The company was initially a National Investment Company, but changed status to a Multinational Investment Company upon approval from the Indo-nesian Capital Investment Coordination Board (‘Badan Koordinasi Penanaman Modal’ - BKPM) in their BKPM decision letter no. 749/I/PMDN/1994 and BKPM decision letter no. 06/V/PMA/2002. Currently Pinang Awan Mill is receiving approximately 43.14% of its supplies of fresh fruit bunches (FFB) from 3 company-owned estates (Sei Daun Estate, Batang Saponggol Estate and Merbau Estate) and the remaining 56.86% from independent smallholders, and the mill has no scheme smallholder. Table 3: FFB Supply Information for Pinang Awan Pal m Oil Mill

FFB Contributors

FFB supplied from January to December 201 5

FFB supplied from January to April 2016

Tonnes % Tonnes %

Company owned estates :

Sei Daun Estate 66,005.220 20.68 17,535.350 23.41

Batang Saponggol Estate 47,545.890 14.89 12,708.520 16.96

Merbau Estate *) 22,387.130 7.02 4,807.910 6.42

Sub Total 135,938.240 42.59 35,051.780 46.79

Independent outgrowers : 183,210.773 57.41 39,847.446 53.21

TOTAL 319,149.013 100.00 74,899.226 100.00

Note :

*) For 2015, FFB of merbau estate is not supplied to Pinang Awan Mill but to Daya Labuhan Indah Mill (Wilmar Group), because Daya Labuhan Indah Estates is just replanted. So, FFB of Merbau Estate is to fulfill the ca-pacity process of that mill.

1.7 Actual production volumes, tonnages and project ed outputs.

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



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Note : * At time of audit, only PK products have been sold through RSPO eTrace

** As per mill budget 2016 (January until December 2016)

1.8 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 to 30 years depend on actual plantation productivity. Information on the dates of plantings are as per the table below. Table 5: Age and year of plantings of company estat e supplying to Pinang Awan Palm Oil Mill

Age & Year of Plant-ings

Oil palm planted area at each estate(ha)

Sei Daun Batang Saponggol

Merbau

0-5 yrs (2011-2015) 0 0 192.55 5-10 yrs (2006-2010) 510.46 51.87 0 10-15yrs (2001-2005) 95.29 21.08 192.99 15-20yrs (1996-2000) 822.63 1096.31 465.11 20-25yrs (1991-1995) 370.82 0 0 25-30yrs (1986 -1990) 632.54 476.99 69.77

TOTAL 2,431.74 1,646.25 920.42

Amount (MT)

CPO PK

Previous certified tonnages claimed* 28,292.000 6,430.000

Certified tonnages sold* 0 6,242.500

Certified tonnages purchased 0 0

Actual Production for year 2015 59,462.764 16,542.366

Actual Certified Production for year 2015 22,804.614 6,339.095

Conversion Rate for year 2015 OER: 20.04 KER: 5.57

Projected output for year 2016** 60,996.00 16,493.40

Projected certified production for year 2016** 24,102.90 6,517.50

Projected certified FFB from certified estates 118,500

Projected conversion rate for year 2016*** OER: 20.34 KER: 5.50

Projected FFB for year 2016 299,880



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Table 6: Planned and actual oil palm replanting act ivities for PT Perkebunan Milano

Year Total planned re-planting area (ha)

Total planned replanting area for each estate (ha) Actual total area

replanted (ha) * Sei Daun Batang

Saponggol Merbau

2016 275.42 107.93 82.07 85.42 85.42

2017 194.35 124.58 0.00 69.77 0.00

2018 212.24 212.24 0.00 0.00 0.00

2019 151.64 54.80 44.93 51.91 0.00

2020 160.33 50.38 109.95 0.00 0.00

Total 993.98 549.93 236.95 207.10 85.42

Note: * currently in progress of being replanted

1.9 Area of Plantation (Total, Planted and Mature)

Table 7: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Perkebunan Milano (Pe-riod of January to December 2015)

Estate Name Total area (ha)

Oil Palm Planted area

(ha)

Mature (Produc tion)

area (ha)

Immature (Non-

production) area (ha)

FFB Production (tonnes)*

Average yield

(tonnes/ha/year)

Sei Daun Estate

2,568.37 2,431.74 2,431.74 0.00 66,005.22 27.14

Batang Saponggol Estate

1,749.43 1,646.25 1,646.25 0.00 47,545.89 28.88

Merbau Estate 974.77 920.42 727.87 192.55 22,382.13 27.52 TOTAL 5,292.57 4,998.41 4,805.86 192.55 135,933.20 28.28

Note : * Data for year 2015

Table 8: Land use data for PT Perkebunan Milano

Estate Name

Total area (ha)

Oil Palm Planted

Area (ha)

HCV/ Potential HCV areas

Land used for other purposes (ha)

Roads, Housing & Drainage

Nursery Mill Conflict

area

Other Land (Non Plantable)

Sei Daun 2,568.37 2,431.74 0 127.74 8.5 0 0 0.39

Batang Saponggol 1,749.43 1,646.25 35.68 67 0 0 0 0.5

Marbau 974.77 920.42 18.12* 54.35 0 0 0 0

TOTAL 5,292.60 4,998.41 35.68 249.09 8.5 0 0 0.89

Note:

* include in planted area.



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1.10 Progress against Time Bound Plan Table 9: Time Bound Plan of the Other Management Un its

Name of Holding Location Time bound

plan for certifi-cation (year)

Remarks

Sapi (1 + 2)

Sandakan, Sabah 2008 Certified

Sabahmas

Lahad Datu, Sabah 2008 Certified

Reka Halus


Saremas (1 + 2)

Miri Serawak 2008 Certified

Kaminsky


Suai


Segarmas


Terusan (1 + 2)


Kiabau


Ribubonus


PT Perkebunan Milano (Sungai Daun, Batang Saponggol & Merbau estate)

North Sumatra 2009 Certified

PT Mustika Sembuluh Central Kalimantan 2009 Certified

PT Kencana Sawit Indonesia West Sumatra. 2010 Certified

PT Kerry Sawit Indonesia Central Kalimantan 2010 Certified

PT Tania Selatan (Burnai Barat & Burnai Timur estate)

South Sumatra 2010 Certified

Hibumas Sandakan, Sabah 2010 Certified

Sri Kamusan Sandakan, Sabah 2010 Certified

Sekar Imej Sandakan, Sabah 2010 Certified

Aktif Kukuh & Koerasi Sandakan, Sabah 2010 Certified

PT AMP Plantation West Sumatra 2011 Certified

PT Primatama Muliajaya West Sumatra 2011 Certified

PT Agro Nusa Investama (Sambas) West Kalimantan 2012 Certified

PT Buluh Cawang Plantations South Sumatra 2012 Certified

PT Tania Selatan South Sumatra 2012 Certified

PT Bumi Sawit Kencana Central Kalimantan 2012 Certified

PT Sarana Titian Permata Central Kalimantan 2012 Certified

PT Gersindo Minang Plantations West Sumatra 2013 Certified



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Name of Holding Location Time bound

plan for certifi-cation (year)

Remarks

PT Daya Labuhan Indah North Sumatra 2013 Certified

PT Permata Hijau Pasaman West Sumatra 2013 Certified

PT Perkebunan Milano (Cabang Dua Estate)

North Sumatra 2013 Certified

PT Sinar Siak Dian Permai Riau 2014 Gap Assesment on 19/09/2014

PT Agro Pelindo Sakti South Sumatra 2014 Certified

PT Mentaya Sawit Mas Central Kalimantan 2014 Certified

BBPOP (Benso Plantation) Ghana 2015 Certified

PT Murini Sam Sam Riau 2015 Full Assessment on 02/11/2015

PT Bumi Pratama Khatulistiwa West Kalimantan 2015 Gap Assesment completed

PT Karunia Kencana Permaisejati Central Kalimantan 2015 Full Assessment completed

PT Rimba Harapan Sakti Cntral Kalimantan 2015 Certified

PT Pratama Prosentindo West Kalimantan 2016 Planned

PT Putra Indotropical West Kalimantan 2016 Planned

PT Agronusa Investama (Pahauman) West Kalimantan 2016 Planned

PT Buluh Cawang Plantation West Kalimantan 2016 Planned

PT Daya Landak Plantation West Kalimantan 2016 Planned

PT Indoresins Putra Mandiri West Kalimantan 2016 Planned

PT Agro Palindo Sakti West Kalimantan 2016 Planned

PT Agro Indah Persada 2 Jambi 2017 Planned

PT Musi Banyuasin Indah South Sumatra 2017 Planned

Table 11: New Development Area under Wilmar Interna tional

Name of Holding Location Total area NPP Status according to

RSPO NPP procedure

PT Agro Indah Persada Merangin. Jambi 1,200 ha Approved

PT Agro Nusa Investama Sambas

Sambas, West Ka-limantan

1,024 ha Approved

Biase Plantations (Ibiae Estate)

Calabar, Nigeria 5,594 ha Approved



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Biase Plantations (Calaro Extension)

Calabar, Nigeria 3,066 ha Not submitted (Pending HCV/HCS study

Eiyup Industry (Oban Es-tate)

Calabar, Nigeria 2,986 ha Not submitted (Pending

HCV/HCS study

Biase Plantations (Biase estate)

Calabar, Nigeria 8,029 ha Overlapping boundaries

The audit team is satisfied that the company conforms to the RSPO requirements for partial certification as laid out in Clause 4.2.4 of the RSPO Certification Systems document.

1.11 Progress of associated smallholders or outgrow ers towards RSPO compliance

In year 2013, Pinang Awan mill has 68 independent outgrowers that supplied FFB to their mill. All independent outgrowers have no permanent contract with Pinang Awan mill, and free trade market is now applied for all independent outgrowers that supplied for Pinang Awan mill.

1.12 Compliance to Rules for Partial Certification

Compliance of the uncertified management units of Wilmar Plantation Limited against the rules for partial certifi-cation according to RSPO Certification System clause 4.2.4 was assessed through document check for all com-pany’s self assessment report for uncertified unit. A summary of findings is as stated below.

Partial Certification Requirements Audit Findings

(a) The parent organization or one of its majori-ties owned and / or managed subsidiaries is a member of RSPO.

Wilmar International Indonesia is RSPO member with membership number 2-0017-05-000-00.

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

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

Refer to the time bound plan under Section 1.10 above

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

There are some newly developed plantation areas un-der Wilmar International such as in Jambi province, West Kalimantan province Indonesia and Nigeria as explained on the table 11 above. Some areas have undergone the New Planting Procedure (NPP) and been approved while some areas are still undergoing the NPP, as shown in Table 11 above.

(f) Land conflicts, if any, are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Fa-cility, in accordance with RSPO criteria 6.4, 7.5 and 7.6.

PT Asiatic Persada, which was previously a subsidiary of Wilmar had a significant land conflict issue but has been sold to other plantation company and is now no longer a subsidiary of Wilmar Plantation.

Wilmar International carried out the New Planting Pro-cedure for BIASE Plantation Limited (Ibiae estate) in Nigeria with an announcement made on the RSPO website on 9 November 2012. During this NPP pro-cess, a complaint was submitted by the Rainforest Resource & Development Centre (RRDC) on behalf of the Ibiae Land Lord Community. The complaint cov-



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ered infringements to several aspects of Principle 1 and Principle 2 of the RSPO P&C. The case was tak-en up and investigated by the RSPO Complaints Pan-el, with decision made for RSPO to a lawyer well ac-quainted with Nigerian laws to review and give an au-thoritative opinion on whether the company had com-plied with the legal requirements of Nigeria. The legal opinion was received by the RSPO on 27 August 2014, and based on this opinion, the RSPO confirmed that BIASE Plantations was in compliance with legal requirements and closed the case. However, the result was not accepted by RRDC as well as the NGO, Friends of the Earth and the issue remains ongoing with no resolution. As the company has complied with requirements to attempt to resolve the dispute through the RSPO grievance procedure, this is noted by the TUV Rheinland audit team as an observation and pro-gress of the case will be monitored.

Further details on this case are available here: http://www.rspo.org/members/complaints/status-of-complaints/view/26 .

There is also on ongoing land dispute at PT Gersindo Minang Plantation (GMP), West Sumatra under Wil-mar, which has been ongoing since year 1997 with the village of Jaorang Rantau. This company has been RSPO certified by another certification body that is monitoring the status of the dispute with the RSPO.

(g) Labour disputes, if any, are being resolved through a mutually agreed process, in accord-ance with RSPO criterion 6.3.

A previously ongoing labour conflict in PT Tania Se-latan regarding employee bonus has been solved. There are no other identified labour disputes ongoing at other subsidiary companies of Wilmar.

(h) Legal non-compliance, if any, are being re-solved in accordance with the legal require-ments, with reference to RSPO criteria 2.1 and 2.2.

Some of Wilmar’s other management units have not complied with certain legal requirements, for example in PT Sarana Titian Permai, PT Kerry Sawit Indonesia, PT Mustika Sembuluh estate under another Wilmar In-ternational management unit, there is an issue with the land area stated in the land use right certificate (HGU). However, the company is taking action by inviting the National Land Agency (BPN) to remeasure the land and resolve the issue. The process is still ongoing.

1.13 Approximate Tonnages Certified

The approximate tonnages certified based projection production in year 2016 for company owned estates only are as follows:

Crude Palm Oil (CPO) : 24,102.90 tonnes Palm Kernel (PK) : 6,517.50 tonnes



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2.0 ASSESSMENT PROCESS

2.1 Certification Body PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent test-ing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 62 countries on all five continents offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, as well as CDM Validations and Verifications. ’s office is located in Jakarta, Indonesia.

2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this surveillance audit are as per the table below:

Name Position Qualifications / Experience

Naik Mo-nang Par-lindungan

Lingga

Lead Auditor

Education: Bachelor of Forestry, Gadjah Mada University. Training attended: ISPO Auditor, Quality Management System (QMS) Auditor/Lead Auditor (ISO 9001:2008) by IRCA, Environmental Management Systems Auditor/Lead Audi-tor Conversion Training by IRCA (ISO 14001-2004), Lead Auditor RSPO Training, SCCS Training and HCVA Training

Working experience:

Field Assistant PT Sapta Karya Damai (2008-2013), Auditor in PT Sucofindo (2013-2015), and Auditor in PT TUV Rheinland Indonesia (2015-present).

Aswan Ha-sibuan

Auditor

Education: Sarjana Teknik Industri –Sumatera Utara University, Indonesia Training attended: Lead Auditor ISO 9001:2000 – TUV Rheinland; training lead assessor ISO 14001 – TUV Rheinland; Lead Auditor training OSHAS: 2007 di TUV Rheinland Indonesia, Ahli K3 Umum, ISPO Lead Auditor, RSPO Lead Au-ditor, ISCC Auditor, SCCS Auditor, Coating Inspector by Indocor & LIPI

Working experience: Professional industry 1999-2004, Quality Management Consultant (2004-2009), Lead Auditor for QMS, EMS, OHSAS at PT TUV Rheinland Indone-sia, Auditor RSPO and ISPO (2011- present)

Wahyu Auditor

Education : • Master Degree of Management of Manufacturing Engineering, Faculty

of Engineering, University of Pancasila • Degree of Mechanical Engineering, University of Indonesia

Training attended: RSPO Lead Auditor Course, Pro-Forest & Daemeter, Calculation of Green House Gas at Palm Oil Plantation, Komisi ISPO, ISPO Lead Auditor Course, Komisi ISPO, Verified Legal Compliance & Reduced Impact Logging Auditor Training, by Tropical Forest Foundation, SVLK Auditor Training, Ministry of Forestry, CoC Auditor – LEI, ISO 9001:2008, IRCA Approved Course, ISO 14001:2004, IRCA Approved Course Working experi ence :



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PT Carsurin, as QHSE Coordinator (2006 -2009), PT Mutu Hijau Indonesia, Jakarta as Technical Manager (2010-May 2014) and Auditor PT TUV Rhein-land Indonesia (May 2014-present)

Panggad-ing Na-

inggolan Auditor

Education :

Bachelor of Social, Institut Ilmu Sosial dan Ilmu Politik, Jakarta. Training attended:

RSPO in house training by Mutu Agung Lestari, ISPO Training by Komisi ISPO and Awareness QHSE (management system review dan integrated management system concept ISO 9001, 14001, OHSAS.

Working experience:

Komisi Nasional Perlindungan Anak – Community Relationship Staff, Divison Staff of Education Program – Common Ground Indonesia, Reporter on Global Informasi Bermutu, Producer on Netwave Multimedia, Producer on Satu Visi Perkasa Produksi, Project Supervisor on Surya Solusi Informasi and Auditor PT TUV Rheinland Indonesia.

2.3 Assessment Methodology & Agenda

The surveillance assessment was conducted betwen 23 to 27 May 2016 as per the 1st Surveillance audit pro-gram below. The assessment was carried out in accordance with TUV Rheinland RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for Indonesia and recorded their findings.

Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com-promising the integrity of the assessment in anyway.

The 2 sampled estates and 1 mill were visited and the assessment team carried out field and document assess-ments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evi-dence was recorded for individual estates. Interviews were conducted at all estates and the mill.

During the surveillance audit, there is no raised non conformity. The surveilance assessment agenda is as ex-plained below.



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Surveillance Assessment Agenda:

Date Location/ Main sites

Main activities

24 May 2016

Sei Daun mess hall, Sei Daun es-tate

Opening Meeting Verification previous audit findings Verification of document relate of (all estate) : - Environmental, agrochemical, OHS, compliance regulation issues - Legal land, management plan, best practices, HCV issues - Social and employees - Good Agricultural practices in Sei Daun estate (weirs Block 66,67,80,81) - OHS system (accident records, recommendation letters for transfer of work

for workers found with high blood cholinesterase levels and pregnant female sprayers, evidence of transfer to other work for aforementioned workers, OSH policy, OSH committee letter of approval from the Manpower Depart-ment).

- Waste ( medical waste disposal records) - Legal requirement register - Insurance of worker (Jamsostek) payment records for temporary workers - Interview with harvesters and harvesting supervisor - Interview with female sprayers - Hazardous waste store - Fertilizer store - Sprayer’s washroom - Chemical container and fertilizer and washing area - Housing compound - Domestic waste landfill - Clinic

25 May 2016

Merbau Es-tate

Verification of document and field relate of : - Good Agricultural practices in Merbau estate (harvesting block 36 Afdeling I,

spraying block 55 Afdeling II) - Legal land and maintenance of boundary stones/pillars (boundary in block 51) - HCV (river in block 34, 38 and 49) - OHS system (accident records, recommendation letters for transfer of work

for workers found with high blood cholinesterase levels and pregnant female sprayers, evidence of transfer to other work for aforementioned workers, OSH policy, OSH committee letter of approval from the Manpower Department).

- Waste ( medical waste disposal records) - Legal requirement register - Insurance of worker (Jamsostek) payment records for temporary workers - Interview with harvesters and harvesting supervisor - Interview with female sprayers - Hazardous waste store - Fertilizer store - Sprayer’s washroom - Chemical container and fertilizer and washing area - Housing compound - Domestic waste landfill - Clinic - Consultation with local community leader of Pulo Bargot

26 May 2016

Pinang Awan Mill

Verification of document and field relate of : - Incoming FFB verification (security post, loading ramp) - Interview with mill workers (boiler supervisor) - Good Agricultural Practices - Field visit to land application site for mill effluent - Waste management (hazardous waste store, palm oil mill effluent

treatment ponds, mill license for temporary hazardous waste storage, li-cense for land application, land application records)



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Date Location/ Main sites

Main activities

- Pollution prevention control - Water management - OSH system (fire simulation records, medical check reports for year

2014 and 2015) - Warehouse (mill compound, chemical store) - Worker facilities, medical facilities at Pinang Awan Mill - Environmental (Environmental Management and Monitoring Program

(UPL/UKL) and implementation reports, environmental objectives, tar-gets and improvement plan, greenhouse gas calculation sheet, renewa-ble energy efficiency analysis document)

- Training (boiler operator training certificates and licenses) - Consultation with local community supplier of Pinang Awan Village - SCCS - Closing Meeting



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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings The following is a summary of findings during this surveillance audit for the criteria listed in the RSPO Princi-ples & Criteria – Generic 2013 & RSPO Supply Chain Certification Standard year 2014. RSPO P&C

Principle 1: Commitment to transparency

Criteria assessed: CR1.1, CR1.2, CR1.3 Criteria not assessed : - Findings: The company has updated list of stakeholders for both estates and mill. Stakeholders listed include sur-rounding government offices (at provincial, district, sub-district and village level), community leaders, other palm oil companies, police stations, universities and school, NGO’s (national, local level), contractors, sup-pliers, smallholders, social organizations, workers and community members. The lists are updated periodi-cally and are available at each estate and mill. The list will be updated at least once a year. There is evi-dence that the list of stakeholder was updated on January 2016.

The company has 2 (two) lists of stakeholders due to the company located at 2 (two) districts, i.e.: Labuhan Batu Selatan and Labuhan Batu Utara districts. The 1st List was cover Sei Daun Estate, Batang Seponggol Estate, and Pinang Awan Mill, since the estates and mill located at Labuhan Batu Selatan Dis-trict, Sumatera Utara Province, and the 2nd list was cover Merbau Estate, since the estate located at Labuhan Batu Utara District, Sumatera Utara Province.

The list consists of data of stakeholder’s name, address, and contact person or PIC’s name and phone number. Stakeholders listed include surrounding government offices (at provincial, district, sub-district and village levels), community leaders, other palm oil companies, police stations, universities and school, NGO’s (national, local level), contractors, suppliers, smallholders, social organizations, workers, press, and community members.

The types of information which are available to public are (but not limited) as stated on management decree letter No. 001/MLN-EXT/VI/2015, signed by Group Estate Manager, date June 08, 2015. The information consist of:

1. Company profile 2. Management and Monitoring Environmental Effort (UKL & UPL) 3. Identification of environmental aspects and evaluation of environmental impacts 4. Identification and Social Impact Handling Plan 5. OHS Management System 6. Company Policy 7. Land use right (HGU) and other related licenses 8. Area statement and Mill production capacity including Maps 9. Maps of river within areal of company 10. Procedures of estate and mill operations 11. Organizational structure 12. HCV documentation 13. CSR & CDP documents 14. Public Summary of certification report 15. Grievance, Complaint, and its handling 16. Negotiation procedures 17. Continual improvement plans

There is evidence that the decree letter No. 001/MLN-EXT/VI/2015 was disseminated to relevant stake-holder, e.g.: listed at Buku Expedisi, that found at June 25, 2015, the letter was disseminated to Sub-district



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head of Torgamba and Head of Police Torgamba Subdistrict. The organization has established an SOP that describes the process (of information shar-ing/dissemination), that is procedure no. PRO-BM.GEN-001, Rev.02, effective date November 20, 2009. As stated in the procedure the person who responsible for providing & updating information, they are CD Officer as coordinator and head of related functions as members. For example at Merbau Estate: Merbau estate has maintained and updated list of sakeholder. The last updated has conducted at January 15, 2016. The stakeholders listed was include: Governmental agencies (district levels, sub-district levels, villages), local communities (masyarakat adat), communities, NGO and Youth organization, suppliers, press, Creditor, competitor, organization within company (worker union/SBSI, Football Club, Volleyball club, Gender committee, etc), company’s cooperative and etc.

There is evidence that the decree letter No. 001/MLN-EXT/VI/2015 was disseminated to relevant stake-holder, e.g.: listed at Buku Expedisi, that found at June 19, 2015, the letter was disseminated to head of Pulo Bargot village, Subdistrict Merbau head, mnagemnet of PT Smart Brussel, Head of police sub district Merbau, head of perkebunan milano village, and etc. The company has some policy and procedures regarding to communication and information, such as: • Policy of Communication was signed by Group Plantation Head, Group CSR Head and Representatives

of Worker (Head of Worker Union/SPSI Sei Daun Estate). The policy was updated on September 2010. • Procedure No. PRO-BM.GEN-001, Rev.02, Dated November 20, 2009, Namely Procedure of Communi-

cation, Consultation, and Coordination to External • Procedure No. PRO-GEN-011, Rev. 02, dated September 23, 2013, namely Procedure of Internal Com-

muntication and Consultation • Procedure No. PRO-BM.GEN-002, Rev. 03, dated March 01, 2012, namely “Penanganan Hubungan dan

Upaya Pemberdayaan Masyarakat”. As mentioned in the procedure, number 7.6, stated: “all processes input handling shall be 1 (one) month at maximum time”. The PIC was assigned for response to stake-holder and their responsible are :

1. Personnel and General Affair • Responsible to register input/output: information request, grievance, and proposal for community

development • Extent the information/grievance/proposal for community development to Estate and Mill Manag-

er. 2. Estate Manager and Mill Manager

• Extend the information/grievance/proposal for community development to relevant functions • Making decision as their authority as appropriate.

3. Bina Mitra/Head of Functions • Conducted field analysis/input classification • Input response regarding to priority scale • Publicity result of analysis or response results • Maintained related records

4. Public Speaker • Get analysis response, formulize input handling, socialization of handling input, conducting moni-

toring/evaluation effectiveness of input handling. • Reporting for company’s interest and other parties • Maintained relevant document/records.

The SOP was cover the elements as follow: the frequency of updating the stakeholder list, evidence of stakeholder verification, type of provided information (E.g. Environmental, social and legal), the frequency and level of access to this information,, how and where is the information disseminated, the responsible person for providing & updating information, describing the process (of information sharing/dissemination) and how stakeholders aware of the type of information available and the procedures for accessing the information.

There is evidence that Sei Daun Estate has maintained records of requests for information and responses in the Log Book. As seen in the logbook, the Sei Daun Estate had received 36 requests/proposals since August 07, 2015 until May 12, 2016. There is evidence that all letter received by Sei Daun Estate are assistance pro-posal. There were no requests for information or complaints made. For example:



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• Letter from Panitia HUT RI ke-70, Sumberrejo, dated August 07, 2015 has been response. • Letter from Panitia HUT RI ke-70, P. Damai Village, dated August 07, 2015 has been response • Letter from Panitia HUT RI ke-70, Pengarungan Village, dated August 07, 2015 has been re-

sponse • Letter from Dusun Sei Daun, dated May 12, 2016, regarding proposal for Heavy Equipment. This

requesiton has been response dated May 16, 2016.

There is evidence that response to requests for informationin Sei Daun Estate timely and appropriate. How-ever, not all of the response to incoming letter accompanied by the date of the response.The Pinang Awan Mill has maintains records of all requested made by stakeholders in a logbook (handwritten), including infor-mation on the date when request was received, party making the request, details of request, letter number, the responsible person, response from the mill and date of completion. As seen from the logbook, the mill had received 25 requests since start of year 2016 (April 2016), all of which were request for assistance. There were no requests for information or complaints made.

Merbau Estate has maintains records of information request and responses in the Log Book. As seen in the logbook, the Sei Daun Estate had received 18 requests/proposals since September 23, 2015 until March, 03, 2016. There is evidence that all letter received by Merbau Estate are assistance proposal. There were no re-quests for information or complaints made. The type of information which are available to public are (but not limited) was stated on management decree letter No. 001/MLN-EXT/VI/2015, signed by Group Estate Manager, dated June 08, 2015. The information consist of:

1. Company profile 2. Management and Monitoring Environmental Effort (UKL & UPL) 3. Identification of environmental aspects and evaluation of environmental impacts 4. Identification and Social Impact Handling Plan 5. OHS Management System 6. Company Policy 7. Land use right (HGU) and other related licenses 8. Area statement and Mill production capacity including Maps 9. Maps of river within areal of company 10. Procedures of estate and mill operations 11. Organizational structure 12. HCV documentation 13. CSR & CDP documents 14. Public Summary of certification report 15. Grievance, Complaint, and its handling 16. Negotiation procedures 17. Continual improvement plans

The company already share their documents such as legal, environmental, social to stakeholders, for exam-ple: Sei Daun estate: a. Report of Committee of OHS to Head of Manpower & Transmigration of District Labuhan Batu Selatan,

for period July to September 2015, Letter No. 02/MLN-EHS/VI/2015 b. Plantation Report to Regent of Labuhan Batu Selatan District for Period July to December 2015, with

cover letter No. 11/BMR-MLN/III/Ext/2016, dated March 07, 2016

Merbau estate: a. Report of Manpower Within Company, report date May 07, 2015, Registered no. 560/374/DSTK/2015 has

been reported to Head of Social and Manpower Agency of Labuhan Batu Utara District. b. Report of UKL & UPL Semester I, 2015, has been reported to Environmental Agency of Labuhan Batu

Utara District. c. Report of UKL & UPL Semester II, 2015, has been reported to Environmental Agency of Labuhan Batu

Utara District.

Pinang Awan Mill: As mentioned in Procedure PRO-GEN-002, the Sustainability department will be control the documents as mention on the table below, information about list of publicly available document has been uploaded also on



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the company’s website with information as we mentions on the Cr.1.1.1 above.

Management documents such as environmental management document, HCV management document and SIA management document has been setting up as well as its monitoring plan. The report stored on sustaina-bility and EHS officer and publicly available. The organization has established code of conduct, document no. 044/DIR-KP/XII/2015, dated December 15, 2015. The Code of Conduct has approved by Country Head. The document was contains the code of integrity and commitment to ethical behavior in the whole conduct of operations and transactions. The Code of Con-duct was cover for Plantation and Mill of Wilmar Group Indonesia. The code of conduct has been written in the Bahasa Indonesia language, so easily to understand by all levels within the organization. The code of conduct was included: 1. Code of Conduct Principle 2. Conflict of Interest 3. Accurate Records 4. Bribery and Illegal or Unethical Trading Practices 5. Entertainment and Gifts 6. Misuse of Position 7. Insider Trading 8. Confidentiality 9. Restriction on Solicitation 10. Media Relations 11. Trade Union, Poitical and Social Activities 12. Installation of Illegal Computer Software 13. Reporting, Cooperating with Investigations and Discipline in Connection with Violation.

The company’s Code of Conduct consists of three principles, i.e.: 1. To avoid conflict of interest. 2. To avoid misuse and / or abuse of position 3. To ensure confidentiality of information and to prevent misuse of information gained through the Compa-

ny’s operations, either to personal gain or for any purpose other than that intended by the Company. There is evidence that the code of conducts has been communicated to all levels of the workforce and opera-tions within the organization, including contracted third parties, e.g.:

• Minute of Socialization of Company Code of ethics and Integrity, held on Apel Pagi Perawatan Divisi I, dated May 19, 2016. Socialization has conducted by Ali Rasiden (EHS Sustainability). The socialization was attended by 75 persons.

• Minute of Socialization of Company Code of ethics and Integrity, held on Apel Pagi Perawatan Divisi II (Afdeling III), and dated May 19, 2016. Socialization has conducted by J. Lumbantoruan (Bina Mitra SDE). The socialization was attended by 66 persons.

Based on interview/discussion with some worker at Merbau Estate and Pinang Awan Mill, was found that the policies has been known and understood by filed operators. e.g.: based on interview results, the gender policy and OHS policy has been known by spraying worker, harvester and one of worker at Perumahan 2 in Merbau Estate. Compliance status: Full Compliance

Principle 2: Compliance with applicable laws and re gulations

Criteria assessed: CR2.1, CR2.2, CR2.3 Criteria not assessed: Findings: The company has list of legal requirement as documented on PRO-GEN-031 and Form for Law and Regula-tion List Register, rev 5, dated 25 Juni 2015, on Occupational Health and Safety, The SOP PRO-GEN-031 and Form for Law and Regulation List Register, rev 5, dated 04 July 2015, on Environment it is contain for



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each specific related available activities in the Pinang Awan Mill, Sei Daun and Batang Saponggol Estates.

There are evidences of compliance to regulation requirements and sighted from some licenses for Estate and Mill which were found to be still valid, as follows :

The SOP PRO-GEN-031 covers all applicable requirements, The SOP states that the identification and evalu-ation is to be carried out 4 (four) times a year and conducted by the each section, and estate and will be com-piled by Legal officer and supported by the Head of Operations / field and other departments within the com-pany organization. Most estate maintains and updates their list of all applicable legal requirements relating to environmental, occupational safety and health, the company plantations, and employment as well as records of internal compliance checks to legal requirement.

During the audit, there was sufficient evidence to show that the mill and estates have taken efforts to comply with all applicable legal requirements. For example, checks of legal documents showed that the mill and es-tates have all their legal documents required to conduct their operations.

PT Perkebunan Milano’s estates and Pinang Awan Mill has a procedure to ensure compliance with relevant legal requirements i.e. SOP PRO-GEN-031. As per this procedure, each division or department head is re-sponsible to identify all legal requirements pertaining to their department, prepare a legal requirement register and ensure compliance to all legal requirements. Checks to ensure accuracy of updated laws is to be done at least once a year, while an evaluation on compliance to legal and other requirements shall be carried out at least twice a year.

The company provides a mechanism for evaluation of implementation and compliance to applicable legal re-quirements in a standard operation procedure i.e. PRO-GEN-031 and Form for Law and Regulation List Reg-ister, rev 5, dated 15 April 2015. There are also procedures which define the mechanism of evaluation of compliance to regulations related to the company's plantation, legislation related to the environment, legisla-tion relating to labor, and regulations related to health and safety. The SOP states that the identification and evaluation is to be carried out 2 (two) times a year and conducted by the each section, and estate and will be compiled by Legal officer and supported by the Head of Operations / field and other departments within the company organization. PT. Milano has had the legality of land either for Mill and estate as follows:

• Pinang Awan Mill HGB No. 1281 / HGB / 22.12 / 95 on the ground for Mill area of 19.09 hectares for a period of 20 years stipulated in the Special situations Image Map No. 33/12 / IV / 1995 dated October 24, 1995 which is located in the village of Aek Batu, District Pinang city, Labuhan Batu district. HGB endorsed by the Head Office of the National Land Agency of North Sumatra Province. HGB is valid for 20 years effective since February 14, 1996 until February 13, 2016. The Company currently being applies for an extension the current process where the National Land Agency Labuhan Batu District has sent a letter of application for extension of HGB to the National Land Agency Province with the letter number 1441 / 14-2300 / X / 2015 dated October 26, 2015.

• Batang Saponggol Estate has permission HGU through BPN Decision No. 83 / HGU / BPN / 95 date December 13, 1995. Based on the Land Book is mentioned with the permission of the concession pe-riod of 25 years and will expire on 11 April 2021. The concession is approved by the Decree of the BPN area of 1,749.43 ha

• Sei Daun Estate has a BPN Decree No. 15 / HGU / BPN RI / 2013 date February 15, 2013 about granting extension of time period of the concession on behalf of PT. Milano plantations on land in South Labuhan Batu Regency, North Sumatra province, Under the Land Book is mentioned with per-mission HGU period of 25 years and will expire in December 2038. The concession is approved by the Decree of the BPN area of 2,568.37 ha. The company has a business license plantations for the cultivation of oil palm (IUP-B) with the number: 525.26 / 44/2010 dated February 24, 2010 with an ar-ea of 2,493.19 ha located in Pengarungan village, District Torgamba. There is a difference area be-tween the IUP-B with the latest concession area of 75.18 Ha. It is because differences in the measur-ing instrument at the time of reassessment for granting the extension of the right to cultivate. It has been described in the letter of the decision to grant an extension of the right to cultivate. This case raise as observation

• Merbau Estate has a BPN Decree No. 20 / HGU / BPN RI / 1996 dated May 31, 1996, on behalf of PT. Milano plantations on land in South Labuhan Batu regency, North Sumatra province. Under the Land Book is mentioned with permission HGU period of 25 years and will expire in August 2021. The



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concession is approved by the Decree of the BPN area of 974.77 ha The company has map of HGU pillars. Based on the map, Sei Daun Estate has 82 pillars and Merbau estate has 10 pillars. Based on field visit, the company maintenance the pillars with well. The company has proce-dure of HGU pillars maintenance (SOP-BM.LING-007 revision 00 effective date November 03, 2011). In the procedure described that monitoring of pillars conducted every 3 months. The company has regularly monitor-ing schedule every 3 months.

Since 2014 – 2016 there are no conflicts over land in Pinang awan Mill, Batang Saponggol Estate, Sei Daun Estate and Merbau Estate.

Community relations with the company PT. Milano well established and communication with the companies represented by the village government.

There is no evidence that the company has carried out their operations in a manner that diminished the legal or customary rights of other users especially the local community’s surrounding the company’s area. Planta-tions already existed long before the existence of community`s. Company has a documented procedure on conflict resolution and compensation, document no. PRO-BM.GEN-007, applied since 01 July 2009, which contains a flowchart on the company’s conflict resolution mechanism. The company has conducted an assessment together with a social consulting company to identify all existing traditional and or customary rights of other users within all the company’s area, and some existing traditional rights of local communities were identified at Merbau Estate, Batang Saponggol Estate and Sei Daun Estate, such as grazing, fishing, gathering and sale of mushrooms and vegetables, access to roads, and main-tainance of graveyards. All these are activities allowed under agreed conditions between the company and the local communities. There is no specific FPIC procedure, The company has documented meeting minutes of an event conducted by the company on since year 2009 at Merbau Estate in order to socialize the results of the company’s social impacts assessment as well as discuss the traditional rights of the land users. During this meeting, maps of appropriate scale showing the traditional rights of the land users were developed with the participation of the invited local communities. Socialization regarding the company’s recognition of existing traditional and or customary rights was also performed at Sei Daun estate and at Batang Saponggol Estate. Head of village from respective villages assigned as community representative for each negotiation process accompanied by community’s leader, this is confirmed by the communities during onsite interview and stake-holder consultation. Compliance status: Compliance with observation

Principle 3: Commitment to long-term economic and f inancial viability

Criteria assessed: CR3.1 Criteria not assessed: - Findings: The company has established projection periods management plan is valid from 2015 until 2020 for Estate and Mill. The company’s budget included expenses for corporate social responsibility (CSR) and environmen-tal activities, but there were no details on the CSR and Environmental Management activities that would be conducted by the company within 1 cycle’s period. Management plan including budget for all area stated con-sidering planting years, non-planted areas, i.e. HCV, conservation areas, fragile soils, enclaves. Crop projec-tion = Fresh Fruit Bunches (FFB) yield trends , Mill extraction rates = Oil Extraction Rate (OER) trends for year



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2015 to 2020 , Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; Forecast prices for next 3 years considering trend of FFB and Oil price within last 5 years.

Every year the company make yearly budget according to long term business plan, the actual result will be used for long term business annual review. To ensure financial viability in the certain time at least 5 year pe-riod, the company provides a mechanism for evaluation from management plant every month from every es-tate, mill and every user of budgets, evaluation management plant related realization program and budget i.e.

PT Perkebunan Milano has developed a 5 year replanting program from year 2016 to 2021. The replanting program can be seen in the table below:

Estate Program replanting (Ha)

2016 2017 2018 2019 2020 2021

Sei Daun 107.93 99.90 132.00 103.90 75.06 -

Batang Saponggol

82.07 - - 44.93 109.95 -

Marbau 85.42 69.77 - 51.91 - -

CDE - 270.62 - - - -

Total 275.42 440.29 132.00 200.74 185.01 -

The actual replanting on Merbau Estate i.e. year 2014 is 50.72 ha, year 2015 is 56.41 ha and year 2016 is 85.42 ha

Compliance status: Full compliance

Principle 4: Use of appropriate best practices by g rowers and millers

Criteria assessed : CR4.1, CR4.2, CR4.3, CR4.4, CR4 .5, CR4.6, CR4.7, CR4.8 Criteria not assessed : - Findings: The organization has established procedures and work instructions both for Mill and Estate as listed in the document “Daftar Induk Dokumen”, document no. FRM-GEN-019. The SOP was cover key processes, both for Mill and plantation, i.e: harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, and other supporting SOP’s. All of procedures have written in Bahasa Indonesia so easily to understand by all workers at all levels within the organization. Copies of the procedures has available at point of use, for example based on verification at Sei Daun Estate, Merbau Estate and Pinang Awan Mill, found that the pro-cedures was available. The organization has established work instructions for all estates activities including land clearing, mature and non-mature planting management, manuring, transportation, pest management, soil conservation, hazardous chemical use, etc. The organization was defined mechanism to ensure that all procedures and work instruc-tions available at point of use. Records of distribution of documents are available, e.g.: “Tanda Terima Doku-men” such as: 1. Document No. SOP-EST-013, Rev. 03, issued dated November 24, 2015, namely: SOP Deteksi Sensus

Hama dan Penyakit. The document was distributed to R&D, Field SDE, PGA SDE, Field BSE, PGA BSE, Filed MBE, PGA MBE, Field CDE, and PGA CDE.

2. Document No. SOP-GEN-013, issued dated July 29, 2015, namely: SOP Perlindungan Flora dan Fauna. The document was distributed to Field SDE, BM SDE, PGA SDE, Field BSE, BM BSE, PGA BSE, Filed



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MBE, BM + PGA MBE, Field CDE, and BM/PGA CDE.

The SOP Purchase of FFB, doc. No. SOP No. 001 / TBS / IV / 2014 has been revised, become document no. 001/TBS-SOP/VIII/2015, SOP Name Pembelian Tandan Buah Segar (TBS) Kelapa Sawit, Effective date Agustus 10, 2015. Section D (Policy) of the SOP has been revised, i.e.: to ensure that all received FFB by the organization has not broken the applicable legal and regulations, e.g: FFB sources not come from robbing, forest area, and etc. There is evidence that the SOP has been communicated to FFB Suppliers, e.g.: records of attendance list of “Sosialisasi SOP Pembelian TBS dan MoU Jual Beli TBS” dated August 13-14, 2015. The socialization was conducted by Mr. Rustam Efendi (operasional, located at Rantau Prapat Ramp and at-tended by 18 suppliers.

The company has a master list of all SOPs, namely Daftar Induk Dokumen, document no. FRM-GEN-019. The document consists of information such as document no., type of document, document’s name, docu-ment’s categories, and revision status. Type of document consists of Policy, Manual, Procedure, and SOP. Meanwhile, the status of revision can be using for keep track of revisions. All of procedures SOP and other documents written in Bahasa Indonesia language so easily to understand by all persons at all levels within or-ganization. Mechanism for record of training of all levels has defined in procedure no. PRO-GEN-002 (Rev.03, dated May 07, 2012) namely Procedure of Control of Record; Internal control (e.g. audit and review, field inspection) pro-cedure in place to monitor consistent implementation of SOPs has defined in procedure no. PRO-GEN-003 (Rev.03, dated June 05, 2014), namely Procedure of Internal Audit. The organization has assigned trained and competent personnel as Intenal Auditor to carry out internal control activities through Decree No. 001/Reg.1/ Int/VII/2015, Regarding Assignment of Internal Auditor PT Perke-bunan Milano, was signed by Sr. HRR Manager, dated July 2015. The internal auditor was assigned consist of 7 (seven) auditors. There is evidence that audits has carried out regularly covering implementation of all the SOPs and covered all estates and mill. The last audit has onducted at February 22-26, 2016. The mechanism to address non-compliance and corrective action for continuous improvement has defined in procedure no. PRO-GEN-004 (Rev. 01, dated May 01, 2010) namely Procedure of Corrective and Preventive Action and procedure no. PRO-GEN-006 (Rev. 02, dated June 01, 2014) namely Procedure of Management Review.

The company has maintained records of internal audit results and records of corrective actions and improve-ment taken. The records have summarized in document “Laporan Ketidaksesuaian dan Tindakan Perbaikan”, FRM-GEN-004 (rev.04). Based on the records, founds, e.g.:

• Internal audit has conducted at Pinang Awan Mill at February 24, 2016; audit standards are RSPO and ISPO; auditor name Hadia Mufti Lubis; There is 18 NCRs raised during that internal audit and there is evidence that correction and corrective actions has taken to rectify nonconformities and prevent recur-rence. There is evidence that all actions was verified and closed.

• Internal audit has conducted at Merbau Estate at February 26, 2016; audit standards are RSPO and ISPO; auditor name Ali Rasiden; There is 19 NCRs raised during that internal audit and there is evi-dence that correction and corrective actions has taken to rectify nonconformities and prevent recur-rence. There is evidence that all actions was verified and closed.

• Internal audit has conducted at Batang Saponggol Estate at February 22, 2016; audit standards are RSPO and ISPO; auditor name Hadia Mufti Lubis and Nasiman; There is 17 NCRs raised during that internal audit and there is evidence that correction and corrective actions has taken to rectify noncon-formities and prevent recurrence. There is evidence that 1 (one) NCR has not closed yet, that there is no records of meeting with the impacted parties due to replanting plan at 2016. The dateline has been proposed on August 2016.

• Internal audit has conducted at Sei Daun Estate at February 23, 2016; audit standards are RSPO and ISPO; auditor name Ali Rasiden; There is 13 NCRs raised during that internal audit and there is evi-dence that correction and corrective actions has taken to rectify nonconformities and prevent recur-rence. There is evidence that all actions was verified and closed.

The organization has established an SOP for third-party FFB sourcing, i.e: 1. “SOP of FFB Receiving, Doc. No. SOP-MILL-001, Rev. 04, dated May 08, 2012. The SOP defined to en-

sure that all received FFB (own estates and third parties estates) at Pinang Awan Mill in accordance with defined requirements.



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2. SOP of FFB Purchasing, Doc. No. SOP-MILL-044, Rev.-, dated November 28, 2009. The SOP defined to ensure that FFB purchasing carried out in effective and efficient way and in accordance with applicable requirements.

The organization has list of updated FFB Supplier, both of internal parties and third-parties, and recorded 56 suppliers totally, consist of 2 (two) internal suppliers and 54 (fifty-four) third-parties suppliers. There is evi-dence that the Pinang Awan Mill has daily and summary records and maintained records of volume and ori-gins of third-party FFB received. Daily records were available on document of Daily Report FFB, and found contained data of volume and ori-gins of third-party FFB. These records can be verified against the available documents, i.e.: Surat Pengantar Buah (SPB) (FRM-EST-010), Weight Bridge Slip (FRM-MILL-004) and Berita Acara Sortasi (FRM-MILL-003). FFB supplies from smallholders are either supplied directly to the mill by smallholder located nearby the mill, or through FFB collectors (middlemen or FFB agents). PT Perkebunan Milano has an FFB transit ramp locat-ed at the Rantauparapat region to collect FFB supplies from smallholders that are located far from Pinang Awan Mill.

The third party types supply FFB to Pinang Awan mill are categorized as follow: 1. Direct Supply to Pinang Awan Mill

• Independent out grower direct supply to Pinang Awan Mill • Independent out grower supply FFB trader (agent) then FFB agent to Pinang Awan mill

2. Direct Supply to Ramp Rantauparapat then to Pinang Awan Mill • Independent out grower direct supply to Ramp Rantau Parapat • Independent out grower supply FFB trader (agent) then FFB agent to Ramp Rantau Parapat

before to Pinang Awan mill. The company has agronomy guidance and procedure for plantation 2015. In the procedure there is procedure for fertilization. The company has been conducted fertilization in accordance with exixting procedure.

The company has records of organic and an organic fertilization until December 2015 and January until April 2016. Recording the realization of fertilization showed that fertilization activities carried out by the work pro-gram of fertilization and the recommended dose of fertilizer. Each estate has realized recordings of fertilization per tonne of FFB production i.e:

Sei Daun Estate

Year 2015 (January until December) • RP; total realized up to December 2015 amounted to 24,244 kg, with FFB produced 66,005.22 tons; so

the application of fertilizers per tonne of FFB at 0.36 kg / tonne of FFB • MOP; total realized up to December 2015 amounted to 511,100 kg, with FFB produced 66,005.22 tons;

so the application of fertilizers per tonne of FFB at 7.74 kg / tonne of FFB • Dolomite; total realized up to December 2015 amounted to 22,020 kg, with FFB produced 66,005.22

tons; so the application of fertilizers per tonne of FFB at 0.33 kg / tonne of FFB • Borate; total realized up to December 2015 amounted to 14,280 kg, with FFB produced 66,005.22 tons;

so the application of fertilizers per tonne of FFB at 0.21 kg / tonne of FFB • NPK Super; total realized up to December 2015 amounted to 1,337,582 kg, with FFB produced

66,005.22 tons; so the application of fertilizers per tonne of FFB at 20.26 kg / tonne of FFB • SOA; total realized up to December 2015 amounted to 556,340 kg, with FFB produced 66,005.22 tons;

so the application of fertilizers per tonne of FFB at 8.42 kg / tonne of FFB

Year 2016 (January until April)

• Dolomite; total realized up to April 2016 amounted to 21,305 kg, with FFB produced 17,535.35 tons; so the application of fertilizers per tonne of FFB at 1.21 kg / tonne of FFB

• NPK Super K 13-8-27+0.5B; total realized up to April 2016 amounted to 675,050 kg, with FFB produced 17,535.35 tons; so the application of fertilizers per tonne of FFB at 38.49 kg / tonne of FFB

• Kieserite; total realized up to April 2016 amounted to 15,945 kg, with FFB produced 17,535.35 tons; so



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the application of fertilizers per tonne of FFB at 0.90 kg / tonne of FFB

Merbau Estate

Year 2015 (January until December) • SOA; total realized up to December 2015 amounted to 171,299 kg, with FFB produced 22,382.13 tons;

so the application of fertilizers per tonne of FFB at 7.65 kg / tonne of FFB • RP; total realized up to December 2015 amounted to 28,919 kg, with FFB produced 22,382.13 tons; so

the application of fertilizers per tonne of FFB at 1.29 kg / tonne of FFB • MOP; total realized up to December 2015 amounted to 151,986 kg, with FFB produced 22,382.13 tons;

so the application of fertilizers per tonne of FFB at 6.79 kg / tonne of FFB • Dolomite; total realized up to December 2015 amounted to 28,354 kg, with FFB produced 22,382.13

tons; so the application of fertilizers per tonne of FFB at 1.26 kg / tonne of FFB • Borate; total realized up to December 2015 amounted to 4,707 kg, with FFB produced 22,382.13 tons; so

the application of fertilizers per tonne of FFB at 0.21 kg / tonne of FFB • NPK Super K; total realized up to December 2015 amounted to 477,057 kg, with FFB produced

22,382.13 tons; so the application of fertilizers per tonne of FFB at 21.31 kg / tonne of FFB • Kieserite; total realized up to December 2015 amounted to 9,533 kg, with FFB produced 22,382.13 tons;

so the application of fertilizers per tonne of FFB at 0.42 kg / tonne of FFB

Year 2016 (January until April)

• NPK Super K; total realized up to April 2016 amounted to 204,489 kg, with FFB produced 4,807.91 tons; so the application of fertilizers per tonne of FFB at 42.53 kg / tonne of FFB

• Kiserite; total realized up to April 2016 amounted to 21,476 kg, with FFB produced 4,807.91 tons; so the application of fertilizers per tonne of FFB at 4.46 kg / tonne of FFB

The company has procedure for leaf and soil sampling. The procedure state that leaf analyse conducted every once year and soil analyse conducted every 5 years. The company has records of leaf analyze that has been conducted on April 2015 by Research and Development PT Sentana Adidaya Pratama Agrochemical Labora-tory. This analyze used as fertilization recommendation for year 2016. Soil analyze has been conducted on November 2014 by EMU Laboratory Wilmar International Plantation. The result of analyze used as fertilization recommendation and fertilization program.

The company has records of FFB application. Sei dDaun Estate has summary of EFB application until De-cember 2015 namely 1,234.01 ha with total empty fruit bunches (EFB) as many as 49,363.36 tonnes and year 2016 (until April) namely 313.47 ha with total EFB as many as 12,541.49 tonnes.

The mill conducted effluent application on Sei Daun Estate from January until April 2016 i.e: January (12,727 m3), February (12,371 m3), March (13,038 m3) and April (11,907 m3). For Merbau Estate not conducted EFB application.

The company has map of soil semi detail with scale 1:40,000 (Sei Daun Estate) and 1:30,000 (Merbau Es-tate). Based on field visit at Sei Daun Estate and Marbau Estate, the location is flat so the company not has management plan for location with steep areas.

The company has records of plan and realization of road maintenance year 2015. Realization of main road maintenance year 2015 as long as 403,060 (Sei Daun Estate) and 8,295 meter (Merbau estate) meter and collection road as long as 399,090 meter (Sei Daun Estate) and 14,540 meter (Marbau Estate). For year 2016 (until April), realization of main road maintenance as long as 64,700 meter (Sei Daun Estate) and 810 meter (Marbau Estate) and realization of collection road maintenance as long as 62,440 meter (Sei Daun Estate) and 5,770 meter (Marbau Estate)

The company has management and monitoring of peat soil for palm oil plantation (SOP-EST-028 revision 00 effective date February 01, 2015). In the procedure described about the thickness of the peat, the nature of maturity, peat subsidence, nature and type of peat, a drainage, canal maintenance, water management. In the procedure is also explained that the water level is maintained at 60 cm - 80 cm. Based on soil analyze which has conducted by Param Agricultural Soil Surveys (M) Sdn Bhd on August 2008, no peat soil on Sei Daun es-



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tate and Merbau Estate. The company does not conducted drainability assessment before replanting because the company has not peat soil. The company does not have a margial soil (sandy, low organic matter, acid sulphate soil) so it does not have a management plan on marginal land.

The company has water management plan of PT Perkebunan Milano year 2016. The water managemen plan includes water sources identification, identification for activity that used water in large number, calculation of estimates of water use. The company has report related to realization of calculation of water use and water quality testing.

The company has data of water sources identification on housing location i.e. artesian well. The company car-ried out on water protection with conducted quality water testing. The company has procedure for riparian pro-tection. The company has been implemented riparian protection with planting of vertifer grass, prohibit sign-board installment.

The company conducted liquid waste management with used IPAL. The company also conducts testing of liq-uid waste quality to Sucifindo laboratory. Based on testing result the quality of liquid waste still below the threshold for COD, BOD, pH and other parameters. The mill has land application license based on Head De-cree of Capital Investment and Legal Service Board Labuhan Batu Selatan District with number 503/424/BPPTPM/2013 dated 27 December 2013.

The company has records of used water per tonnes FFB with details:

• Year 2015: the use of water for 1 year as many as 289,129 m3 with FFB is processed as many as 296,761 tonnes so that water use per tonne of FFB is 0.97 m3 / tonne FFB

• Year 2016 (until April): the use of water until April as many as 75,158 m3 with FFB is processed as many as 69,985 ton so that water use per tonne of FFB is 1.07 m3 / tonne FFB

The company has IPM plan which stated in budget of year 2016 and outlined in the monthly work program. IPM plan is made for each pest identified. The plan consists of pest detection, pest census and pest control. The company used pest control such as biologically (planting of Turnera surbulata) and Tyto alba. Sei Daun estate has owl nest as many as 18 pieces and Merbau estate has owl nest as many as 10 pieces. The company has detection and pest census procedure (SOP-Est-013 revision 03 effective date November 24, 2015). In the procedure explained about methodes for conducted detection and pest census so can be known the level attacks and how to control when there is an attack. Sei Daun Estate and Merbau Estate has records of pest result from January until April 2016. Based on result records of pest detection that has been conducted, there is low attack under the threshold but not conducted controlling. In the procedure explained if any attcaks 10-20% sample of tree so that continued to IPM census. Up to the audit carried out, based on the result of pest detection that there has never been performed control-ling for the level of attacks because there is a low level attacks. The company has been conducted training for pest office which involved in the pest control. Material of train-ing i.e how to detection, how to census, sampling and action of control. Sei Daun Estate conducted the latest training on March 24, 2016 and Marbau Estate on April 17, 2016. Evidence of training such as attendent list of participant and material of training. Company has letter from Office of Social, Labor and Transmigration of District Labuhan Batu Selatan, number 560/135/DSTKT/2016, on February 24th, 2016. Which allowed PT Perkebunan Milano to use Regent 50 SC, Bravo 50 EC, Rhodiamine 720 WSC, Glisat 480 SL, Winson 20 WG, GArlon 670 EC, Cozeb 80WP, Capture 50 EC, Petrokum 0.005RB, in Team 150SL, Cymbush 50 EC, Dipel WP, Dithane M45, Dense 520 EC, Agris-tik, Tiara 20 WDG, Basta 150 WSC,@20 Liter, Tikumin 0,0375 BB, Glinat 150SL, Marshall 5GR, dan BM Zeb-co 80 WP, dengan ketentuan diantaranya.

Company has record of active ingredient, LD 50 area treated, amount of active ingredients applied per ha and number of applications), as record in ‘Analisa Pemakaian bahan Aktip per Ha tahun 2016”, during 2016 com-pany only use Glisat, Tiara, Glinat, Tikumin, Agristick and BM Zebco. For examples while visit in Marbau Es-tate Afdeling 1, Blok 36, there is circle spraying activity for Immature tree using Glinat and Tiara. Application dosage is 120 cc/kap.



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Company has plan to reduced usage of pesticide Trend 2013 to 2015, compare to plan 2016. There is usage of Health Organization Class 1A or 1B, but this agrochemical registered in Indonesia Agrochemical Green book (Tikumin and Sime Ebor Bites) during year of 2015 and April 2016, only for specific purpose usage, to spend all this stock. Training regarding spraying technique, usage of PPE, spraying hazardous and mitigation was held in February 12th, 2016 for 17 sprayers and their foreman Mr. Topik Hidayah as Training conducted by Mr. Hadian Supiat-na. As visit in blok 36 all sprayer has equipped by proper PPE such as, Apron, masker, Rubber handgloves, and boots. All sprayers wash themself in washing house at plantation before back home, and take fresh milk which is provide by company before home. All spraying equipment is stored in company.

Base on field visit to Marbau Estate in blok 36, all sprayers has equipped by proper PPE such as, Apron, masker, Rubber handgloves, and boots. All sprayers wash themself in washing house at plantation before back home, and take fresh milk which is provide by company before home. All spraying equipment are stored in company, Marbau Estate Has License for temporary store hazardous waste from 660/45/LH/2014 dated on February 2014 from district government of Labuhan Batu Utara, to keep hazardous waste for 180 days.

Training for spraying operator conducted yearly, for example in year 2016, already conducted on April 07th, 2016 training regarding spraying since circle spraying, selective spot spraying, Weed control, re-entry sign board usage, washing spraying equipment, washing room, and PPE. Training attended by spraying operator and foremen.

All pesticide containers are stored in Temporary store hazardous waste, and treated as hazardous waste. Empty pesticides container sent to licensed collector (Shali Riau Lestari), as hazardous waste regularly. Last submission to collector on January 22nd, 2016 by manifest number 0005921. The company not applied pesticides by aerially. Company implements waste management by separate organ-ic and an-organic waste since office, housing, and plantation activities such as fertilizer application. Organic waste and an-organic waste dump to landfill in plantation separately.

Medical surveillance for pesticide operators held in 11 December 2016, some of them has exceed parameters, and company already forward to advanced medical check, and company has remove them to non-chemical job. Base on interview with spraying operator in afdeling-1 Marbau Estate, all sprayers has experience medical surveillance. Including spraying foremen. One them are detected has a health problem related to pesticide, company already remove her to another job which is not related to pesticide. There is no job, undertaken by pregnant or breast-feeding women. There is no change to Health and Safety policy. Health and Safety plan has developed by assessing all activi-ties in PT Perkebunan Milano. The OSH policy includes documented objectives and targets i.e. comply with the company’s OSH procedures, committed to wearing of Personal Protective Equipment (PPE) at work sites, and manage potential work risks at the site.

Pinang Awan Mill has identified and documented Occupational Health and Safety (OHS) risks for all Mill activi-ties, although this was documented under its 02 January 2016.

Company provides PPE for all activities both plantation and Pinang Awan Mill, including Laboratory, also Shower/Eye wash.

Also in Pinang Awan Mill an inconsistent in the work permit system implementation was found as the welding process work in the mill doesn’t have a permit and the work process was nearly finished. This was also raised as an observation.

Company has identified Mr. Jubeir Rangkuti as EHS staff and Mr. Ali Rasiden Daulay, SH as safety committee secretary. Company conduct regular meeting at monthly base, for example meeting on January 25th, 2016 dis-cussed about PPE availability, training OHS, and inspection of warning signboard. Minutes of meeting was recorded and reported to Management and District Government. Environment sanitation, housing security, ac-



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cident rate, spillage handling.

Company has develop document of Hazard Identification, Risk Assessment and Risk Control Batang Saponggol, Sei Daun Estate and Merbau Estate and Mill Pinang Awan, dated January 06th, 2016 for all estate activities including spraying, manuring, harvesting, workshop activities, generator, truck transportation, chemi-cal and material storage, and waste handling.

For Mill Pinang awan acivities including FFB receiving and shorting, waste handling, Biogas engine operation, Loading Ramp, processing, Engine room, boiler station, water treatment plant, dispatching, warehousing, and laboratory operation.

Working station environment measurement for Ambien air, Noisy, land Vibration, lighting, odor, and else was held on October 24th, 2015 by independent accredited laboratory.

Training related safety working conducted in Milano, as record in minutes of meeting of April 20th, training re-lated to safety working and First aid action, training held for Maintenance, processing operator, shorting oper-ator, compounding operator, QC/lab operator and nurse.

Minutes of meeting of April 30th, 2016 for training of Accident investigation which are attended by Admin Head, Processing Head, Security Head, security, Maintenance clerk, Maintenance operator, personal and General affair, store man, and EHS.

Company has identified Mr. Jubeir Rangkuti as EHS staff and Mr. Ali Rasiden Daulay, SH as safety committee secretary. Company conduct regular meeting at monthly base, for example meeting on January 25th, 2016 dis-cussed abpot PPE availabiity, training OHS, and inspection of warning signboard. Minutes of meeting was recorded and reported to Management and District Government. Environment sanitation, housing security, ac-cident rate, spilage handling,

P2K3 for Marbau Estate has reported regularly to District Government of Labuhan Batu Utara District, the last report submitted in April 2016. Report content including regular meeting and discussion regarding health, safe-ty and welfare of employee, as minutes of meeting on March 29th, 2016.

In Mill Pnang Awan, Mr. Febri Afiatsyah assigned as responsible person for Health and safety. Regular meet-ing conducted to discuss any issue related to health, safety and welfare, as documented in minutes of meeting January 22nd, 2016 and February 29th, 2016.

The company has an emergency response procedure documented under Standard Operating Procedure No. PRO-GEN-013 Rev 05 dated 15 April 2015, including identification of potential emergency situations (fire, ac-cidents, flood, explosion, and chemical leakage) and a flowchart for Handling Fire Emergencies. Pinang Awan Mill has records of emergency response training and simulation on 22 May 2015 for over 50 workers, as well as land burning simulation on 22 May 2015 for 35 estate division staffs. It was confirmed through interviews with three harvesters that they had attended the emergency response training. Notes of the training results are maintained, including the steps of the accident & emergency response procedure. Records of other OSH train-ing, i.e. for first aid and management of hazardous waste, are available as described under CR4.8. Fire emer-gency training for Merbau Selatan Estate and Sei Daun was conducted on February 05th, 2016 for 46 staffs.

Emergency situation drill conducted in February 06th, 2016 in Mill area. Fire fighting simulated by all parties in Mill organization, since Mill Manager, admin head, security, Store, processing, Paramedic, Weighing Bridge operator, Maintenance, Electric, Mechanic and EHS.

There is no accident recorded since 2012 until the audit day as reported to district government of kabupaten Labuhan Batu Selatan.

During site visits, field executor (supervisor) in Sei Daun, Merbau and Batang Saponggol Estates were found having brought first aid kits to the field, and those are located at other locations such as estate office, work-shops, chemical storehouse, etc. It was observed that the first aid kit at Division 1 of Sei Daun office a com-plete pack of first aid kit. However, at Merbau Estate phase 3, harvester and manure foreman also have a first aid kit.



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All estates provide National Employee Social Security (BPJA) to permanent employees, as sighted from sam-pled payment slips of 2 harvesters of Merbau Estate, as verified with interview. According to the company’s Work Instruction for BPJS while another 2% payment is made through regular deduction of their basic salary. It has been verified paid correctly. As for contract workers, Sei Daun Estate deducts the amount required for their insurance against payment to the respective contractors, and pays this insurance amount directly to the relevant authority to ensure that all contract workers are covered with insurance.

All workers are provided with medical care, including daily workers. Company has record of Lost time injuries of accident, total reportable accident are 32, with total lost time during year 2015 was 97 days for Estate only, but for Mill Pinang Awan There is no accident recorded since 2012 until the audit day as reported to district government of Labuhan Batu Selatan District.

The organization has defined Training Matrix and Training Program for 2016, that approved by DM on January 2016. The training matrix 2016 contains information functions/positions and type training need. Meanwhile, the 2016 training program consist of:

• Soil and leaf analysis

• Pest Census

• FFB Cencus Technique

• Social impact management

• Quality of Harvesting

• Manual and Mechanic Fertilizer

• Emergency Response

• First Aid

• Accident investigation

• Emergency Response at Store

• RSPO

• ISCC

• ISPO

• Material Safety Data Sheet (MSDS)

• Method of GHG Data Input

• Wilmar Core Value andn Foremanship Training

• Harvest

• Personal Protective Equipment (PPE)

• Perjanjian Kerja Antar Waktu

Some of training has been realized, i.e.: are Harvesting Quality at April 2016, Accident Investigation at May 2016 and MSDS at May 2016.



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Merbau Estate:

Merbau estate has document “Program Pelatihan dan Pengembangan SDM for 2015 and 2016. There is rec-orded that some training has been successfully conducted during 2015, i.e.:

• Soil and leaf analysis at April 14, 2015

• Technique of Pest Census at April 14, 2015

• Technique of FFB Cencus at April 14, 2015

• Social impact management, at June 19, 2015

• Emergency response at Store, at November 17, 2015

• ISCC at November 17, 2015

• MSDS at November 17, 2015

Meanwhile, has recorded some training successfully conducted in 2016, i.e.:

• Identification aspect and impact assessment & OHS, at January 28, 2016

• First aid, at March 28, 2016

• Technique of Pest Census at April 7, 2016

• Technique of FFB Cencus at April 7, 2016

• Manual and Mechanic Spraying and Fertilizer at April 7, 2016

• Soil and leaf analysis at April 7, 2016

Pinang Awan Estate:

Training & Development of Human Resources Program year of 2015 (FRM-HRD-046), i.e.:

1. Socialization of Electrical and Instrument SOP realized on February

2. Trainng of DOBI, has been realized on February

3. Training of Emergency Response Team (TPKD) realized on February

4. Training of RSPO, realized on April

5. Training New Version of P&C RSPO/SCCS & E-trace,realized on April

6. Traning Accident Investigation, realized on August

7. Interpretation of P&C RSPO/SCCS Seminar realized on September

8. Traning of Chemical Handling (Hazardous materials and Hazardous Waste) realized on October

9. Principle & Criterion of ISCC, GHG & Job Description realized on September

10. First Aider Training for New Employee, realized on September



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11. Basic of OHS for New Employee, realized on September

12. Socialization of Gender Comittee for New Employee, realized on September

The organization has carried out identification of training need as seen on Document of Training Need Identifi-cation of 2016 (FRM-HRD-045. Then, based on the identification results, the organization develops training and development program. The training and development program of human resources for year 2016 docu-mented in form no. FRM-HRD-046, and consist of:

1. OHS Expert on Electrical, realized on February 2016

2. Wilmar Core Value (WCV). realized on March 2016

3. Emergency Response Plan, realized on February 2016

4. First Aider for New Employee, realized on April 2016

5. Basic OHS for New Employee, realized on April 2016

6. Incident investigation for new employee, realized on April 2016

7. First Aid Traning, realized on February 2016

8. RSPO P&C, SCCS dan ISPO, realized on February 2016

9. Domestic Waste Management to Housing, realized on April 2016

10. Socialization LPG for housewife, realized on April 2016

Merbau Estate:

There is evidence that training records available and maintained, such as meeting minute, attendance list, training evaluation, and personal map. The personal map has contained records of training for each employ-ee for staff levels (Golongan/Class III Up) only. The personal map can be access in the WIP PGA System Ap-plication. However the personal map for class II has not available

Training records golongan/class II - employee has not documented appropriately at Merbau Estate. This is raised as observation.

Pinang Awan Mill:

Training record of each employee available, i.e.:

• Incident Investigation Training (internal training), dated April 30, 2016, held on Meeting Room of POM Pinang Awan. The training was attended by 12 persons

• Basic OHS & First Aid Training (internal training), dated April 20, 2016, held on Meeting Room of POM Pinang Awan. The training was attended by 12 persons

• Emergency Response Team (internal training), dated February 06, 2016, held on Meeting room Mess POM Pinang Awan. The Training was attended by 24 persons.

• Basic OHS internal training for new employee, dated Seoptember 08, 2015, held on Meeting Room PKS. The training was attended by 13 persons

Compliance status: Compliance with observation



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Principle 5: Environmental responsibility and conse rvation of natural resources and biodiversity

Criteria assessed: CR5.1, CR5.2, CR5.3, CR5.4, CR5. 5, CR5.6 Criteria not assessed: Findings: Sei Daun Estate: The organization has been conducted EIA and well known as UKL and UPL (Environmental Management Means and Environmental Monitoring Means). The UKL & UPL for Sei Daun Estate has been conducted in accordance with scope of operations of the organization and has approved by BLH (Environmental Agency) of Labuhan Batu Selatan District, according to Decree no. 660/53.a/BLH/2/2012, dated February 06, 2012. Its mean the Sei Daun Estate’s EIA has been conducted and documented according to local and national legal and requirements. The EIA was cover for area 2,500 ha and production capacity 22 tonne FFB per day in ap-proximately. The UKL & UPL was cover phases, i.e.: preparation (pre-construction), construction and post-construction (operational). The pre-construction phase consist of processes, i.e.: land acquisition (2,500 ha), Licemsing (2,500 ha), determination of border of land areal (2,493.19 ha), and development documents of UKL and UPL. The construction phase (physical development) consist of land clearing (907.20 ha), workers (441 persons), road construction (50.38 ha), and office building construction (1 unit), housing for staff (4 units) and workers housing (30 units), Development of infrastructures, such as: Mosque (1 unit), Mess (1 unit), School (1units), Cooperation (1 unit) and etc. The post-construction/operational phase consist of Seedling (3 ha), preparation of plants (2,412.17 ha), palm oil plants (1,908.2 ha), harvesting (22 tonne per day), FFB transportation (14 units of truck) dand estate maintenance (500 ha). The EIA also has taking into account water usage (60 M3 per hour), energy (90 KVH), Fuel (12,000 liter per month) and Oil (200 liter per month). Merbau Estate: EIA, namely UKL and UPL (Environmental Management Means and Environmental Monitoring Means) for Sei Daun Estate has been conducted according to scope of operation and has been approved by authority institu-tion, i.e.: BLH (Environmental Agency) of Labuhan Batu Utara District, according to Decree no. 660/028/BLH-3/2012, dated January 25, 2012. Its mean the Merbau Estate’s EIA has been conducted and documented in accordance with local and national legal and requirements. The EIA was cover for area 1,012.5 ha and pro-duction capacity 50 tonne FFB per day in approximately. The EIA was cover phases, i.e.: preparation (pre-construction), construction and post-construction (operation-al). The pre-construction phase consist of processes, i.e.: land acquisition (1,012.5 ha), licensing (1,012.5 ha), determination of arel/land border (974.77 ha), and development of UKL and UPL documents. The construc-tion phase (physical development) consist of land clearing (907.20 ha), workers (130 persons), road develop-ment (47,25 ha), and office building (1 unit), staf housing (4 unit) and workers housing (30 unit). The EIA al-so has taking into account water usage (350 M3 per day), energy (46 KVH), Fuel (12,500 liter per month) and Oil (150 liter per month) . Pinang Awan Mill: EIA, namely UKL and UPL (Environmental Management Means and Environmental Monitoring Means) for Pinang Awan Mill have been conducted according to the scope of operation and have been approved by au-thority institution, i.e: BLH (Environmental Agency) of Labuhan Batu Selatan District, according to Decree no. 660/435.a/BLH/2011, dated September 12, 2011. This EIA is revised version due to a plan to process the fi-bre become pellet (pelleting) with capacity 6-9 ton fibre per hour. Its mean the Pinang Awan Mill’s EIA has been conducted and documented in accordance with local and national legal and requirements. The EIA was cover 19,090 m2 of area for Palm Oil Mill (POM) for 60 ton TBS per hour and fibre pelleting from fibre. The type and production capacity are CPO 90,000 tonne per year and Palm Kernel 19,000 tonne per year, pellet 13,500 tonne per year. Water sources for production and domestic will taken from surface water and ground water and water need was estimated as follow surface water 1,000 M3 per day and ground water 320 m3 per day. Meanwhiile, the water needs was predicted as below:

• Production 470 M3 per day, • Boiler 600 M3 per day, and



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• Domestic 250 M3 per day. The Sei Daun and Merbau estates have an environmental management plan as documented in the document UKL & UPL. The UKL & UPL was included the following items: impact sources (activities at all phase and processes), type of impacts (to air, land, water, flora, fauna, and communities), threshold (tolok ukur), means of impact management, location to manage, responsible persons and authority agency as superintending. Sei Daun estate has implemented and reported to authority agency regularly in accordance with legal re-quirements. Some of evidence are:

• Report of implementation of UKL and UPL Semester I 2015 • Report of implementation UKL and UPL Semester II 2015. There is evidence that the Sei daun estate

has monitoring quality of ambient air, water quality (ground and surface water), emission of vehi-clesand etc. The monitoring/test of environmental quality has conducted by accredited external envi-ronmental labaratory, that is Balai Teknik Kesehatan Lingkungan Pengendalian Penyakit (BTKLPP) Kelas I Medan, Direktorat Jenderal Pengendalian Penyakit and Penyehatan Lingkungan, Kementeri-an Kesehatan RI. Based on the test results, all environmental parameters still under threshold value according to legal and requirements.

Merbau Estate has implemented and reported to authority agency regularly according to legal requirements. The evidence are:

• Report of implementation of UKL and UPL Semester I 2015 • Report of implementation UKL and UPL Semester II 2015. There is evidence that the Merbau estate

has monitoring quality of ambient air, clean water, surface water (upstream block 41 & 51), surface water (downstream at block 33 and 39), ground water, emission of vehicles and etc. The monitor-ing/test of environmental quality has conducted by accredited external environmental labaratory, that is Balai Teknik Kesehatan Lingkungan Pengendalian Penyakit (BTKLPP) Kelas I Medan, Direktorat Jenderal Pengendalian Penyakit and Penyehatan Lingkungan, Kementerian Kesehatan RI. Based on the test results, all environmental parameters still under threshold value according toapplicable legal and requirements.

Pinang Awan Mill:

Environmental monitoring has been implemented regularly and reported to the authority institution in accord-ance with legal and other requirements. Environmental monitoring was carried out by acredited laboratory (Environmental Quality Testing Laboratory, BINALAB and Sucofindo). Pinangg Awan Mill has carried out en-vironmental monitoring for Semester II, 2015 for:

1. Ambient air, according to goverment regulation (PP) No. 41 year 1999, conducted once every 6 months. Sample point has taken i.e.: Mill area / in front of office, worker housing area, Biogas area, housing location nearby land application.

2. Emission from fixed sources (sumber tidak bergerak) according to Environmental Ministry Regulation No. No. 07 yera 2007, conducted once every 6 months. Sample has taken i.e: Genset 1, Genset 2, Boiler 1, and Biogass Genset

3. Effluent testing, conducted once every 1 month, according to PermenLH No. 29/2003; the testing has carried out by Sucofindo.

4. Testing of monitoring well, conducted once every 6 month, according to PermenLH No. 29/2003. The testing has carried out by Sucofindo. Sample has taken i.e: Monitoring Well of Non LA, Monitoring Well of LA, and Monitoring Well of Citizen.

5. Testing of soil quality, conducted once per 1 year, according to PermenLH No. 29/2003. The testing has carried out by Laboratory of Soil Science Department and Land Resourcs, Faculty of Agriculture IPB. Test report No. 017/LHP/Lab DITSL/XI/2015, dated November 04, 2015.

6. Noise level test, at engine room biogas, Boiler, Area Sterilier, Engine Room, and Kernel. Some of high-lighted was exceed the threshold value (refer to testing report No. 669-12/Bis/BINA/XII/2015, dated December 15, 2015). However, the organization has defined and implemented appropriate operational control and provides suitable PPE for workers affected.

7. Emission from transportation vehicle, etc. During surveillance audit, there is not revision of identification HCV report that was made by external AKSENTA (member of HCVNI) and PT Perkebunan Milano has HCV management and monitoring plan. The HCV assessment has been conducted to covering all of protected areas, identification of HCV habitats and



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conservation status. The assessment conducted by qualified assessor. The company has map of HCV include in the HCV assessment report. The company has HCV managemen plan for 2016. The company has conducted measures for implemented of management plan and stated on HCV report. Patrol program not only focused on monitoring company's as-sets and illegal activities now but also to monitor identified HCV areas and ensure no wildlife hunting is carried out. PT Perkebunan Milano has carried out socialization of HCV to worker dated on May 2, 2016. All identified HCV 6 areas still exist and are well maintained such as grave complex in Merbau estate, and boundaries of these areas have also been maintained and visible marked. The company has taken actions to protect identified HCV areas or identified potential HCV areas, yellow paint as marking for boundaries of HCV areas are visible and well maintained eg, in Riparian river at block 34, 38 and 49 in Merbau estate. Sign boards regarding no hunting activities were sight and well maintained still visible in all Milano estates and stra-tegic locations such main roads. Hunting is strictly prohibited in HCV area as well as taking of fauna from the plantation and adjacent land. Posters and signs warning of the presence of protected species. The poster con-tains information about all protected species within PT Perkebunan Milano areas, and restrictions on hunting activities. All identified HCV area has been indicated on the HCV map; the map is sufficient and clear. Dedi-cated officer for HCV in PT Perkebunan Milano no change since year 2011.

The company define policy to protect RTE species as stated on Wilmar Sustainibility policy. There is a pro-gram to regularly educate the workforce about the status of the RTE species as well as program to protect RTE species through inspections activities as mentioned on SOP-GEN-013 rev. 02 section 4.3.3 The compa-ny will issuing punishment to all workforces working for the company is found to capture, harm, collect or kill these species. There is no identified HCV set-asides with existing rights of local communities in PT Perke-bunan Milano The mill and all estates have identified all potential sources of wastes and pollution in their Environmental and Safety Aspects and Impacts Identification document prepared in updated year 2016. All estates have a Standard Operating Procedure available for management of domestic wastes generated from housing & offic-es, plastic wastes as well as for hazardous wastes.

Sei Daun estate, Merbau estate and the mill have their own licenses for hazardous waste collection which are confirmed to be valid at explained under CR2.1 above, while Batang Saponggol estate sends their hazardous wastes for collection to Sei Daun estate. Sei Daun estate maintains records of amount of hazardous wastes received from Batang Saponggol estates, as seen from sample receipt records for 7 July 2014 and 29 April 2014. Sei Daun estate maintains records of incoming hazardous wastes in Control Form for Incoming and Outgoing Hazardous Wastes and Inventories of Hazardous Wastes. Hazardous wastes are collected by li-censed contractors PT Shali Riau Lestari, where most recent collection was on January 27th, 2016 with 0005906 for Used Oil.

Mill Pinang Awan waste such as, fiber and Shell reused as biomass for Boiler furnace, while POME processed as biogas to generate electricity power for housing. Company also waste water treatment plant and apply treated waste to land application in Sei Daun Estate. During January 2016 company apply treated waste to land application amount 12,371M3, and in April 2016 company apply amount 11,807M3. Permit for land appli-cation issued by government of district Labuhan Batu Selatan number: 503/424/BPPTPM/2013 date Decem-ber 27th, 2013 for 3 years.

Hazardous waste such as used oil, battery casing, lamp, medical waste, used filter, contaminated Hand-gloves, Empty chemical container, expired chemical and its container, chemical bag, sent to licensed collec-tor. The last shipment to collector completed in January 24th, 2016 to PT Shali Riau Lestari as manifest num-ber 0005907 till 0005913.

Company has temporary hazardous waste permit as Number 503/198/BPPTPM-LS/2016, valid for 5 years since February 01st, 2016. All chemical container sent to Temporary Hazardous Waste from estate Batang Saponggol estate to Sei Daun as recorded in Hazardous Waste Balance in Sei Daun estate as recorded at May 20th, 2016 amount 10 pcs Glisat empty container. Empty container treated as Hazardous waste. Some pesticide uses by company are: Glisat, Garlon, inteam.

All estates and mill have documented SOP defining procedures for management of hazardous waste collec-tion, segregation & disposal control. Merbau estate and Sei Daun estate maintains monthly records of



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amounts of clinical wastes produced. Clinical wastes are sent each month to local hospital for incineration and records of amounts of clinical wastes sent and incinerated are maintained. All estates temporarily store and send other hazardous wastes to the mill for disposal, which has a valid license for storage of hazardous wastes. All hazardous wastes collected are not stored more than 3 months, whether at the estate or the mill. Records of when hazardous wastes are sent to the mill are also maintained. The mill stores hazardous wastes in accordance to legal requirements. However, manifest records of hazardous wastes sold to the hazardous wastes collector do not contain sufficient information to track amount of wastes collected, For example, Mill Pinang Awan:

Mill waste such as, fiber and Shell reused as biomass for Boiler furnace, while POME processed as biogas to generate electricity power for housing.

Hazardous waste such as used oil, battery casing, lamp, medical waste, used filter, contaminated Hand-gloves, Empty chemical container, expired chemical and its container, chemical bag, sent to licensed collec-tor. The last shipment to collector completed in January 24th, 2016 to PT Shali Riau Lestari as manifest num-ber 0005907 till 0005913.

Sei Daun estate has an analysis document of usage of petrol & diesel from year 2011 to 2015 for estate vehi-cles and equipment, including the truck/dump truck, carpool vehicles, school buses, excavators, tractors, power generator, water pump, grader and compacter. The total annual diesel usage was 332.842 liters during year of 2015.

Pinang Awan mill maintains records of energy use and efficiency analysis for year 2016 (up until April) and 2015. The efficiency analysis was prepared using monthly data on FFB processed, CPO produced, fiber and shell produced, turbine energy usage and amount of shell and fiber used for the turbine, including calorie val-ues for shell and fiber and renewable energy usage.

Pinang Awan Mill determine norm for Fossil Fuel usage for loader operation 50 liters per days. Actual usage till end of April 2016 usage anount 9.396 liters.

The company still implemented a Zero Burning Policy for Land Preparation. The company also does not per-mit the use of fire to burn waste materials including garden wastes and packaging materials at the housing ar-eas. Wastes are segregated at source into organic, inorganic, and hazardous (chemical) waste. Even though from on-site visits, it was found that there were some inconsistencies in housing waste disposal methods for certain houses, however most workers and their families are aware of the company’s waste disposal system and that they cannot burn their waste.

The company has installed a fire alarm system at the mill, workshop and other main buildings, as well as con-ducted training on fire fighting and fire drills. Fire extinguishers are the mills and estate offices are also availa-ble and records of maintenance are available. For Merbau estate, about 107 hectares of land were replanted in year 2014 and year 2015, and it was con-firmed from field visits that the replanted areas were already in the existing area of PT Perkebunan Milano and there was no evidence of burning of the areas prior to replanting. The land clearing was carried out through felling and chipping of the old palms. Sei Daun Estate The organization has assessed polluting activities including gaseous emissions and particulate. The docu-mented list of all identified polluting activities is available, i.e.: Identifikasi Aktivitas Sumber Emisi Gas Rumah Kaca (GRK), document no. FRM-GEN-068, rev. 00, dated April 01, 2013. The document was updated at Jan-uary 01, 2016. Based on the document, the list of polluting activities are FFB transfortation, Generators opera-tion, Oil Storage, Fertilizer usage, Fuel storage, Chemical usage for plantation, and EFB application for land fertilizer. Pinang Awan Mill: There is identified activities generating pollution and emission, according to assessment result on January 6, 2015 as recorded on (FRM-GEN-D16) Identification Environmental Aspect and Hazard for Safety and Health; Impact/risk for Environmental and Safety/Health. The list of activities generate pollution and emission in PT Perkebunan Milano and Pinang Awan mill i.e.;

• Effluent pond



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• Operational land application • Operational Engine Bio • Operational Blower Suply Methane

There is identification source of GHG emission as recorded on document FRM-GEN-068 dated January 01, 2016, identified source for PT Perkebunan Milano, i.e:

1. Transportation 2. Genset Emission 3. Oil storage 4. Fertilizer 5. Fuel storage 6. Spraying 7. EFB application

Company has planning to reduce and mitigate GHG emission, e.g. preventive maintenance, reforestation, EFB application for cover crop and fuel such as explain above. The planning objective and target has been defined, basically the company target is maintain all pollution and emission under government and other re-quirement target.

The company using independent third party to monitor all identified pollution and emission as required by EISA document, i.e. Bina Laboratorium North Sumatera province. There is regular monitoring records such as:

• Air emission ambient certificate no. 845-6/U/BINA/V/2015 • Genset air emission quality, boiler with certificate no. 845-13/U/BINA/V/2015 dated 27 April s/d 2 Mei

2015, the result is has fulfil government regulation. • Result of test vibration result by Independent laboratorium following standard SNI 19-7117.2-2005

the result is has fulfilled government regulation. no. 13/Men/X/2011 Company conduct regular monitoring, following approved document RPL and RFP by government, between six monthly and or one year.

The company a monitoring system in place for greenhouse gas (GHG) emissions, which are calculated using the RSPO endorsed Palm GHG tool. As seen from the company’s Palm GHG Summary Report dated May 16, 2016, as folow:

• Total emissions calculated were 0.91 tCO2e/t product for both CPO and PK, with no emissions for palm kernel oil (PKO) and palm kernel expeller (PKE).

• Total field emissions was calculated to be 33,483.89 tCO2e from own crop and 71,453.76 tCO2e from out growers,

• Total mill emissions were determined to be -35,681.53 tCO2e. The field emission sources included fertilizer transport, N2O from fertilizers, fuel consumption and peat oxida-tion, with no emissions for land conversion as the company has not carried out any land conversion. Merbau Estate: Document of Identifikasi Limbah Organik, Anorganik dan LB3, document no. FRM-GEN-068A, rev.00, updated January 01, 2016. The identified sources was included following: domestic activities, estate’s Merbau Estate:

• Dokumen Identifikasi Aktivitas Sumber Emisi Gas Rumah Kaca (GRK), document no. FRM-GEN-068, rev.00, updated January 01, 2016. The significant pollutant and GHG emission was identified are: ve-hicle emission, generator emission, oil vapour, fertilizer vapour, fuel vapour, chemical vapour, and EFB application vapour.

• There is identified type of emission, sources (activities), risk levels (low, medium and high), manage-ment plan, status of implementation and frequency. Evidence that all risk was identified on low level.

• Monitoring system has been established including frequency of monitoring. Pinang Awan Mill: Dokumen Identifikasi Aktivitas Sumber Emisi Gas Rumah Kaca (FRM-GEN-068) last update February 01, 2016. Based on the document found that the type of emission and it’s sources as follow:



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• Boiler emission • Diesel Generator emission • Bio Gass Generator emission • Methane Gas • Vehicle emission

There is evidence that GHG calculation has reported to RSPO Secretariat on May 16, 2016 for January – De-cember 2015.

Compliance status: Full Compliance

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills

Criteria assessed: CR6.1, CR 6.2,CR6.3, CR6.4, CR6. 5, CR6.6, CR6.7, CR6.8, CR6.9, CR6.10, CR6.11 Criteria not assessed : -

Findings:

PT. Milano has a Social Impact Assessment Assesment, document prepared in 15-19 July 2009 by the Aksen-ta Institution. The SIA document are cover all of the potential impact factors, including: Access and use rights, Economic livelihoods (eg paid employment) and working conditions, subsistence activities, cultural and reli-gious values, health and education facilities, other community values, the resulting from changes such as im-proved transport / communication or arrival of substantial migrant labor force.

Minutes meeting and documentation of the results of consultation with affected parties were stored properly,

Available, document record has to according to the SIA, outline the plan on mitigation, implementation and monitoring. PT. Milano had plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts been developed

Consultation activities conducted at July 16, 2016 in Pengarungan attended by 38 citizens. Dissemination of Company`s Social management plan 2016 at Merbau Plantation Village office was conducted on April 8, 2016. Activity was attended by village head of Pulo Bargot, village head of Perkebunan Marbau, village head of Bandar Sentosa, and community leaders.

Records of social management plan review activities conducted in 2016 involving the affected parties in this case the community`s representatives, which was attended by the Pengarungan village head and other village citizens dated April 6, 2016 attended by 41 participants and for employees March 15-17, 2016 was attended by 15 participants. Social Management Plan has changed from the previous year there were five impacts are managed and moni-tored, in 2016 was reduced to three impacts include: build understanding and skills of the company, employ-ees and the surrounding communities through meetings of formal and non-formal, empowering the community and business development economics productive, contributing to improvements and maintenance of basic community infrastructure. Company`s has not partnership agreement with smallholder.

PT Milano has a Standard Operating Procedure (SOP) related consultation and communication procedures are as follows: SOP Communication, Participation and Communication, Document No. Pro- Gen-011, Revi-sion 02, dated 23 September 2013 applies. The SOP are explained:

• For stakeholders to provide information, questions, dissatisfaction related to industrial relations, de-scription of potential problems and others.

• For unit leader agencies coordinate communication and consultation to answer / provide the infor-mation required by stakeholders, including a meeting to find a solution if the requested information goes a solution.

The SOP intention to receive and provide information and feedback to the stakeholders by using good lan-guage, easy to understand and be understood.

There are management personnel responsible for the delivery of information and feedback to stakeholders represent by Public Speaker team contained in Estate (Batang Saponggol, Sei Daun and Merbau) and Pinang



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Awan Mill.

PT. Milano key stakeholder’s are: outgrower, village government, Sub Distric government, Distric Goverment, NGO, local community, and farmers.

Record communication

Letter No. 200/79 / DSP / VII / 2015 of the Village Head Pengarungan July 24, 2015 concerning aid to build a house fire disaster victims, the response of management through letter No. 75 / MLN-SDE / EXT / VII / 2015 dated July 29, 2015 concerning the approval of its grant for the purchase of materials amounted Rp. 1.000.000, - which will be awarded on August 30, 2015.

PT. Milano has a policy of "Whistle Blowing Policy" that are specifically related to the settlement of disputes affected communities, which guarantees confidentiality (anonymity) repporteur or whistleblower cases.

In addition to company policy, PT Milano also has a Standard Operating Procedure (SOP) which regulates the submission of complaints, transparency of information and settlement of the conflict, namely:

a. SOP handlers Relations and Community Development Effort (No. Document PRO-BM.GEN-002 dat-ed 1 July 2009) there is an explanation that the company will facilitate if complainants requested con-fidentiality of his identity, without prejudice to the essence and the company's response to the com-plaint.

b. SOP Management Relations and Community Development Effort No.Pro-BM.Gen.002 revision 01 on 1 July 2009, which serves as a technical guide application of the principle transparanasi in imple-menting the delivery of information, complaint, proposal / assistance between the company and ex-ternal parties for the public interest so sure every request and delivery of the above can respond as effectively as possible .:

c. SOP Land Dispute Resolution No. SOP-Permit Land & Ops-007, the effective date is October 15, 2008. SOP describes the steps to resolve, namely:

• Identification of the problem / root of the problem,

• Analysis of the problem (using the law of cause and effect),

• Set a plan to do the proper treatment quickly, and directed

• Continuous evaluation and monitoring s.

Since 2015 until may 2016, there is no conflict with public related to land tenure or grievance from stakehold-ers.

PT. Milano has a Standard Operation Procedure (SOP) related to the identification of the legal rights of the community, namely SOP Land Acquisition and Land Permit No. Ops -005 dated October 15, 2008, which aims to ensure that decisions, steps or actions in the process of acquiring land for the benefit of industrial oil palm plantations is done properly, appropriately and in accordance with prevailing regulations and meet the princi-ples and criteria of the RSPO, HCVF, and FPIC particularly for land-related interests of the community and communal land.

Procedures related to the calculation or the calculation of fair compensation has been carried out based on the prevailing custom in the community. For productive land will be taken into account the number and age of the existing productive plants.

Acquisition procedure of land owned by Pinang Awan Mill, Batang Saponggol Estate, Sei Daun estate, and Merbau estate has accounted for differences in legal proof of ownership and communal ownership and their heirs.

Additional compensation in the form of an opportunity to work as permanent employees or casual laborers in the housekeeping (cleaning service) and maintenance of the plants in the garden with a standard salary in ac-cordance with the MSE (minimum wage counties).

Available documents payment of employees wages in April 2016 which is comply with the Governor Decree No. SUMUT 188.44 / KPTS / 2016 UMSK oil palm plantation sector IDR 2.250.000.- and Internal memo No. 001.MLN-HRD / IM-III / 2016 dated March 22, 2016, concerning the wage scale in 2016.

The company has documented working agreements called Joint Employment Contract (‘Perjanjian Kerja Ber-sama’ or PKB) that regulate the rights and obligations of employees/workers signed by the Director and



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Chairman of the Worker Union .

Facilities on PT Milano:

a. Pinang Awan Mill :

• Housing: house 131 employees

• Medical / Clinic: 1 unit clinic, 1 midwife, doctor visits every week

• Education: Daycare, ECD

• Sports: football field, volley ball

• Entertainment: gathering once a year,

• Clean water from the water from the water treatment company.

b. Batang Saponggol Estate :

• Housing: 147 home employees

• Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks.

• Education: early childhood and kindergarten

• Religious: Mosque 3 units, 1 unit of the Church

• Education: Daycare, early childhood and kindergarten, school buses 2 units

• Sports: football field, 2 units volley ball, badminton 2 units

• Entertainment: gathering once a year, a single organ / choir

• Clean water from the company with the wellbore

c. Marbau Estate:


• Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks and one unit ambulance.

• Education: early childhood and kindergarten

• Religious: Mosque 2 unit

• Education: Daycare, early childhood and kindergarten

• Sports: football field, volley ball,

• Entertainment: Music “gambus”

• Clean water.

d. Sei Daun Estate :


• Medical / Clinic: there are clinics with medical personnel midwife and doctor visits every 2 weeks and one unit ambulance.

• Education: Daycare, early childhood and kindergarten

• Sports: football field, volley ball, badminton

• Clean water.

• Entertainment: gathering once a year, a single organ / choir



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• Clean water from the company with the wellbore.

A public facility for employees has been prepared by the company in accordance with their financial capabili-ties. During a visit to the housing Sei Daun Estate and interviews with labour unions, all workers receive hous-ing facilities.

All estates area is near from local economic center (market etc.). Small shop supplying workers everyday needs of consumptions are available in every emplacement. Food is adequately, sufficiently and affordably supplied by these local shops, there is no restriction from the company for worker to build a shop in housing facilities areas.

PT Perkebunan Milano has published a statement in Bahasa Indonesia recognising the rights of employee to freedom of association in the Memorandum Intern No. 026/WIP-HRD/Int-VIII/2009, dated August 12, 2009, regarding Revision of Labour Conditions, and was signed by HRD Head (Jakarta). Point 1 stated that “the company ensure of all employees to freedom of association and become membership of labour union regard-ing applicable legal and regulations. The implementation of the above company’s policy, i.e: Sei Daun Estate: 1. Bipartite cooperation institution of Sei Daun estate that has been registered by the Social and Labor

Agency of Labuhan Batu Selatan District, Number: KEP.560/08/TK/2015, dated March 18, 2015 2. Worker Union (Serikat Buruh Perkebunan Nusantara/Serbundo) Basis PT Milano Sei Daun, Decree of

Menakertrans No. Kep.16/Men/2001, dated November 20, 2015, regarding registration of worker union Serikat Buruh Perkebunan Indonesia (Serbundo), PT Milano Sei Daun Basis, No. 001/S.Pmhn/Ext/PB-Sebundo/XI/2015, dated November 09, 2015.

Pinang Awan Mill: There is Decree of Extension of Decree No. 077/DPD-KBP/LBS/KPTS/VI/2013, dated June 21, 2013. Regard-ing decree of “Kesatuan Buruh Perjuangan”, Worker’s Mill of Milano, Pinang Awan, Pinang Dame village, Tor-gamba Sub-district. Merbau Estate Decree of Head of Social and Labor of Labuhan Batu Utara District, No. Kep.560/192/DSTK/LKS-B/2016, dat-ed February 15, 2016, Regarding approval of Bipartite Committee (Pegurus Lembaga Kerjasama Bipartit) at PT Perkebunan Milano, Village of Perkebunan Milano, Merbau Sub District, and Labuhan Batu Utara District, Sumatera Utara Province. There is evidence that PT Perkebunan Milano has maintain records of minute meeting between the company and worker representatives, e.g.: Pinang Awan Mill: Minutes of the formation of LKS Bipartite with the company PT. Milano, One such document is the minutes: Minutes of bipartite negotiations on Thursday, May 28, 2016, discussion material on the Cooperation Agree-ment, which was attended by representatives of the company and union representatives. Sei Daun Estate:

• Minute meeting dated April 15, 2016, held on Meeting Room of Sei Daun Estate; meeting was attend-ed by 17 persons. The meeting was discussed issues: worker recruitment, review of bipartite commit-tee, PPE implementation, annual leave, and BPJS Kesehatan (healthy insurance).

• Minute meeting dated March 14, 2016, held on Meeting Room of Sei Daun Estate; meeting was at-tended by 13 persons. The meeting was discussed issues: PPE implamentation, environmental clean-liness, security, worker union (Serikat Pekerja), and socialization of HIV/Aids.

Merbau Estate: Data available the minutes of the formation of LS Bipartite with the company PT. Milano are : replacement work on the feast day of Eid al-Fitr, THR and employees Loans, Production and transport during of Eid and Duty Shift Eid PT Perkebunan Milano has minimum working age for workers clearly defined in the Memorandum Intern No. 026/WIP-HRD/Int-VIII/2009, dated August 12, 2009, regarding Revision of Labour Conditions, was signed by HRD Head (Jakarta). Based on the memorandum, the minimum age of worker was defined less than 18 year.



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In other hand working hours has clearly defined in the valid Company Regulation (PKB), Article17. Working hours are 7 hours per day with working day 6 days per week. Holiday following the provisions of national holi-day. Based on document “Data Karyawan” updated April 30, 2016, total number of employee, as follow:

• Sei Daun Estate is 291 persons. • Merbau Estate is 146 persons • Pinang Awan Mill: 148 persons

Based on the above documents, there is evidence that the age of all employee has higher than 18 years old.

PT. Milano has had a Policy Regarding Respect for Human Rights that includes:

1. Rights of Workers:

• Freedom of association

• There is no forced labor

• No child labor

• Decent working conditions

2. Rights and Indigenous Communities Around

• Respect for the rights of land ownership

• A commitment to carry out the process of Free, Prior and Informed Consent (FPIC) with local communities before opening a business unit

• Commitment to the application of openness, communication, fairness and equity positions in each handler conflict towards achieving a joint solution

Implementation of policies implemented at the latest PT Milano December 31, 2014

Based on interviews with workers in mind that workers and groups including local communities, women, and migrant workers there is no discrimination in recruitment.

Recruitment is open to anyone who has the ability, given appropriate salary Minimum Wages District, granting medical benefits applicable to all employees.

Men and women have the same opportunities in the process of recruitment, payroll, and benefits. Menstrual leave and childbirth / breastfeeding women are given to employees regardless of their race or religion race.

Recruitment, promotion conducted by expertise, educational background suitability for certain positions as well as their employee performance assessment each year.

As an example:

• Promotion on behalf Faisal Ardiansyah Ritonga (Mill) promotion from class 2A to 2B based on Decree No. 013 / HRD-Raper PT. MLN-PA POM / PER / I / issued on January 1, 2014

Daily paid worker agreement on behalf Agus Suranda, as manuring at Merbau Estate, valid from March 1, 2016 - February 28, 2017. Wages accordance with Minimum wages at North Labuhan Batu IDR. 90,000 / day.

PT. Milano already has the Employment Policy and Employee Protection Policy that explicitly prohibits all forms of sexual harassment. Based on interviews with workers in mind that this policy is understood by all workers, and they understand that severe sanctions are dismissal. Until now this aduit conducted in 2015 there were no cases of sexual harassment and other complaints of women workers. There are organizations Gender Committee, which facilitates both female worker complaints related to employment and sexual har-assment. The Committee has had a program of socialization and consulting work related to sexual harass-ment. Gender Committee has Decree of the Board of Directors to carry out their duties. But operationally has carried out activities which socialization. The socialization material:

• Addressing domestic violence

• The role of women in the family

• Increased income families



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• Employment policies governing the reproductive rights of workers are clearly stipulated in the Compa-ny at:

• Article 52 about menstruation leave: Employees who feel pain during menstruation is not required to work on the first and second days of menstruation.

• Article 51 on maternity leave / breastfeeding:

• To Employees pregnant women given the right break 1.5 (one setenqah) months prior to the time, ac-cording to calculations doctor will give birth and 1.5 (one half) months after delivery or abortion.

• The days of rest give birth because abortion should be based certificate obstetrician or midwife who cared for him,

• Rest childbirth can be extended if the doctor or midwife who cared deems it necessary that the em-ployees concerned women still have to rest and apply the provisions of the Wages For PainThe im-portance of education for children avoid drugs.

The company has been contained in the Regulations governing the article laments that article 61 on the set-tlement of complaints, which contains:

1. Any complaints or complaints of an employees attempted first be discussed and resolved by direct su-pervisor.

2. If the measures in paragraph 1 (a) can not be resolved, then with the knowledge of his superiors, the employee concerned may submit a complaint or a complaint to his superiors higher verbal / written.

3. If the step paragraph 2 can not be resolved, the employee can complain to the organization's employ-ees to resolve together with the Personnel department.

4. In the event that settlement deliberation referred to in paragraph (3) is not reached, the employer and the worker / laborer resolve industrial disputes through industrial relations dispute settlement proce-dure regulated by law.

Since 2015 until May 2015 there no complaint from female labour related sexual harrasment or reproduction right

Pricing of fresh fruit bunches (FFB) is performed by a commission formed by members of the Provincial level is a outgrowers, Mill and Plantation Office. Price is valid for one month decided to come and publicized through mass media such as “Analisa” and “Medan Bisnis” newspapers that can be accessed by the entire community.

The Company provides pricing information based on the results of TBS at the provincial level. Pricing TBS is not the authority of the palm oil companies, but the collective decision of the commission of the Provincial lev-el.

Both Pinang Awan mill and their FFB supplier has signed FFB procurement agreement. As stated on the agreement section 3, FFB price will follow CPO price. However there is no clear mechanism to calculate FFB price from current CPO price. The agreement not explains Information on the trading price based on the price of CPO's HO, composition-based pricing: production cost, transportation costs, costs of loading and unload-ing cost and the estimated yield. The auditor clarified to suppliers (contract holder No. 001/MLN-RAMP/TBS/01/2015; No. 002/MLN-RAMP/TBS/01/2015), they aware about price calculation as mention ver-bally by the FFB procurement department Pinang Awan mill.

Pinang Awan mill and their supplier has signed FFB procurement agreement, all parties have understood without agreement the mill will not receive FFB. The agreement has been explain term and condition for FFB purchased, including Wilmar’s policy regarding the legality of FFB sources. However from the interviewed re-sult the supplier has no well understanding about Wilmar policy for FFB tarcebility and legality of FFB source. This is a room for Pinang Awan mill to improve supplier understanding about Wilmar’s sustainibility policy.

FFB agreed payment has been paid on time by PT Milano through office units in Rantau Prapat. This is based on payment receipt supplier (Abd Wahab Dalimunte) from FFB delivery order at April 2016.

Records of Contribution to local development based on the results of consultation with local communities as follows:

• Heavy equipment assistance, one unit greader for the construction of schools in Tanah Merah Pulo



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Bargot village dated 16 September 2015, based on Pulo Bargot Village Head request letter of for help of heavy equipment , dated 15 September 2015,

• Financial support for SMPN 2 Merbau IDR. 300,000 for the renovation of school buildings dated Feb-ruary 17, 2016; based on principal of SMPN 2 Merbau letter No. 421.3 / 169 / SMP.2 / TU / 2016 dated January 9, 2016.

• Heavy equipment assistance for road repair Sei Daun village along 3 Km dated May 4, 2016, based on letter No.09 / DSN-SD / DSP / V / 2016 concerning a request for help of heavy equipment from the Sei Daun village head dated May 12, 2016.

Company`s has not partnership agreement with smallholder, the company did not provide the of human re-sources to the smallholder.

Based on employment data on PT Milano all workers have a clear identity and there is no illegal worker (traf-ficked) or forced. Workers may refuse to work if they are not working in accordance with the existing labour regulations.

There is no form of forced or trafficked labour in all PT Perkebunan Milano estates and Pinang Awan Mill. The requirement is not relevant and not applicable .

Wilmar respect and protecting human rights in order to create safety for every one of all forms of harassment and violence create working environment and living environment that is safe, clean, and healthy.

Human rights dissemination policy has been carried out on March 11 and March 31, 2016 (Estate, Mill), Feb-ruary 4, 2016 at Merbau Estate


Principle 7: Responsible development of new plantin gs

Criteria assessed: - Criteria not assessed: CR7.1, CR7.2, CR7.3, CR7.4, CR7.5, CR7.6, CR7.7 Findings: PT Perkebunan Milano has not commenced any new oil palm development since the establishment of the RSPO Principles and Criteria. Therefore, Principle 7 is considered “Not Applicable”. Compliance status: Not Applicable

Principle 8: Commitment to continuous improvement i n key areas of activity

Criteria assessed: CR8.1 Criteria not assessed: - Findings: The estates and mill have a monitoring action plan and implementation report based on their Environmental Management and Monitoring plan (UPL/UKL), and regular evaluations of plantation and mill operations. For example, Batang Saponggol estate and the mill prepares a report of their implementation of the UPL/UKL once every 6 months as required by the environmental department, which covers aspects required to be moni-tored in the UPL/UKL. For the estate, this includes ambient air quality, groundwater quality, waste collection, water biota sampling and analysis, road damage, social economic aspects such as hiring of workers and FFB and EFB transport (which can impact water and air quality), as well as impacts to community health due to fer-tilizer application, and FFB and EFB transport. While for the mill, the implementation report includes results ambient air quality, boiler emission quality, palm oil mill effluent quality, soil quality of land application area, noise levels, and scheduled waste production records.

Company has set up social management plan according to the needs and aspirations of the affected stake-



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holders, this in accordance with the actual recording and interviews with Bargot Pulo village head, but there is expectation for collaboration in order to village road maintenance. Compliance status : Full Compliance

• RSPO SCCS

Pinang Awan Palm Oil Mill is producing crude palm oil (CPO) and palm kernel (PK). The company currently sells their product without claiming it as certified sustainable palm oil (CSPO) but sold as International Sustainability Carbon Certification (ISCC) certified claimed product. The company only claiming certified sustainable palm kernel (CSPK) and the product sells was register on RSPO eTrace. from RSPO to support implementation of sustainability requirements.

The company implements SCC-RSPO with “Mass Balance (MB)” model according to the nature of mill FBB sup-ply condition. The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements (it was assessed/audited against Module E), including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements. Results of audit/assessment as de-scribe on the explaination belows:



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E.1 Definition

Findings: The organization (Pinang Awan Mill) implemented the RSPO-SCCS Mass Balance (MB) model. This SCCS model allowed to mixing of certified and uncertified product but shall be control by the Mass Balance record to ensure the quantity of certified product, and only certified product could be claim by the organization as certified palm oil product. Organization has identified the volume of certified and uncertified FFB supplied to the mill. Pinang Awan mill has record of incoming FFB supplyed to the mill. Based on year of 2015 data and 2016 until April, FFB incoming into the mill is came from owned estate and out growers/third party. During the surveillance assessment, for 2015 total incoming FFB from owned estate under (scope certification) is 113,551.110 mt and from out grower is 183,210.773 mt. While the uncertified FFB, for 2015 was 183,210.773 mt and for 2016 until April was 39,847.446 mt (came from out grower/third party). Compliance status: Full Compliance

E.2 Explanation

Findings: Estimated of tonnage CPO and PK products has been recorded in to the public summary of the P&C certifica-tion report. The actual of certified CPO and PK year 2015 are 22,804.614 MT (CPO) and 6,339.095 MT. Whereas, projec-tion of certified product year 2016 are 24,102.90 MT (CPO) and 6,517.50 MT (PK) with projection of certified FFB process is 118,500 MT and extraction rate are 20.34% (OER) and 5.50% (KER). This information gets from budget of mill year 2016. Registration with IT trading platform PT Perkebunan Milano has register to RSPO IT system with license num-ber RSPO_PO1000000560. Pinang Awan Palm Oil Mill has already selling PK RSPO certified and has evi-dence the transactions has conducted in the RSPO E-Trace. Total selling PK RSPO certified from January until April 2016 as much as 1,942.12 mt. Compliance status: Full Compliance

E.3 Documented procedures

Findings: The company has list of procedures for implementation of SCCS as seen on Master list document (FRM-GEN-019) , the company establish procedure for receiving order of certified product both in sales department and mill, there is clear explanation about how to issued Main Delivery document and partial delivery. The company has policy regarding SCCS model will used for CSPO production process, according to decree letter no. 001/MLN/SK/V/2012 regarding company decision for Supply chain model i.e. Mass Balance signed by Unit Head Pinang Awan Mill. The mill have documented procedures for receiving and processing certified and non-certified FFBs i.e. SOP-MILL-001 rev. 04 May 08 Incoming FFB procedure, 2011; SOP-Mill 002 FFB Sortation: SOP-MILL-001 for Weight Bridge Mill, and A set of SOP FFB processing since receiving until product dispatch SOP-Mill-003 to SOP-Mill-044 and procedure for Mass Balance calculation as stated on SOP-MIL-047 (include of mass balance format for palm kernel). No changes on company’s mechanism for control and maintenance of the data and document used in produc-tion process, as stated on SOP PRO-GEN-002 dated May 07, 2012 all records related to CSPO & CSPK Prod-uct Company will be maintained for 10 years. The mill has been assigning person, i.e. mill manager that having overall responsibility for and authority over the



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implementation of SCCS requirements and compliance with all applicable requirements. The mill manager is expected to be able to demonstrate awareness of the facilities procedures for the implementation of SCCS standard. Respective staff has good knowledgeable and competent in implementing the supply chain proce-dures in Pinang Awan mill, as proved during interview with weight bridge staff, FFB ramp etc. The mill has records balance for all receipts of RSPO certified FFB and delivery CPO & PK on daily basis. The material balance includes information about incoming FFB from company’s estate and out grower, FFB process, CPO & PK production including OER & KER. Since year 2014 Pinang Awan Mill has been selling certified PK to PT Wilmar Bioenergy Plintung Riau, all volumes of palm kernel that are delivered are deducted from the ma-terial accounting system according to actual daily conversion rate. The material balance can show deliver product sales from a positive stock. The mill will indicate product name and supply chain model in Weigh Bridge Document, including information about RSPO certificate number as stated on SOP-Mill-039 which is explain about how to put supply chain model used in trade documents such Main Delivery Order, Weigh Bridge Slip, Delivery Order. All certified CPO will be transferred to PT Wilmar Bioenergy Plintung Riau for ISCC claimed. There is training evidence for SCCS awareness for Mill staff manager level and all relevant staff such as at-tendance list FRM-HRD-020; training was conducted on February 15, 2016. Evidence of training: Minutes meet-ing SCCS workshop for employees working with Critical control Point such as Photographs of training session dated February 15, 2016.




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E.4 Purchasing and good in

Findings: Pinang Awan Mill has Incoming FFB procedure (SOP -Mill-001) description about definition for certified FFB (RSPO) and non-certified FFB (RSPO) because the company implement many sustainability standards such as RFS, ISCC, and RSPO. The SOP also state verification process for incoming FFB without clear information about responsibility and verification mechanism for certified material. There is information about selected sup-ply chain model on SOP production FFB.

According to SOP-Mill-045, material weighing, the mill has mechanism to receive FFB both from certified sources and non-certified sources. Incoming certified FFB will have documents such as: Weighbridge slip, grad-ing records, delivery Notes including information from the origin estate with certified stamp. FFB from out grow-ers are accompanied by weighbridge slip, grading records, delivery Notes without certified stamp. Certified sta-tus will be stated on ‘Incoming Certified FFB Received’ report (daily, monthly and three monthly reports) in weighbridge location. Whereas, non- certified status will be stated on ‘Incoming non-certified FFB Received’ report. It is recapitulation of production report for year 2015 & 2016, including volumes of FFBs received which is separated into certified and non-certified FFB volumes. Based on table 3 above that FFB supplier are Sei Daun estate, Batang Saponggol estate and Merbau Estate (company owned estate) and out grower.

Pinang Awan mill has procedure and mechanism to inform the over production into the CB by document number SOP-Mill-048 Rev 0 date issue May 1, 2012, mentioned “if over production projected, the management representative will inform to the CB related that over production”,

Compliance status : Full Compliance

E.5 Record keeping

Findings: The organization has established a mechanism for control and maintenance of the data and document used in production process, as stated on SOP PRO-GEN-002 rev 03 dated May 7, 2012 all records related to CSPO & CSPK Product Company will be maintained for 10 years. Implementation of control and maintenance of the da-ta & document has consisted. All records (weighbridge slips, FFB delivery note and FFB grading report) col-lected or complied per month. Records on the quantity of FFB received and CPO/PK dispatched daily is main-tained in the weighbridge software. The mechanism to update information about production (production CPO/PK, dispatch CPO/PK, stock CPO/PK, OER and KER) to related section is by email notification every morning by the logistic division. The mill maintains accurate, complete and updated records and reports. The mill has records balance for all receipts of RSPO certified FFB and delivery CPO on daily basis. The mate-rial balance includes information about incoming FFB from company’s estate and out grower, FFB produced, CPO result including OER, PK result including KER, product dispatch and balance product in the storage tank including the mass balance percentage, included information about PK production from certified FFB. All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion rate. The material balance can show deliver product sales from a positive stock. There is no outsourced process in Pinang Awan Mill. The mill’s product CPO and palm kernel are internally pro-cessed in company’s location. Compliance status: Full Compliance



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3.2 Status of Previously Identified Non-conformitie s • RSPO P&C

A total of 3 non-conformances were identified during recertification audit. These consisted of 2 major non-conformities and 1 minor non-conformitiy. During this surveillance assessment, it was found that there was suffi-cient evidence for closure of all non-conformities. The following is a description of the evidence of action taken to close the non-conformities raised during the previous surveillance, as well as auditor’s conclusions on the status of the non-conformities.

Criterion 4.1. (Minor indicator 2) A mechanism to check consistent implementation of p rocedures shall be in place.

Non-conformance No 2015- 01 of 03 (Minor non-confor mity) There is no mechanism for checking the implementation of SOP Purchase of FFB, SOP No. 001 / TBS / IV / 2014 section D for out-grower and out-grower agent that supplies FFB to Milano Ramp and Pinang Awan Palm Oil Mill Verification result :

• The SOP Purchase of FFB, doc. No. SOP No. 001 / TBS / IV / 2014 have been revised, become docu-ment no. 001/TBS-SOP/VIII/2015, SOP’s Name: Pembelian Tandan Buah Segar (TBS) Kelapa Sawit, Ef-fective date August 10, 2015. Section D (Policy) of the SOP has been revised, i.e.: to ensure that all re-ceived FFB by the organization has not broken the applicable legal and regulations, e.g: FFB sources not come from robbing, forest area, and etc.

• There is evidence that the SOP has been communicated to FFB Suppliers, e.g.: records of attendance list of “Sosialisasi SOP Pembelian TBS dan MoU Jual Beli TBS” dated August 13-14, 2015. The socialization was conducted by Mr. Rustam Efendi (operational located at Rantau Prapat Ramp and was attended by 18 suppliers).

• There is evidence that internal audit has carried out regularly covering implementation of all the SOPs. Scope of internal audit includes all estates and mill operations. The last audit was carried out on February 22-26, 2016.

Auditor Conclusions: Closed Criterion 4.1. (Major indicator 4) The mill shall record the origins of all third-part y sourced Fresh Fruit Bunches (FFB).

Non-conformance No 2015- 02 of 03 (Minor non-confor mity) 1. List of out-grower and Out-grower Agent in Rantau Prapat ramp only to the period 23 July 2015. 2. In the

list there are 4 out-growers agent are listed, but information regarding the list of their FFB suppliers for the out-grower Agent are not available.

2. PT Perkebunan Milano has own SOP for purchase of FFB from outside parties, namely SOP No. 001 / TBS / IV / 2014 issued on June 2014. However, the SOP has not been applied to the suppliers agent who supply the FFB to Milano Rantauparapat Ramp

Verification result :

1. The company provide sample of List of out-grower and Out-grower Agent including FFB suppliers for the out-grower Agent e.g. for Agent ASR and TKM and SYO.

2. Company provide evidence i.e. records of socialization SOP SOP No. 001 / TBS / IV / 2014 issued on June 2014, it was conducted on August 12 & 14, 2015 as proved by list of participant and photograph.

Auditor Conclusions: Closed



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Criterion 6.10. (Major indicator 2) Evidence shall be available that growers/millers ha ve explained FFB pricing, and pricing mechanisms for FFB and inputs/ services shall be documented (where these are under the control of the mill or plantation). Non-conformance No 2015- 03 of 03 (Major non-confor mity) The FFB pricing mechanism has not been defined in the SOP to purchase FFB from outside parties, namely SOP No. 001 / TBS / IV / 2014 as well as in the purchase agreement that has been signed by FFB suppliers and Milano Ramp. Verification result : The company provide revised SOP No. 001 / TBS / IV / 2014 that has been included FFB pricing mechanism from outside parties. The company also provide evidence that the agreement between Pinang Awan Mill and their FFB supplier has been revised to include the mechanism of FFB pricing e.g. agreement no. 036/MLN-RAMP/TBS/08/. Auditor Conclusions: Closed

• RSPO SCCS

A total of 1 non-conformance was identified during recertification audit. During this surveillance assessment, it was found that there was sufficient evidence for closure of all non-conformities. The following is a description of the ev-idence of action taken to close the non-conformities raised during the previous surveillance, as well as auditor’s con-clusions on the status of the non-conformities.

Ref. 5.7.1: Supply chain actors who: • are supply chain actors between the mill and fina l refinery; • take legal ownership and physically handle RSPO C ertified Sustainable oil palm products; and • are part of the supply chain of RSPO Certified Su stainable oil palm products must register their tra ns-action in the RSPO IT platform at the time of physi cal shipment as required by the rules set by RSPO. Non-conformance No 2015- 03 of 03 (Major non-confor mity) Pinang Awan Palm Oil Mill has already selling PK RSPO certified, but no evidence the transactions has conducted in the RSPO E-Trace Verification result : The company provide evidence regarding E Trace transaction data for selling PK RSPO certified to PT Wilmar Nabati Indonesia, e,g, Transaction ID TR-c6c8ea4a-e655 :

• Transaction Status Announced • Creation Date 07/31/2015 • Last Updated 07/31/2015 • Last Updated By Joshua Lim.

Auditor Conclusions: Closed

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

During 1st surveillance assessment, there is no nonconfomance were identified against RSPO P&C and RSPO SCCS.



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3.4 Noteworthy Positive Components

No. Clause Comment

1 Auditee has been understood about RSPO princip and criteria so that the data can be easy distribute to auditor

2 The company has methane capture as one of efforts to reduce emission

3.5 Conclusion and Recommendation for RSPO P&C & RS PO Supply Chain Certification

The audit team has confirmed through the audit process that Pinang Awan Mill has established and maintains an effective system to ensure compliance with the RSPO P&C Generic 2013 and RSPO Supply Chain Certification System requirements (November 2014). It is also confirmed that the company’s annual volume of CPO and PK sold for the period of year 2015 has not exceeded the certified annual tonnages as claimed in the organization’s RSPO certificate No. 01 100 106470 because no CSPO claimed product sold as RSPO SCCS and there is 6,242.500 mt CSPK claimed product sold as RSPO SCCS until recertification audit. TUV Rheinland recommends that PT Perkebunan Milano (mill & estate) be continuing approved for certification of compliance to the RSPO P & C and Supply Chain Certification System requirements.

3.6. Issues Raised by Stakeholders and Findings Per taining to Issues

Below is a summary of issues raised by stakeholders interviewed onsite

No. Issues Raised Management Response Audit Verification

1. Housing security, which left by occupants / employees to return home town celebrate Idul Fitri

Companies will prepare addi-tional security personnel during the holidays

Company explaination is accept-ed, will be verified on the next audit.



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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveilance audit is planned for May 2017.

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

It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content. Signed on behalf of PT Perkebunan Milano Name: Position: Date:

Signed on behalf of TUV Rheinland Indonesia Naik Monang Parlindungan Lingga Lead Auditor Date: Juni 29, 2016



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APPENDICES

Appendix 1: Detail of certificate



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Appendix 2: List of Abbreviations

AMDAL Analisis Dampak Lingkungan & Sosial (Social & Environmental Impacts Assessment)

BHL Buruh Harian Lepas (Temporary worker) BKPM Badan Koordinasi Penanaman Modal (Capital Investment Coordination Board) BOD Biological Oxygen Demand BPN Badan Pertanahan Nasional (National Land Agency) CDM Clean Development Mechanism COD Chemical Oxygen Demand CPO Crude Palm Oil Disnaker Dinas Tenaga Kerja (Labour Department) EIA Environmental Impact Assessment EMP ERTs

Employe Endangered, Rare & Threatened species

ESH Environmental Safety & Health EHS Environmental Health & Safety ETP Environmental Target Program FFB Fresh Fruit Bunches EFB Empty Fruit Bunches EMU Environmnetal Management Unit FORKASS GIS

Forum Komunikasi Masyarakat (Community Communication Forum) Global Information System

HCV High Conservation Value HRD Human Resources Department HGU Hak Guna Usaha (Land Use Rights) ISCC IPM

International Sustainibility and Carbob Certification Integrated Pest Management

IUP Ijin Usaha Perkebunan (Plantation Operation Permit) JHT JKK JKM K3

Jaminan Hari Tua Jaminan Kesehatan Keluarga Jaminan Kematian Keselamatan dan Kesehatan Kerja (Occupational Safety & Health)

Kadisbun Kepala Dinas Perkebunan (Head of Plantations Department) KepMen Naker Keputusan Menteri Tenaga Kerja (Workforce Minister’s Decree) KHT Karyawan Harian Tetap (Permanent Worker) LTA Lost Time Accident MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health PGA PK

Personel and General Affair Palm Kernel

PKO Palm Kernel Oil PKS Pabrik Kelapa Sawit ( Palm Oli Mill) PLN Perusahaan Listrik Negara (National Electricity Body) POME Palm Oil Mill Effluent PPE Personal Protective Equipment RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SCC SIA

Suply Chain Certification Social Impact Assessment

SKU SK-KBP

Satuan Kerja Unit (Daily permanent Worker) Serikat Pekerja-Kesatuan Buruh Perjuangan (Workers Union)

SOP Standard Operating Procedure SBSI Serikat Buruh Sejahtera Indonesia (Indonesian Labour Union) SPSI Serikat Pekerja Seluruh Indonesia (Indonesian Workers Union) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UMP Upah Minimum Propinsi (Provincial Minimum Wage) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)



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Appendix 3: List of Stakeholders Interviewed and Co ntacted

No. Name of Stakeholder

Institution - Address Remark

Staff Interviewed On-Site 1. Ali Rasidan EHS Staff 2. Jubeir Rangkuti EHS Staff 3. Sandra Yossi Sustainibility HO 4. Mulyadi Mill Manager 5. Sumardi KTU SDE 6. Febry Afiatsyah EHS Mill 7. J. Lumbantoruan Senior BM Staff 8. Asima Nadapdap KTU 9. T. Napitupulu PGA RO 10. Alfian CDO 11. Hariyanto PGA MBE 12. Guntur DC Mill 13. Suharmadi Asisten Mill

Stakeholder Interviewed onsite 1 Sabar Village Head 2 Hadyah Mufti Lubis Human Resource Manager (Region) 3 Alfian Public Relation to stakeholder 4 Asima Nadapdap Gender Committee 5 Fazarudin Harahap Foreman harvesting 6 Khairul Anwar Foreman spraying 7 Juminen Sprayer 8 Sutija Sprayer 9 Miswati Sprayer

10 Rudian Sprayer 11 Legiati Sprayer 12 Siti Murni Sprayer



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Appendix 4: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for Improve ment Crit eria 1 • Ensure the Plantation Bussiness Permit for Cultivation (IUP-B) Sei Daun Es-

tate still can be use after land title extension where there is a difference area between the IUP-B with the latest concession area of 75.18 Ha. It is be-cause differences in the measuring instrument at the time of reassessment for granting the extension of the land title

• Ensure that the HGB Pinang Awan Mill as soon as possible to get from na-tional land agency where the current process is the company has been ap-plies HGB extension permit

2.2.1

2 All of pesticides used reporting to related agency. For example: Sime Ebor Bites (active ingrident is warfarin) still not include in the recommendation for year 2016

4.6.4

3 Training record for each staff employee (grade III) to up stated on personal map document that can be access on WIP PGA System Application.

4.8.2

Documents

Draft Laporan PT Perkebunan Milano - ASA11 Report