RSPO THIRD SURVEILLANCE ASSESSMENT REPORT PPB OIL … · RSPO THIRD SURVEILLANCE ASSESSMENT REPORT PPB OIL PALMS BERHAD TERUSAN CERTIFICATION UNIT SANDAKAN, SABAH MALAYSIA ASSESSMENT

MSC/RSPO/DOC/06-02 Issue 1 Rev. 0

CONFIDENTIAL

1

RSPO THIRD SURVEILLANCE ASSESSMENT REPORT

PPB OIL PALMS BERHAD

TERUSAN CERTIFICATION UNIT

SANDAKAN, SABAH MALAYSIA

ASSESSMENT DATE: 17th- 19st JULY 2013

SIRIM QAS INTERNATIONAL SDN. BHD. Building 4, SIRIM Complex,

No. 1 , Persiaran Dato’ Menteri, Section 2, 40700 Shah Alam, Selangor Darul Ehsan,

Malaysia. Tel: 603 5544 6448 Fax: 603 5544 6763

Website : www.sirim-qas.com.my

http://www.sirim-qas.com.my/

MSC/RSPO/DOC/06-02 Page 2 of 71 Issue 1 Rev. 0

TABLE OF CONTENT

1.0 Scope of the Certification Assessment 1.1 Introduction.................................................................................................. 1.2 Location of Mills and Estates....................................................................... 1.3 Production Volume of All Certified Products................................................ 1.4 Certification Details...................................................................................... 1.5 Description of The Supply Base................................................................. 1.6 Planting Profiles……………………….......................................................... 1.7 Time Bound Plan for Other Management Units........................................... 1.8 Progress of Associated Smallholders / Small growers Towards

Compliance with Relevant Standard...........................................................

1.9 Organizational Information / Contact Person(s).......................................... 2.0 Assessment Process 2.1 Certification Body........................................................................................ 2.2 Qualification of Lead Assessor and Assessment Team.............................. 2.3 Assessment Methodology........................................................................... 2.4 Date of Next Surveillance Visit.................................................................... 3.0 Assessment Findings 3.1 Summary of findings.................................................................................... 3.2 Identified Non-conformities.......................................................................

3.3 Status of Non-conformities Previously Identified.............................

3.4 Noteworthy Positive Observation.................................................................

4.0 Assessment Recommendation

5.0 Certified organization’s Acknowledgement of Internal Responsibility and Formal

sign-off of assessment findings………………………………………………………..

List of Tables Table 1 Location of Mill and Estates

Table 2 Total and Composition of Workers in the Certification Unit

Table 3a Actual CPO and PK tonnage for Terusan CU (January 2012 to December 2012)

Table 3b Actual CPO and PK for January 2013 – June 2013 and Estimated CPO and PK for July 2013 – December 2013

Table 4 FFB contribution to Terusan POM for 2012 & 2013

Table 5a Terusan 1 Estate : Date of planting and area planted with oil palm

Table 5b Terusan 2 Estate : Date of planting and area planted with oil palm

Table 5c Rumidi Estate : : Date of planting and area planted with oil palm

Table 6 Approximate CPO and PK Tonnage Claimed for Certification

Attachments: Attachment 1 Location Map for Terusan Certification Unit in Sandakan, Sabah, Malaysia

Attachment 2 RSPO Surveillance Assessment Programme

Attachment 3 Detail of Non Conformity and Corrective Actions Taken 2013

Attachment 4 Verification on previous assessment findings 2012


Abbreviations:

ARM Agriculture Reference Manual

BOD Biochemical Oxygen Demand

B.Sc. Bachelor of Science

CA Collective Agreement

CHRA Chemical Health Risk Assessment

COD Chemical Oxygen Demand

CPO Crude Palm Oil

CUs Certification Units

DID Drainage and Irrigation Department, Malaysia

DOE Department of Environment

DOSH Department of Occupational Safety and Health

EAI Environmental Aspect Identification

EARA Environmental Auditors Registration Association

EB Executive Board

EFB Empty Fruit Bunch

EIA Environmental Impact Assessment

EIE Environmental Impact Evaluation

EMP Environmental Management Plan

EPF Employees Provident Fund

EQA Environmental Quality Act

ERT Endangered, Rare and Threatened Species

FFB Fresh Fruit Bunch

FMA Factory Machineries Act

FSC Forest Stewardship Council

GAP Good Agricultural Practice

GPS Global Positioning System

Ha Hectares

HCV High Conservation Value

HIRARC Hazard Identification, Risk Assessment and Risk Control

IEMA Institute for Environmental Management and Assessment

IPM Integrated Pest Management

ISO International Organization for Standardization

IRCA International Register of Certificated Auditors

JCC Joint Consultative Committee

MSDS Material Safety Data Sheet

MOA Memorandum of Alliance or Agreement

MPOA Malaysian Palm Oil Association

MPOB Malaysia Palm Oil Board

MYNI Malaysia National Interpretation

MYNI – WG Malaysia National Interpretation – Working Group

NADOOPOD Notification of Accident, Dangerous Occurrence, Occupational Poisoning and Occupational Disease

NCR Non-Conformity Report

NGO Non Governmental Organisation

OER Oil Extraction Rate

OG Oil & Grease

OSH Occupational Safety and Health

OSHA Occupational Safety and Health Act

OHSAS Occupational Health and Safety Assessment Series

Ph.D. Doctor of Philosophy

PIC Person-In-Charge


PK Palm Kernel

PMM Proposal of Mitigation Measure

POM Palm Oil Mill

POME Palm Oil Mill Effluent

PPE Personal Protective Equipment

PTW Permit To Work

QMS Quality Management System

RSPO Roundtable on Sustainable Palm Oil

SIA Social Impact Assessment

SOCSO Social Security Organization

SOP Standard Operating Procedure

SPIEU Sabah Plantation Industry Employees Union

UNFCCC United Nations Framework Convention for Climate Change

UKAS United Kingdom Accreditation Services

USA United States of America

USECHH Use and Standards of Exposure of Chemicals Hazardous to Health

WWF World Wide Fund for Nature


SURVEILLANCE ASSESSMENT REPORT 1.0 Scope of the Certification Assessment

1.1 Introduction The certification unit (CU) assessed in this surveillance was Terusan CU which was part of Terusan Sdn. Bhd. (TSB). TSB is wholly owned subsidiary of PPB Oil Palms Berhad (PPB Oil Palms). Terusan CU consisted of Terusan Palm Oil Mill, Terusan 1 Estate, Terusan 2 Estate and Rumidi Estate. The Stage 2 audit on Terusan CU against the requirements of the RSPO MY-NI was conducted by SIRIM QAS International Sdn. Bhd. (SIRIM QAS International) on 1st October 2009 and was certified in 7th September 2010. Terusan Palm Oil Mill (TPOM) commenced operations in 1995 with a processing capacity of 60 metric tonnes of fresh fruit bunches (FFB) per hour. As Terusan 1, 2 and Rumidi estates had been fully developed, Principle 7 of the RSPO Principles & Criteria would not be applicable. 1.2 Location of mill and estate

Terusan Mill, Terusan 1, Terusan 2 and Rumidi Estates are located in Sandakan District, Sabah, Malaysia. Terusan can be accessed by using the Sandakan – Telupid Road and about 160 km from Sandakan. In the immediate vicinity of Terusan certification unit were a few villages and other oil palm plantations. Along the northern boundary there were Kg. Rumidi, Kg. Tendu Batu and Kg. Nangoh. Along the western portion were Kg. Perenchangan, Kg. Bakong-Bakong, Kg. Sualog, Kg. Panimbanan and Kg. Lidong. Kg. Toniting was found at the southern side while Andamy Plantation was on the west separated by a public road from Terusan 1 and 2 Estates. Adjacent of Rumidi Estate at the southern boundary was Bidu-Bidu Forest Reserve. The mill and each of the 3 estate were equipped with living quarters (known as line site) for the staff working within the CU. The location map of Terusan CU (mill and estates) is shown in Attachment 1 while their coordinates are detailed in Table 1.

Table 1: Location of Mill and Estates

Operating Unit Latitude Longitude

Terusan Palm Oil Mill 5° 49' 54.687" N 117° 20' 30.315" E

Terusan 1 Estate 5° 47' 23.104" N 117° 23'37.202" E

Terusan 2 Estate 5° 49' 57.944" N 117°20'22.743" E

Rumidi Estate 5° 55' 59.804" N 117° 18'43.466" E (Note: The coordinates are for the offices of the palm oil mill and estates)

The total and composition of the workforce of Terusan POM and its supply bases is shown in Table 2.


Table 2: Total and Composition of Workers in the Certification Unit

Operating Unit

Local

Foreign

Sub-Total

Terusan Palm Oil Mill

49 35 84

Terusan 1 Estate

81 327 408

Terusan 2 Estate & Rumidi Estate

169 500 669

Total

299 862 1,161

1.3 Production Volume for All Certified Products All the three estates had been supplying FFBs to the Terusan POM. Apart from these estates, there were independent smallholders and small growers which had been sending their harvests to the same mill. The average annual FFB contribution from each estate to the Terusan POM is summarised below. Table 3a: Actual CPO and PK tonnage for Terusan CU (January 2012 to December 2012)

FFB Received (mt) 197,366.170

FFB Processed (mt) 197,382.380

Total CPO Production (mt) 39,588.444

Total PK Production (mt) 9,185.121

Certified CPO (mt) to be claimed – Mass Balance 29,809.790

Certified PK (mt) to be claimed – Mass Balance -

Non-Certified CPO (mt) 9,778.650

Non-Certified PK (mt) -

Table 3b: Actual (January 2013 – June 2013) and Estimated (July 2013 – December 2013) of CPO and PK for Terusan CU

Actual Estimate Total

FFB Received (mt) 102,277.970 114,820.000 217,097.970

FFB Processed (mt) 102,268.100 105,029.13 207,297.230

Total CPO Production (mt) 20,968.318 21,514.942 42,483.260

Total PK Production (mt) 4,847.629 4,811.619 9,659.248

Certified CPO (mt) to be claimed – Mass Balance 14,450.19 17,182.433 31,632.623


Certified PK (mt) to be claimed – Mass Balance 3,340.680 3,780.739 7,121.419

Non-Certified CPO (mt) 6,518.130 4,919.854 11,437.984

Non-Certified PK (mt) 1,506.950 1,079.189 2,586.139

1.4 Certification Details The name of the certified Unit and its RSPO identification are as follows: Parent company: PPB Oil Palms Berhad, Certificate number: RSPO 0008 The date of certification : 7th September 2010 1.5 Description of The Supply Base The FFB is sourced from company owned estates that are certified and a small percentage from smallholders’ crop. Details of the FFB contribution from each source are shown in the following tables:

Table 4: FFB Contribution by Each Estate and other sources to

Terusan POM for 2012 and 2013

FFB Supply

FFB Production (Actual Jan-Dec 2012)

FFB Production (Actual Jan to June

2013)

FFB Production (Estimated (July – Dec

2013)

Tonnes % Tonnes % Tonnes %

Terusan 1 Estate

53,142.090

27% 26,608.730

26% 34,020.00

30%

Terusan 2 Estate

68,500.830

35% 29,633.150

29% 57,020.00 50%

Rumidi Estate

25,595.330

13% 12,770.390

12% -

Outside suppliers

934.170 0.47% 218.840 0.21% -

Total - 1,118.280 1%

1.6 Planting Profiles

Year of Establishment of Estates and Area Planted with Oil Palm

Table 5a: Terusan 1 Estate

Year of Planting

Planting Cycle 1st / 2nd Generation

Planted Area (ha) Percentage of Planted Area

1989 1st Generation 244.6 100%



1992 1st Generation 1007.6 100%


Total 2544.1 100%

Table 5b: Terusan 2 Estate

Year of Planting



1990 1st Generation 607.16 18.8

1991 1st Generation 1277.48 39.7

1993 1st Generation 1030.35 31.9

1994 1st Generation 306.56 9.6

Total 3221.55 100

Table 5c: Rumidi Estate

Year of Planting



1991 1st Generation 164.19 14.8

1994 1st Generation 652.97 58.7



2013 2nd Generation 212 19.1

Total 1111.87 100

1.7 Time Bound Plan for Other Management Units PPB owned and operates 6 palm oil mills in Sabah and 2 palm oil mills in Sarawak respectively. The fruits for the 6 mills in Sabah were supplied by 13 oil palm estates while 4 estates supplied their fruits to the 2 mills in Sarawak. PPB has been on schedule with the time bound plan for the certification of all the CUs. To-date, all the 8 CUs (plam oil mills) had been certified to the RSPO MY:NI P&C. SIRIM QAS International Sdn.Bhd. (SIRIM QAS International) had been involved with the certification of five of the CUs. 1.8 Progress of Associated Smallholders/Smallgrowers Towards Compliance with Relevant Standard Terusan CU had no plan or programme to engage their associated smallholders / smallgrowers towards compliance to relevant RSPO standard as Terusan CU do not intend to apply third party contribution of FFB for claiming of CPO and PK. 1.9 Organizational Information/Contact Person The details of the contact persons as shown below:


Address: PPB Oil Palms Berhad, Sabah Operations, Lot 1A, KM 15, Jalan Labuk, Locked Bag 34, 90009 Sandakan, Sabah, Malaysia.

Contact person (at Sandakan): Mr. Tee Seng Heng General Manager Phone: +6089 671546 / +6089 670208 Fax: +6089 670260 e-mail: [email protected] Contact person (at Terusan): Name : Martin Junius Designation : Senior Manager Address : Terusan Estate, Locked Bag 34, 90009, Sandakan, Sabah Telephone : 089253122 Fax : 089253123 e-mail : [email protected]

2.0 Assessment Process

2.1 Certification Body SIRIM QAS International Sdn. Bhd. is the oldest and leading certification, inspection and testing body in Malaysia. SIRIM QAS International provides a comprehensive range of certification, inspection and testing services which are carried out in accordance with internationally recognised standards. Attestation of this fact is the accreditation of the various certification and testing services by leading national and international accreditation and recognition bodies such as the Department of Standards Malaysia (STANDARDS MALAYSIA), the United Kingdom Accreditation Services (UKAS), the International Automotive Task Force (IATF), and the Secretariat of the United Nations Framework Convention for Climate Change (UNFCC). SIRIM QAS International is a partner of IQNet, a network currently comprising of 36 leading certification bodies in Europe, North and South America, East Asia and Australia. SIRIM QAS International has vast experience in conducting assessment related to RSPO assessment. We have certified more than a hundred palm oil mills and several estates to ISO 14001 & OHSAS 18001. We have also conducted pre assessment against RSPO Principle and Criteria. SIRIM QAS International was approved as a RSPO certification body on 21st March 2008. 2.2 Qualification of Lead Assessor and Assessment Team The assessment team consisted of four assessors. The details of the assessors and their qualification are detailed below:

mailto:[email protected]


Assessment Team

Role/Area of RSPO Requirement

Qualification and Experience

Dr. S.K. Yap

Assessment team leader/ estate environmental issues and HCV habitats

Over 400 auditor days of auditing experience, having audited to the following: ISO 14001, MTCS and FSC forest management certification & RSPO

Completed RSPO Lead Assessor Course - 2008

Successfully completed EARA approved lead Assessor course for ISO 14001: 2001

Ph. D. (Forest Biology) University of Aberdeen (Scotland) and University of Malaya Fellowship in Tropical Rain Forest Project.

B.Sc. Hons. Second Class Upper (Botany), University of Malaya

Memberships in Professional Organizations:

Member of the IUFRO Working Party on Seed Problems. Nominated as one of the candidates for the Co-Chairman of Working Party in 1986.

Project Leader for Project 8 of the Reproductive Biology of Tropical Trees of the ASEAN-Australian Tree Improvement Programme. 1986. Given the role to develop research activities on reproductive biology within ASEAN countries with sponsorship from Australia.

Elected member of the Committee on Forest Tree and Shrub Seeds of the International Seed Testing Association. 1989 to 1992.

Vice Chairman of the Working Group on Seed Origin and Genetic Resources of the ASEAN Canada Forest Tree Seed Centre. 1990 to 1995. Responsible in coordinating research activities on genetic resources within the ASEAN countries.

Project leader on Impact of Acid Precipitation on Forest working in conjunction with researchers from China, Indonesia, Japan and Thailand.

Mohamed Hidhir Bin Zainal Abidin

Lead Assessor / Milling Operation,

Occupational Health and Safety

Over 100 days of auditing experience, having audited on: ISO 9001, ISO 14001, & RSPO.

4 years’ experience in palm oil milling

Successfully Completed RSPO Lead Assessor Course – 2013

Successfully completed ISO 14001 EMS RABQSA/IRCA approved Lead Assessor – 2012


Successfully completed ISO 9001 QMS RABQSA/IRCA approved Lead Assessor – 2012

Successfully completed OHSAS 18001 OHSMS RABQSA/IRCA accredited Lead Assessor Course – 2012

B.Sc. (Hons) Chemical Engineering

Dr Rusli Mohd Assessor / Social issues and related legal issues

Collected 40 auditor days auditing to FSC Forest Management requirements & RSPO.

Peer reviewer for FSC Forest Management certification reports

PhD Forestry-Policy

M. Phil. Forestry-Policy

B.Sc. Forestry

Mr. Selvasegam a/l T Kandiah

Assessor / Good Agricultural Practices (GAP) and related legal issues

Collected 13 days of RSPO audit.

Completed RSPO Training - 2012

Attended RSPO workshop - 2013

B. Sc. (Hons) Agriculture – University of Agricultural Sciences, Hebbal, Banglore, India (1969-1973)

A Planter with Kumpulan Guthrie Berhad (1995-2002 – retired)

Inclusive of One year in Liberia and

2 years in Estate Department in Kumpulan Guthrie Berhad, HQ

Experience in Managing:

Nursery :

rubber and cocoa

Immature Area : Cocoa Replant, Rubber Replant, Oil Palm Replant Oil Palm New Clearing

Mature Area: Cocoa, Rubber & Oil Palm.

Collection : Harvesting, Cocoa (i.e Splitting Cocoa Pods & Fermenting and Drying Beans), Oil Palm – In field collection (i.e Buffalo, Jamsa, Mini Tractor, Crane Loading, Bin Loading (Jamsa) Rubber - tapping

Vehicle Maintenance & Workshop : Mini Tractors, Jamsa, Lorries – Tippers and Flat Body, Prime Movers, Jeeps

Estates Developments : Collection of Data for Monitoring Estates’ Performance, Organizing Seminars, Meetings, Forecasting Workers Housing Requirement for all estates

Company - Forecasting FFB Yield &


Oil Extraction Ratio for Company, Assist in Computerising Budget Formatting and Budget Preparation, Assist Formulation of Best Practices

Formulation of SOP for all Estate Operations for all workers, Junior Staff and Senior Staff

Mr Hazani Othman

Assessor / RSPO Supply Chain Certification Standard

Over 200 auditor days of auditing experience of RSPO, (MC&I) and FSC forest management and chain-of-custody certifications and ISO14001 Environmental Management System.

Successfully completed EARA ISO 14001 Environmental Management System approved Lead Assessor course.

Successfully completed IRCA ISO 9001 approved Lead Assessor course.

Successfully completed RSPO P&C Lead Assessor course.

Attended RSPO P&C certification requirement training.

General Manager, Department of Technical, Forest Plantation Development Sdn. Bhd. 2009-2011.

Head, Department of QA/QC, Hoto Stainless Steel Industries Sdn. Bhd. 2006-2009.

Bachelor of Forestry, Universiti Pertanian Malaysia.

Diploma in Forestry, Universiti Pertanian Malaysia.

2.3 Assessment Methodology The surveillance assessment was guided by the sampling formula of 0.8 √y. Nonetheless, all the estates were visited in this assessment but were assessed with different elements of the standard. The mill is assessed in every assessment. The assessment team carried out field and office assessments for conformance against the RSPO-MY principles and criteria. The visits also covered HCV habitats, labour lines, storage areas and other workplaces. Common systems were identified and specific evidences were recorded for individual estates. Interviews, particularly those with employees, local communities and suppliers were conducted formally as well as informally, without the presence of company management personnel. In addition to that, records as well as other related documentation were also reviewed. The assessment programme is in Attachment 2.


2.4 Date of Next Surveillance Visit The next surveillance assessment is expected to be conducted around September 2014.


3.0 Assessment Findings 3.1 Summary of Findings The findings of the Annual Surveillance Assessment were presented during the on-site closing meeting. There were major nonconformity report (NCR) being raised on the Terusan CU’s compliance against the requirements of the RSPO MYNI. The details of the NCR and the corrective actions taken are as in Attachment 3. The detailed findings of the assessment on the CU’s compliance with the requirements of the RPSO MYNI are as follows: PRINCIPLE 1: COMMITMENT TO TRANSPARENCY

Criterion 1.1

Oil palm growers and millers provide adequate information to other stakeholder on environmental, social and legal issues

relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making.

Indicator 1.1.1

Records of requests and responses must be maintained.

Major compliance

Guidance :

Growers and millers should respond constructively and promptly to requests for information from stakeholders

Criterion 1.2

Management documents are publicly available, except where this is prevented by commercial confidentially or where

disclosure of information would result in negative environmental or social outcomes.

This concerns management documents relating to environmental, social and legal issues that are relevant to compliance

with RSPO Criteria. Documents that must be publicly available include, but are not necessarily limited to:-

1.2.1 Land titles / user rights (C 2.2)

1.2.2 Safety and health plan (C4.7)

1.2.3 Plans and impact assessments relating to environmental and social impacts (C 5.1, 6.1, 7.1, 7.3)

1.2.4 Pollution prevention plans (C 5.6)

1.2.5 Details of complaints and grievances (C 6.3)

1.2.6 Negotiation procedures (C 6.4)

1.2.7 Continuous improvement plan (C 8.1)

Guidance:

Examples of commercially confidential information include financial data such as costs and income, and details relating to

customers and/or suppliers. Data that affects personal privacy should also be confidential.

Audit findings

The Terusan CU had provided a set of documents on legal, environmental and social issues related to RSPO in Bahasa Malaysia and these documents were listed in the letters to stakeholders. As noted in the previous surveillance all the estates had maintained records on requests for information or documents that were related to the RSPO Criteria. There was a written SOP for stakeholders’ consultation and a Public Information Request (PIR) Form was made available to any interested parties. Letters were again written to stakeholders on 11 July 2013 informing them that documents were available for inspection in the offices of the estates. The stakeholder list was also updated in 2013.

The record books on requests for information showed that Terusan CU had not received any request for such information from external stakeholders except auditors. Requests were made


by staff of other estates and from the head office. It was noted that the Department of Environment (DOE) had visited Terusan POM on several occasions. The communication from the DOE during its recent visit was not documented. Area for improvement where Terusan CU to ensure that communication with stakeholders (including DOE) in the mill should always be documented and retained so as to be able to identify and ensure requests or comments if any be responded accordingly. As noted in the previous surveillance all the estates had maintained management documents relating to environmental, social and legal issues that were relevant to compliance with RSPO Criteria as specified in the Criterion. Records on requests for information or for these documents were maintained. There was a written SOP for stakeholders’ consultation and a Public Information Request (PIR) Form was made available to any interested parties. Letters were sent to stakeholders on 11 June 2013 informing them that documents specified in the Criterion were available for inspection in the offices of the estates.

PRINCIPLE 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

Criterion 2.1

There is compliance with all applicable local, national and ratified international laws and regulations

Indicator 2.1.1

Evidence of compliance with legal requirement

Major compliance

Indicator 2.1.2

A documented system, which includes written information on legal requirements.

Minor compliance

Indicator 2.1.3

A mechanism for ensuring that they are implemented.

Minor compliance

Indicator 2.1.4

A system for tracking any changes in the law.

Minor compliance

Audit findings A legal register RSPO Register of Legal and Other Applicable Requirement with all applicable laws was presented. The list was updated with amendments added in January and June 2013 by the Sustainability Manager. These new laws were the Weights and Measure Act 1972 and Electricity Supply act 1990. All relevant permits and licenses of mill and estates were made available and displayed in the respective offices. Prescribed premise license (Jadual Pematuhan) was found to be valid until 30 June 2014. Among the environmental legal requirements applicable to Terusan CU are:

(a) Environmental Quality (Scheduled Wastes) Regulation 2005. (b) Environmental Quality (Clean Air) Regulation 1978. (c) Jadual Pematuhan (No. Lesen: 001201) as required by Environmental Quality (Prescribes

Premises) (Crude Palm Oil) Regulation 1977. Compliance to the registered applicable legal and other requirements was monitored. Records of compliance monitoring were presented. These records of monitoring could be enhanced by including dates, evidences, periods covered, and names of personnel conducting it was raised.


Inspection of the compliance indicated that there the following requirements were yet to be complied by Terusan estate and mill:

(a) Jadual Pematuhan (No. Lesen: 001201) with reference to requirement of Section 49A of Environmental Quality (Amendment) Act 2012 pertaining to have competent person responsible for effluent treatment system, air pollution control equipment, and scheduled wastes management in the mill.

(b) Regulation 36 of Environmental Quality (Clean Air) Regulation 1978 pertaining for obtaining approval for installation of applicable generator sets at Terusan 1 and Terusan 2 estates.

The legal statutes inspected in the estates were Occupational Safety and Health Act 1994,

Factories and Machinery Act 1967, Petroleum (Safety Measures) Act 1984, Fire Services Act

1988, Poisons Act 1952, Pesticides Act 1974, Workers’ Minimum Standards of Housing and

Amenities Act 1990, Sabah Environment Protection Enactment, 2002, Sabah Water Resources

Enactment, 1998 and Labour Ordinance of (Sabah Cap. 67) 1950.

All the relevant permits and licenses were displayed prominently in the office of the estates and mill.. These were: 1. ‘Ordinan Perniagaan Profesion dan Perlesen Perdagangan’ (Trading Licence) 2. ‘Surat Kuasa’ or Authorization Letter issued by the Enforcement Division, Ministry of

Domestic Trade and Consumer Affairs for Petrol, Diesel and Chemical Fertilizer 3. Permit Potongan Daripada Gaji Pekerja issued by the Jabatan Tenaga Kerja Sabah for

Terusan 1 and Terusan 2 Estates (Permit to Deduct Wages of Workers) 4. Licence No. B-000130/08 valid until 12.03.2013 and B-003786/05 valid until 23.05.2013

from Jabatan Tenaga Kerja Sabah for the employment of foreign workers in Terusan 1 and 2 Estates.

In the mill there were additional licenses shown:

i. Air compressor license

ii. MPOB License

iii. License for Generator Sets

iv. License to Employ Foreign Workers

During the 2012 surveillance the register in Terusan Mill had not included the Weight and Measure Act 1972, Electric Supply Act 1990 and other approval conditions for de-sludging activities. An OFI TS 1/2012 was raised on the gap. During this surveillance the legal register had been updated to include these legal requirements and the OFI was closed


Relevant Licences and Documents on Display in the Terusan Mill Office.

A Register of Legal and Other Applicable Requirement for Terusan Estate and Mill was updated in January and June of 2013 but the table of content of the register for the estate was observed to have not included Jadual Pematuhan, Sijil-sijil Kelulusan and Akujanji letter with Environmental Protection Department. The Sustainability Manager East Manager was given the task of monitoring the compliance with all the legal requirements. The monitoring of compliance was conducted against the register of the applicable legal and other requirement, and the result was presented. Approval conditions under EQA 1974, (Prescribed Premise) Crude Palm Oil 1977 had been implemented and evaluated during this assessment. Monthly reports for effluent final discharge and quarter year report to DOE have been submitted and there was no occasion of non-compliance for the discharge during the evaluation period inspected. There was an established system for tracking changes in laws. The Sustainability Manager had been working with the legal department, relevant agencies and mass media to track any changes in the law.

Criterion 2.2

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

rights.

Indicator 2.2.1

Evidence of legal ownership of the land including history of land tenure.


Major compliance

Indicator 2.2.2

Growers must show that they comply with the terms of the land title. [This indicator is to be read with Guidance 2]

Major compliance

Indicator 2.2.3

Evidence that boundary stones along the perimeter adjacent to state land and other reserves are being located and visibly

maintained.

Minor compliance

Specific Guidance: Growers should attempt to comply with the above indicator within 15 months from date of announcement

of first audit. Refer to State Land Office for examples of other reserves. Indicator 2.2.4

Where there are, or have been, disputes, proof of resolution or progress towards resolution by conflict resolution processes

acceptable to all parties are implemented. CF 2.3.3, 6.4.1 and 6.4.2.

Minor compliance

Guidance:

1. For any conflict or dispute over the land, the extent of the disputed area should be mapped out in a participatory way.

2. Where there is a conflict to the condition of land use as per land title, growers must show evidence that necessary action

has been

taken to resolve the conflict with the relevant authorities.

3. Ensure a mechanism to solve the dispute (Refer to C 6.3 and C6.4)

4. Evidence must be demonstrated that the dispute has been resolved.

5. All operations shall cease on land planted beyond the legal boundary.

Audit findings All the estate land was leased from the Sabah State Government and the condition of the lease was for ‘Agriculture Purpose’. All the estates were found to be in compliance with that lease condition. Terusan and Rumidi Estates had a 99 year lease on the land from the Sabah State government.

Land titles for all the estates were presented as follows: a. Title Lease for Terusan Estates CL 085322854 issued on 9 June 1997 for 6,354.8 ha.

b. Title Lease for Rumidi Estate Lease CL 085208359 for 972 ha issued on 24 December

1965.

As reported in the previous surveillance, part of the Rumidi Estate was purchased from Sabah Land Development Board (SLDB) in August 1993 by Sapi Plantation Sdn. Berhad (SPSB). The company was allowed by SLDB to enter the land and work in it pending the issuance of the land title to SLDB. SLDB had acknowledged that it had taken action to secure the title from the authority and transfer to SPSB in a letter dated 11 September 2012. The audit team was informed that a draft title CL No. 085341546 was issued by Land and Survey Department and pending registration. Once this this is registered it will be transferred to SPSB but there was no progress reported. All the estates were in compliance with the condition as stated in the terms and conditions of the lease agreements that the land would be for agricultural purpose. It was observed that 972 ha in Rumidi Estate were approved for cocoa and that the estate was applying to Jabatan Pertanian (Department of Agriculture) to alter the approval to oil palm. During the site inspection conducted in all the estates, it was observed that there were distinct red coloured wooden boundary markers. The boundary stones, its positions of these markers were labeled and marked on the Boundary Stone maps and the position of each marker recorded.


Boundary Marker and boundary stone with Neighbouring Plantation in Rumidi Estate

As stated in the previous report the legacy dispute covering 57 hectares in Rumidi Estate dating from the time of transfer of ownership from the Sabah Land Development Board (SLDB) had been settled. The management had acknowledged the existence of the communities and did not infringe on the land and had excluded the piece of land from its ownership. This was demarcated on the map of the estate. Consultation with the communities of Kampung Peranchangan, Kampung Nangoh and Kampung Gana Pati had confirmed the excision and they were still waiting

for the grant of title from the relevant authority.

Criterion 2.3

Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and

informed consent.

Indicator 2.3.1 Where lands are encumbered by customary rights, participatory mapping should be conducted to construct maps that show the

extent of these rights.

Major compliance

Indicator 2.3.2

Map of appropriate scale showing extent of claims under dispute.

Major compliance

Indicator 2.3.3

Copies of negotiated agreements detailing process of consent (C2.2, 7.5 and 7.6).

Minor compliance

Audit findings There was no land within the estates being encumbered by customary rights. The land opposite Rumidi Estate which was claimed by the local communities had been resolved by the exclusion of this area from the estate through mutual agreement with the affected communities in 2011. This area was demarcated on the map of the estate.

As indicated in the findings on Indicator 2.3.1 above, there were no longer any cases involving land disputes in Terusan CU. The management of Terusan CU and the communities had resolved the land claim through consultations and had mapped out the boundaries of the affected area.


PRINCIPLE 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY

Criterion 3.1

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

Indicator 3.1.1

Annual budget with a minimum 2 years of projection

Major compliance

Specific Guidance:

Annual budget may include FFB yield/ha, OER, CPO yield/ha and cost of production that is not required to be publicly

available.

Indicator 3.1.2

Annual replanting programme projected for a minimum of 5 years with yearly review.

Minor compliance

Audit findings A Management Plan including crop forecast, infra-structure development (agricultural machinery, roads, houses etc.) covering the period of 2011 to 2014 had been prepared for all the estates and made available to the assessment team. Annual Budget covering Management Plan including crop forecast, infra-structure development (agricultural machinery, roads, houses etc.) had been prepared for both estates only until the year 2014. The projection was made only for 1 year and not as the minimum two years specified. Annual budget for the years 2008, 2009, 2010, 2011 and 2012 were kept in the office were made available to the audit team. Copies of Annual Report 2008, 2009, 2010, 2011 & 2012 were also available. Data was kept for FFB production from 2010 to June 2013. For the Terusan 1 and 2 Estates, Five Year FFB Yield Projection from 2009 to 2014 was presented. The projected Yield per Hectare (YPH) for Terusan 1 in 2013 was 25.94 tonnes and for Terusan 2 and Rumidi it was 23.08 tonnes. The CAPEX document for 2012/2013 was made available during the audit. Most of the budgeted expenses were on mill continual improvement programmes including modification and machine upgrades as well as for safety and environment. Accommodation and facilities upgrades for staff quarters were also included. The replanting scheduled for 2012 could not be completed with over 244.6 ha postponed to 2013 which at time of visit had not commenced. Both DXP seedlings and Clonal seedlings were sighted in the main oil palm nursery in Terusan 2. There were a total of 24,880 DXP seedlings and 9,200 clonal seedlings

Clonal Seedlings in the main nursery


However Terusan CU had an annual replanting programme only up to 2016 not the 5 years specified.

PRINCIPLE 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS

Criterion 4.1

Operating procedures are appropriately documented and consistently implemented and monitored. Indicators:

4.1.1 Documented Standard Operating Procedures (SOP) for estates and mills Major compliance 4.1.2 Records of monitoring and the actions taken are maintained and kept for a minimum of 12 months. Minor compliance

Findings: In palm oil mill Standard Operating Procedure (SOP) for each stage of the process had been prepared and placed at the appropriate sites. Copies of the SOPs were presented to the audit team. The Agriculture Manual & Standard Operation Procedure [Manual and SSOP] (2011 Edition) was presented during the surveillance. All the estates continued to use this Manual as the documented operating procedure. This Manual prescribed all the standard operation procedures from nursery, land preparation to harvesting as well as monitoring of compliances. Records of fertilizer application, pest and diseases control as well as weeding regimes were all done in accordance to these SSOPs. Selective weeding in Rumidi Division had been carried out along the inter lines of oil palm blocks. Circles and paths too had been sprayed. However, the road sides in some blocks, as seen Block 113, had tall woody growth and some lalang which should be eradicated as they are categorized as noxious weeds in the Agricultural Manual.

At time of the assessment it was noticed that Oil Palm Loose Fruits (LF) were well recovered. However in the circles underneath the palms of blocks 01, 02 & 49 in Terusan 2 were wild oil palm seedlings (VOPs). These VOPs should be eradicated to maintain clean circles to enhance ease of collection of LFs.

Both Terusan 1 and Terusan 2 estates had used buffalos for harvesting FFBs and for breeding in Rumidi Estate.

Harvesting using buffalos in the estates

The number used for harvesting and for breeding was documented as in Table 7.


Number of buffalos used in harvesting and breeding in the CU

Estate

Used for Harvesting Breeding Programme Total Male Female Male Female

Terusan 1 3 40 0 0 43

Terusan 2 0 107 0 0 107

Rumidi 0 0 2 38 40

Total 3 147 2 38 190

In addition to the above there were 7 male and 9 female calves. During the examination of the buffalos kept in the estate it was noticed that there were no appropriately maintained records of treatment done to buffalos and calves. It was specified in the SOP for buffalo livestock that deworming medicine had to be given to adults 2 to 3 times a year. Calves should also be given similar treatment on the first week. Hemorrhagic septicemia (HS) vaccine was to be administrated to calves at 3 to 4 months old.

KPI system had been introduced since 2011 for monitoring purposes. The records made available on KPI for Harvesting covered the categories of Good, Unripe, Rotten & old Bunches, Long stalk and Loose Fruit collection. It was observed that, ripeness standard and chemicals usage were understood by the field workers as evident during the random interviews conducted in the field. Workers training schedule, programmes and records for 2012 were inspected. The checking on crop quality was done by the Eco-Management Audit Unit. As in the estates, the mill also had its own mill operation manual and SSOP that had been continuously used and implemented. There was no change in the procedure since the last audit. The latest procedure dated November 2011 covered all the main activities for the mill operation including security, weighbridge – FFB Reception, weighbridge – sales & dispatch, loading ramp – FFB grading, sterilizer, threshing, pressing, storage of CPO & PK, boiler house, engine room, confined space and Lockout/Tagout, POME treatment, storage tank cleaning and SSOP MILL-025 for gauge testing. Relevant SOPs were displayed at various work station for easy reference, for example, at estate office notice board and mill workstation.

Relevant SSOPs on Display in the Terusan Mill and Estates.


Relevant SSOPs on Display in the Terusan Mill and Estates.

There were some procedures which were listed in the OSH manual had yet to be incorporated in the SSOP for easy reference and updating. SOP for working at height had yet to be incorporated in the SSOP (Safe Standard Operating Procedure). A SSOP/guideline for the use of motorcycle within the plantation had also not incorporated with the guideline of Road Safety Department. Relevant records of monitoring such as monthly monitoring of effluents, emission of black smoke, records on scheduled wastes and quarterly reports submitted to DOE by mill were observed. As for the estate, relevant records related to EIA approval for Proposal Replanting of Oil Palm Estate, Beluran, Sabah – JPAS/PP/02/600-1/11/1/150, 12/4/13 and records on scheduled wastes were made available. All observed records were retained for not less than 12 months. In addition to these internal reports, PPB Oil Palms had to submit the MPOB (EL) MF4 and MPOB PX4-MF on monthly basis as part of the formal performance reports.

Criterion 4.2

Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. MY-NIWG recommends that the indicators in criterion 4.2 and 4.3 are linked 4.2.1 Monitoring of fertilizer inputs through annual fertilizer recommendations. Minor compliance 4.2.2 Evidence of periodic tissue and soil sampling to monitor changes in nutrient status. Minor compliance 4.2.3 Monitor the area on which EFB, POME and zero-burn replanting is applied. Minor compliance Guidance:

Long-term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Managers should ensure that best agricultural practice is followed. Nutrient efficiency must take account of the age of plantations and soil conditions.

Findings: Soil Fertility had been maintained by regular application of inorganic fertilizers, application of empty fruit bunches (EFBs) mulching, proper frond stacking (biomass), POME application, and by maintaining soft weeds within interlines. A soil test was conducted and the agronomist had drawn up a soil map. Soil sampling was scheduled once at every 6 years. This was as per ISCC requirement with the last samplings done on 6 June 2011. .


Foliar sampling was carried yearly and the results formed a basis for fertilizer recommendation. Fertilizers recommendation for the period of 2013 had been prepared based on the foliar sampling done 1n 2012. The latest sampling was conducted in February 2013, the results of which would form the basis for the fertilizer recommendation of 2014. Monthly records of fertilizers applied were kept. The fertilizer program and application status in tonnes as shown below.

Recommendations on fertilizer application and amount applied in the estates

Fertilizer

Recommendation for 2013 Applied as at June 2013

Terusan 1 Terusan 2 Rumidi Estate

Terusan 1 Terusan 2 Rumidi Estate

NPK Super K 839 922 234 839 922 234

Borate 39.55 35 10 - - -

NK3 895 956 236 591 582 220.15

RP 129 152 54 - - -

MOP - 438 164 - - -

Kieserite - - 33 - - 33

SOA - 585 152 - - -

NPK - - 12 - - -

GML 99 180 - 99 180 -

As mentioned in the findings on Indicator 4.2.1, an annual agronomic foliar analysis had been conducted in all the estates and the results formed a basis to ascertain soil fertility and recommendation for the use of fertiliser. Soil sampling as per ISCC requirement was also done every 6 years and the latest was done on 6 June 2011. Soil fertility had been maintained by the application of empty fruit bunches (EFBs) mulching, proper frond stacking (biomass), POME application, regular application of inorganic fertilizers and water management. Empty fruit bunches (EFBs) and decanter cake were distributed and used as organic fertilizer for the oil palm trees in the estates.

Distribution of Empty Fruit Bunches as Fertilizers in Block 02 in Terusan 2 Estate

. Mulching was done at a rate of 40 to 80 mt/ha/year. It was observed that the application of EFBs as fertilizer had been adhered to the structured EFB Application Program for both Terusan 1 and Terusan 2 Estates. Maps of EFB application and monthly records were maintained. EFB application in metric tonnes and hectares applied is shown in Table 9. Monthly records of EFB usage (block by block) were also inspected.


EFB application in the 3 estates

Year 2010 2011 2012 2013 *

Unit Mt Ha Mt Ha Mt Ha Mt Ha

Terusan 1 9,858.2

0 127.9

7 2,214.50 27.48 11,069.67 138.38 2,209.2

5 27.62

Terusan 2 2,346.0

0 458.8

1 20,041.35 702.3

2 25,497.82 1,361.4

9 17,708.

40 306.53

Rumidi Estate

2540.31 31.75 127.20 1.59 - - - -

*until June 2013

POME was discharged for land irrigation after appropriate treatment. Monitoring of POME application was recorded in a logbook. Among the information monitored are daily activity, flow meter reading, and information of trenches applied.

Criterion 4.3

Practices minimise and control erosion and degradation of soils. Indicators:

4.3.1 Documented evidence of practices minimizing soil erosion and degradation (including maps). Minor compliance Specific Guidance:

Replanting on sloping land must be in compliance with MSGAP Part 2: OP (4.4.2.2) For Sarawak, steep slopes are considered high risk erosion areas and cannot undergo replanting unless specified in the EIA report and approved by the Natural Resources and Environment Board (NREB). For Sabah, slopes 25 degree and steeper are considered high risk erosion areas and cannot undergo replanting unless specified in the EIA report [Environment Protection (Prescribed Activities)(Environment Impact Assessment) Order 2005] and approved by the Environmental Protection Department (EPD). Slope determination methodology (slope analysis) should be based on average slope using topographic maps or topographical surveys. 4.3.2 Avoid or minimize bare or exposed soil within estates. Minor compliance Specific Guidance:

Appropriate conservation practices should be adopted. 4.3.3 Presence of road maintenance programme. Minor compliance 4.3.4 Subsidence of peat soils should be minimised through an effective and documented water management programme. Minor compliance Specific Guidance:

Maintaining water table at a mean of 60 cm (within a range of 50-75cm) below ground surface through a network of weirs, sandbags, etc. in fields and watergates at the discharge points of main drains. 4.3.5 Best management practices should be in place for other fragile and problem soils (e.g. sandy, low organic matter and acid sulphate soils). Minor compliance

Findings: Slope classification maps for the 3 estates were examined. As reported previously the terrains of the estates were generally gentle and undulating with only 0.03% of Terusan 1 Estate with 12 o to


18o gradient while Rumidi Estate had 0.68% of its area with gradient of 12 o to 18o and as a whole only 0.01% of Terusan CU had terrain of 8o to 25o. Planting of cover crops was implemented along steep slopes. Soil erosion monitoring was started in June 2011 with 6 plots in Terusan 1 Estate and 6 plots in Terusan 2 Estate recorded in Soil Monitoring Forms. During the field inspection, it was observed that generally the estates had been well protected from soil erosion with natural vegetation. Planting of Mucuna bracteata had been done along slopes and a map to indicate the planting of was also presented. The practice of circular weeding and frond stacking had further reduced area of exposed soil. It was observed that harvesting roads in all the estates were of satisfactory condition and road cambers were maintained to allow easy water runoff. Rain water was drained into the terraces and lower slopes. There was a road maintenance programme as shown in the machine utilization record documented as Heavy Machinery Schedule for each of the estate. All estates had a schedule for machinery use. Terusan 1 Estate Schedule of Heavy Machineries for Road Maintenance (Back Hoe) and Terusan 2 Estate Schedule of Heavy Machineries for Road Maintenance (Motor Graders and Compactors) from January to December 2013 were presented. There was no peat soil in the 3 estates thus management practices for fragile soils were not developed. The Bergosang Soil series covered 54% of Terusan 1 and 2 Estates and the water levels were maintained between 45 cm and 60 cm using sand bags bunds and water gates. The level were monitored using ‘Free Board Indicators’. There were 32 water gates each in Terusan 1 Estate and Terusan 2 Estate. Maps of the water gates were presented to the auditors. Water gate No. 4 in Terusan 1 was inspected at time of assessment.

The use of sand bags and water gates to maintain water levels in the estates

Criterion 4.4

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

4.4.1 Protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate. Major compliance Specific Guidance:

Riparian buffer zones: Reference to be made to relevant national regulations or guidelines from state authorities e.g. Department of Irrigation and Drainage (DID), whichever is more stringent.


4.4.2 No construction of bunds/weirs/dams across the main rivers or waterways passing through an estate. Major compliance 4.4.3 Outgoing water into main natural waterways should be monitored at a frequency that reflects the estates and mills current activities which may have negative impacts (Cross reference to C 5.1 and 8.1). Major compliance 4.4.4 Monitoring rainfall data for proper water management. Minor compliance 4.4.5 Monitoring of water usage in mills (tonnage water use/tonne FFB processed). Minor compliance Specific Guidance:

Data trended where possible over 3 years to look into resource utilization 4.4.6 Water drainage into protected areas is avoided wherever possible. Appropriate mitigating measures will be implemented following consultation with relevant stakeholders. Minor compliance 4.4.7 Evidence of water management plans. Minor compliance

Findings: There was a Riparian Zone Management Guidelines for protection of riparian belts along the major rivers. During inspection of the estates it was observed that boundaries of these riparian belts were clearly demarcated with red paint around the palm stems and blue signboards erected. Natural vegetation had colonized these riparian buffer belts as no weeding or fertilizer application was allowed. These buffer belts were also shown in maps of the estates.

Riparian Buffer Belt in Rumidi Estate clearly demarcated with healthy regeneration of

natural vegetation

It was observed that there was no construction of bunds/weirs/dams across the main rivers or waterways in the estates and that all stream and drainage were without any obstruction except for the 74 water gates at Terusan 1 Estate and Terusan 2 Estate to control water level and prevent entry of brackish water into the planted areas. Water sampling had been conducted at specified sampling points along the main rivers in all the estates. Terusan1 had one sampling point (T1), Terusan 2 Estate had 3 sampling points (T2, T4


and T 10) while Water sampling points were located at Rumidi, Terusan 1 and Terusan 2 Estates. These water sampling points of the estates were shown on a map in the document Surface Water Quality Sampling Report March and July 2012 Terusan Estate. Water samplings had been conducted by Ecological Monitoring Unit at the 5 discharge points into the rivers around the mill and estate. During the inspection only one of the sampling points (T2) was clearly signposted. All these sampling points should be clearly marked on ground.

Water sampling point No. 2 at Terusan 1 Estate

With the completion of the EIA report Proposed Replanting of Oil Palm Plantation at Terusan Estate, Beluran Sabah PPB Oil Palms Berhad August 2012 that was approved on April 2013 monitoring of surface water had been specified as part of the approval conditions. Records of water sampling conducted in Terusan Estate in March and July 2012, December 2012 and April 2013 had shown that the water BOD and COD were above the Class II B specifications. A follow up root cause analysis could be conducted to improve the quality of water discharges into the rivers. Water quality at the final discharge point from the mill was monitored monthly as prescribed in Jadual Pematuhan. Record of monitoring was presented for review. The results of monitoring indicated that the mill complied with its prescribed parameters and limits. The monitoring reports had to be submitted to DOE quarterly as prescribed by the regulatory agency. The monitoring was conducted by an independent accredited laboratory. Terusan mill had also conducted a systematic monitoring of air qualities. The Stock Emission Report and Dust Emission Monitoring Report for Chimney No. 1 sampled on July 2012 were inspected. Data on rainfall was collected by the estates. Records on rainfall from 1992 to June 2013 were made available and these were examined by the assessment team. Terusan CU had continued to monitor the amount of water being used by the mills and the estates. The water used was segregated for domestic and mill process consumptions. Procedures on minimizing water usage were implemented in all the offices, mills and estates. Rain water harvesting was constructed in line sites and estate complexes. It was observed that the records of the mill’s daily water use (litres of water per ton of FFB) as well as the monthly and daily water consumption in the estates were being kept. Monthly summary records of water consumed for 2011, 2012 and up to June 2013 were examined. The Terusan


Estate Water Management Plan was also made available during the surveillance. For domestic use, raw water consumption (l) per head per day in 2011 was an average of 477.3 l/head per day, in 2012 it was 467.85 l/head per day and up to June 2013, the average usage was 398.2 l per head per day. For processing, the water consumption was at 1.26 l per tonne of FFB processed for 2011; 1.29 l per tonne of FFB processed for 2012 and up to June 2013, the usage was at 1.38 l per tonne of FFB. There was no water drainage into any of the identified protected areas. A Water Management Plan was presented for each estate and also for the mill. The Plan for the mill had established objectives to increase efficient use of water:

(a) reduce 15% water usage / population. (b) reduce 10% water usage / FFB.

Awareness program and monitoring of usage had been implemented. The staff was made aware of the need to conserve water in all the offices, mills and estates. All the water obtained from the rivers was treated before human consumption. To improve the harvesting of rain water, every house had been equipped with its own rain water collection tanks.

Criterion 4.5

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

4.5.1 Documented IPM system. Minor compliance 4.5.2 Monitoring extent of IPM implementation for major pests. Minor compliance Specific Guidance:

Major pests include leaf eating caterpillars, rhinoceros beetle and rats. 4.5.3 Recording areas where pesticides have been used. Minor compliance 4.5.4 Monitoring of pesticide usage units per hectare or per ton crop e.g. total quantity of active ingredient (a.i.) used/ tonne of oil. Minor compliance

Findings: Terusan CU had continued to implement the Integrated Pest Management (IPM) in the estates. One of the techniques used was by establishing beneficial plants along road sides and vacant areas. The estates had planted Cassia cobanensis, Tunera subulata and Antigonon leptopus in 2013. Maps of areas planted were provided to the auditor. An OFI TS 3/2012 was raised during the previous surveillance on the need to establish more beneficial plants as the last planting was done in 2009. This OFI was closed with the observed additional planting. Monitoring of incidences of pest infestation of Bagworm, Nettle Caterpillar as well as other insect pests was conducted. As rat damage was below the threshold level baiting was not required. The estates had also initiated a census on Ganoderma infected palms from October 2012. Monitoring extent of IMP implementation for major pests was carried out by monthly pest-detecting census. The results of Bagworm, Nettle Caterpillar attacks and rat damage census were made available during the surveillance. As mentioned in the findings under Indicator 4.5.1, additional beneficial plants were planted in 2013 along road sides and vacant areas in all the


estates. The species used were Antigonon leptopus, Cassia cobanensis and Tunera subulata. All the estates continued to record areas sprayed with pesticides in field cost books, in programme sheets and bin cards. As a result of pest threshold levels being low in 2012 no pesticides were used against pests and no rats baits were used. Pesticides usage had been monitored in the chemical register dated 12 June 2012 which was reviewed. It recorded all chemicals used as herbicides, insecticides, fertilizer, oil and lubricant and chemical for water treatment. Record sheets documenting the amount and type of chemicals used for each field, its area in ha and % a.i. for each month of the year was presented. A summary of chemicals used in each estate for each month was also provided to the audit team. In addition the agrochemical consumption for each estate was also made available. The usage of pesticides for 2013 in the estates was established and maintain.

Criterion 4.6

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

4.6.1 Written justification in Standard Operating Procedures (SOP) of all agrochemicals use. Major compliance 4.6.2 Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Major compliance Specific Guidance:

Reference shall also be made to CHRA (Chemical Health Risk Assessment) 4.6.3 Pesticides shall be stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations. Major compliance Specific guidance:

Unless participating in established recycling programmes or with expressed permission from the authorities, triple rinsed containers shall be pierced to prevent misuse. Disposal or destruction of containers shall be in accordance with the Pesticide Act 1974 (Act 149) and Environmental Quality Act 1974 (Scheduled Wastes) Regulations 2005. 4.6.4 All information regarding the chemicals and its usage, hazards, trade and generic names must be available in language understood by workers or explained carefully to them by a plantation management official at operating unit level. Major compliance 4.6.5 Annual medical surveillance as per CHRA for plantation pesticide operators. Major compliance 4.6.6 No work with pesticides for confirmed pregnant and breast-feeding women. Major compliance 4.6.7 Documentary evidence that use of chemicals categorised as World Health Organisation Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions and paraquat, is reduced and/or eliminated. Adoption of suitable economic alternative to paraquat as suggested by the EB pending outcome of the RSPO study on IWM. Minor compliance 4.6.8 Documented justification of any aerial application of agrochemicals. No aerial spraying unless approved by relevant authorities. Major compliance 4.6.9 Evidence of chemical residues in CPO testing, as requested and conducted by the buyers. Minor compliance 4.6.10 Records of pesticide use (including active ingredients used, area treated, amount applied per ha and number of applications) are maintained for either a minimum of 5 years or starting November 2007. Minor compliance


Findings: As stated in the previous surveillance all chemicals usage was based on the ‘need to do basis’ to enhance field operations. A written justification in the SOPs on the use of agrochemicals had been written. The Agricultural Manual had included a chemical register list which indicated the purpose of usage (intended target), hazards signage, trade and generic names. Pesticides selected for use were those officially registered under the Pesticides Act 1974 (Act 149). As documented during the last surveillance there was the PPB’s Oil Palm’s Occupational Safety and Health Policy, plan and programme. The plan had been documented, communicated and implemented across all levels of the organization. The Safety and Health Manual and Safety and Health Plan were revised in December 2009. Hazard identification, risk assessment and risk control (HIRARC) records, as well as CHRA records were verified during this surveillance. Based on the recommendation of the CHRA, medical surveillance had been conducted for employees, such as estate sprayers and mill laboratory operators, whose jobs required them to be exposed to chemicals by an Occupational Health Doctor and monthly assessment of pregnancy by estate’s medical assistants. Recommendations from CHRA were continuously implemented through the yearly medical surveillance programme for the sprayers The storage of chemical herbicides was found to be in accordance to the related legal requirements. Concrete chemical stores in all the estates were constructed with locked doors. When interviewed the chemical storekeepers had shown understanding of the hazards involved and the required control measures. Records of the purchase, storage and use of agrochemicals were properly documented in the Stock Statement Return. All stores were locked and specific person-in-charge had been assigned to attend to it. The appropriate PPE for handling these chemicals were also available at the point of use and were inspected during the surveillance. Both Terusan 1 & 2 estates had continued the practice to recycle fertilizer bags by triple-rinsing method . The recycled bags were used for collecting loose fruits. Designated facility for triple-rinsing was observed. Wastewater from triple rinsing was collected and re-used for field spray application. Empty chemical containers had to be triple rinsed and if not required for use in the field were pierced to prevent misuse. This process was also stated in the Evaluation of Environmental Aspects and Impacts of the CU.

Water Filling and Triple Rinsing Area


MSDS instructions written in Malay were clearly displayed at the store as well as on the back of the tank used to transport pre-mixed chemicals to the field.

Clearly displayed MSDS Instructions on the back of the tanker transporting pre-mixed chemicals

After spraying a warning sign was put up on site to inform people on chemical application .

Warning sign put up after spraying of herbicides

Based on the recommendation of the CHRA, medical surveillance has been conducted for employees, such as estate sprayers and mill laboratory operators, whose jobs required them to be exposed to chemicals. Terusan CU had also a schedule for medical surveillance of its workers. Monthly medical surveillance was conducted by the Estate Medical Assistant for estate sprayers who were exposed to the potential dangers of chemicals. Records for the check up from January to December 2012 and January to June 2013 were presented during the surveillance. There was also a monthly record of pregnant and lactating women. In March 2013 three cases of pregnancy were detected and the workers issued with medical certificate chits with a recommendations to be transferred to another work station. This process would be enhanced by the issuance of the Medical Removal Protection form. In addition to the above, all the sprayers had to undergo annual medical surveillance carried out by Occupational Health Doctor (Dr. Mohd Azizan Abd Aziz) registered with DOSH Registration No. HQ/10/DOC/10/167. Record Book and Certificate of Fitness issued to each of the 64 workers


from Terusan 2 Estate and 54 workers from Terusan 1 Estate on 3 March 2013 were shown to the auditors. These workers were recorded to be healthy. This test was in accordance to the Occupational Safety and Health Act 1994. As to date there was no request from CPO buyer to test chemical residues in CPO. It was found that parameter for testing were established in accordance to Palm Oil Refiners Association of Malaysia (PORAM) and Malayan Edible Oil Manufacturers Association (MEOMA) standards. However, as part of the requirement on Food Safety Management System (FSMS) @ ISO22000, Terusan POM had conducted CPO testing on pesticides, heavy metal and microbiological content on annual basis by an external accredited laboratory, IDELAB Sdn Bhd. Certificate of fitness dated 28th April 2012 was presented during assessment and result was found within the stipulated limits. Sampling for 2013 had been carried on 17th June 2013 but results of the analysis had not been released by the laboratory. There was no evidence to show that ‘Paraquat’ had been used in any of the estates. Examination of records had shown that there was no aerial spraying being conducted in all the estates. For 2009, 2010, 2011, 2012 and up to June 2013 a total of 25.799 a.i. (active ingredients) per ha were applied in the field in the three estates. These chemicals used are as shown in the table in 4.5.4. The total a.i. per ha used were 6.98 in 2009, 4.59 in 2010, 7.41 in 2011 and 4.94 in 2012. A gradual decrease in the quantity of chemicals use was observed in the three estates from 2009 to 2013. A bin card system for the issuance of agrochemicals (FIFO) had been practiced in the chemical store.

Criterion 4.7

An occupational health and safety plan is documented, effectively communicated and implemented

Indicator 4.7.1

Evidence of documented Occupational Safety Health (OSH) plan which is in compliance with OSH Act 1994 and Factory and

Machinery Act 1967(Act139).

Major compliance

The safety and health (OSH) plan shall cover the following:

a. A safety and health policy, which is communicated and implemented.

b. All operations have been risk assessed and documented.

c. An awareness and training programme which includes the following specifics for pesticides:

i. To ensure all workers involved have been adequately trained in a safe working practices ( See also C4.8)

ii. All precautions attached to products should be properly observed and applied to the workers.

d. The appropriate personal protective equipment (PPE) are used for each risk assessed operation.

i. Companies to provide the appropriate PPE at the place of work to cover all potentially hazardous operations such as

pesticide application, land preparation, harvesting and if used, burning.

e. The responsible person (s) should be identified.

f. There are records of regular meetings between the responsible person(s) and workers where concerns of workers about

health and

safety are discussed.

g. Accident and emergency procedures should exist and instructions should be clearly understood by all workers.

h. Workers trained in First Aid should be present in both field and mill operations.

i. First Aid equipment should be available at worksites.

Indicator 4.7.2

Records should be kept of all accidents and periodically reviewed at quarterly intervals.

Major compliance

Specific Guidance:

Record of safety performance is monitored through Lost Time Accident (LTA) rate.


Indicator 4.7.3

Workers should be covered by accident insurance.

Major compliance

Audit findings Terusan CU had continued to adopt the PPB Oil Palm’s occupational safety and health policy, plan and programme approved by top management. Inclusive of the subsidiary policy there were 8 policies sighted in total. All the 8 policies were displayed in mill and estate offices and at strategic location in the workstation of the POM. To meet PPB’s commitment of the policy an OSH plan and programmes for the mill and individual estate had been established. The policies, OSH plan and programmes had been communicated and implemented to all levels of the organization. Interviews with employees showed that they were aware of the OSH policy, objectives and programmes and generally understood their requirements. The OSH plan sighted had been improved and continued to address among others issues related to hazard identification risk assessment and risk control (HIRARC), medical surveillance programme, Safety committee meeting and workplace inspection on quarterly programme, OSH training among staff and also the third party inspection and monitoring programme as required under USECHH 2000 regulation were conducted. PPB Oil Palm Berhad (Sabah Operation) had established OSH objectives and targets for 2013. The first was on the Lost Time Injury Rate (LTIR) for occupational accident cases involving lost days. For every 200,000 working hours the LTIR was targeted to be below 5. Reduction of total accidents by 30% for the estates and mills on three years average (2010-2012) and zero occupational fatalities were targeted. Objectives and targets were monitored in the monthly, half yearly and yearly basis based on the accident statistics submitted by the estates and mills. The EMU team had been assisting mill and estates in terms of implementation of OSH plans and programmes. There were records of regular meetings/communications between management and workers on workers’ health and safety. Briefings and discussions were done during the regular morning roll calls and the quarterly OSH Committee meetings. The minutes of these meetings had been maintained and Terusan CU had taken the necessary actions to rectify issues highlighted in the meetings. Overall the corrective actions were found satisfactory. However, as the OSH committee members were appointed as an employee or employer representative, the roles and responsibility had yet to be clearly spelled out in the appointment letter to promote active participation and involvement in the OSH implementation for Terusan CU. OSH performance was continuously monitored and accident cases were managed in accordance with NADOOPOD Regulations 2004. Accident records were kept and reviewed. An accident scoreboard was made available at mill and estates and updated regularly to show the current OSH performance status. In 2012 there were 10 cases recorded with 6 days of Lost Time Incident (LTI) at the mill. Accident investigation had been conducted by the OSH committee and reports were made with the format standardized for all PPBOP Berhad. Root causes of accidents had been identified and appropriate control measures implemented as well as revision of HIRARC. This included engineering control, administrative control or the used of PPE that had to be implemented and improved after the occurrence of accidents. Formal reporting to DOSH, JKKP 6 and JKKP 8 form was sighted submitted to DOSH in timely manner. First aid cases had to be further investigated to identify actual root cause of the accident for Terusan Mill and estates Hazard identification, risk assessment and risk control (HIRARC) register was verified during the assessment. HIRARC register for Terusan for POM was newly revised and updated on 5 June 2013 after occurrence of accident at the workplace. Rating and hierarchy of control were revised as a preventive measure and precaution to the workers at workplace. These changes were made in response to the notice of improvement (NOI) issued by DOSH reference number 3A075834 dated 8 March 2013. It was sighted during site visit, a blow down pipe near to chemical store was


not properly covered where HIRARC and method of control had yet to identify tis problem. Other types of hazards which included ergonomic hazards on handling calcium carbonate and riding motorcycles inside estate and government gazzeted roads had yet to be identified. It was also observed that ladder used at Terusan 1 water treatment plant had not been modified for safety. The CHRA was revised with an assessment conducted on 26 September 2012 for the POM as its 5 years validity period ended on 2012. Report presented was done by competent Hygiene Technician 1 registered with DOSH and certificate of competency as shown in the report (JKKP HIE 127/171-2(253). All work units in the mill operation were risk assessed in terms of exposure of hazardous chemicals, fumes and other inhalable dust. The results were tabled in the Form F as a recommendation by assessor for additional control measure to be implemented by the individual work unit. The report was found comprehensive but discrepancy noted on the recommendation whether to install Local Exhaust Ventilation (LEV) or maintained existing engineering control equipment @ general exhaust ventilation at the mill laboratory. Terusan POM had yet to communicate with the assessor regarding this issue. Recommendation by assessor had yet to be submitted to DOSH as required by USECHH Regulation 2000. Other monitoring activities as required by USECHH Regulation 2000 had been carried out in 2012. Monthly checking on the LEV system by in-house technician was consistently implemented and verified the monthly inspection records. As the CHRA assessment had been verified together with the implementation of CHRA recommendation thus OFI TS 4/2012 raised during the previous surveillance was closed.

New revisited CHRA report September 2012

Local exhaust ventilation monitoring was done on 13 September 2012 by registered Industrial Hygiene Technician consultant (JKKP HIE 127/171-3/2(146)). Based on the results, it was noted that face velocity of fume cupboard and transport velocity on the ducting section was above the minimum recommended value by ACGIH. Generally engineering control equipment was in good working condition. Medical surveillance programme as recommended by CHRA assessor was done on July 2013 on 23 workers from different work units in the mill. A registered Occupational Health Doctor (OHD), DOSH : HQ/10/DOC/00/138, Dr Goh Chii Guey examined all the workers that were exposed to the hazardous chemical on their routine jobs. Based on the result, all workers were fit to work without any occupational disease that required medical removal protection. Annual audiometric testing was conducted on 17th March 2013 on a group of 17 participants. Eight workers were found to have normal hearing and the remaining 9 workers were found affected with mild hearing impairment. There was no occurrence of STS (standard threshold shift) for this


annual audiometric programme. Recommendation was to repeat audiometric test for next year and follow-up treatment by OHD or Ear, Nose & Throat specialist for employee with hearing impairment. This was yet to be expedited. Evidence of implementation of appropriate risk control measures was observed during the field and mill assessment. Employees had been provided with and were seen to be using the appropriate PPE. These were safety boots, helmets, goggles, ear plugs, rubber and cotton gloves, aprons and breathing masks. Records of PPE issuance were maintained and were presented during the assessment. Minimum standard of PPE used for the workers were based on the CHRA recommendation. It was observed during the inspection that the fireman at the boiler station was not fully equipped with the appropriate PPE while doing clinkers raking jobs.

The issuance of PTW (permit to work) for all the hazard areas such as confined spaces, working at height and other jobs performed by contractors in the premises was sighted during the audit. As part of administrative control, warning signage for confined spaces, high decibel areas and SSOP was widely displayed at workplace. On the Lock Out Take Out (LOTO) implementation, PTW issuance was not standardized as described in the SSOP.

Workers interviewed showed that they understood the reasons and the importance of wearing PPE provided by the company. At the time of assessment all employees at mill and estates were found to adhere to the requirements of using PPE in their workplace. Those who worked with chemicals had been trained on the use of PPE, material safety data sheet (MSDS) with emphasis on precautions attached to products to be observed at all times, and safe work practices based on chemical handling procedures. However, some MSDS kept at Terusan POM and estates could be improved to make sure all mandatory elements were listed in the MSDS as well as obtaining bi-lingual MSDS in national language and English. First aid boxes were noticed located at several strategic locations at the mills and were also provided to each of the field supervisors. Trained First Aiders were present in the field and mill. Emergency procedures and instructions for response during emergency were understood by those workers interviewed. Emergency response plan had been tested for both mill and estate. Emergency fire evacuation drill was conducted on August 2012 for Terusan POM, however the scenario and post mortem report can be improved. The objective of the drill was achieved and for the evacuation time was within the evacuation time objective. Terusan CU had been granted fire certificate with the readiness of fire hydrant and fire alarm system which were tested regularly during monthly inspections. Electric and diesel standby pumps when tested during this assessment were found to be in the good working condition (Photo 15). For the fire fighter preparedness, Terusan POM had been provided with adequate number of fire extinguishers and fire hydrant points at strategic locations in the mill. Fire extinguishers were serviced and inspected in March 2013 and valid for one year. Hose reel and nozzle were inspected and tested on monthly basis by mill fire fighting team as well as during quarterly workplace inspection exercise.


Hydrant pump unit for emergency preparedness and emergency evacuation route for Terusan POM

The Terusan POM had insured their workers with accident insurance under Ace Jerneh Insurance Berhad, policy number W0190657 with period of cover until December 2013. Malaysian employees were covered by SOCSO.

Criteria 4.8

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

4.8.1 A training programme (appropriate to the scale of the organization) that includes regular assessment of training needs and documentation, including records of training for employees are kept. Major compliance Guidance:

Appropriate training should be given to all staff, workers and contractors by growers and millers to enable them to fulfill their jobs and responsibilities in accordance with documented procedures. All Estate Hospital Assistants (EHA) are trained on the chemicals used and related laws.

Findings Training programme, Annual Training Plan for 2013 for the mill and estates had been established and reviewed. Among the trainings identified were related to SSOPs (spraying, manuring, mulching), environmental awareness / conservation, chemical handling, chemical / waste spillage, scheduled wastes handling and emergency response. Observed trainings were conducted as plan, followed by assessment as required. Relevant personnel training records inspected had been updated accordingly. An Evalusai (Penilaian) Latihan (Evaluation of Training) form had been established and was completed after every training session by each trainee. During the field interviews with the workers at the various work sites, they were found to be knowledgeable on the safety usage of PPE, the danger of chemicals they handle, the need to follow SSOP and the emergency action to be taken when responding to emergency situations. Training needs for Terusan 1 & 2 estates could be further improved with regards to the notice issued by DOSH in other certification units which included : i) USECHH 2000 training

ii) Formal training for Safety & Health Committee roles & responsibility

iii) Formal training for Safety & Health Committee on incident investigation

iv) Road safety training by competent training provider


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

Criterion 5.1

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

5.1.1 Documented aspects and impacts risk assessment that is periodically reviewed and updated. Major compliance 5.1.2 Environmental improvement plan to mitigate the negative impacts and promote the positive ones, is developed, implemented and monitored. Minor compliance Guidance:

Non-restrictive format e.g. ISO 14001 EMS and/or EIA report incorporating elements spelt out in this criterion and raised through stakeholder consultation.

Findings Terusan CU had continued to continuously reviewed and up-dated the environmental aspects and impacts risk assessment for activities relating to the estates and mill operations. A document TE/EAI 101, 26/5/13 Identification of Environmental Aspects and Impacts and Evaluation of Significance for Terusan Estates was presented. Another document TE/MIT 02/0812 Significant Environmental Aspects and Impacts Mitigation Methods for Terusan Estate 2012 was prepared and made available and presented to the assessment team. The recent update included the use of decanter cakes, nursery, landfill and construction of new building. The list of environmental significant impacts prepared was related to 3 main environmental receptors such as land (scheduled waste), air (stack emission - boiler) and water (effluent discharge) and the mitigation measures that were available during the audit. The register had identified relevant mill operation that had environmental impacts, such as water and diesel usage, generation of scheduled wastes, EFBs and effluent, as well as emission of black smoke. Environmental improvement plan to prevent and mitigate negative environmental impacts and to promote positive environmental impacts was established, as documented in “Pollution Prevention Plan”. The prevention and mitigation methods concerning usage, generation and emission were found implemented and monitored. The positive aspects of using EFBs for mulching and POME for land irrigation were implemented and monitored. The estates had also identified relevant environmental impacts, including positive ones as well as plans for improvement. Among the relevant environmental aspects in the estate were water and diesel usage, generation of scheduled wastes, clinical wastes and waste water resulting from triple-rinsing. Observed positive aspects were the 3Rs program for recycling of used tin can, aluminium can, paper, glass bottles, and plastic bottles. During 2012 surveillance audit, the positive impacts of recycling domestic wastes and the practice of segregating organic and non-organic wastes at the line sites yet to be included in the list of impacts. OFI TS 5/2012 was raised. During 2103 surveillance audit, it was observed that positive aspect of recycling domestic wastes and segregation of organic and non-organic wastes had been identified in the environmental aspect and evaluation register. Thus, previous OFI TS 5/2012 closed. Environmental improvement plan to prevent and mitigate negative environmental impacts and to promote positive environmental impacts was established, as documented in “Pollution Prevention Plan”. The prevention and mitigation method concerning usage, generation and emission were


found implemented and monitored. Among the plans were improving the quality of effluent discharged from the mills, reduction of fuel consumption and increasing the 3Rs initiatives in domestic waste management. Mitigation of the negative impacts of domestic wastes was initiated with a recycling plan at the line sites. Different bins for organic and inorganic wastes were provided for the inhabitants . The amount collected was recorded.

Designated collection bins for different types of wastes in the estates

The positive aspects of using EFBs for mulching and POME for land irrigation were also found implemented and monitored. However, few of the positive impacts pertaining to recycling (e.g. decanter cake, EFBs) and segregation of solid wastes (e.g. paper, plastic, aluminium containers) had yet to be updated in the register. Further, the good environmental practice for recycling / reusing domestic solid wastes including monitoring could be extended to mill as well. The plan could further be improved with the mitigation methods for ponds desludging / desilting at the mill to include guideline by DOE.. Continuous improvement plan was established to reduce: (a) 15% water usage / population. (b) 10% water usage / FFB.

Criterion 5.2

The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exists in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations. Indicators:

5.2.1 Identification and assessment of HCV habitats and protected areas within landholdings; and attempt assessments of HCV habitats and protected areas surrounding landholdings. Major compliance 5.2.2 Management plan for HCV habitats (including ERTs) and their conservation. Major compliance 5.2.3 Evidence of a commitment to discourage any illegal or inappropriate hunting fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts. Minor compliance

Findings The HCVF scoping assessment of the estates had been completed in July 2008 and sites with attributes HCV 6 and HCV 4 were identified. In addition to the report by the consultant entitled ‘HCVF Scoping Assessment of Terusan 1, Terusan 2 and Rumidi Estates of PPB Oil Palms Berhad’ an additional High Conservation Value Identification & Mangement Terusan Palm Oil Estates 2009 was prepared.


As detailed in the HCV Management and Monitoring Action Plan 2011-2015 was reviewed and revised in 26 June 2013. It consisted of a systematic monthly monitoring programme had been established and had been enhanced with notes as well as pictures of the sightings of animals. The personnel involved had been trained on recognizing signs of animal activities by Senior Manager of Biodiversity Wilmar Group. The budget plan of 2012 had not clearly stated financial support for the HCVF activities and a Minor NCR TS3/2012 was raised. In the 2013 budget for Terusan 2 Estate the HCV component was incorporated under Code ECS 1700 Boundary Survey-GPS/HCV/Monitoring while for Terusan 1 Estate this was under Code SAP 6244021 GPS/HCV/Monitoring. This Minor NCR was closed. The HCV Management and Monitoring Plans for Terusan 1, Terusan 2 and Rumidi Estates 2013 were presented to the assessment team. The documents had included the HCV habitats. It was noted in the previous surveillance that the Management and Monitoring Plans for HCV could be improved with consultation with relevant experts. Consultation with an NGO on the identification of ERTs and HCV sites had been conducted in March 2013 and a study had been scheduled in October 2013. Poaching was not allowed within the plantation with warning signage being placed at the entrances of each estate. Posters on protected animals were also observed being displayed at the guard posts. Evidence of a commitment to discourage any illegal or inappropriate hunting had been instituted through control entrance gates and monitoring teams.

Criterion 5.3

Waste is reduced, recycled, re-used and disposed off in an environmentally and socially responsible manner. Indicators:

5.3.1 Documented identification of all waste products and sources of pollution. Major compliance 5.3.2 Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution. Minor compliance Specific Guidance:

Schedule waste to be disposed as per EQA 1974 (Scheduled Wastes) Regulations, 2005. Reference to be made to the national programme on recycling of used HDPE pesticide containers. Municipal waste disposal as per local authority or district council in accordance to the Ministry of Health guidelines (i.e. specifications on landfills, licensed contractors, etc) or Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446). 5.3.3 Evidence that crop residues / biomass are recycled (Cross ref. C 4.2). Minor compliance Specific Guidance:

POME should be discharged in compliance with the Environmental Quality Act 1974 (Act 127) and Regulations. For Sabah and Sarawak, POME should be discharged according to the respective state policies.

Findings Wastes and sources of pollution, as well as plan to mitigate were documented in “Environmental Aspect & Impact Register“ and “Pollution Prevention Plan” respectively. Wastes generated were either disposed off according to prescribed regulations in environmentally responsible manner or recycled. Those wastes disposed accordance to prescribed regulations were effluent discharge, scheduled wastes, and particulate emission. Other wastes were managed by reduction either in accordance to 3Rs program (e.g. EFB, fibre, shell paper, fertilizer bag, glass bottles, plastic bottles, tin can, aluminum can, metal scraps) or environmentally friendly landfills for bio-degradable domestics waste.


As reported during the previous surveillance an active Recycle Programme for domestic and office wastes had been established. Summary records for 2013 for Terusan Estates on the amount of paper, plastic, aluminum and metal wastes were made available. The largest collection was contributed by 706 kg of metal collected over the first 6 months of 2013. It was observed that recycling bins had been placed in all offices and line sites. In addition, at all the landfill sites recycling bins were also made available for the sorted domestic wastes brought in from the estates. Monitoring was implemented for disposing of wastes. Nevertheless, the good practice of proper 3Rs and record-keeping could be extended to recycling of used chemicals containers (e.g. gallon) at mill. . Generally the wastes generated in the mill were non-biodegradable wastes such as scheduled waste, scrap metal from maintenance and upgrading works, as well as biodegradable wastes like crop residues/biomass/organic wastes like fruit fibres, shells, EFBs, decanter cakes and POME. These were segregated into recyclables and non-recyclables. EFBs and decanter cakes were sent to the estates for soil refinement application. Shells and fibres were used as boiler fuel and the surplus portions were sold to interested buyers. Boiler ash were recycled back and used for road maintenance. General waste as well as scrap iron were collected from the line site and mill and disposed at centralized dumping site. Scheduled wastes had been identified in the estates and mill and managed as per DOE scheduled waste specifications. Proper storage facilities were constructed for these schedules wastes. Each container was properly labeled. During the previous surveillance the storage retention time for some of the wastes generated in the mill was not adhered to. The mill has taken necessary action to ensure scheduled waste was disposed in accordance with regulation.

Scheduled Waste store at Terusan mill and estate

The written approval by DOE permitted Terusan POM for the final discharge to be limited to the waterways and land irrigation for the neighboring estates. Monthly samplings were done by external laboratory with quarterly reports submitted to DOE. it was found that Terusan POM had continuously complied with the final discharge limit stipulated in the written approval. The disposal of scheduled wastes was done through a licensed contractor, Tiang Cheong Brick Sdn. Berhad and Petrojadi Sdn. Bhd. in accordance to the Schedule Waste 2005. The licences issued to the 2 contractors were valid valid until 30 April 2013 to transport and store scheduled waste. During the previous surveillance audit, the estates observed continued to face the problem of disposal of scheduled waste due to their remote locations. This had caused the mill and estates to store the scheduled waste generated for a period of more than 180 days and/or more than 20 tonnes capacity. It was observed that there was no application made to DOE for extension of


storage period resulting in a Major NCR TS1/2012 raised for Terusan POM. The same NCR was raised referred to desludging activities in Terusan POM. Notice from DOE was received on 27 June 2012, refer DOE (NOI) Notice Of Improvement ASSH/SPK/(B)152/000/017JLD5 for not following the desludging procedure. There was no report sent as per approval conditions from DOE dated 25 November 2011 (ASSH(B)31/152/000/060 Jld. 7 (58) on the monitoring of desludging activities before, during and after desludging with supporting picture and reports. The Terusan POM had replied to DOE on that issue and still pending for reply. Terusan Cu had taken actions to remove the scheduled wastes appropriately, and the response letter together with pictorial report as required had been submitted to DOE. Thus, the previous Major NCR was closed. Consignment Note for Scheduled Wastes for the removal of these wastes during the first 9 months of 2012 were examined and found to be in order. During the 2012 surveillance audit, it had found that all estates had been operating their own Scheduled Waste store. They also maintained their own records of Scheduled Waste as per requirements of DOE, which included inventory, storage and disposal and monthly submission of said records to DOE. Sighted an inventory according to the 5th Schedule at Terusan 2 Estate had not been consistently maintained as the amount of scheduled waste disposed was not documented. A mechanism to identify competence of scheduled waste contractor had yet to be established. During this surveillance audit, the scheduled wastes records, including inventory record was observed in order. The mechanism to identify competence contractor was also established, and observed the contractor appointed comply with DOE requirements. Thus, the previous OFI TS 7/2012 closed. Wastes and Pollution-Identification, Prevention, Mitigation and Improvement Plan Terusan Estate (1&2) Third revision was completed on 15 July 2011. This document was established and implemented to avoid and reduce pollution. The plan comprised of relevant SSOPs concerning handling, storage, mitigation, disposal of wastes. Scheduled wastes, effluent, and black smoke were managed in accordance to applicable legal requirements. 3Rs programme was established and implemented for non-biodegradable wastes. Bio-degradable wastes were buried in landfills as per adopted guideline. Collection areas and bins were provided for scheduled wastes and solid wastes at mill and estates respectively. Ponds and sumps were constructed for liquid wastes, as well as bund to contain leakage or spillage. During inspection at Terusan 1 Estate, it was observed that: (a) monitoring of oil traps could be enhanced to ensure the level of water should be controlled,

especially, during heavy rains.

(b) secondary containment / bund or other appropriate action could be implemented for storing spent oil in drums in generator set room.

It was observed that EFB and decanter cakes had been collected and used for fertilizing and soil improvement in the estates. Fibres and shells had been recycled as boiler fuel. As stated in 4.2.3 the EFB Application Programme for all the 3 estates was examined during the surveillance. Monthly EFB Usage based on block by block was presented during the surveillance.

Criterion 5.4

Efficiency of energy use and use of renewable energy is maximized. Indicators:

5.4.1 Monitoring of renewable energy use per tonne of CPO or palm product in the mill. Minor compliance 5.4.2 Monitoring of direct fossil fuel use per tonne of CPO or kW per tonne palm product in the mill (or FFB where the grower has no mill Minor compliance


Findings It was observed that the oil palm fiber and shells from the processing of FFBs in the palm oil mill were used as boiler fuel to generate steam for the mill, as well as electricity for the mill complex and line sites. The CU had maintained, monitored and recorded the usage of this renewable energy monthly. The Terusan CU had continued to monitor the monthly consumption of diesel per tones of CPO in all the estates and palm oil mills. Monthly consumption of diesel was documented in all estates and mills. The diesel consumption from 2008 to June 2013 was shown in the following:

Consumption of diesel in the estate

Year Diesel consumed (l)

Consumption (l/MT FFB)

Consumption (l/ha)

2008 441,785 2.20 64.24

2009 422,321 2.47 61.41

2010 432,801 2.48 62.93

2011 562,701 4.46 81.82

2012 636,755 2.35 96.77

To June 2013

97,921 2.52 45.44

The Terusan CU had continued to monitor consumption of diesel (direct fossil fuel) per tones of FFB processed in the palm oil mill. Monthly consumption of diesel was also recorded in all the estates and mill.

Consumption of diesel in the mill

Year Diesel consumption (l) Volume per tonne of FFB processed

2011 248,042 1.12

2012 325,562 1.65

2013 to June 129,300 1.30

Criterion 5.5

Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN Guidance or other regional best practice. Indicators:

5.5.1 No evidence of open burning. Where controlled burning occurs, it is as prescribed by the Environmental Quality (Declared Activities) (Open Burning) Order 2003. Major compliance 5.5.2 Previous crop should be felled/mowed down, chipped/shredded, windrowed or pulverized/ ploughed and mulched. Minor compliance Specific Guidance:

A special dispensation from the relevant authorities should be sought in areas where the previous crop or stand is highly diseased and there is a significant risk of disease spread or continuation into the next crop. 5.5.3 No evidence of burning waste (including domestic waste). Minor compliance


Findings There was no open burning being observed during this surveillance audit as this had not been allowed under the law and not permitted under any circumstances as clearly stated in the Manual and SOP.

During replanting phase all the old palms would be felled, chipped and shredded and mulch. There was no replanting carried out in 2012. No burning of domestic wastes was allowed as specified under the Manual and SOP. All the domestic wastes were collected and disposed off in a landfill.

Criterion 5.6

Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Indicators:

5.6.1 Documented plans to mitigate all polluting activities (Cross ref to C 5.1). Major compliance 5.6.2 Plans are reviewed annually. Minor compliance Specific Guidance:

Pollutants and emissions are identified and plans to reduce them are developed in conformance to national regulations and guidance. 5.6.3 Monitor and reduce peat subsidence rate through water table management. (Within ranges specified in C 4.3). Minor compliance

Findings Plan to reduce pollution continue implemented and monitored. Legal applicable pollution such as effluent, black smoke and scheduled wastes continue managed to comply to its requirements. Bio-degradable and non-degradable wastes were continued segregated. Mill bio-degradable wastes such as EFBs, decanter cakes were used for soil improvement in the estates while fibres and shells continued to be used as fuels. Non bio-degradable wastes continued been implemented 3Rs program. Bio-degradable wastes continue to be landfills. Pollutants and emissions had been identified in the Aspects and Impacts Register. Proper procedures had been developed to reduce them which were in accordance to the national regulations and guidance. Terusan CU had continued to continuously reviewed and up-dated the environmental aspects and impacts risk assessment for activities relating to the estates and mill operations. Pollution Prevention Plan had been developed and implemented for wastes and pollution identified in the TE/EAI 02/0812 Identification of Environmental Aspects and Impacts and Evaluation of Significance for Terusan Estates. Monitoring of implementation was via various periodical reports / checksheets. Those documents were presented and reviewed. Terusan CU had continued reviewed and up-dated those documents upon changed relating to the estates and mill operations or activities identified. Water table management was not applicable as there was no peat soil in the estates


PRINCIPLE 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND OF INDIVIDUALS AND COMMUNITIES BY GROWERS AND MILLERS

Criterion 6.1

Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Indicators:

6.1.1 A documented social impact assessment including records of meetings. Major compliance Specific Guidance:

Non-restrictive format incorporating elements spelt out in this criterion and raised through stakeholder consultation including local expertise. 6.1.2 Evidence that the assessment has been done with the participation of affected parties. Minor compliance Specific Guidance:

Participation in this context means that affected parties or their official representatives or freely chosen spokespersons are able to express their views during the identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. 6.1.3 A timetable with responsibilities for mitigation and monitoring is reviewed and updated as necessary. Minor compliance

Findings The Social Impact Assessment for Terusan CU conducted in 2009 entitled Primary Report of SIA (Design Phase) for Terusan Oil Palm Plantations and Terusan Palm Oil Mill of PPB Oil Palms Berhad (Sabah), still formed the basis for managing social issues. As reported in previous surveillance audits the report was prepared with the participation of the relevant stakeholders including the estate workers, contractors/suppliers, neighbouring local communities and smallholders. The report described the background of the estates, mill and local communities; highlighted the survey methodology, and presented issues raised together with mitigation plan. Some of the issues raised by the internal stakeholders, particularly pertaining to housing and amenities, were continuously resolved by the management.

Evidence was sighted in the estates and mill on the update of the SIA action plans. The estates and mill had organized regular meetings with their workers representatives, FFB suppliers, canteen operators, contractors/suppliers and local communities to review and update old social issues as well as identified new ones. The outputs of these meetings were incorporated into the SIA action plans. The reviewed Social Impact Management Plan – Terusan Estate 2012 and Community Development Plan - Terusan Estate 2012 which had included a timetable with responsibilities for mitigation and monitoring, were presented during the surveillance. New measures had been introduced and projects implemented in the reviewed plans showing that there was continuous improvement in handling social impacts. Terusan estates and mill had regular meetings with representatives of the local communities and oil palm smallholders. Meetings with external stakeholders are held at least once a year while

those with internal stakeholders are held more often. These meetings could very well serve as a mechanism for revising and updating the SIA Action Plans as well as issues that required long-term mitigation and monitoring plans. The issues raised by the internal stakeholders were often related to housing, medical and child


care facilities. The local communities, on the other hand, were more concerned with the help and support which they could obtain from the estates and mill, for examples, employment opportunities and services that could be provided for their welfare.

Criterion 6.2

There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. Indicators:

6.2.1 Documented consultation and communication procedures. Major compliance 6.2.2 A nominated plantation management official at the operating unit responsible for these issues. Minor compliance 6.2.3 Maintenance of a list of stakeholders, records of all communication and records of actions taken in response to input from stakeholders. Minor compliance

Findings The previous audit had reported in some details the consultation and communication procedures used by the CU in handling internal and external communications. These were in accordance to the document The Standard Operating Procedure for Consultation and Communication [Document No. RSPO 6.2(2)] that was prepared by the RSPO Unit of PPB Oil Palms Bhd. The CU had continued to use internal communication techniques, such as morning assemblies, notice boards and posters, suggestion boxes and complaint forms. External communication had been effected mainly through mail correspondence. A thorough examination of Terusan 2 Estates’ correspondences with local stakeholders revealed that it abided very much with the requirements of external communication procedures, particularly in terms of the timing of responses which were within two weeks upon receipt of complaints. Notwithstanding the above, it was found that the CU did not conduct meeting with stakeholders and welfare committee members as prescribed by the consultation and communication procedures. The procedures required that stakeholders meetings be held twice per year. However, the records showed that only one stakeholder meeting was regularly held every year for the past two years. In the case of Terusan Palm Oil Mill, the Jawatankuasa Kebajikan did not meet four times annually as recommended by the procedures. The estates and mill may either conduct more meetings or, otherwise, consider reviewing the procedures themselves.

As spelled out in the communications procedure, the estate/mill manager would be the person appointed to handle communication matters. However, the job could be delegated to his subordinate through a letter of appointment. The appointment could either be for a specific time period or for the entire period of employment with the estate or mill. In the case of Terusan Mill, the manager himself is the responsible officer in charge for communication matters as noted in the appointment letter.

Lists of stakeholders were updated and maintained by the estates and mill. As in other PPB CUs, the lists comprised government agencies (national, state and local), contractors/suppliers (including FFB suppliers for mills), neighbouring estates, schools, panel doctors and local communities. It was observed that the lists of stakeholders were quite long (about 100). Some of these


stakeholders, however, may not have continuous relevance with the CU’s operations. The lists would need to be continuously reviewed and only those with immediate relevance maintained as stakeholders.

Evidences of communication with outside and inside stakeholders were many and kept in various files in the estate/mill. Files on external communication were kept according to the agencies or parties communicated, for examples, Department of Safety and Health, and Department of Environment and so forth. In addition, minutes of the various meetings held with internal and external stakeholders were also kept for records and reference.

Criterion 6.3

There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. Indicators:

6.3.1 Documentation of the process by which a dispute was resolved and the outcome. Major compliance Specific Guidance:

Records are to be kept for 3 years. 6.3.2 The system resolves disputes in an effective, timely and appropriate manner. Minor compliance 6.3.3 The system is open to any affected parties. Minor compliance Guidance:

Dispute resolution mechanisms should be established through open and consensual agreements with relevant affected parties. Complaints may be dealt with by mechanisms such as Joint Consultative Committees (JCC) with gender representation. Grievances may be internal (employees) or external.

Findings The CU had continued to use the Dispute and Resolution Procedure (Document RSPO 2.2) which was issued on 2/1/2009 for resolution of disputes. The procedure would start with the receipt of complaint from any party, its investigation, proposed solutions and acceptance of the solutions or otherwise. If the proposed solution was rejected, the dispute would be brought for third party arbitration. Grievance or dissatisfaction on the part of the employees could be conveyed through the “Borang Aduan” (appended to Document RSPO 6.2). The complaint form had since been split into two to differentiate between “complaints” and “request for services.” The estates and mill maintain their own files on complaints and requests for services. The records were sighted to be in order and updated. In terms of land matters, procedures for resolving dispute were as prescribed in the State of Sabah Land Ordinance. It was reported that there had not been any outstanding disputes with any party since the last surveillance audit. The land claim issue involving the people of Kg. Gana Jati and Kg. Nangoh had already been resolved with the CU surrounding 57 acres to the people involved. Requests for services from the workers had been handled satisfactorily by the estate/mill management. As a matter of fact, there had been very few requests since the last audit in the Terusan estates. This could be due to the fact that the workers were now living in new houses


which required little maintenance. Interviews with workers revealed that they were happy with the policies of the estates pertaining to wages, jobs, housing, water, electricity, children education and clinic services. The complaints procedures could be used by the public to channel their dissatisfactions while the grievance procedures were for internal use.

Criterion 6.4

Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Indicators:

6.4.1 Establishment of a procedure for identifying legal and customary rights and a procedure for identifying people entitled to compensation. Major compliance 6.4.2 A procedure for calculating and distributing fair compensation (monetary or otherwise) is established and implemented. This takes into account gender differences in the power to claim rights, ownership and access to land; and long-established communities; differences in ethnic groups’ proof of legal versus communal ownership of land. Minor compliance 6.4.3 The process and outcome of any compensation claims is documented and made publicly available. Minor compliance Specific Guidance:

This criterion should be considered in conjunction with Criterion 2.3.

Findings In the event of cases involving the loss of customary land rights, the estate will manage them using the procedure entitled “Process for Identification of Legal and Customary Rights and Identifying People Entitled for Compensation” which was adopted in November 2008 based on the formal legal procedure for identification of native rights and entitlement, namely, gazetted areas of Sabah. Essentially, the procedure described how to check for legal status of the lands in question and laying out the criteria in deciding who should be compensated and the amount of compensation. Other than the land claims issue mentioned earlier, there had not been any other issue of land claims involving the estates.

Criterion 6.5

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

6.5.1 Documentation of pay and conditions. Major compliance 6.5.2 Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit. Minor compliance 6.5.3 Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible (not applicable to smallholders). Minor compliance


Findings Interview was held with both local and foreign workers. Pay and conditions of employment had been spelled out in the employment offer letter. The basic pay of any daily-waged worker was adjusted to RM 30.77/day so to achieve the basic wage specified by law. According to those interviewed, the monthly income would usually be more than RM1000.00. Piece-rated workers, for examples, harvesters and maintenance workers were paid based on their productivity. It was not uncommon that the monthly incomes of daily-waged workers be higher than their piece-rated counterparts. This was particularly true in times when the FFB productions were lower than usual.

Interview conducted with local and foreign workers

A complaint was received during the interview with workers from a father about her daughter’s June income which, according to her, was lower compared with her other friends. Upon request, a thorough check was done by her supervisor on the works she did during the month. It was found that her monthly income was correctly computed. The supervisor was requested to explain to the worker on the calculation of her monthly income. The employment contracts inspected were in Bahasa Malaysia. The pay slips were in English and the computation of pay could be quite complicated. The CU may need to translate the pay slip into Bahasa Malaysia and subsequently explain it to the workers. The workers and staffs were provided with company’s houses supplied with free water and electricity. A Humana school, surau, clinic, crèche, and sundry shop were available in the CU. Both rain and treated water were used by the workers. Electricity was supplied at certain period of time in the evening and early morning. An OFI was raised in the previous audit on the need for rain water analysis for drinking. Subsequently, an analysis was carried out on the rain water and it was found to be safe for consumption. The OFI was closed. Incidentally, the workers’ interviewed revealed that they have not been drinking rain water. Most of the houses in the CU were newly constructed under the Class H scheme. The majority of the mill’s houses, however, were old and in the process of being replaced with new ones. The compounds of these old houses would need regular upkeep and maintenance. The grasses had to be regularly cut and the drains cleaned and regularly monitored.


Old and new housing quarters (line site) of the mill

Housing inspections were conducted regularly by the estate’s health assistant. His reports which focused on housing cleanliness were presented to the main Safety and Health Committee of the CU for information and actions, if necessary. The CU had instituted a common system for dealing with complaints and requests from the workers on housing and other matters. Two forms had been developed to be filled by the workers; for complaint and request, respectively.

Criterion 6.6

The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. Indicators:

6.6.1 Documented minutes of meetings with main trade unions or workers representatives. Major compliance 6.6.2 A published statement in local languages recognizing freedom of association. Minor compliance

Findings The estate’s and mill’s workers were not unionised. They could channel their views or problems to the management via the Social and Welfare Committee whose membership comprised the workers’ representatives and management. The Committee had been meeting on a regular basis (at least twice per year) to discuss issues of interest to the workers and the estates/mill. The minutes of the meetings were kept in proper files for records. A policy, entitled Himbauan, was publicized as notices in ‘Bahasa Malaysia’ on freedom of workers to join union was made available publicly in all estates/mill. The statement stated, among others, that the workers were allowed to join any registered organizations or associations and also foreign workers were not allowed to hold any positions in the organizations or associations. The statement was signed by the estate’s manager.

Criterion 6.7

Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions. Indicator:


6.7.1 Documented evidence that minimum age requirement is met. Major compliance

Findings The CU had adhered to the child labour policy as espoused by the International Labour Convention which stated, among others, that those under 18 years must not be employed to work in hazardous jobs. The master lists of employees sighted in the estates/mill showed that no worker below the age of 18 years was recruited in the CU since the last surveillance audit. The youngest employee recruited by Terusan mill in 2013 was born in 1994.

Criterion 6.8

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

6.8.1 A publicly available equal opportunities policy. Major compliance 6.8.2 Evidence that employees and groups including migrant workers have not been discriminated against. Minor compliance Guidance:

The grievance procedures detailed in 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements.

Findings As reported in previous audit, the equal opportunity policy had been made publicly available in the estates/mill. The policy emphasized on worker’s information, recruitment and selection, training, employee development, terms of service and records of service. This policy was posted on notice boards for the understanding of the public and workers. No evidence on discrimination was found during the audit. The terms of employment, work assignments, housing policy, medical and child care facilities had not been found to be discriminatory. Interviews with workers also revealed that the CU had not discriminated its staffs and workers. Foreign workers received similar pay, stayed in the same housing complex and enjoyed similar medical benefits as their local counterparts. Notwithstanding the above, unlike their local counterparts, foreign children were not allowed to attend public schools as specified by the government. For that reason, a Humana school had been set up to provide primary education to the children of Indonesian workers. The school’s curriculum was based on the Indonesian education system.

Criterion 6.9

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

6.9.1 A policy on sexual harassment and violence and records of implementation. Major compliance 6.9.2 A specific grievance mechanism is established. Major compliance


Findings Terusan CU had established policies on sexual harassment which provided guidelines for the handling of sexual harassment cases in the estates/mill. In addition, a manual entitled “Sexual Harassment in the Workplace” has been published and kept in all the estates and mill. The manual contained the grievance procedure to handle sexual harassment in the workplace. Also, “Jawatankuasa Wanita dan Kanak-Kanak” (Women and Children Committee) had also been formed in the CU. The “Jawatankuasa Wanita dan Kanak-Kanak (JKWK)” met regularly but had not been active in organizing appropriate gender related activities for their members. More often than not the activities were social in nature. The female workers in Terusan Mill had been very active in sports unlike their counterparts in the estates. The CU’s management may encourage the JKWK to plan and implement appropriate activities focusing on the concerns of women. Such activities could include awareness on sexual harassment, training on women rights and counseling for women affected by violence. The activities must be documented. As mentioned above, the grievance procedure had been established in the Manual. However, it had not been put to test because there has been no incidence on sexual harassment in the CU.

Criterion 6.10

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

6.10.1 Pricing mechanisms for FFB and inputs/services shall be documented. Major compliance 6.10.2 Current and past prices paid for FFB shall be publicly available. Minor compliance 6.10.3 Evidence that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent. Minor compliance 6.10.4 Agreed payments shall be made in a timely manner. Minor compliance Guidance:

Transactions with smallholders should consider issues such as the role of middlemen, transport and storage of FFB, quality and grading. Smallholders must have access to the grievance procedure under Criterion 6.3, if they consider that they are not receiving a fair price for FFB, whether or not middlemen are involved. The need for a fair and transparent pricing mechanism is particularly important for outgrowers, who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO criteria, consideration must be given to the costs of such changes, and the possibility of advance payments for FFB could be considered.

Findings Interviews were held with two FFB suppliers and three contractors/suppliers of goods and services to learn their experience in dealing with the estate/mill. The FFB suppliers had been selling their fruits more than 20 years. The goods suppliers, on the hand, had been dealing with the mill for more than 10 years. One of the FFB suppliers mentioned that he often communicated with PPB office in Sapi to find out about FFB prices before each sale. However, the actual price paid for his fruits would only be


known the next month after the sale. Nonetheless, the actual price received would almost be the same as what was revealed by the office. The mill would display on the notice board the past month’s FFB price. Quotations of products and services from the general contractor/supplier would be provided to the mill and estates. The mill/estates would then select the successful supplier based on the price quoted for the product and service as practiced elsewhere. Terusan POM did not display the past prices of FFB. Only the price of the most recent month (May, 2013) was available at the weigh bridge. Due to this non-conformance, a Minor NCR was raised.

FFB price display at the weigh bridge

Few business contracts each signed by the mill and the contractor were examined. All the parties would have understood the contractual agreements as there were no complaints raised by the contractors. The FFB suppliers and contractors/suppliers interviewed praised the CU for being very prompt with its payment. According to them payments would usually be made between three to four weeks after delivery of fruits or services. Evidence was sighted on the FFB crop advice which showed that payment was made in a month following the delivery of fruits.

Criterion 6.11

Growers and millers contribute to local sustainable development wherever appropriate. Indicator:

6.11.1 Demonstrable contributions to local development that are based on the results of consultation with local communities.

Minor compliance

Findings The Terusan CU had contributed to local development in several ways. Foremost, due to its close proximity, the mill had been the focal point for the local communities to sell their FFB. Next, the estates and mill had also been one of the major sources of employment for the local villagers. During the interview with the local communities the community leader of Kg. Lubuk Dungun, more


than 40 people of Kg. Lidong and Lubuk Dungan were working with Terusan estates. The economic well being of the local communities was very dependent on the mill.

Some leaders of the local villagers interviewed

In addition, the estates’ roads were the major means of communications between the interior kampongs (for examples, Kg. Lidong and Kg. Lubuk Dungun) and the surrounding areas, particularly the urban centers. The estate’s clinic had extended its services to those who required medical help from the surrounding communities. The hall and school bus were often used for various purposes by the local villagers. The CU had also assisted in the maintenance and upkeep of roads in the villages by providing machinery and materials. In the past, the CU had also made meaningful financial contributions towards various events and activities organized by the kampongs and schools, including sports and games as well as academic excellence activities. PRINCIPLE 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS

Criterion 7.1

A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to

establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management

and operations.

Indicators:

7.1.1 An independent and participatory social and environmental impact assessment (SEIA) to be conducted and documented

(Cross ref. to C 7.2, 7.3, 7.4, 7.5, 7.6).

Major compliance

Specific Guidance:

SEIAs to include previous land use / history and involve independent consultation as per national and state regulations, via

participatory methodology which includes external stakeholders. For Sabah, slopes 25 degrees and above are considered high

risk erosion areas and cannot undergo replanting unless specified in the EIA report [Environment Impact Assessment (Order

2005)] and approved by the Environmental Protection Department (EPD). For Sarawak, steep slopes are considered high risk

erosion areas and cannot undergo replanting unless specified in the EIA report [Natural Resources and Environment

(Prescribed Activities) Order 1994] and approved by the Natural Resources and Environment Board (NREB).

7.1.2 The results of the SEIA to be incorporated into an appropriate management plan and operational procedures developed,

implemented, monitored and reviewed.

Minor compliance

7.1.3 Where the development includes smallholder schemes of above 500ha in total, the impacts and implications of how it is

managed should be documented and a plan to manage the impacts produced.

Minor compliance


Guidance:

The terms of reference should be defined and impact assessment should be carried out by accredited independent experts, in

order to ensure an objective process. Both should not be done by the same body. See also C 5.1 and C 6.1. This indicator is

not applicable to development of smallholder schemes below 500ha. For Sabah, new planting or replanting of area 500ha or

more requires EIA. For areas below 500ha but above 100ha, proposal for mitigation measures (PMM) is required. For

Sarawak, only new planting of area 500ha and above requires EIA. Onus is on the company to report back to the DOE on the

mitigation efforts being put in place arising out of the EIA.

Assessment of above and below ground carbon storage is important but beyond the scope of an EIA. Note: This aspect will be

considered by an RSPO Greenhouse Gas Working Group.

Terusan CU has no plan for new planting. The assessors verified that they could not see any new land being opened up for new planting. Thus Principle 7 is not applicable. PRINCIPLE 8: COMMITMENT TO CONTINOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY

Criterion 8.1

Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations. MY NIWG commits to demonstrate progressive improvement to the following but not limited to: 8.1.1 Minimise use of certain pesticides (C4.6) Major compliance 8.1.2 Environmental impacts (C5.1) Major compliance 8.1.3 Maximizing recycling and minimizing waste or by-products generation. Major compliance Specific Guidance:

To work towards zero-waste (C5.3) 8.1.4 Pollution prevention plans (C5.6) Major compliance 8.1.5 Social impacts (C6.1) Major compliance 8.1.6 A mechanism to capture the performance and expenditure in social and environmental aspects. Minor compliance Guidance:

Specific minimum performance thresholds for key indicators should be established. (See also C 4.2, 4.3, 4.4, and 4.5). Growers should have a system to improve practices in line with new information and techniques and a mechanism for disseminating this information throughout the workforce. For smallholders, there should be systematic guidance and training for continuous improvement.

Findings During the previous surveillance it was noted that the management of the estates and mills had established a monitoring system for continuous improvement through a Continuous Improvement Plan. The activities that were directed at improving areas of key operations had been carried out and recorded in a brief table-form in the file on Principle 8. A periodical review of the progress of the implementation of the action plan was recorded and would serve as a management tool for continuous improvement. Records of improvements made that allow demonstrable continuous improvement in key operations had been made. A mechanism to capture the performance in social aspects developed through the Social Management Plan and Community Development Plan had been established. The activities listed in the two Plans and the monitoring of the actions taken demonstrated the continuous improvement achieved in matters related to the social aspects.


Terusan CU continued its commitment towards continuous improvement of their operation. Actions specified in the Continuous Improvement Plan and Pollution Prevention Action concerning environmental management continued to be implemented. Monitoring activities were also continued. The estates had maintained a programme of determining the threshold level of pest infestation before deciding on pesticides application. Records of agrochemical consumption for the 3 estates for 2013 as shown in Indicator 4.5.4 had indicated a slight reduction of herbicide use. Mill wastes had continued been recycled as soil supplement and EFBs used as fertilizer in the field. During previous surveillance audit, owing to the difficulty of getting contractors to remove scheduled wastes from the mill and estates individually, a joint effort could be made to obtain the service a single contractor to collect the accumulated scheduled wastes. OFI TS 8/2012 was raised. Follow-up on during this audit, joint disposal between estates and mill had been made accordingly. The OFI TS 8/2012 closed. Programmes on recycling and minimizing waste as well as by products generation had been established. Recycling bins and proper management of schedules wastes had been implemented. Recycling bins for organic and non-organic wastes were provided at all the line sites as well as the land fill sites. Recyclable items were collected and disposed off to a contractor. There was also a Waste and Pollution Identification Procedure, Mitigation and Improvement Plan. A guideline on landfill for disposal of domestic wastes was written. Pollution Prevention Plan continued to be implemented. Regulated sources of pollution, such as effluent, black smoke and scheduled wastes were controlled and monitored to comply with legal requirements. Mill bio-degradable wastes continued recycled. Non bio-degradable wastes continued landfilled. Pond, sumps and oil traps were constructed and maintain to prevent discharge of contaminated water. Bund constructed in chemicals and oil storage areas. Oil traps been constructed at all the workshops to contain any leakage / spillage of waste oils into the environment. A major improvement was the replacement of almost all of the old wooden quarters with the construction of a new Class H labour line. Every unit of the labour line had been equipped with electricity and treated water supply. Larger tanks for rain water storage were also added to each unit. Proper sanitation facilities with sewage treatment had also been provided. A concrete crèche was built for the benefits of the workers in the estates and mill. Terusan CU had also provided pre-school and primary school for the children of its foreign workers by way of the Humana schools. For the older children there was a secondary school with an Indonesian curriculum (SMP) on the estate. Free transportation to near-by government schools for children of local workers and staff was provided by the estate. A mechanism to capture the performance in environmental aspect had been maintained. Continued implementation and monitoring of Pollution Prevention Plan as well as annual budget demonstrated the continuous improvement and environmental performance. A mechanism to capture the performance in social aspects (Social Management Plan and Community Development Plan) had been well established. The activities listed in the two Plans and the monitoring of the actions taken demonstrated the continuous improvement achieved in matters related to the social aspects. The OFI R 2 raised during the previous surveillance was therefore closed.

Module E – CPO Mills: Mass Balance

Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill

and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers,

in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil

palm products produced from processing of the certified FFB as MB. The estimated tonnage of CPO and PK

products that could potentially be produced by the certified mill must be recorded by the certification body in the

public summary of the certification report. This figure represents the total volume of certified palm oil product


(CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be

recorded in each subsequent annual surveillance report.

Audit findings

Since the last audit, there have been no major changes in the key personnel performing activities related to the company’s supply chain system. Mr. Mustapha Habe, the Mill Manager was still the person responsible for ensuring the implementation and maintenance of the supply chain system as required under the RSPO Supply Chain Certification Standard. Ms. Umah Sarigoh, the Administration Officer was still giving the critical support in terms of system documentation and record keeping. TPOM has continued to implement the MB model for its supply chain system since obtaining certification in April 2011. TPOM’s main supply of RSPO-certified sustainable FFBs has been from its own estates: Terusan 1, Terusan 2 and Rumidi Estates which have been awarded the RSPO Certificate for Sustainable Palm Oil Production in September 2010 by SIRIM QAS International. There have been no changes on the procedures for purchasing RSPO certified FFBs. There was still no sales contract being issued by the supplying estate neither was there a purchase order being issued by TPOM. The payment of the in-coming RSPO certified FFBs was still being handled at the corporate level. In addition to its own supply bases, TPOM has also bought non-certified RSPO FFBs from independent small-holders from the surrounding areas. TPOM has outsourced the dispatch of the RSPO CSPO and PK to a transportation company, Lotus Truckway Sdn Bhd (Lotus Truckway). There were 2 signed contracts between TPOM and Lotus Truckway. One was a contract ref. TPOM/CPO-TA/001/2013/sb (for crude palm oil transport) which was dated 1 January 2013. The other contract was ref. TPOM/PK-TA/001/2013b (for palm kernel transport) which also dated 1 January 2013. There is a clause in both of the contracts, which requires Lotus Truckway to comply with the relevant laws including taking reasonable steps to train, educate and inform its agents, employees, workers, staff and sub-contractors on the policies, objectives, targets and requirements of the EMS 14001, RSPO and any other applicable requirements of the applicable certification schemes. In addition to these two contracts, there was a self-declaration letter issued by Lotus Truckway in which it has agreed to comply with the intents of the requirements of the RSPO Supply Chain Certification Standard and allow unrestricted access to its premise and operation system to a Certification Body (CB) for the purpose of conducting RSPO supply chain certification audit. TPOM has conducted a briefing session for the key personnel whose works were related to the activities and implementation of the company’s supply chain system as well as to familiarize them with the revised RSPO Supply Chain Certification Standard. The briefing was held on 15 May 2013 and facilitated by Ms. Lydia Michael, Supply Chain Executives from PPB Oil based in Sandakan, Sabah. Record of attendance at this briefing was made available. A few of the names in the attendance list were randomly selected and then interviewed. Based on the interviews held with them, it was found that they have clearly understood their work activities related to the implementation of the supply chain system and the requirements of the revised RSPO Supply Chain Standard. TPOM has not and would not be directly involved in the selling of the RSPO CSPO or certified PK. All sales and marketing-related activities would still be done by the marketing departments at the Head Offices in Kuala Lumpur and Singapore. .During the intervening period since the last audit,


TPOM has not dispatched any RSPO CSPO. The last dispatch of RSPO CSPO was made on 25 September 2011. TPOM would not be making any claims using the RSPO trademark on the RSPO CSPO or certified PK it delivers to SEO. However, it was observed that the SOP requires that any communications and the use of the RSPO trademark for RSPO certified products must comply with the document ‘RSPO Rules on Market Communication and Claims’ All certified FFB came from PPB own estate and non-certified FFB come from third party FFB supplier.

Month

FFB Intake

Sustainable Non Sustainable

(MT) (MT)

Opening stock as at 1st Jan 2012

8,897.130 7,004.820

Feb 10,725.550 2,079.540

March 11,887.870 2,102.750

April 11,351.020 3,042.120

May 12,732.030 2,355.150

June 10,252.070 2,675.030

July 10,504.440 2,288.900

August 10,074.330 2,229.430

Sept 14,568.130 3,276.750

Oct 14,813.700 5,175.270

Nov 16,102.440 7,788.240

Dec 16,263.710 9,175.750

Year 2012 Total 148,172.420 49,193.750

Month

FFB Intake

Sustainable Non Sustainable

(MT) (MT)

Opening stock as at 1st Jan 2013

12,348.380

5,642.550

Jan

Feb 11,328.480 4,282.340

March 13,401.120 4,556.940

April 11,838.090 9,003.100


May 12,350.620 4,748.100

June 9,082.700 3,695.550

Year 2013 Total 70,349.390 31,928.580


3.2 Identified Non-conformities Details of the non-conformities, corrective actions taken by Terusan CU and assessors’ verification of the corrective actions taken are in Attachment 3. 3.3 Status of Non-conformities Previously Identified All previous nonconformities were verified for the corrective actions effectiveness. Corrective action has been taken and verified by the assessor. Details of the verified nonconformities are in Attachment 4. 3.4. Noteworthy Positive Observations

Terusan CU had improvement made to their RSPO implementation. This can be seen from physical improvement of housing and related amenities condition, use of cover crops instead of herbicides, as well as chemical and wastes storage area including the changing room for the sprayers. It was also observed almost all of the old wooden quarters with the construction of a new Class H labour line. Every unit of the labour line had been equipped with electricity and treated water supply. Larger tanks for rain water storage were also added to each unit. Proper sanitation facilities with sewage treatment had also been provided. The level of awareness among the workers on the RSPO implementation was also found to be adequate. They are able to explain not only the operating procedure related to their work but also the impact of its deviation, the consequence for not following them and the importance in achieving conformity to the RSPO requirements.

4.0 Assessment Recommendation Based on the evidences gathered during the on-site visits, the assessment team has raised major and minor NCR on the Terusan CU against the requirements of the RSPO MYNI. The Terusan CU had taken the appropriate corrective actions to address the major nonconformity. The assessment team had verified and was satisfied with the corrective actions taken by the CU and had subsequently closed out this major NCR. The corrective actions taken by the CU to address these minor NCR would be verified during the next annual surveillance assessment.



Attachment 1

Location Map of Terusan Certification Unit, Sandakan Sabah, Malaysia


Attachment 2

RSPO SURVEILLANCE ASSESSMENT PLAN

1. Objectives

The objectives of the assessment are as follows: (i) To determine PPB Oil Palms Berhad – Terusan and Ribubonus Certification Units

conformance against the RSPO Principles & Criteria Malaysian National Interpretation (MY-NI).

(ii) To verify the effective implementation of corrective actions arising from the findings of last assessment.

(iii) To make appropriate recommendations based on the assessment findings. 2. Date of assessment : 15 - 16 July 2013 ( Ribubonus Certification Unit )

: 17 - 19 July 2013 ( Terusan Certification Unit ) 3. Site of assessment : PPB Oil Palm Berhad

Ribubonus Certification Unit Ribubonus Palm Oil Mill Ribubonus Estate

Terusan Certification Unit

Terusan Palm Oil Mill Terusan 1 Estate Terusan 2 Estate Rumidi Estate

4. Reference Standard

a. RSPO P&C MY-NI b. RSPO Supply Chain Certification Standard (25 November 2011) c. Company’s audit criteria including Company’s Manual/Procedures

5. Assessment Team a. Lead Assessor : Dr. Yap Son Kheong b. Assessors : Mohamed Hidhir Zainal Abidin

Dr.Rusli Mohd Hazani Othman Selvasingam a/l Kandiah Ismail Ibrahim If there is any objection to the proposed audit team, the organization is required to inform the Lead Auditor/RSPO Section Manager.

5. Audit Witness : Maris Zudrags (Lead assessor from ASI) : Reza Azmi (Local expert) : James Sandom (ASI trainee auditor) 6. Audit Method Site audits including observation of practices, interviews with interested parties (employees, nearby population, etc.), documentation evaluation and evaluation of records.


7. Confidentiality Requirements SIRIM QAS International shall not disclose any information concerning the company regarding all matters arising or coming to its attention with the conduct of the programme, which is of confidential in nature other than information, which is in the public domain. In the event that there be any legal requirements for disclosing any information concerning the organization, SIRIM QAS International shall inform the organization of the information to be disclosed. 8. Working Language : English and Bahasa Malaysia 9. Reporting a) Language : English b) Format : Verbal and written c) Expected date of issue : Thirty days after the date of assessment d) Distribution list : client file 10. Facilities Required

a. Room for discussion b. Relevant document and record c. Personnel protective equipment if required d. Photocopy facilities e. A guide for each assessor

11. Assessment Programme Details : As follow

Page 65 of 71

Date : 15 July 2013 (Monday)

Activities /areas to be visited

Dr Yap Son Kheong

(HCV)

Selvasingam a/l T Kandiah

(GAP & IPM)

Hazani Othman

(EMS)

Mohamed Hidhir

(OHS)

Dr. Rusli Mohd

(Social & Worker Issues)

Ismail Ibrahim (Supply Chain)

Auditee

10:00 – 10:15 am

Ribubonus CU & Terusan CU : Opening meeting, audit team introduction and briefing on audit objective, scope, methodology, criteria and programmes by audit team leader

Top mgmt & Committee

Member

10:15 – 10:30 am

Briefing on the organization background and implementation of RSPO (progress of the smallholder) on RSPO standard of compliance and verifying previous assessment finding – non conformities Major or Minor (if any) Confirmation of audit plan

Management representative

10:30– 5:00 pm Ribubonus Estate Documentation verification Inspection

Area of more than 25o

Inspection of protected sites with HCV attributes

Riparian zone

River system including POME discharge

Forested area

Ribubonus Estate Site visit and assessment

Good Agricultural

Practice

fertilizer stores

witness activities

at site (weeding/

spraying/harvestin

g)

Assessment on P2 (C2.1, C2.2.- 2.2.1, 2.2.2, 2.2.3), P3, P4 (C4.1, 4.2, 4.3, 4.5, 4.6), C5.5, P6 (6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11), P8

Ribubonus Mill & Ribubonus Estate

Administration

department

Facilities at

workplace (rest

area, etc)

Utilities (gen-set,

boiler, etc.)

Production area

Chemical store

Workshop

Interviews with

mill’s workers

Ribubonus Mill Site visit and assessment at Ribubonus Palm Oil Mill

Administration

department

Facilities at

workplace (rest

area, etc)

Utilities (gen-

set, boiler, etc.)

Production area

Chemical store

Workshop

Interviews with

mill’s workers

Ribubonus Estate Discussion with relevant management (CSR, community affairs) and preliminary viewing of documentation relating to local communities issues such as EIA, SIA and management plans. Assessment on P1, P2-C2.1-2.1.1, P6 (6.1, 6.2, 6.3, 6.4) P8 Visit and assessment at:

Workers Issues

Line site

Ribubonus

Ribubonus Mill Verification on documents and records on:

Purchasing and

receiving of

certified materials

Organisation

structure and responsibilities

Processing of

certified materials

(control, conversion

and tracking)

Claims

Sales and delivery

Training

Record keeping

Outsource

Guide/PIC

Page 66 of 71

estates

surrounding

community

Humana

School

Provision shop

operator

Dispensary

Safety records

5.00 pm Review and writing of NCR (if any). End of audit at Ribubonus POM

8.00 pm– 9.30 pm

Audit team discussion on findings

Date : 16 July 2013 (Tuesday)

Activities /areas to

be visited

Dr Yap Son

Kheong (HCV) Ribubonus

CU

Selvasingam a/l T Kandiah (GAP &

IPM) Ribubonus CU

Hazani Othman

(EMS) Ribubonus CU

Mohamed

Hidhir (OHS)

Ribubonus CU

Dr. Rusli Mohd

(Social & Worker Issues) Ribubonus

CU

Ismail Ibrahim (Supply Chain)

Terusan CU

Auditee

8.00 am-12.00 pm Continue auditing on unfinished elements Verification on documents and records on:

Purchasing and

receiving of

certified materials

Organisation

structure and

1.00 pm– 3.00 pm Audit team discussion on findings, preparation for closing meeting and writing of NCR/OFI (if any) Guide/PIC

3.00 pm– 5.00 pm Closing meeting and oral presentation of Ribubonus CU findings

5.00 pm End of audit on Ribubonus CU

Guide/PIC

Page 67 of 71

Date : 17 July 2013 (Wednesday)


Dr Yap Son Kheong

(HCV) Terusan CU

Selvasingam a/l T Kandiah (GAP & IPM)

Terusan CU

Hazani Othman

(EMS) Terusan CU

Mohamed Hidhir

(OHS) Terusan CU

Dr. Rusli Mohd

(Social & Worker Issues) Terusan CU

Auditee

8:00 am – 8:15 am Opening meeting, audit team introduction and briefing on audit objective, scope, methodology, criteria and programmes by audit team leader

Top mgmt & Committee

Member

8:15 am– 8:30 am Briefing on the organization background and implementation of RSPO (progress of the smallholder) on RSPO standard of compliance and verifying previous assessment finding – non conformities Major or Minor (if any) Confirmation of audit plan

Management representative

8:30– 5:00 pm Terusan 1 & 2, Rumidi Estates Documentation verification

Terusan 1 & Rumidi Estates Site visit and assessment

Terusan Mill & Terusan 1 & 2 Estates

Terusan Mill & Terusan 1 & 2 Estates

Terusan Mill & Rumidi Estate Discussion with relevant management (CSR, community affairs) and

Guide/PIC

responsibilities

Processing of

certified materials

(control, conversion

and tracking)

Claims

Sales and delivery

Training

Record keeping

Outsource

Review and writing of NCR (if any). End of audit at Terusan POM

Page 68 of 71

Inspection

Area of more

than 25o

Inspection of

protected sites

with HCV

attributes

Riparian zone

River system

including POME

discharge

Forested area

Good Agricultural

Practice

fertilizer stores

witness activities at

site (weeding/

spraying/harvesting

)

Assessment on P2 (C2.1, C2.2.- 2.2.1, 2.2.2, 2.2.3), P3, P4 (C4.1, 4.2, 4.3, 4.5, 4.6), C5.5, P6 (6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11), P8

Administration

department

Facilities at

workplace (rest

area, etc)

Utilities (gen-set,

boiler, etc.)

Production area

Chemical store

Workshop

Interviews with

mill’s workers

Administration

department

Facilities at

workplace (rest

area, etc)

Utilities (gen-set,

boiler, etc.)

Production area

Chemical store

Workshop

Interviews with

mill’s workers

preliminary viewing of documentation relating to local communities issues such as EIA, SIA and management plans. Assessment on P1, P2-C2.1-2.1.1, P6 (6.1, 6.2, 6.3, 6.4) P8 Visit and assessment at:

Workers Issues

Line site

Terusan 1 estate

surrounding community

Humana School

Provision shop operator

Dispensary

5.00 pm- End of day one on Terusan CU

8.00 pm– 9.30 pm Audit team discussion on findings

Date : 18 July 2013 (Thursday)


Dr Yap Son Kheong

(HCV) Terusan CU

Selvasingam a/l T Kandiah (GAP & IPM)

Terusan CU

Hazani Othman

(EMS) Terusan CU

Mohamed Hidhir

(OHS) Terusan CU

Dr. Rusli Mohd

(Social & Worker Issues) Terusan CU

Auditee

8.00 am-5.00 pm Continue auditing on unfinished elements

5.00 pm End of day two audit on Terusan CU Guide/PIC

8.00 pm– 9.30 pm Audit team discussion on findings

Page 69 of 71

Date : 19 July 2013 (Friday)

Activities/areas to be

visited Dr Yap Son Kheong Terusan CU

Mr Selvasingam a/l T

Kandiah Terusan CU

Hazani Othman

Terusan CU

Mr Mohamed Hidhir

Terusan CU

Dr. Rusli Mohd

Terusan CU

Auditee

7.30am -11.00 am Continue auditing on unfinished elements (if any) Relevant PIC

11.00 am-1.00 pm Audit team discussion on findings, preparation for closing meeting and writing of NCR/OFI (if any)

1.00 pm– 2.00 pm Closing meeting and oral presentation of findings Top Management & committee member

02.00 pm End of audit on Terusan CU

Page 70 of 71

Attachment 3

DETAIL OF NON-CONFORMITY AND CORRECTIVE ACTIONS TAKEN (2013)

P & C Indicator

Specification Major/Minor

Detail Non-conformances Corrective Action Taken Verification by Assessor

Indicator 2.1.1

Major Terusan mill and estates had yet to comply with: (a) Name and qualification of

competent person have yet to be submitted to DOE as per requirement stated in Jadual Pematuhan.

(b) Submission for approval to DOE as per requirement stated in the abovementioned regulation on installation of generator sets had not been done.

(c) A random sampling from the Master Employee List revealed that there were 12 workers whose work permits had expired and not renewed as of June 2013.

(d) There was no competent person in-charge for the greatest horsepower 400kVA/320kW/430hp generator set at Terusan Mill and 200kVA/160kW/ 214hp at Terusan 1 & 150kVA/120kW/160hp at Terusan 2 Estate

- 1st Grade ICE driver for Terusans

Mill - 2nd Grade ICE driver for Terusan

1 and Terusan 2 (Rumidi Div) Estate

a) Name & qualification of competent person has submitted to Department of Environment (DOE)

b) Contractor has appointed by Terusan CU to obtain an approval from DOE for Diesel Generator set Written.

c) Work permit worker (including 12 workers) was renewed.

d) Terusan CU has submitted an application to Department of Occupational Safety & Health (DOSH) for candidates to seat for ICE examination (Grade 1 & Grade 2). Advertisement in the local newspapers (i.e. Daily Express) on ICE position.

Relevant document related to (a), (b), (c ) and (d ) was verified by the assessment team. Status : Closed

Indicator 3.1.1

Major Terusan Estate 1, Terusan Mill, Terusan 1 and Terusan, 2 did not have the 2 years annual budget projection. The projection of budget is only until 2014 for Terusan Mill, Terusan 1 and Terusan 2.

Annual budget projection for 5 years was established

Relevant document was verified by the assessment team. Status : Closed

Indicator 3.1.2

Minor Terusan 1 and Terusan 2 did not have the annual replanting program projected for a minimum of 5 years with yearly review

Replanting program was established

Document was verified by the assessment team.

Indicator 6.10.2

Minor Terusan Palm Oil Mill did not display the past prices paid for FFB

To display the FFB past price at office notice board

Photograph shown that FFB price was displayed Status : Closed

Page 71 of 71

Attachment 4

VERIFICATION ON PREVIOUS ASSESSMENT FINDINGS (2012)

P & C Indicator

Specification Major/Minor

Detail Non-conformances Corrective Action Taken Verification by Assessor

Indicator 2.1.1

Major There is evidence of non-compliance against regulation a) An approval condition dated 25 Nov. 2011 for de-

sludging of anaerobic pond no.3 were not adhered b) No competent Internal Combustion Engine (ICE) driver to

operate 2 generator set at Terusan mill and 1 generator set at Terusan 2 Estate

c) Scheduled waste was stored more than 180 days at Terusan mill

a) Desludging pond approval was obtained from Department of Environment (DOE).

b) Terusan CU planned to send the candidates for ICE competent person. The advertisement in local newspaper to recruit ICE competent person.

c) Scheduled waste has disposed to the DOE License Contactor

Corrective action was carried out for item a, b & c. Verified & found adequate. Status : Close

Indicator 5.2.2

Major HCV management & monitoring action plan 2011-2015 had been written for each of the estate. There was no indication of budget allocation to support this plan. The implementation of this plan in the short-term and long term period had not been supported with an allocation in the budget plans for Terusan 1 & Terusan 2 Estate.

Budget has allocated for HCV management plan for Terusan 1 & Terusan 2 Estates

Corrective action was carried out accordingly. Verified and found adequate Status : Close