Roundtable on Sustainable Palm Oil...Payabagas Village, Tebing Tinggi sub-district, Serdang Bedagai...

Roundtable on Sustainable Palm Oil

Public Summary Report Report no.: 096705

Certification Assessment against the

RSPO Principles & Criteria Indonesia National Interpretation - May 2008

PT Perkebunan Nusantara III

Sei Mangke Palm Oil Mill

Jln. Sei Batang hari No. 2 Medan, 20122 North Sumatera, Indonesia

Report prepared by: Dian S. Soeminta

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

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

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT 3

1.1 National Interpretation Used 3 1.2 Type of Assessment 3 1.3 Location and Maps 3 1.4 Description of Supply Base 10 1.5 Dates of Plantings and Replanting Cycles 11 1.6 Other Achievements and Certifications Held 12 1.7 Organisational Information / Contact Person 12 1.8 Description of Plantation Environment and Social Economic Context 12 1.9 Time Bound Plan for Other Management Unit and Justifications 18 1.10 Area of Plantation (Total, Planted and Mature) 19 1.11 Approximate Tonnages Certified 19 1.12 Date of Certificate Issued and Scope of Certificate 19 2.0 ASSESSMENT PROCESS 19

2.1 Certification Body 20 2.2 Qualifications of Lead Assessor and Assessment Team 20 2.3 Assessment Methodology 21 2.4 Stakeholder Consultation and Stakeholders Contacted 24 2.5 Date of Next Surveillance Visit 27 3.0 ASSESSMENT FINDINGS 28

3.1 Summary of Findings 28 3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions 44 3.3 Noteworthy Positive Components 54 3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues 54 3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 63 APPENDICES 64

Appendix 1: Details of Certificate 64 Appendix 2: Certification Audit Plan 64 Appendix 3: List of Abbreviations 70

RSPO Certification Assessment Report

- PT Perkebunan Nusantara III – Sei Mangke Mill

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1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used

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

1.2 Type of Assessment

The main certification assessment was carried out on 1 (one) mill i.e. Sei Mangke Oil Mill and 5 (five) es-tates owned by PT Perkebunan Nusantara III North Sumatra. The assessment was carried out from 22 to 26 June 2009.

1.3 Location and Maps The following are maps showing the locations of the assessed estates and mill in North Sumatra, Indone-sia.

Figure 1: Map of North Sumatra, Indonesia

North SUMATERA



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Figure 2: General location of the plantation located in areas within Simalungun District, Batu Bara District, Serdang Bedagai District and Asahan District in the North Sumatra region.

Assessment location split into 5 districts: 1. Simalungun District 2. Batu Bara District 3. Serdang Bedagai District 4. Asahan District



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Figure 3: Map of Bangun Estate located at the Simalungun District



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Figure 4: Map of Dusun Ulu Estate and Sei Mangke Mill located in Simalungun District

and Asahan District



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Figure 5: Map of Gunung Pamela Estate located in Serdang Bedagai District



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Figure 6: Map of Gunung Para estate located in Serdang Bedagai District



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Figure 7: Location of Rambutan Estate located in Serdang Bedagai District



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The GPS locations of the assessed mill and estates are as follows:

Table 1: GPS locations of Sei Mangke mill and company-owned estates within its supply base

1.4 Description of Supply Base The supply base of Sei Mangke Palm Oil Mill consists of 5 company-owned estates and independent smallholders supplying to the mill. The company-owned estates supplying to Sei Mangke mill are Dusun Ulu Estate, Bangun Estate, Gunung Para Estate, Gunung Pamela Estate, Rambutan Estate, while other sources of fresh fruit bunch (FFB) are supplied by independent smallholders from within the Simalungun District and Serdang Bedagai District. Sei Mangke Palm Oil Mill (POM) is one of several palm oil mills owned by PT Perkebunan Nusantara III, and is located in Sei Mangke Kecamatan Bosar Maligas Kabupaten Simalungun, North Sumatra. Sei Mangke POM was established in 1997, with its license of establishment (izin pendirian) according to the following details: Surat Keputusan (Decree Letter) Bupati from the District Head of Simalungun, No. 503/4560/IISIM-1997. Sei Mangke POM has a production capacity of 30 ton/hour. Currently, Sei Mangke POM receives FFB supplies from 5 company-owned estates, and these are Dusun Hulu Estate, Bangun Estate, Gunung Pamela Estate, Gunung Para Estate, and one division of Rambutan Estate. Sei Mangke Mill also receives FFB supplies externally from independent smallholders, who act as middlemen or FFB agents to collect FFB from many small farmers and supply these to the mill. These agents are CV Benta-sil, CV KPM Mandiri and Primkopad Bais TNI. Sei Mangke POM is located within area of Dusun Ulu es-tate. The FFB supplies received from company-owned estates and independent smallholders are as de-scribed below:

GPS locations Name of mill / estate Location Latitude Longitude

Sei Mangke Palm Oil Mill (PSMKI)

Sei Mangke, Bosar Maligas sub-district, Simalungun district.

03º07’50.8” 099º20’37.9”

Dusun Hulu Estate (KDSHU)

Nagori, Dusun Ulu, Ujungpandang sub-district, Simalungun district, 21184

03º05’56.8” 099º28’43.9”

Bangun Estate (KBANG)

Nagori Senio, Gunung Malela sub-district, Simalungun district, 21151

02º58’27.7” 099º10’05.0”

Gunung Para Estate (KGPAR)

Gunung Para 2 Village, Dolok Mer-awan sub-district, Serdang Bedagai district, 20600

03º09’53.2” 099º06’27.8”

Gunung Pamela Es-tate (KGPMA)

Gunung Pamela Village, Sipispis sub-district, Serdang Bedagai dis-trict, 20692

03º13’19.5” 099º03’51.9”

Rambutan Estate (KRBTN)

Payabagas Village, Tebing Tinggi sub-district, Serdang Bedagai district 20602 & Sei Semujur, Sei Suka sub-district, Batu Bara district

02º54’04.2” 099º34’00.2”



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Table 2: FFB Supply Information for Sei Mangke Mill

FFB supplied from January to December 2008

FFB supplied from January to May 2009

FFB Contributors

Tonnes % Tonnes %

Company owned estates:

Bangun Estate 23,389 18 9,046 10

Dusun Hulu Estate 62,432 48 21,077 24

Rambutan Estate 6,510 5 5,726 7

Gunung Para Estate 2,224 2 25,986 30

Gunung Pamela Estate 25,698 20 10,758 12

Sub Total 120,253 93 72,593 83

Independent smallholders: Primkop Bais-TNI 7,960 6 460 0.5

CV Karya Putra Mandiri 1,200 1 167 0.2

UD Bentasil - - 14,154 16

Sub Total 9,160 7 14,781 17

Total 129,413 100 87,374 100 Source: FFB Data production for January to December 2008 & January to May 2009 for mill’s supply base

1.5 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings is as per the table below. Table 3: Age and year of plantings of company estate supplying to Sei Mangke Mill

Age of Planted Areas (Ha) Name of

estate

Total planted

area (Ha) 0-3 yrs 4-8 yrs 9-13 yrs 14-20 yrs 21-25 yrs

Dusun Hulu 4,177.57 357.80 2,118.77 410.87 1,290.13 -

Bangun 1,560.56 159.28 1,029.5 311.78 - 60 Gunung Para 552.44 - 29.65 522.79 - -

Pamela 1,881.90 175.50 888.09 787.38 - 30.93

Rambutan 4,572.97 448.40 1,494.98 169.57 2,460.02 -



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1.6 Other Achievements and Certifications Held Table 4: Details of other certifications or awards held by PTPN III

Name of mill / estate

Certification Standard / Award achieved

Certification Body / Awarder

Date Achieved

KRBTN ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PSMKI ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PSSIL ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PANAS ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PSSUT ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PSBAR ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PPARO ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PTORA ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PATOR ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

PSDAN ISO 9000/14000/SMK3* TUV/Sucofindo 1998/2000/1999

* SMK3 refers to System Manajamen Kesehatan dan Keselamatan Kerja (Occupational Safety & Health Man-agement System)

1.7 Organisational Information / Contact Person

Contacts details of the company are as follows:

1.8 Description of Plantation Environment and Social Economic Context 1.8.1. Estate History Dusun Hulu Estate

Company Name: PT Perkebunan Nusantara III

PKS Sei Mangke

Jln. Sei Batang hari No. 2 Medan Address:

Contact Person:

Mr. Tio Handoko

Telephone: 061-8452244

Email: [email protected]



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Dusun Hulu estate is one of the company-owned estates owned by PT Perkebunan Nusantara III under Sei Mangke POM’s supply base. The estate has a total area of 4,808.60ha. Dusun Hulu estate was ini-tially a foreign-owned company named NV.RCMA. In 1958, the name of the estate was changed to Pe-rusahaan Perkebunan Negara Baru, after which on April 10, 1976 the name of the estate was once again changed to PT Perkebunan Indonesian Nusantara V (PTPN-V). In 1996, the company merged with two other plantation companies, PTPN-III and PTPN-IV, through the government regulation no 8 year 1996, to form a single entity under the name of PT Perkebunan Nusantara III (PTPN-III). Dusun Hulu estate is located within the Simalungun District and Batu Bara District, and the company owns the Land Use Certificate (Hak Guna Usaha – HGU) for their operations on this estate. The details of validity of their land use certificate are as follows: 1. SKPTS Mendagri No. SK.31/HGU/BPN/95 with area of 2,002.77 Ha is valid until December 3, 2025

and located at Sei Mangke 2. SKPTS Mendagri No. SK.29/HGU/BPN/95 with area of 835.83 Ha is valid until December 31, 2025

and is located at Limau Manis 3. SKPTS Mendagri No. SK.13/HGU/DA/82 with area 1,970.00 Ha, expired on December 31, 2006

and is under progress for renewal Dusun Hulu estate has two commodities planted i.e. a rubber plantation covering an area of 371.95 ha and the oil palm plantation covering 4,177.57 ha, and 259.08 ha for housing area and other purposes. Bangun Estate Bangun estate was developed during the rule of the Dutch government, and was nationalised in 1958, upon decision by the new government of the Republic of Indonesia. Ownership of Bangun estate has changed several times since then, and a summary of history of ownership for this estate is as follows: - Year 1958 to 1961: owned by Perusahaan Perkebunan Negara (PPN) Baru - Year 1961 to 1963: owned by PPN North Sumatra II - Year 1963 to 1969: owned by PPN Karet VI - Year 1970 to 1976: owned by PPN IV - Year 1976 to 1994: owned by PT Perkebunan IV In May 1995, Bangun Estate was acquired by PT Perkebunan Nusantara III. The total area under Ban-gun estate is 3,252.24 Ha. Bangun Estate is located in Simalungun District (DSIMA) and the company owns the Land Use Certificate (Hak Guna Usaha – HGU) for their operations on this estate. The details and validity of land use certificates for the estate are as follows: • SKPTS BPN No. 102/HGU/BPN/2005 dated July 8, 2005, HGU No. 2 Simalungun District, Talun

Kondot village with area 894.68 hectare valid until December 31, 2029. • SKPTS BPN No. 3/HGU/BPN/2005 dated January 13, 2005, HGU No. 1 Simalungun District, Ban-

gun Village, with area 2,357.56 hectare valid until August 09, 2030. Bangun estate has two types of planted commodities i.e. rubber plantation of 1,287.92 hectares and the oil palm plantation covering an area of 1,560.56 hectare, as well as 403.77 ha identified as HCV areas, and used for other purposes such as housing. Gunung Para Estate Gunung Para estate was established as a foreign company by the Dutch Company CMO (Culture Myde Oeskut), and was later taken over by Indonesian Government on December 10, 1957. The estate own-ership history is summarized as follows: - Year 1957-1960: Owned by PPN Baru - Year 1961-1962: Owned by PPN North Sumatra VII - Year 1963 -1968: Owned by PPN IV Rubber - Year 1969 – 1976: Owned by PPN IV - Year 1977 – 1994: Owned by PT Perkebunan IV - Year 1994 – 1996: Owned by PT Perkebunan III,IV,V



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Since March 11, 1996 Gunung Para Estate has been under the management of PT Perkebunan Nusan-tara III. The estate is located is in the Serdang Bedagai district North Sumatra Province. Gunung Para Estate has a license for operation with land use certificate (HGU) and validity details as follows: • Land Use Certificate No. 159 dated 01 September 2005 under SK 180/HGU/BPN/2004 dated 16

December 2004 valid until 31 December 2029; Land location at Gunung Para II, Dolok sub-district, District of Serdang Bedagai covering area of 4,030 Ha; Map number: 18/04/2004 – 15 September 2004.

Gunung Para estate has two planted commodities i.e. a rubber plantation covering 2,934.48 ha and an oil palm plantation covering 552.44 ha, as well as 543.08 ha identified as HCV areas and used for hous-ing and other purposes. Gunung Pamela Estate Initially Gunung Pamela estate was a foreign plantation company that was named NV.RCMA, in 1958 Gunung Pamela estate management was taken over by the Indonesian Government and the estate was then under the management of the company Perkebunan Negara Baru. On April 10, 1976 the estate ownership changed again to be under PT Perkebunan V. Then in 1994 after the merger of the 3 (three) state owned plantations, PTP-III, PTP-IV and PTP-V, Gunung Pamela plantation management went un-der PT Perkebunan Nusantara III. The total plantation area of Gunung Pamela estate is 5,589.05 Ha is located in the Serdang Bedagai District and the validity details of the operational license certificates from the National Land Agency (BPN) are as follows: - Land Use Certificate No. 1 dated 04 January 1983 under SK 38/HGU/DA/1980 dated on 10 June

1980 valid to 31 December 2005; status EXPIRED; Land location at Buluh Duri village, Sipispis sub-district, Serdang Bedagai District covering area of 3,488.73 Ha; The company has applied to the the BPN to renew their HGU certificate since 23 January 2004, with record of application in Director letter no. 3.09/X/06/2004. The BPN has since re-measured the area on February 21, 2008 as evidenced in BPN letter no. 540.152 dated 01 February 2008. The data on re-measurement results were submitted to BPN head office Jakarta through letter No. 540-5336.D dated November 11, 2008 and received by BPN head office Jakarta on November 2008, and the HGU is currently still under process of approval by the BPN head office.

- Land Use Certificate No. 162 dated 01 September 2005 under SK 184/HGU/BPN/2004 dated 17 De-cember 2004 valid until 31 December 2029; Land location at Jambu village, Tebing Tinggi Sub dis-trict, Serdang Bedagai District covering area of 2,100.32 Ha; Map number: 13/04/2004 – 15 Septem-ber 2004.

Gunung Pamela estate has two planted commodities i.e. rubber plantation covering 1,905.83 ha and oil palm plantation covering 1,881.90 ha as well as 1,801.33 ha identified as HCV areas, and used for housing and other purposes. Rambutan Estate Rambutan estate has a plantation area of 6,837.67 ha, the location is part of two North Sumatran prov-inces, i.e. Serdang Bedagai and Batu Bara District (previously part of Asahan District) that is ± 90 km from Medan city. Initially this estate was the property of the Maatskappay Dutch East Indies Company that was supervised by NV RCMA. Since 1958 this company was nationalised to PPN -North Sumatran Branch (state owned company). In 1996, after a restructuring program, the management of Rambutan estate was changed to be under PPN SUMUT IV, and in 1976, management of the estate was changed again to be under PT Perkebunan V. Then in 1994 with the existence of the merging 3 (three) state-owned plantations which were PTP-III, PTP-IV and PTP-V, Rambutan estate plantation management went under PT Perkebunan Nusantara III. The details of the land use certificates for Rambutan Estate are as follows: - Land Use Certificate No. 1 dated 14 May 1996 based on letter from Ministry of Agriculture/Head of

BPN no.51/HGU/BPN/1995 date on 04 August 1995 valid until 31 December 2025; Land location



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at Payabagas village, Tebing Tinggi sub-district, Serdang Bedagai District covering area of 4,373.78 Ha; Map number: 46/04/IV/1994 – 25 November 1994.

- Land Use Certificate No. 1 dated 14 May 1996 based on letter from Ministry of Agriculture/Head of BPN no. 50/HGU/BPN/1995 dated 04 August 1995 valid until 31 Dec 2025; Land location at Sei Bamban village, Tebing Tinggi sub-district, Serdang Bedagai District covering area of 569.32 Ha; Map number: 25/04/IV/1994 – 11 April 1994.

- Land Use Certificate No.1 dated 14 May 1996 based on letter from Ministry of Agriculture/Head of BPN no. 53/HGU/BPN/1995 dated 04 August 1995 valid until 31 December 2025; Land location at Sei Priok village, Tebing Tinggi sub-district, Serdang Bedagai District covering area of 780.45 Ha; Map number: 26/04/IV/1994 – 25 November 1994.

- Land Use Certificate No. 18 based on letter from Ministry of Agriculture/Head of BPN no. 35-HGU-BPN RI-2009 dated 13 February 2009, valid for 25 years. Land location at Sei Simujur village, Sei Suka sub-district, Batubara District covering area of 793.15 Ha; Map number: 23/07/2007 – 26 July 2007.

Table 5: Information on General Conditions of Company Estates included in the Assessment

Estate

Dusun Ulu Bangun Gunung Para Gunung Pamela Rambutan Altitude ± 51 m.a.s.l. ±100-160

m.a.s.l. ± 50-150 m.a.s.l. ± 150-250 m.a.s.l. ± 18

District Simalungun Simalungun Serdang Be-

dagai Serdang Bedagai Serdang Be-

dagai and Ba-tubara

Plantation Administra-

tive Area Dinas

Perkebunan Kab.

Simalungun

Dinas Perkebunan

Kab. Simalungun

Dinas Perkebunan

Kab. Serdang Bedagai

Dinas Perkebunan Kab Serdang

Bedagai

Dinas Perkebunan

Kab. Serdang Bedagai & Batu Bara

Names of areas surrounding estate borders

North border

Division I,II & III Nagori Perda-gangan, Kec. Perdagangan, Kab. Simalungun Division IV, V, VI Nagori Dusun Ulu (Huta Bendo)

Division I,II,III Nagori Silau Malela,Silulu, Margo Mulyo, Serapuh, Pe-matang Ga-jing, SIPEFE Estate Division IV Nagori Talun Kondot

Pabatu estate Pabatu estate

Division I,II,III,IV,V,VII,VIII Sei Bamban Village & Sei Bamban Estate Division VI Sei Mujur Village

East border

Division I,II,III Gunung Bayu estate PTPN4 Division IV,V,VI Nagori Dusun Ulu(Huta Bendo)

Division I-III Pematang Asilum, Bnagun Division I V Nagori Talun Kondot

Paritokan Village, Nagaraja estate

Bandar Bejambu Division I,II,III,IV,V,VII,VIII Paya Bagas Village, Sei Serimah Village Division VI Sei Mujur Village

South Division I,II,III Division I,II,III Dolok Sungai Bah Division



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border Gunung Bayu PTPN4 Division IV,V,VI Tinjoan estate PTPN4

Nagori Senio, Dolok Hantaran, Sungai Bah Bolon Division IV Nagori Simbolon Tengkoh, Road from Simbolon to Siantar

Merawan village, Dolok Merawan Rubber Plantation

Jalingge I,II,III,IV,V,VII,VIII Sei Serimah Village Division VI Sei Simujur

West border

Division I,II,III Dolok Sinum-bah II planta-tion Division IV,V,VI Gunung Bayu estate PTPN4

Division I,II,III Nagori Laras Dua Division IV Nagori Laras Dua

Limbong Village, Sei Bah Renggasan and Gunung Pamela estate

Gunung Manako estate Division

I,II,III,IV,V,VII,VIII Pertapahan Village Division VI Sei Simujur

Other estate information Climate Clas-

sification based on Schimdt

&Ferguson

Type A /wet Type A/ wet Type A /wet Type A/wet Type A/wet

Temperature 26 º to 32º 26 º to 32º 28 º to 34º 26 º to 32º 27 º to 33º Average Rainfall

201 mm/month

169 mm/month 153 mm/month 173 mm/month 142 mm/month

Soil type Red yellow Podsolik

Brown yellow Podsolik

Brown Podsolik

Brown yellow Podsolik

Red Yellow Podsolik

Topography 0-8% ± 8% 3-25% 0-8% 0-8% Land

coverage Palm oil plan-tation, rubber

plantation

Palm Oil plan-tation and

rubber planta-tion

Rubber and Palm oil plan-tation, mar-ginal area

Rubber and Palm oil plantation, marginal area

Rubber and Palm oil plan-tation, mar-

ginal Identified HCV areas

1.1, 1.3, 1.4, 2.3, 4.1, 6 4.1, 6 1.3, 2.3, 4.1 4.1, 6 2.3, 4.1, 6

Total HCV area 83.26 ha 98.5 ha 165.49 ha 211.91 ha 296.29 ha

Villages Surrounding

Estate

Nagori Sei Mangke, Adil Makmur, Na-gori Dusun Ulu, Siringan, Nagori Tim-baan, Perda-gangan II, Perdagangan I, Perlanaan, Antara, Sum-ber Padi, Petatal.

Simbolon Tengkoh, Ta-lun Kondot, Senio, Laras Dua, Silau Ma-lela, Bangun, Margo Mulyo.

Gunung Para II, Limbong, Dolok Mera-wan, Kalem-bak, Benda-harawan, Paretokan, Panglong.

Buluh Duri, Mar-janji, Gunung Pane, Jambu.

Payabagas, Sei Serimah, Pertapan, Sei bamban, Paya Lambong, Sei Priok, Sei Simujur, Paya Mabar.

Source of data: Identification and Analysis of HCV documents year 2009 for 5 estates supplying to Sei Mangke Mill

1.8.2 Community Background



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The following sections describe the local communities that reside inside and surrounding the land boundaries and employees of PTPN III Sei Mangke Mill and all estates related to the mill. According to land use certificates of PTPN III Sei Mangke, Simalungun district, and all estates within the mill’s supply base are located at three districts (Kabupaten), i.e. Simalungun, Serdang Bedagai, Asahan and Batubara North Sumatra Province. The communities surrounding PTPN III’s mill and estates covered within this RSPO certification program are described as follows: (a) 3 sub-districts consisting of 4 villages which are Dusun Ulu, Sei Mangke, Talun Kondot and Bangun village located at Simalungun district; (b) two sub-districts consisting of two villages which are Limau Manis village and Sei Simujur village lo-cated at Batubara district; and (c) 3 sub districts consisting of 6 villages, which are Payabagas, Sei Bamban, Sei Priok, Jambu, Buluh Duri and Gunung Para II located at Serdang Bedagai district. 1.8.3 Community Development The company has a community development or CSR programme under their Small Enterprise Assistance and Environmental Development program (‘Program Bina Lingkungan and Mitra Binaan’) which is man-datory by government (Ministry of State Owed Company Indonesia). The purpose of the programme scheme is to maintain 5% of company profit for the Small Enterprise Assistance and Environmental De-velopment programme. Through the Environmental Development (‘Bina Lingkungan’) program, the company contributes to the local communities surrounding the estates and mill in the form of such as finance grants for student scholarship, foods distribution, worship building, educational facilities rehabilitation and other donation. There are Environmental Development (‘Bina Lingkungan’) programs held at all estates. During assess-ment at Bangun estate, it was found that the actual expenditure through the Environmental Development (‘Bina Lingkungan’) program contributed to the villagers of local community surrounding Bangun Estate was IDR 153,826,550 by the end of 2008; IDR 137,483,500 by the end of 2007; IDR 283,714,000 by the end of 2006. Through the Small Enterprise Assistance (‘Mitra Binaan’) program, the company also contributes to Small Enterprise and Cooperative Development institutions through provision of soft loans with low interests to business units (small enterprises and cooperatives) at all estate as the company’s partners. During as-sessment at Bangun estate was found that the sum of the loans given reached IDR 755,000,000 by the end of 2008; IDR 200,000,000 by the end of 2007 and IDR 250,000,000 by the end of 2006. The com-pany’s allocation of Small Enterprise Assistance (‘Mitra Binaan’) soft loan is based on the company’s budget, Rencana Kerja Anggaran Perusahaan (RKAP). During the main assessment, the auditors visited at least 4 villages. It was found that the dedicated com-pany representative that liases with each village or communities is not recognized by the communities according to ‘Mitra Binaan’ program except for ‘Bina Lingkungan’. Regular open discussions and meet-ings between villagers and company have not been held by the company. The communities only attend company meetings when they are invited as part of the ‘Bina Lingkungan program’ which includes activi-ties such as public health service (Posyandu), donation for school facilities and buildings, provides schol-arship to local students, donations for worships facilities, donations for national day’s celebration and sport facilities. A donation would be allocated to local communities activities based on a requirements proposal submitted by head villages, communities institution or other organization. According to RSPO criterion 6.11, the company’s contribution should be based on communication and consultation with the local community as an outcome of consultation activities with regard to RSPO crite-rion 6.2. Based on community interviews during assessment, it was found that The ‘Mitra Binaan’ pro-gramme is lacking transparency and provision of information to local community. The soft loans given by the company are mainly small, medium enterprises and cooperation involved in activities that not directly related to the core business of company such as palm oil and rubber activities. It was found that the ‘Mi-



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tra Binaan’ soft loan was not given to oil palm farmers group or rubber farmer group or other business re-lated to oil palm or rubbers plantation. According to the ‘Mitra Binaan’ programme, the soft loan will be given based on a proposal submitted by owner of institution to company head office. Some villagers are aware that the mechanism is not clearly defined for local community. However, the company has con-ducted a Participatory Rural Appraisal at the villages surrounding estate to develop a Village or Commu-nity Development Plan on July 2009; the ‘Mitra Binaan and Bina Lingkungan’ program could meet the need of the villages or local communities. Contributions to the local government also clearly documented as contribution of tax, retribution and other government requirement. According Bangun estate, for example the tax and retribution payment to Si-malungun District is IDR 2,009,631,087 by the end of 2008. 1.8.4 Worker Demographic The total number of workers in Sei Mangke Mill in May 2009, as documented by the company, was about 193 employees consisting of management staff, administration staff, mill operational staff, laboratory staff, technical staff and security staff. The total number of workers at all estates by May 2009 (including workers for both palm oil and rubber es-tates within company) are as follows: Table 6: Number of staff and workers at estates included in the assessment

No. of workers/staff

Position Dusun Hulu Estate

Bangun Estate

Gunung Pamela Estate

Gunung Para Es-

tate

Rambutan Estate

Manager 1 1 1 1 1 Estate division head 2 1 2 1 2 Assistants 12 7 9 7 12 Worker 619 538 984 974 1,184 TOTAL 634 547 996 983 1,199 The employees are divided into managerial staff and field workers and almost all are permanent workers. For non-permanent workers doing temporary work, the company hires contractors under strict contractual agreements stating that they are to abide to labour laws. The contractors abide to the labour laws and other related laws such as insurance; pay tax, health and safety regulation. A mechanism to control the labour contractor is in place. The company fully complies to international and national labour law require-ments pertaining to salary, housing facilities, medical and hospital facilities, educational support, worship, sport facilities and other facilities. The company has clear working regulations in place, namely a “Perjan-jian Kerja Bersama” (working agreement) signed by management and a representative of the labour union organization. All employees have equal opportunities for work, promotions and job transfers based on the company’s Competency Based Human Resources Management system. Training program evaluations for employees is implemented and documentation of this is well maintained. Pay and conditions for employ-ees and worker are very well managed and maintained by the company. A reward and punishment sys-tem is implemented under control by the HRD (Human Resources Department) division and supported by the labour union organization within the company.

1.9 Time Bound Plan for Other Management Unit and Justifications

The time frame laid out below is considered to be both challenging and realistic. The company will apply experience gained from their first RSPO main assessment to ensure that the other management units under the company conform to the Indonesian National Interpretation of the RSPO Principles and Criteria. Table 7: Timebound plan for other Management Units under PT Perkebunan Nusantara III



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Name of Holding Location Time bound plan for certification

KRBTN Tebing Tinggi November 2010 PSSIL Sei Silau / Asahan July 2010 PANAS Aek Nabara / L. Batu May 2010 PSSUT Sisumut / L. Batu April 2010 PSBAR Sei Baruhur/ L. Batu March 2010 PPARO Aek Raso/ L. Batu February 2010 PTORA Torgamba/ L. Batu December 2009 PATOR Aek Torop/ L. Batu January 2010 PSDAN Sei Daun/ L. Batu November 2009 PSMTI Sei Meranti/ L. Batu October 2009

1.10 Area of Plantation (Total, Planted and Mature) Table 8: Area Statement of Company estates supplying to Sei Mangke Mill as of May 2009

Estate Name

Total area (Ha)

Total Planted

area (Ha)

Oil Palm planted

area (Ha)

Mature oil palm

planted area (Ha)

Rubber planted

area (Ha)

HCV areas/ Potential

HCV areas (Ha)

Land areas used for

other pur-poses*

(Ha) Dusun Hulu 4,808.60 4,549.52 4,177.57 4,191.72 371.95 83.26 175.82

Bangun 3,252.24 2,848.47 1,560.56 2,101.39 1,287.91 98.65 305.12 Gunung Para 4,030.00 3,486.92 552.44 2,881.22 2,934.48 165.45 377.63

Gunung Pamela 5,589.06 3,787.73 1,881.90 2,725.07 1,905.83 211.91 1,589.42

Rambutan 6516.70 6,085.17 4,572.97 4124.57 1,440,69 296.29 206.75 Note: * Other Purposes e.g. for housing, offices etc

1.11 Approximate Tonnages Certified

Sei Mangke Mill’s annual CPO and PK production is estimated at 40,248 tonnes and 8,114 respectively. Based on FFB supply data for year 2008 as per Table 2, approximately 93% of this production is from the company’s own estates while the remainder is from independent smallholders. As such, the approximate tonnages certified, based on 93% of CPO and PK production in 2008 are as follows: Crude Palm Oil (CPO) : 37,430 tonnes

Palm Kernel (PK) : 7,546 tonnes

1.12 Date of Certificate Issued and Scope of Certificate The date of the issuance of RSPO certificate is 16 August 2010. The certificate is valid until 15 August 2015. Further details of the certificate are included in Appendix 1.

The scope of the certificate covers production of palm oil from Sei Mangke Palm Oil Mill and company es-tates supplying to the mill, which includes Dusun Hulu Estate, Bangun Estate, Gunung Para Estate, Gunung Pamela Estate, and Rambutan Estate.

2.0 ASSESSMENT PROCESS



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2.1 Certification Body TUV Rheinland Malaysia Sdn. Bhd. is a member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 360 locations in 62 countries on all five continents. TUV Rheinland Malaysia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, as well as CDM Project Validations. TUV Rheinland Malaysia’s office is located in Subang Jaya.

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

Dian S. Soeminta

Lead Auditor

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

Suseti-yaningsih Auditor

Education: Bachelor of Agriculture Social Economics – Universitas Pembangunan Nasional (UPN) ‘Veteran’ Yogyakarta (1986); Master of Science in Natural Resources and Environmental Management - Bogor Agriculture Institute Indonesia (1992); Faculty of Forestry & Environmental Science - Albert Ludwig University of Freiburg Ger-many, (2003). Trainings attended: Community Development and Participatory Forest Management trainings conducted in Nepal, India and Thai-land; Gender, Agriculture and Leadership training - Wageningen Uni-versity Netherland; EIA (Environmental Impact Assessment) training - Anutech Australian National University Canberra; Forestry, Market and Society summer school - Albert Ludwig University of Freiburg; ISO 9001:2000 and ISO 9001:2008 training - TUV Rheinland, HCVF (High Conservation Value Forest) Auditor training; CoC and SFM FSC system training. Working experience: Field work experience in social and environ-mental issues for more than 18 years. 15 years experience in forestry and plantation social issues, conducting audits and assessments for social accountability certification systems and management systems, as well as conducting or facilitating trainings on management of so-cial issues. Experienced in conducting assessments for forestry and



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palm oil companies for compliance to WWF Indonesian PFTN (Pro-ducers Forest and Trade Network) standard, FSC standard and RSPO standards respectively. Active in the Working Group for PAN-ASEAN Timber Certification Initiative in Philippine, Thailand, Viet-nam, Myanmar and Brunei. Member of Forest Stewardship Council (FSC) International organization based in Bonn Germany since 2005.

Fadli Auditor

Education: Bachelor of Anthropology, Department of Anthropology - University of Indonesia, Jakarta. Trainings attended: Sustainable Natural Production Forest Man-agement (PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI), Forest Management and Agriculture Auditor Training; ISO 9001:2008, ISO 14000:2004, OHSAS 18001:2007 trainings - Smart-wood/Rainforest Alliance; SA8000 training - SA International; RSPO Lead Auditor Training -Indonesian Palm Oil Commissions. Working experience: Experienced as lecturer for D3 Tourism pro-gram, University of Indonesia. Social Aspect Auditor of PT. TUV In-ternational Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Researcher of Stakeholder Mapping With CSR Indonesia.

Agus Salim Alfat Auditor

Education: Bachelor Degree in Chemistry - Bandung Institute of Technology, Indonesia (1988 to 1993); Master Degree in Quality, Safety and Environment - Otto Von Geuricke, Magdeburg University, Germany (2001 - 2002). Trainings attended: ISO 9000:2000 Series Auditor / Lead Auditor Training - PE International (Jakarta), IEMA Advanced EMS Auditor (IEMA / EARA ISO 14001) Auditor / Lead Auditor Training Course - PE International (Jakarta), OHSAS 18001 Lead Auditor Training Course - PE International (Jakarta). Working experience: Experienced in Quality Control from 1994-2004. Auditor for Quality Management System since 2004 – present. Auditor for Environmental Management System since 2005 – pre-sent. Auditor for OHSAS 18001 since 2007 - present. Conducted over 100 Quality Management System audits since 2004, over 50 Environmental Management System audits since 2006 , and over 25 OHSAS audits since 2007

Carol Ng Expert

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

2.3 Assessment Methodology The certification assessment was conducted from 22 to 26 June 2009, as per the assessment program below. The assessment was carried out in conformance with the procedure as per the RSPO Certification



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Systems document approved by the RSPO Executive Board on June 2007, and with TUV Rheinland Ma-laysia’s RSPO certification procedure for the assessor and the certifier. During the assessment, the quali-fied TUV Rheinland assessors conducted the assessment against the Indonesian National Interpretation (INA-NI) of the RSPO Principles and Criteria (May 08), checked for compliance to the requirements and recorded their findings. Due to the location and proximity of the estates, combined with common management systems and in-formation derived during the gap assessment, it was possible to carry out both field and office assess-ments of all estates and the mill within the time frame without compromising the integrity of the assess-ment in any way. All 5 estates and 1 mill were visited and the assessment team carried out field and office assessments of compliance for all the RSPO principles and criteria. Common findings were identified and specific evi-dence was recorded for individual estates. Interviews were conducted at all estates and the mill. Table 9: Certification Assessment Agenda Date Location/Main

sites Main activities/ Sites assessed

Open Stake-holder consulta-tion at Hotel Siantar

Open stakeholder meeting Focus group discussions on the following impacts of the company: Social amenities, social and environmental impacts, transparency, lo-cal community impacts, contributions to local development, employ-ment opportunities

June 22, 2009

Simalungun Dis-trict Office

Opening meeting. Introduction by team leader. Introduction of team members and as-sessment agenda. Presentation of estates and source of FFB by respective managers.

Dusun Ulu Estate Adil Makmur vil-lage

Chemical stores: Storage, MSDS leaflets, herbicide mixing areas, PPE, ventilation, security. Field Inspection: Herbicide application programmes, harvesting and manuring operations, SOP’s, soil fertility & topography, ground cover, field observation of all operations. Worker interviews. OSH, sexual harassment, gender issues, hous-ing, pay and contracts, child labour, first aid, awareness of company policies and communication mechanisms. HCV’s: HCV identification, management plan, Environmental Impact Assessment and field Implementation. Riparian Zone: Field checks, riparian zone width, current and future management, non-maintenance regimes. Water Management: Water courses, sampling and quality monitor-ing. Road Maintenance: Run off, social amenities, social Impact assess-ment Local Contributions: Contributions to local development by the company, employment opportunities, social impacts, complaints pro-cedure. Workshop: Oil traps, safe working environment, PPE, diesel tanks, waste management. Housing: Inspection of water discharge points, water sources plans, amenities & facilities, housing condition, waste disposal. Document checks.

June 23, 2009

Bangun Estate Talun Kondot village

Chemical stores. Storage, MSDS leaflets, herbicide mixing areas, PPE, ventilation, security. Field Inspection: Herbicide application programmes, harvesting and manuring operations, SOP’s, soil fertility & topography, ground cover, field observation of all operations. Worker interviews. OSH, sexual harassment, gender issues, hous-



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ing, pay and contracts, child labour, first aid, awareness of company policies and communication mechanisms. HCV’s: HCV identification, management plan, Environmental Impact Assessment and field Implementation. Riparian Zone: Field checks, riparian zone width, current and future management, non-maintenance regimes. Water Management: Water courses, sampling and quality monitor-ing. Road Maintenance: Run off, social amenities, social Impact assess-ment Local Contributions: Contributions to local development by the company, employment opportunities, social impacts, complaints pro-cedure. Workshop: Oil traps, safe working environment, PPE, diesel tanks, waste management. Housing: Inspection of water discharge points, water sources plans, amenities & facilities, housing condition, waste disposal. Document checks.

Sei Mangke Mill Mill and workshop inspection Documentation Worker interviews Supply chain: Documentation of incoming FFB supply Standard Operating Procedures OSH: Training, safe working environment, etc. Waste Water Treatment Plant: Effluent, waste water management, land application

June 24, 2009

Gunung Para Estate

HCV’s: HCV identification, management plan, Environmental Impact Assessment and field Implementation. Riparian Zone: Field checks, riparian zone width, current and future management, non-maintenance regimes. Local Contributions: Contributions to local development by the company, employment opportunities, social impacts, complaints pro-cedure.

Gunung Pamela Estate Buluh Duri village Marjanji village

HCV’s: HCV identification, management plan, Environmental Impact Assessment and Field Implementation. Riparian Zone: Field checks, riparian zone width, current and future management, non-maintenance regimes. Local Contributions: Contributions made to local development by the company, employment opportunities, social impacts, complaints procedure. Check on land use

June 25, 2009

Rambutan Estate Paya Bagas Village Sei Mamban village

HCV’s: HCV identification, management plan, Environmental Impact Assessment and field Implementation. Riparian Zone: Field checks, riparian zone width, current and future management, non-maintenance regimes. Local Contributions: Contributions to local development by the company, employment opportunities, social impacts, complaints pro-cedure. Documents review: Compensation mechanism, Resolution Conflict, Communication & Consultation procedure, Management plan, Work-ing agreement (PKB), labour union meetings records. Land use conflict: Interview with affected communities, document checks

June 26, 2009

Director’s Office/ Head office

Final document review: Compilation of audit findings, review and documentation of evidence. Closing meeting: Chaired by the assessment team leader. Welcome



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and introduction by the team leader. Presentation of findings by the assessment team. Questions and answers. Final summary by team leader.

Table 10: Agenda of additional audit conducted to verify closure of major non-conformities

Date Location/Main sites Main activities Dusun Ulu Estate Verify status of land use conflict at Dusun Ulu village,

Adil Makmur Village. Verify mechanism for reception of incoming FFB from independent smallholders at Sei Mangke Mill.

July 23, 2009

Bangun estate Verify status of land use conflict at Talun Kondot Vil-lage

July 24, 2009 Gunung Pamela Estate Verify status of land use conflict at Marjanji Village July 25, 2009 Rambutan Estate Verify status of land use conflict at Paya Bagas Vil-

lage April 26, 2010 PTPN III Head Office Update audit data, verification of corrections & cor-

rective actions taken by the company April 27, 2010 PTPN III Head Office Update audit data, verification of corrections & cor-

rective actions taken by the company

2.4 Stakeholder Consultation and Stakeholders Contacted

Based on information from PTPN III provided to TUV Rheinland Malaysia, selected stakeholders from the company’s stakeholder list were invited for written comment and open stakeholder consultation. Stake-holders present at the open stakeholder meeting provided input about the performance of the company directly or by filling the questionnaire. The stakeholders present were selected based on the representation of relevant institutions interested or affected by PTPN III activities, such as local organizations, NGO’s, media, and local communities around the estates and mill. For stakeholders who attended the open stakeholder consultation, the participants were invited through an invitation letter prepared by TUV Rheinland and were distributed to the parties concerned. In addition, during the main assessment, the assessor team conducted site visits to the vil-lages surrounding the 5 estates and mill, which were included as part of the certification scope to get in-put and verify all issues raised during open stakeholder meeting relating to the company’s performance. PTPN III Sei Mangke mill and all estates have a documented stakeholders list dividing stakeholders into different categories, and including information such as name of contact person, name of organization and address, and relationship with PTPN III. The stakeholder categories include Communities of Villages, Social Organizations, Worship organizations, Government Organizations, Non-Government Organiza-tions, Suppliers, Contractors, Buyers, Universities or educational institutions, Labor Unions, Company Labor Co-operations, and Out-growers. During the RSPO assessment, stakeholders representing all categories were invited independently by the auditing team to attend the stakeholder consultation venue on 22 June 2009 at Siantar Hotel Pematang, Siantar, Simalungun district. The mechanism used to re-ceive information, responses and comments from stakeholders was through the use of questionnaires and focus group discussions. Information according to public announcement was also available at RSPO website and TUV Rheinland Malaysia. Main questions that were asked during the stakeholder consultation are as follows:



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o Are you aware of the RSPO standard? o Do you have any relationship with the palm oil plantation & mill (PTPN III)? o What kind of relationship is this? o Have you attended stakeholder meetings with the company before? What was the purpose of the

meeting? o How often does the company conduct stakeholder meetings? o Do you aware of the company’s legal boundaries? o Are there any environmental impacts resulting from the company’s activities that affect you? o Are there any social impacts resulting from the company’s activities that affect you? o Are there any conflicts or disputes between you and the company? o Have you had any experience having to resolve the problems through conflict resolution? o Have you had any communication and consultation with stakeholders set up by PTPN III? o Are you aware of any HCV areas within PTPN III’s area? o What are the positive and negative aspects of the company? o Do you have any comments on the company? o Do you have any comments on the auditor team? o Do you need a specific meeting with the auditor team after this event?

Table 11: List of stakeholders that attended the stakeholders’ consultation meeting, and stake-holders interviewed on-site during the assessment.

No. Name of Stakeholder Institution and Address

ATTENDEES AT STAKEHOLDER CONSULTATION MEETING: 1 Limson Hutabarat Persatuan Wartawan Indonesia Siantar-Simalungun 2 M. Yamin Indra Lambaga Swadaya Masyarakat Team Operasional Penyelamatan

Aset Negara (LSM TOPAN-RI) Simalungun 3 Ismail Lambaga Swadaya Masyarakat Team Operasional Penyelamatan

Aset Negara (LSM TOPAN-RI) Simalungun 4 Neuritis S Lambaga Swadaya Masyarakat Team Operasional Penyelamatan

Aset Negara (LSM TOPAN-RI) Simalungun 5 Evil Lambaga Swadaya Masyarakat Team Operasional Penyelamatan

Aset Negara (LSM TOPAN-RI) Simalungun 6 Banda Pane Dinas Pengelolaan Sumber Daya Air (PSDA) Simalungun 7 Ir. Eko Harianto Kabid E&P Dinas Pengelolaan Sumber Daya Air (PSDA)

Simalungun 8 Ir. Martua Tambunan Kadinas Perkebunan, Simalungun: 9 Makmur Damanik Assistant II Secretariat Pemkab Simalungun 10 Jati WH Balai Konservasi Sumber Daya Alam (BKSDA) Sumut 11 Elvina Balai Konservasi Sumber Daya Alam (BKSDA) Sumut 12 Yulkhaidin Azis Balai Konservasi Sumber Daya Alam (BKSDA) Sumut 13 Eka Prasetya Balai Konservasi Sumber Daya Alam (BKSDA) Sumut 14 Antonius Damanik Usaha Kecil & Menengah (UKM) Simalungun Cooperative 15 Suparman Sinambela Director of UD. Bentasil: 16 Tahan Saragih Serikat Pekerja Perkebunan (SPBUN) PTPN III 17 Hamdani Serikat Pekerja Perkebunan (SPBUN) PTPN III 18 Agus Yudastowo Serikat Pekerja Perkebunan (SPBUN) PTPN III 19 Zubriadi Lubis Serikat Pekerja Perkebunan (SPBUN) PTPN III 20 Sugino Serikat Pekerja Perkebunan (SPBUN) PTPN III 21 Alimuddin CV. Rezando Pratama, contractor and supplier FFB 22 Media Buana News, Jakarta Sumatera utara bransch office 23 Suwandi Village head of Bahsumbu, Tebing Tinggi, Serdang Bedagai. 24 Bakhtiar Effendi Village head of Bangun 17 25 Mhd. Kholif Village head of Sei Simujur, Sri Suka, Batubara



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26 Asnida Village head of Dusun Ulu, Ujung Padang, Simalungun. 27 Awaluddin Damanik Village head of Mariah Padang, Tebing Tinggi, Serdang Bedagai. 28 Jimin Village head of Sei Serimah, Tebing Tinggi, Serdang Bedagai. 29 Suwandi Village head of Jambu, Tebing Tinggi, Serdang Bedagai. 30 Taufik S.Ag Village head of Bandarawan, Dolok Merawan, Serdang Bedagai 31 Basiman Village head of Nagori Sei Mangkei. 32 Dewi Yanti Purba Village head of Buluh Duri, Sipispis, Serdang Bedagai 33 Zul Ahmad Lubis Village head of Gunung Pane. 34 Irawadi Village head of Katembak 35 Ali Sahril DMK Village head of Gunung Para II 36 Hotman Samosir Contractor CV Gracia Sejahtera 37 Darsono Chandra Community leader of Nagori Senio, Gunung malela. 38 Aliyas Community leader of Sei Simujur, Sei suka, Batu Bara. 39 Aliusman Community leader of Sei Simujur, Sei suka, Batu Bara. 40 Suyanto Community leader of Sei Simujur, Sei suka, Batu Bara. 41 Kamaludin Community leader of Dusun Ulu, Ujung Padang 42 Sumitro Community leader of Limau manis, Limapuluh, Batubara 43 Yusman Damanik Community leader of Nagori Tibaan, Bandar, Simalungun 44 Ferdinand S Community leader of Nagori Sei mangkei, Bosar maligas 45 Sukarjo Community leader of Nagori Sei mangkei, kec. Bosar maligas 46 Syamsul Community leader of Nagori Margomulyo, Gunung malela 47 Nurman SPd Community leader of Gunung Pane, Sipispis 48 Darul Husna Community leader of Gunung Pane, Sipispis 49 Edi Sawito Community leader of Jambu, Meriah Padang, Buuh Duri 50 Ahmad Palm oil farmer of Jambu village 51 H. Suwandi Community leader Pematang Siantar, kec. Gunung Malela 52 Ngatiman Palm oil farmer of Pematangsiantar 53 Sujono Community leader Dusun V Desa Dolok Merawan 54 Safrin Adin Villager of Desa Dolok Merawan, Kec. Dolok merawan 55 Slamet Riyadi Villager of Desa Dolok Merawan, Kec. Dolok merawan. 56 Jumadi Villager of Desa Dolok Merawan, Kec. Dolok merawan. 57 Nisan Villager of Desa Dolok Merawan, Kec. Dolok merawan. 58 Ismail Villager of Desa Dolok Merawan, Kec. Dolok merawan. 59 Isnoto Villager of Desa Dolok Merawan, Kec. Dolok merawan. 60 Edi Sawito Villager of Desa Jambu, Meriah Padang, Buuh Duri 61 Ahmad Villager of Desa Jambu, Meriah Padang, Buuh Duri 62 Darusl Husna Villager of Desa Jambu, Meriah Padang, Buuh Duri 63 M. Rijal Purba Villager of Dusun II Desa marjanji, Kec. Sipispis 64 Azrai Purba, Villager Dusun II Desa marjanji, Kec. Sipispis STAKEHOLDERS VISITED ON-SITE: 1 Asnida Head of Desa Dusun Ulu, Kec. Bosar Maligas 2 Kwatno Villager of Desa Dusun Ulu, Kec. Bosar Maligas 3 Rusnaidi Villager of Desa Dusun Ulu, Kec. Bosar Maligas 4 Wagiso Villager of Desa Dusun Ulu, Kec. Bosar Maligas 5 Mahyudin Secretary of Kepala Nagori Dusun Ulu, kec. Bosar Maligas 6 Zainal Arifin Siregar Head of Lembaga Pengembangan Masyarakat Desa Adil Mak-

mur, kec. Bosar Maligas. 7 Supriyani Secretary of Kepala Desa Adil Makmur, kec. Bosar Maligas 8 Uca Villager of Desa Adil Makmur, kec. Bosar Maligas 9 Rojiun Villager of Desa Adil Makmur, kec. Bosar Maligas 10 Rajali Sinaga Head of Badan Pusat Statistik (BPS) of Desa Adil Makmur, kec.

Bosar Maligas 11 P. Situmorang Head of Talun Kondot land claimer, kec. Pane 12 Satiman Member of land claimer of Talun Kondot, kec. Pane



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13 Sriwati Head of Desa Talun Kondot, kec. Pane 14 Rajali Sinaga Villager of Desa Marjanji, kec. Sipispis 15 Salmin Purba Head of Marjanji land claimer, kec. Sipispis 16 Abdul Sinaga Villager of Desa Marjanji, kec. Sipispis 17 Efendi Kudri Ex Head of Village and land claimer of Desa Sei Bamban, kec.

Tebing Tinggi 18 Suwarno Head of Paya Bagas land claimer, kec. Tebing Tinggi 19 S.P. Tobing Villager of Desa Paya Bagas, kec. Tebing Tinggi 20 Elvi Z. Lubis Finance – Gunung Pamela Estate 21 Suriaty Chan Finance – Gunung Pamela Estate 22 Siti Rifiatus S Archives - Gunung Pamela Estate 23 Supriatik Finance – Gunung Pamela Estate 24 Elly Samijah Plantings - Gunung Pamela Estate 25 Nuriyah Samsul Technical - Gunung Pamela Estate 26 Siti Hawana Technical - Gunung Pamela Estate 27 sulistiawaty DSER 1 - Gunung Pamela Estate 28 Umi Kalsum DSER 1 - Gunung Pamela Estate 29 Nurmawaty Sianipar DSER 1 - Gunung Pamela Estate 30 Marheni Ginting DSER 1 - Gunung Pamela Estate 31 Nujumiah DSER 1 - Gunung Pamela Estate 32 Ranting DSER 1 - Gunung Pamela Estate 33 Yenni F.Simangunsog CKP - Gunung Pamela Estate 34 Yeni Susanti Finance - Gunung Pamela Estate 35 Paini Mandor Contractor of Division 3 Bangun estate, Desa Titibesi 36 Ponirah Mandor Contractor of Division 3 Bangun estate, Desa Batutomo 37 Fitri Contractor worker 38 Marina Contractor worker 39 Ratna Contractor worker 40 Atik Contractor worker 41 Sariani Contractor worker 42 Paijah Contractor worker 43 Mani Contractor worker 44 Geni Contractor worker 45 Desi Contractor worker 46 Nanik Contractor worker 47 Hotman Samosir CV Gracia Sejahtera 48 Fadel Association Security Manager Indonesia AMSI / CV Anugerah

Taufik Brsaudara - Contractor Plantation maintenance Bangun es-tate

49 Syahriani Nainggolan Mandor I CV Gracia Sejahtera 50 Suryadi Mandor II CV Gracia Sejahtera 51 Riza Asih Clerk Staff Division 3 of Bangun estate 52 Suratmin Villager of Serapuh, Gn Malela 53 Suparman UD Bentasil 55 Samino Personnel Assistant of Sei Mangke mill 56 Fianarjali Buluh Duri village secretary 57 Elvi Endi Buluh Duri – village temple villager 58 Muh. Syarif Village office staff of Payabagas village 59 Wahwan Villager dusun 9 of Payabagas village. 60 Usman Saleh P Estate Personnel Assistant of Rambutan estate

2.5 Date of Next Surveillance Visit The date of the next surveillance visit is planned for June 2011.



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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Indo-nesian National Interpretation.

Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making.

Findings: The company has mechanism to record incoming requests of information from relevant stake-holder as documented in their procedure IK-300-01/01 Rev.04. 01-08-2008 regarding process of managing received letters, and procedure IK-300-16/01 Rev. 00.01-09-2007 regarding informa-tion provided to stakeholders; The company has a documented logbook for recording information requests and records of in-coming letters from stakeholders requesting information, examples as per the samples taken at Gunung Para estate, below:

1. Evidence of implementation of procedure available in the form of documented information request to Gunung Para estate made by from SMPN 1 Dolok Merawan on 1st November 2008 for BPN letter for land permit renewal of Gunung Para.

2. Record of information requests made by stakeholders available since 02 January to 22 June 2009 at all estates

Records of responses made to stakeholders' information requested are also available at all es-tates. As stated on documented procedure, IK-3-12-01/01 Rev.04. 01-09-200, regarding information requests, records of responses made to information requested are maintained for a period of time determined by the company according to the importance of the information requested. Compliance status: Full Compliance Criterion 1.2: Management documents are publicly available, except where this is pre-vented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. Findings: The process of managing publicly management documents is sufficient with the following evi-dence:

Documented procedure of IK-3.00-16/01.Rev.00.01-09-2007, pertaining to the data pro-vided to stakeholders.

Circular letter from Management (PTPN III Number 3.00/SE/01/2009 dated 05 January 2009) regarding management documents that can be made publicly available

Bangun estate has prepared a leaflet containing information such as: (a) the estate history (b) estate management practices and Human Resources Development: (c) geographical position; (d) soil and climate (e) status of land titles; (f) estate commodities; (g) ISO Man-agement System achievements; (h) Company’s Vision and Mission; (i) Corporate Social Responsibility Program; (j) Company’s Objectives and target. However the leaflet does not cover their OHSAS program, impacts of the estate activities and the continuous improve-ment plans that carried out, and also the company has bulletins named “Nusa Tiga dan Transformasi Bisnis” distributed to all head village office and other stakeholders.



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Records of information that have been requested by stakeholders are available at each es-tate.

Compliance status: Full Compliance Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations. Findings: There is no evidence of non-compliances with regulations and legal requirements at all estates and mill, except the company still in ongoing progress to renew some expired land cultivation certifi-cates (HGU) such as for Rambutan estate and a part of Dusun Hulu estate (this was raised as a non-compliance under CR 2.2). The company maintains copies of all other required legal docu-mentation, for example their government license with details as follows:

• Government license of Company Establishment Act ('Akta Pendirian Perusahaan') PTPN III No 03, 12 September 2002 with Statement of PTPN III Corporation Enterprise Shareholder's Deci-sion ('Pernyataan Keputusan Pemegang Saham Perusahaan Perseroan PTPN III') received from Notaris Sri Rahayu Hadi Prasetyo SH, Jalan Sei Batang Hari N. 2 Medan.

The company makes efforts to comply with changes in the regulations by having a documented work instruction for updating their list of applicable laws should there be any changes. All applica-ble regulations are listed and updated by the Legal and Risk Management Department in Head Of-fice of Medan. There is evidence that the company make efforts to comply with changes to regula-tions, for example, every year, the company complies to the local and provincial government labor minimum wage standard (Upah Minimum Regional - UMR) based on the North Sumatran Governor Decree No. 561/4213/K-2008, on 17 November 2008, according to the minimum wages standard of North Sumatra in year 2009, which is IDR 905,000. During assessment, it was found that the company paid a salary of about IDR 1,427,302 to employees of stratum IA/1 on May 2009, which is more than the minimum wage standard. A documented procedure for compliance with relevant legal requirements with responsible staff and division is available at management level, district and estate level. As stated on document FM-3-11-01/01 Rev.0.02.06.2009 containing a list of 85 relevant regulations and laws that applicable to PTPN III. Compliance status: Full Compliance Criterion 2.2: The right to use the land can be demonstrated, and is not legitimately con-tested by local communities with demonstrable rights. Findings: Evidence that the company has the right to use land is not sufficient. Land titles for all properties are in accordance with relevant laws are available at Sei Mangke mill, Bangun estate, Gunung Para estate, Gunung Pamela estate. However, for Bangun estate, Gunung Pamela estate and Rambutan estate, some land use certificates have expired, for example: Land Use Certificate (Hak Guna Usaha - HGU) No. 1 of Bangun Estate dated 14-1-1996

under GOI SK.31/HGU/BPN/1995 date on 29-6-1982 valid till 31 December 2006; Land lo-cation at Dusun Ulu village, Bosar Maligas sub district, District of Simalungun covering area of 2,002.77 Ha; Map number: 19/1988 – 26 March 1988. This HGU was expired.

Land Use Certificate (Hak Guna Usaha) No. 1 of Gunung Pamela estate dated 04 January

1983 under SK 38/HGU/DA/1980 date on 10 June 1980 valid to 31 December 2005; Land location at Buluh Duri village, Sipispis sub district, District of Serdang Bedagai cover-ing area of 3,488.73 Ha; Map number: not available. This HGU was expired.



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Land Use Certificate (Hak Guna Usaha) No. 1 of Rambutan Estate dated 14-05-1996 un-der GOI SK.51/HGU/BPN/1995 date on 04-8-1995 ; Land location at Payabagas village, Tebing Tinggi sub district, District of Serdang Bedagai covering area of 4,373.78 Ha; Map number: 46/04/IV/1994 – 25 November 1994. This HGU was expired.

Land Use Certificate (Hak Guna Usaha) No. 1 of Rambutan Estate dated 14-05-1996 un-

der GOI SK.53/HGU/BPN/1995 date on 04-8-1995 ; Land location at Sei Priok village, Tebing Tinggi sub district, District of Serdang Bedagai covering area of 780.45 Ha; Map number: 26/04/IV/1994 – 25 November 1994. This HGU was expired.

There is no record at time of the assessment that renewal of the expired HGU certificates was in progress, as such this was raised as a non-conformity (NCR No. 1 of 20). Legal boundaries are clearly demarcated and maintained on site. However there are several ongo-ing land disputes with local communities at Bangun estate, Gunung Pamela estate and Rambutan estate in which the affected parties have not reached a resolution with the company (raised as NCR No. 2 of 20) The process of managing identification of community activities within company land areas related to the legal rights, traditional rights and other uses of land need to be improved. Land dispute us-ing the conflict resolution mechanism is according to the free, prior and informed consent process. A documented procedure for conflict resolution that is approved by all parties is also in place, how-ever, several local communities are still not aware of this procedure, and there is no evidence that persons making land claims from the company recognize the conflict resolution mechanism as well. This was raised as a nonconformity (NCR no, 3 of 20). Compliance status: Non Compliance ( NCR No, 1 of 20; 2 of 20 and 3 of 20). 1. Land use certificates at Dusun Hulu estate, Gunung Pamela estate and Rambutan estate

has expired. 2. There are land disputes at three estates, however the conflict resolution process has not

been accepted by all parties. 3. Company has also established a conflict resolution mechanism; however it’s not recognized

by all interest parties (e.g. Local community). Criterion 2.3: Use of land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. Findings: Evidence that the use of land for palm oil does not diminish the legal rights or customary rights of other users is not sufficient, with the following evidence:

There is a negotiated agreement signed by all parties that includes names of blocks or estate areas where animal grazing is allowed, including maps of locations, but there are no such agreements pertaining to other forms of traditional rights of the local communities. Maps of lo-cations pertaining to agreements of animal grazing are not of an appropriate scale, as these do not clearly indicate the animal grazing areas as agreed by the affected parties.

Map of appropriate scale showing traditional rights or customary rights of local communities within company areas are not available with appropriate scale.

Copies of negotiated agreements are not available.

Compliance status: Non Compliance (NCR No. 04 of 20) There is no map of appropriate scale showing animal grazing locations in PTPN III Estates area as defined in their negotiated agreements with communities, and no maps of an appropriate



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scale showing extent of recognized customary rights, including the legal internal and external boundaries of others. Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability. Findings: The company’s present documented plan is used as reference for company’s working plan is the Rencana Jangka Panjang – RJP (Long Term Plan) document, but the existing information in the RJP document is more focused on the production plan, planting plan and planned expenditure (cost) associated with production operational for both estates and mill for 5 year working period. However, the RJP document still does not include a working plan for company’s activities related to social aspects, legal compliance, and environmental issues which are currently are the re-sponsibility of the company. The RJP document also has not yet included company’s activities such as long-term corporate CSR (Corporate Social Responsibility) activities of the company’s stakeholders. The RJP includes working plan documents as guidance for activities in all PTPN III estates and mills, and at the assessment time company has established an RJP work plan for the period 2009-2013, including a RJP for Mangke Sei Mill. The RJP documents do not consider the results of the social impacts assessment and HCV identification that have been conducted. As an established plantation, PTPN III’s estate included in this assessment have already com-pleted several planting cycles / crop rotations, in accordance with the characteristics of palm oil trees which have a maximum age of productivity of only 25 years. All estates have a replanting program, documented in their RJP document as "Long Term Plan / RJP", made for the year 2009 until the year 2013. For Simalungun District, there are two company estates that included in the certification as-sessment i.e.: Dusun Ulu Estate and Bangun Estate. In Dusun Ulu estate, there is no replanting program during 2009 to 2013, however in the years 2010 and 2011 there will be a conversion from rubber plantation to oil palm plantation, i.e.155 ha of oil palm plantation in 2010 and 82.50ha in year 2011. For Bangun estate, a replanting plan will be conducted on 2011 for a total area of 60 Ha. Planned conversion from rubber plantation to palm oil will be done in the in 2009 area for total area of 159.28 ha, and in year 2010 for a total area 175.67 Ha. Compliance status: Non compliance (NCR No. 05 of 20) A documented integrated working plan or management plan demonstrating the sustainability of company’s activities from economical, environmental, social and legal aspects for a minimum of 3 years period has not been established. Criterion 4.1: Operating procedures are appropriately documented and consistently im-plemented and monitored. The company has SOP’s which cover all activities in the estates and mill. All the SOP’s of plan-tation and mill are well documented and established. SOP’s for estates cover activities from seeding (nursery), preparation of land, maintenance of unproductive and productive palm tree, harvesting to dispatch of FFB to the palm oil mill. For the mill, SOPs are available for activities from receiving of FFB, sorting, production processes such as sterilizing station, digester, press-ing station, clarification station, kernel silo, until dispatch of CPO, and PK or PKO to storage tank. The company maintains comprehensive annual monitoring records referring to established qual-ity plan and quality objectives. Monitoring of operations is conducted monthly to control the achievement of quality objectives. Records of operational results from plantation and mills are available and well documented in monitoring records and kept by related and responsible persons in charge at each department. The company is already certified to ISO 9000/14000/SMK3 and implements a quality manage-



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ment system, environmental management system and occupational health and safety manage-ment system. Monitoring activities at the mill is based on the Quality Plan of Production Process DP-3.03-05/01 where the monitoring activities for quality is carried out for reception of FFB, sterilizing process, crude oil tank, clarifier tank, oil tank, oil purifier, vacuum dryer, sludge tank, sludge separator, and storage tank. Records of operational results are available and documented, among others: Monitoring at FFB reception refers to acceptance criteria determined by the organization Monitoring at sterilizer includes time, cycles, temperature, pressure, FFA, and capacity,

monitored every each 3 hours Monitoring of oil and nut include FFA, water content, dirt content and monitored by each 3

hours. Monitoring during dispatch also includes FFA, water content and dirt content monitored at

each tank. Monitoring of quality in oil tank is recorded in form FM-03-01/07, example dated 21/06/09

FFA (Free Fatty Acids) = 3.29%, Water content = 0.11%, and dirt content = 0.013%. However since Sei Mangke Mill also receive 60% of their FFB from independent smallholders there is no mechanism to monitor and ensure that all incoming FFB are from responsible sources. Sei Mangke Mill has no mechanism to control FFB supplied by independent small-holders to suppliers selling to Sei Mangke Mill, which is very important to prevent FFB procured from illegal sources from being bought by Sei Mangke mill as this is a common issue in the Si-malungun district. Compliance status: Non-compliance (NCR No. 06 of 20) There is no mechanism to control FFB supplied by smallholders to suppliers selling to Sei Mangke Mill, in order to prevent purchase of FFB procured from illegal sources. Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Findings: Soil fertility is always monitored regularly by the Oil Palm Research Centre (Pusat Penelitian Kepala Sawit - PPKS) in all estates; the results will be used to maintain soil fertility through rec-ommendations for fertilizer application. All fertilizer activities are well planned, implemented and well recorded in each division. Plantings of cover crops of the leguminoceae family such as pu-eraria javanica (PJ), centrocema pubescent (CP) and calopogonium muconoides especially in immature areas are also carried out as an alternative method to maintain soil fertility. EFB is ap-plied to certain areas as determined by foliar analysis. Palm oil mill effluent (POME) is used for land application to increase soil fertility as well and the application were regularly monitored. The company maintains and increases soil fertility by use of fertilizer, legume cover crops for unpro-ductive palm tree, composting, and land applications of POME or EFB. Records of all activities are kept as well. The company has records of regular soil, leaf and visual analysis. Leaf analysis is conducted by the Indonesian Oil Palm Research Institute annually and specifically for each of unit plantation on annual basis to determine the recommended fertilizer inputs. E.g.: Year 2009 --> Dusun Ulu estate with area of 3,943.72 ha, total trees 514,302 and tree/ha is 130 trees. Dusun Ulu estate is divided into 7 divisions with plantings done in the following years: 1993, 1994, 1995, 1997, 1998, 2001, 2002, 2003, 2004, 2005 and 2006. --> Type of fertilizer used: Urea, TSP, MOP, Dolomite, Borax --> Dosage of Urea = 2.50 Kg/tree divided into 2 semesters --> Dosage of TSP = 1.75 Kg/tree divided into semester 1 (1.25kg) and semester 2 = (0.5 kg) --> MOP 2.25 Kg/tree, divided into semester 1 = 1.25kg/tree and semester 2 = 1kg/tree --> Dosage of Dolomite is 3.25 Kg/tree, applied in two times semester 1=1.75 kg/tree and se-



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mester 2 = 1.5Kg/tree For Gunung Para estate, fertilizer recommendations from the Indonesian Palm Oil Research Centre are to be carried out 2 times a year. Fertilizers to be applied in Semester 1 are 131,985 Kg of Dolomite for area of 552.4 Ha; 8,748 kg of PHE for area of 552.4 Ha; and 241,780 kg of NPK for area of 552.4 Ha. For Semester II, fertilizer recommendations are 86,428 kg of Dolomite for area of 552.4 Ha ; 8,752kg of PHE for area of 552.4 Ha; 118,093 kg of NPK for area of 552.4 Ha.

Soil analysis will be conducted on 2009 and organization has made a request to Indonesian Oil Palm Research Centre documented in letter no. 3.01/X/13/2009 dated 17 March 2009 for soil analysis to be conducted for the whole area of PTPN3. Compliance status: Full Compliance

Criterion 4.3: Practices minimise and control erosion and degradation of soils. Findings: All estates have a Standard Operating Procedure for soil conservation, which describes objec-tives, work instructions and techniques to prevent soil damage due to erosion, excessive run-off and leaching. During site visits to sloped areas at Dusun Hulu estate and Gunung Pamela es-tate, it was observed that there is a good amount of ground cover at planted slope areas, and trees are planted using the horse shoe (‘tapak kuda’) method in which the soil where individual trees are planted is made flat to reduce soil erosion. Estate division offices maintain road maintenance programs developed on a 3 month rotation period, and include maps to indicate areas where road maintenance is conducted. Estate budg-ets also include allocation for road maintenance activities. Site visit confirms roads are reasona-bly well maintained, with drains and silt pits dug at roadsides for soil erosion control. All estates maintain a document with identification of marginal soils, which states that all estates do not have peat soil or fragile or marginal soils other than sloped areas. However this soil identifica-tion document contained insufficient information and inaccurate data as sloped areas sighted in the field were not identified in this document. Topography, soil and hydrology maps to confirm that there are no fragile and marginal soils within the estate areas were not available. This was raised as a non-conformity. Compliance status: Non-compliance (NCR No. 07 of 20) Topography, soil and hydrology maps showing the soil distribution at all estates are not avail-able.

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

Findings: The company estate’s have an SOP on protection of riparian river areas, but it has no specific instructions on methods for protection of riparian rivers, and this was raised as an observation. At river buffer zones at all estates, it was observed that marking of buffer zones was not complete and there is evidence of chemical spraying being carried out at oil palms at riparian river. For Rambutan Estate, high bunds approximately 2.5m wide were present along the length of the river banks, between the river and the planted areas, thus preventing run-off of chemicals into the river, therefore no buffer zone marking is required. For the mill, POME is treated pumped directly to field for land application. Four samples of mill



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effluent are sent for analysis by the laboratory of the Environmental Department of Simalungun District once every 6 months. Analysis results for past 2 years show results for each parameter is within the legal parameters. Records also show that water analysis is conducted for water samples taken from the point of the mill monsoon drain just before entering the river, and water analysis records for Jan and Feb 09 showed that parameters analyzed (pH, COD, BOD, N-NH3, N-total, SS and TS) are within limits. However it was observed on site that the water at the sampling point appeared unclean, therefore it is likely that readings are inaccurate. This was raised as an observation. Evidence of elements of implemented water management with records is available at all estates and the mill. For example, estates have identified water sources surrounding their land, and maintain daily records of amounts of water supplied to each worker's housing. Mill water usage has been recorded monthly with records from January 2007, with target for water usage levels set between 1.5 - 2.0 m3/ton FFB. Monitoring records show that this has been consistently achieved. However, for all estates and the mill, there is no documented Water Management Plan that combines these elements and also considers other aspects of water management. This was raised as an observation Calculation of water usage per tonne FFB at the mill was not yet done at time of audit, but the mill staff produced the document based on water usage records while the audit team was still-on site. As such, this was raised as an observation. The document showed that water usage per tonne FFB for January to May 2009 met targets defined by the mill. Compliance status: Compliance with observations Criterion 4.5: Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques. Findings: Detailed work instructions for handling of pests are documented in estates’ Standard Operating Procedures. Work instructions include methods of performing census and handling of nettle cat-erpillars, Oryctes rhinoceros and rats. IPM implementation is monitored at estate division offices, which maintain 3 month rotation schedules to conduct census of nettle caterpillars, rats and Oryctes rhinoceros, and maintain re-sults of census. Chemical issuance records for 2008 and 2009 show chemicals used for pest control were issued only at fields where pests are found. Census records of nettle caterpillars at Gunung Para estate & Gunung Pamela Estate for whole of 2009 shows zero caterpillars found. However, site observation shows low levels of caterpillar attack on palms, as such census may not have been done correctly, and this was raised as an observation. All estates have no re-cords of trainings conducted on IPM implementation. Only informal on-the-job training is con-ducted. For estates, monitoring of pesticide toxicity units for chemicals applied against nettle caterpillars is recorded in dosage of chemical applied per hectare. For Gunung Para estate, estate has documented targets for usage of Sida Up, Decis and Ally, calculated in dosage applied per ha for year 2008 and 2009 (no Decis used in 2009), and record of amounts of pesticides applied to different fields. However, calculation of pesticide toxicity units in active ingredient or LD 50 per tonne FFB or per hectare for all estates was not available. The calculations for Gunung Para estates was prepared during the audit period, but not for other estates. Compliance status: Non-compliance (NCR No. 08 of 20 and 09 of 20) Estates have no records of trainings conducted on IPM implementation, and no records of monitoring of pesticides toxicity units in a.i. /LD 50 per tonne of FFB or per hectare.



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Criterion 4.6: Agrochemicals are used in a way that does not endanger health or the envi-ronment. There is no prophylactic use of pesticides, except in specific situations identi-fied in national Best Practice guidelines. Where agrochemicals are used that are catego-rised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rot-terdam Conventions, growers are actively seeking to identify alternatives, and this is documented. Findings: The company uses only approved and registered agrochemicals. Records of all pesticides used including active ingredients used, area treated, amount applied per ha and number of applica-tions made are maintained. Records show that the agrochemicals used are appropriate and in accordance with product label recommendations for target species. Waste materials from agro-chemicals including pesticides containers are properly stored at chemicals warehouse with good ventilated and disposed in accordance with laws and regulations. The use of WHO type 1a or 1b chemicals, such as paraquat and Klerat which has the active material “Brodifacoum”,listed as a WHO type 1 chemical, have been demonstrably reduced and some, such as paraquat, are no longer in use. The chemical stores are well designed and managed with good ventilation. Agrochemicals used by organization as listed in their list of pesticides include, among others: • Herbicides such as Sportak, Ally 20 WDG, Crash 480 AS, Glitop 480 AS, Emulgator, Sida Up 480 AS (active ingredient: Glyphosate) • Insecticides - such as Decis, Marsal 5G, Matador • Fungicides such as Bayleton, Derosal, Dakonil, Bayfolan, Dithane M45, Orthene 75 SP • Rodenticides such as Klerat RBM/Storm, Ratgone, Petrokum RMB Waste material from agrochemicals are stored in hazardous waste stores and sold to organiza-tions that have permits from the government to collect the hazardous waste as per the local regulation, ‘Peraturan Perundangan PP No.18/1999’ and ‘PP No.85/1999’ about handling of hazardous waste. Work instructions on handling of hazardous waste, including packaging of fer-tilizer and agrochemicals are documented in IK-3.12-07/01 about handling and using of solid waste. Records of trainings conducted for all chemical operators (sprayers) at all plantation divisions are available. The training was conducted by the OHS personnel, nurse and mandors for each division. The content of training covers information about chemicals used, toxicity and hazards, how to return the balance of chemicals and also packaging to the store. Sprayers are also trained not to conduct spraying on riparian zones, drains and slopes. Sprayers must inform the OHS personnel and visit the clinic in case of any accidents. First aid records and interviews with the workers and medical staff confirmed that annual check ups take place for estate works handling chemicals. Pregnant and breast feeding woman not al-lowed to conduct spraying activities or other work involving agrochemicals. They are assigned other types of work, such as assisting in the day care centre. Records for medical check up are maintained. Based on interviews with female sprayers, it was confirmed that spraying activities for breast-feeding or pregnant woman are not allowed and the female sprayers are aware of this company requirement. Health check-ups are conducted for all employees once a year. For company’s management team, health check ups are conducted by a third party hospital, while for estates workers han-dling chemicals (such as sprayers) and mill assistants, as required by law no. 1, 19970 on Oc-cupational, Health and Safety, these workers are required to have their medical checks con-ducted by a paramedic from HIPERKES (Labour Department, Occupational Safety and Health Section/ Balai Kesehatan dan Keselamatan Kerja Departemen Tenaga Kerja). If there are workers who have health problems caused by their work, the clinic doctor will refer the pa-tient to the company’s hospital. For serious health problems, the company’s hospital may



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also refer the patient to a third party hospital which has the suitable medical facilities. Sam-ples of health check records for Sei Mangke mill workers and estates workers were checked, and records show that checks were conducted for workers on April 27 and 28, 2009. Compliance status: Full Compliance Criterion 4.7: An occupational health and safety plan is documented, effectively commu-nicated and implemented. Findings: The company has implemented a certified Occupational Health and Safety management system and has an OSH Policy implemented in the plantation and mill. The OSH Policy was established and signed by head of the Estate Labour Union (SP BUN) Mr. Rachmat Prawirakusumah and President Director Mr. Drs. H. Akmaluddin Hasibuan dated 31 January 2005. OSH committees are identified and responsible persons for safety programs are included in responsibility charts. The company has records of an appointment letter No. 173/IV/DTK/2009 dated 07 April 2009 from the Official Head of Workers ('Kepala Dinas Tenaga Kerja') for Simalungun District for for-mation of a worker's occupational health and safety committee within the organization. Ap-pointed committee list i.e. Ir. Hakim Sadli Hutasuhut as the senior advisor, H. Ismanto Nasution as committee head, and Dahlin as the committee secretariat. An OSH work program is docu-mented and records of regular meetings to discuss health, safety and welfare issues are kept by the OHS person. Health examinations are conducted annually for all workers especially those exposed to high risk work. Records of these are available and well kept. All workers have been trained in OHS and this is regularly updated. Records include photographic evidence and signed attendance sheets. Accident records are maintained and reviewed by OHS committee at the OHS meetings regu-larly (once a month). Record of work accidents are kept by hospital and OHS personnel and documented in form FM-12-2003. Supervisor at all locations are responsible to investigate acci-dents and reporting these to the hospital and OHS supervisor. Example records: Accident was recorded for worker, Mr. Ngatimin, during transportation due to not wearing PPE, and date of accident was 21 May 2009. The company’s risk assessment for Occupational Health and Safety is documented in form FM-03-01, last revision date 08 January 2007. Identification of risk assessment was performed by all of unit departments such as division offices, office, warehouse, transportation, etc. However, several hazardous and high risk activities have not been identified in the risk assessment such maintenance activities carried out with heavy machinery, land clearing. Worker accident insurance is in place and up to date. The organization provides insurance for worker through Jamsostek (worker’s insurance required under Indonesian law), which includes coverage of accidents, pension, and death. The organization also provides a hospital to all em-ployees. A health examination to employees exposed to high risk work was conducted by the Occupational Health and safety Department on 27th April 2009, with evidence in the forms of re-port from Dr. Santi Yuliandari dated 25 May 2009. The examination includes a lung examination to workers at chemicals warehouse, sprayer, electricians and fertilizer applicators. Accident and emergency preparedness procedures are also established and available. Proce-dure to handle emergencies are documented under PK3-10 revision 01 dated 06-01-2006, and cover emergencies such as fire, explosion, force major, and public demonstrations. Emergency procedures for handling fire at available at office, land and mill and documented in diagram of SD-10-03. First Aid kits were provided all estate offices and the mill office and first aid trainings are con-



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ducted by OHS personnel and nurses at all estates and the mill. However, it was found workers are not using PPE as required. For example, it was observed at the mill that several contract workers transporting empty fruit bunches to lorries were not wearing sufficient protective equip-ment (only one worker was wearing a safety helmet, others had no safety helmets or safety boots, and some workers at noisy areas were not wearing ear plugs). At the workshop, it was observed that old and worn masks were being used and shared by the same workers. First aid kits were available at several locations within the mill. At Gunung Para estate, a video of workers in the field showed sprayers not wearing any aprons or gloves during spraying. During site visit to Gunung Pamela estate, it was observed that harvesters were wearing proper protective equipment. However, there was no first aid equipment available or brought by a mandore at the field while work such as spraying or harvesting is being carried out. Workers stated that they re-ceived first aid training but if they had injuries during work, they would be taken to the estate clinic for treatment. Compliance status: Non-compliance (NCR no. 10 of 20 and no. 11 of 20) Several hazardous and high risk activities have not been identified in the risk assessment. Workers were found not wearing sufficient personal protective equipment.

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

Findings:

A clearly documented training programme for staff and employees is available. Records of employee training programme are available at the estate and mill for staff, but for

managerial staff, the records are maintained at the HRD management office. Contractors use only experienced worker and this is clearly stated in the contractual agree-

ments. Compliance status: Full Compliance

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 pro-mote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Findings: The company has identified negative environment impacts for all activities in the 5 estates and Sei Mangke mill. In line with implementation of their environmental management system ISO 14001:2004 that is already certified, PTPN III management periodically updates their environ-mental management program to consider all new and existing negative impacts, with the objec-tive to mitigate and minimize impacts level. As required by government regulation no 27 year 1999 relating to development of AMDAL docu-ment, each estate and mill has their AMDAL/UKL and UPL documents. AMDAL is Environmental Impact Assessment, UKL is Environmental Management Plan and UPL is Environmental Moni-toring Plan. The company reports its environmental performance based on the UKL and UPL documents to the local government every six months. Positive impacts from estates and mill activities have been identified in AMDAL/UKL/UPL docu-ment, however company has no actions or plans to improve positive impacts from their activities and no documented evidence that company has managed identified positive impacts as stated on UKL/UPL documents. This was raised as an observation. Compliance status: Compliance with observations



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Criterion 5.2: The status of rare, threatened or endangered species (ERTs) and high con-servation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into ac-count in management plans and operations. Findings: A HCV Assessment was carried out by BKSDA, and assessment document dated June 2009 is available at all estates except for Rambutan estate. Report lists a total of 27 areas in all estates identified as HCV, of which 11 areas are HCV 1, 11 areas identified as HCV4, and 5 areas iden-tified as HCV 6. No HCV 2, 3, or 5 areas were identified. A highly endangered species, the pan-golin ('trenggiling') was also identified in several estates. The HCV assessment document is still not sufficient, and had several inconsistencies in the HCV definitions used. There were also inconsistencies between the locations of HCV areas on HCV maps and in the HCV assessment document as well as on the field. A HCV Monitoring plan is documented, entitled 'Rencana Jangka Panjang Program Konservasi Periode 2009-2011', dated June 2009, but plan is lacking detail. The plan only includes a timetable for carrying out identification of flora and fauna at protected areas, installment of HCV indicating signs, restrictions to enter protected areas, regular management and monitoring and 3 monthly reports on status of programme. An annual evaluation of the effectiveness of the program is also to be carried out (but as programme was only implemented this year, no evaluation done yet). There is no specific management plan for pangolins; however, management has stated that they restrict outsiders or company personnel from entering the protected areas for hunting. Posters and signs prohibiting hunting of protected species and information on identified HCV areas are visible in appropriate scale in all locations that identified as HCV areas. There is no evi-dence or reported about hunting activities carried out by company’s worker.The company assigns personnel assistants (APK) in each estate to monitor plans associated with HCV and ERT species, however the APK personnel are not sufficiently competent in managing HCV’s, and although the company has provided training on HCV’s this was only attended by head office personnel. Compliance status: Non-compliance (NCR 12 of 20 and 13 of 20) A Management Plan for identified HCV is still not established, and personnel dedicated to monitor HCV are not sufficiently competent. Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner Findings: Waste products have been identified and categorized as hazardous and non-hazardous waste. Hazardous waste is stored in a dedicated store, with appropriate label and disposed of by a licensed company. Generated hazardous waste includes used oil from the workshop and mill, used chemical containers (packing), and old batteries. Non hazardous wastes include household waste. Records of disposal of wastes are available. Plans to avoid pollution are in place (documented in Environmental Management Program) and include careful mixing of agrochemicals, diesel tank, bunding, a dedicated concrete waste store and bounded workshop, oil traps and controlled household waste disposal. Compliance status: Full Compliance

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

Findings: All energy used in the mill are monitored, fossil fuel consumption is controlled and well recorded. Renewable energy is generated in Sei Mangke mill such fibre and shell that produced from the



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mill activities. However records of monitoring of renewable energy used and its efficiency analysis were not available at Sei Mangke mill. It is raised as non conformties. The rubber factory at Gunung Para estate previously used fossil fuel for energy, but as of May 2008, a thermal oil heater at rubber factory has been used for burning of shell for renewable en-ergy. Records showed that usage of fossil fuel at rubber factory was gradually reduced to the point where it is no longer being used to operate rubber factory (only used for transportation purposes), therefore this was noted as a positive observation. Compliance status: Non compliance (NCR 14 of 20) No records are available for renewable energy used and its efficiency analysis in Sei Mangke

Criterion 5.5: Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

Findings: The company has a Zero Burning Policy stated in their company manual and part of their management commitment. The use of fire is not allowed for any land preparation or for replanting. There is no evidence that the company uses fire in the field or for replanting activities. The company has operating procedures as guidance for emergency situations such land burning. However, PTPN III 's zero burning policy is only focused on replanting activities, there is no restriction on burning of domestic waste, and an instance of open burning of domestic waste was observed being carried out in front of a division office at Gunung Pamela estate. This was raised as an observation. Compliance status: Compliance with observations Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Findings: SOP for mill includes detailed work instruction on handling of mill effluent, which includes details and specifications of effluent treatment pond facilities, specifications of raw effluent, description and methods for each step of effluent treatment process. Work instructions also include handling of rubber effluent (as mill also processes rubber). Generated emission from mill activities such as chimney emission are monitored at least once every six months and regularly reported to local government. The company establishes an environmental management program to prevent pollution and emission annually based on results of environmental impact identification. Compliance status: Full Compliance 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 im-pacts and promote the positive ones are made, implemented and monitored, to demon-strate continuous improvement. Findings: The process of managing social impact identification of all plantation estate and mills are not ap-propriate due to the following:

The social impact identification has been carried out by an independent consultant and as-sessment report is available. The social impact assessment focused on community demo-graphic, structure and activities, however there is a lack of evidence of stakeholder partici-pation in the assessment, and the document also lacks details on the positive and negative social impacts of the company. This is raised as a non conformity as recorded on NCR no.



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15. Since the social impact assessment result still lacks details of identified positive and nega-

tive impacts of company’s activities, there is no a company procedure for identification of social impacts, management and monitoring for social activities for continuous improve-ment, and no regular monitoring and management plan for identified social impacts is not available. This was raised as a non-conformity as recorded on NCR no. 16.

A documented action plan for social impact management (dated 2009-2011) is available but was not developed based on the social impact assessment with participation of the commu-nity, employees, and other stakeholders.

Compliance status: Non Compliance (NCR 15 of 20; 16 of 20) • There is no evidence of participation from relevant stakeholders while conducting the social

impact assessment. • There is no action plan for regular monitoring and management of social impacts. Criterion 6.2: There are open and transparent methods for communication and consulta-tion between growers and/or millers, local communities and other affected or interested parties. Findings: The process of managing transparent communication and consultation is sufficient, with evi-dence as follows: A documented procedure for stakeholder communication and consultation is in place. Com-

munications and consultations held with stakeholders are well documented. A list of stakeholders is available and well maintained according to the stakeholder relations. Record of stakeholder’s aspirations and consultation are available. The company has appointed dedicated staff who responsible for consulting and communicat-

ing with local communities, however the number of dedicated staff is low and not very effec-tive in maintaining regular communications with their stakeholders and communities.

Compliance status: Compliance with observation Criterion 6.3: There is a mutually agreed and documented system for dealing with com-plaints and grievances, which is implemented and accepted by all parties. Findings: A documented procedure of handling complaints formulated as document procedure “Conflict Resolution” No. IK-3.09-15/01 Rev.05/02-06-2009 is available The procedure has been communi-cated to stakeholders of Simalungun district on 14 May 2009, with evidence in the form of an at-tendance list of 159 participants with their signatures.

Record of handling complaints and community aspirations are available in all estate. Documenta-tion of handling of complaints of employee and other stakeholders are available and maintained by the personnel assistant (APK).

The company has a procedure for identification and calculation of fair compensation for the loss of legal or customary rights, but the procedure lacks transparency and needs to be improved further through participation of stakeholders such as local community representatives and relevant agen-cies. The procedure is also not well informed to the local communities. This is raised as a non con-formity.

Compliance status: Non Compliance (NCR no. 17 of 20) There is a procedure for handling complaints for both employees and worker. However the pro-cedure of identification and calculation of fair compensation for the loss of legal or customary rights was not done transparently with the participation of the affected parties, and there is no



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evidence of mutual agreement of the procedure with local community representatives and rele-vant agencies. 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, lo-cal communities and other stakeholders to express their views through their own repre-sentative institutions. Findings: The process of managing compensation for loss legal or customary rights is sufficient with evi-dence as follows:

Documented procedure for the loss of legal rights of community is available and instructions state that if the conflict is resolved than compensation in the form of gifts (“sugu hati”) should be given and the calculation should be discussed with the local communities involved in the conflict and related stakeholders.

To date, there have been no parties entitled to receive compensation or “sugu hati” due to the loss of legal right, therefore there is no documentation on identification or persons enti-tled to receive compensation made, and no records of any compensation that has been made to outside parties.

To date, there has been no negotiation process of compensation settlements, therefore there is no documentation of any compensation negotiation processes.

Compliance status: Full Compliance Criterion 6.5: Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent liv-ing wages. Findings: The process of managing pay and conditions for employees and employee of contractors are suffi-cient with evidence as follows: Clear documentation of employees’ pay rates including copies of receipts for employees and

workers are available. Clearly written work regulations and work contracts, in accordance with existing regulations. Facilities such as housing, medical facilities, workship area, educational support, and sports

area are provided by the company. Documented contractor agreements are available and it is stated in clause 12 of these con-

tracts that contractors shall comply with all Indonesian’s labour laws and regulations, while it is stated under clause 16 that contractors should provide work insurance and other taxes as re-quired under Indonesian’s labour law no. 13, 2003.

Compliance status: Full Compliance 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 in-dependent and free association and bargaining for all such personnel. Findings: The right of all personal to join trade union is respected by the company, with evidence as fol-lows:

Company policy recognizing freedom of association is available. A worker’s union, Serikat Pekerja Perkebunan (SPBUN) is available at the plantation. Minutes of meetings between the company and the worker’s union, SPBUN are well docu-



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mented at all estates and mill. Compliance status: Full Compliance Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions. Findings: The company has a documented company policy on minimum worker age that is in compliance with legal requirements. The minimum worker age is 18 years old. Checks of employee records show that the company policy on working age is being imple-mented, as the youngest employee found at all estates and mill was 21 years old. Compliance status: Full Compliance 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. Findings: The company has a documented equal opportunities policy, in which it is stated that every em-ployee has equal opportunities in developing their career in terms of skill enhancement and get-ting promotions There are evidence of equal opportunity in that the company provide management positions for both female and male employees of all levels through CBHRM system, training is available for female and male employees and there no evidence of discrimination of employees. Compliance status: Full Compliance Criterion 6.9: A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied. Findings: The process of managing prevention of sexual harassment and other forms of violence against woman is not sufficient, as explained below :

A documented policy on prevention sexual harassment is available and being imple-mented.

A documented company policy on protection of reproductive rights is available and being implemented.

Implementation on prevent sexual harassment not sufficient due to lack of communication of the policy to all employees and contractor workers.

Records of applications from female workers for maternity leave, menstruation leave, and documentation of expenses pertaining to births are documented in the mandores’ book and is evidence that the company respects the reproductive rights of their female workers.

While a general mechanism for handling conflicts is available, the company lacks a more specific grievance mechanism for female workers to raise female-related issues. This was raised as an observation.

Compliance status: Non Compliance (NCR No. 18 of 20) There is a policy to prevent sexual harassment and all other forms of violence against women within the company. However the implementation is not sufficient as there is lack of socialization of the policy to both male and female workers.



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

The FFB prices are made publicly available and prices are informed to suppliers on a daily ba-sis. The pricing mechanism for suppliers and other stakeholders is well documented by Sei Mangke mill monthly. However, management has no mechanism to ensure that suppliers re-ceiving FFB from smallholders inform the smallholders on the FFB prices, or mechanism from smallholders to receive information on FFB pricing from the mill. As such smallholders may not be aware of the actual FFB pricing and may not be paid fairly by suppliers. There is evidence that the FFB suppliers do not fully understand the terms of their contract agreements with the mill with respect to their responsibility to independent smallholders, and well as pricing information and other relevant clauses. The mechanism for payment is clearly stated on contractual agreement. Interviews with suppli-ers and contractors revealed that the payment is made in time twice a week as per the contract agreement. However, some contractors receive payments late, but the company management explained that this was due to non-compliance to the company's quality or quantity requirements by the supplier. Compliance status: Non Compliance (NCR no. 19 of 20) FFB prices and pricing mechanism is made available to suppliers. However there is lack of evi-dence that smallholders selling FFB to the suppliers also receive transparent information from the mill or suppliers on FFB prices. There is also no evidence that both suppliers and their small-holder get access to the procedure of handling of complaints. Criterion 6.11: Growers and millers contribute to local sustainable development wherever appropriate. Findings: Records of contributions made to the local development including a CSR program are managed and well documented in their Small Enterprise Assistance & Environmental Development Program (‘Mitra Binaan and Bina Lingkungan’) document. However, during the assessment it was found that most of contributions made were not based on the result of consultation with local communi-ties (as criterion 6.2). Most of local communities claim it was not planned thoroughly with their par-ticipation. For continual improvement the contribution should based on output of communication and consultation related to 6.2. Records of company contributions to the government in accordance with regulations are also well documented (example: taxes, restitution and others). Compliance status: Compliance with observations

Principle 7: Responsible development of new plantings

Findings: All PTPN III estates were established during the Dutch legacy as rubber plantations, after which most of these were converted into oil palm. There has been no new land cleared for new plantings. Due to this, principle 7 is not applicable to the company. Compliance status: Not Applicable



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Criterion 8.1: Growers and millers regularly monitor and review their activities and de-velop and implement action plans that allow demonstrable continuous improvement in key operations. Findings: The monitoring action plan available at the estates and mill based on the social and environ-mental impact assessment is not sufficient, and regular evaluations of plantation and mill opera-tions have not yet being conducted (according to RKAP or RJP). The estates have a docu-mented annual monitoring management plan, entitled Environmental Management Program Year 2009 ('Program Manajemen Lingkungan Tahun 2009') which includes action plan for activi-ties identified as having significant environmental impacts as per their Environmental and Risk Aspects and Impacts Analysis ('Hasil Identifikasi Aspek dan Dampak Lingkungan dan Resiko Tahun 2009'). The company also has their UKL document (Environmental Management Plan) and UPL document (Environmental Monitoring Plan) which was based on their AMDAL docu-ment (Environmental Impacts Assessment). The company reports its environmental perform-ance based on the UKL and UPL documents to the local government every six months, as re-quired by Indonesian law. However, the monitoring plan for all estates does not include management of social impacts and risk as pertaining to Criterion 6.2. Compliance status: Non Compliance (NCR no. 20 of 20) There is a monitoring action plan for environmental impacts. However the action plan does not include management of social impacts as pertaining to Criterion 6.2.

3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions A total of 20 nonconformances were identified during the main certification assessment. These con-sisted of 9 major non-conformities and 11 minor non-conformities. A summary of all identified non-conformances, corrective actions taken by the company and auditor conclusions is as below:

Criterion 2.2, indicator 1 (Major): Documents showing ownership or lease of the land in accordance with relevant laws. NCR No. 01 of 20 Non-conformance: The Land Use Certificate (HGU) for Bangun estate, Gunung Pamela estate and Rambutan es-tate has expired, and is under the process of renewal. However there is no documented evi-dence of the ongoing renewal process of the expired HGU documents for Dusun Hulu, Gunung Pamela estate and Rambutan estate.

Corrective Action: To make a request to the related government department to renew the expired Land Use Certifi-cates (Hak Guna Usaha) for Bangun estate, Gunung Pamela Estate and Rambutan estate.

Auditor Conclusions: Closed with observations During verification audit conducted on April 2010, it was confirmed that the renewal of the HGU documents for Rambutan estate were approved, while those for Gunung Pamela and Bangun estate are still in progress. The company maintains all evidence and records of their application for renewal of the HGUs, and the progress of renewal of the remaining expired HGUs is being monitored. Criterion 2.2, indicator 3 (Major): Where there are, or have been, disputes, proof of reso-lution or progress towards resolution by conflict resolution processes acceptable to all parties are implemented.



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NCR no.02 of 20 Non-conformance: There are land disputes ongoing at three estates, however the conflict resolution process has not been accepted by all parties. The land areas under dispute are as follows:

Gunung Pamela Estate 150 ha lease at Marjanji village Bangun Estate 116 ha lease at Talun Kondot Village, Rambutan Estate 14 ha lease at Sei Mamban village Rambutan Estate 82 ha lease at Paya Bagas Village

Corrective Action: To define the mechanism for conflict resolution/resolution of land disputes and consult with lo-cal communities making land claims to ensure this mechanism is agreed upon as a conflict resolution process. Auditor Conclusions: Closed with observations On the Gunung Pamela Estate (Marjanji) land dispute: A documented agreement between PTPN III KGPMA Gunung Pamela Estate with the Pamela Reformation Group of Marjanji vil-lage has been done and signed by parties concerned. The community has also been invited to re-establish the mechanism of conflict resolution and this will be carried out during the imple-mentation of the SIA. Through interviews with the coordinator of Marjanji Reformation Team at Marjanji village and PTPN III management, it was found that with regards to the land dispute of Marjanji, all parties agreed to follow the decision of the National Land Certification Institution Centre in Jakarta regarding the status of the land use certificate. Even though the land dispute has not been resolved but the documentation of negotiated agreement for resolution conflict is available and kept by all parties. On the Bangun Estate (Talun Kondot) land dispute: The company has reached a consensus with the Talun Kondot farmer parties to have an agreement with regards to conflict resolution in that area and to define the mechanisms of conflict resolution and prepare compensation in the form of gifts (‘suguhati’). This was carried out together during the implementation of SIA. Through interviews with the persons mediating the land claims made by the Talun Kondot vil-lage community, and with PTPN III management, it was found that there was a negotiated agreement between company and local community to forward their land dispute case to the In-donesian legal court. The conflict resolution commenced with negotiations between the af-fected parties and followed by legal case as there was no solution that is accepted by all par-ties. Even though the land dispute is not yet resolved, but documentation of negotiated agree-ment according to resolution is available and kept by all parties. On the Rambutan Estate (Paya Bagas) land dispute: The company collected the justice court decisions and media coverage related to the court decisions on this land dispute issue with the Paya Bagas farmers. The company also prepared a format for gifts (‘Suguhati’) as compensa-tion. In addition, the company also making efforts to resolve the issues of land under dispute us-ing the conflict resolution mechanism documented in their IK Conflict Resolution” No. IK-3.09-15/01 Rev.05/02-06-2009 and IK ---- (Communication and Consultation). Through interviews with the coordinators of the land claims made by Paya Bagas and PTPN III management, it was found that the land dispute of Paya Bagas still on-going. There is no negotiated agreement on conflict resolution that accepted by all parties. There is a documented Decree of High Court Justice Median North Sumatra Number 01/PDT/PRODEO/2009/PT.MDN dated on 14 July 2009 stating that the request of free civil case (‘permohonan secara prodeo perkara perdata’) No. 26/Pdt.G/2007/PN-TTD was not accepted. This free appeal was lodged by 157 claimants. However, according to the land claim coordinator of the Paya Bagas community, the persons making claims to the land through court are not from the Paya Bagas community, which claims to be the heir of the 82 ha land. According to the coordinator from Paya Bagas, the group mak-ing the claim to this land was sent by a former Village Head for his own personal interests. For



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this case, PTPN III was requested to develop a resolution plan that must be agreed upon by the disputing parties. The Justice Court of Mahkamah Agung has decided that the 14 Ha land area at Sei Bamban vil-lage that is occupied by the local community is part of the land use certificate (HGU) of PTPN III’s Rambutan Estate. Currently, the local community is still occupying the land and PTPN III management has sent a management letter No. 3.11/X/21/2009 on 10 July 2009 to Head of Kejaksaan Tinggi North Sumatra requesting for a facilitator for land dispute resolution. The process of land dispute resolution still on going. Criterion 2.2, indicator 2 (Minor): A mechanism to resolve conflict which is accepted by all parties. NCR No. 03 of 20 Non-conformance: The company has established a conflict resolution mechanism; however it is not recognized by all interested parties (e.g. Local communities). Corrective Action: To communicate the conflict resolution to the local communities and ask for feedback on the mechanism for conflict resolution. The activity is to be carried out together with the preparation of the village Community Mapping Program. Communication of the conflicts resolution mechanism to all stakeholders shall be conducted for mutual understanding and implementation. Brochures explaining the conflict resolution are to be distributed to all stakeholders. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. Communication of the conflict resolution mechanism to the local community was carried out on 7 July 2009 at Bangun estate. Documented records of the 105 participants who attended the meeting are available. Through publicizing of the mechanism or procedure to the local people, their awareness or understanding of the company’s conflict resolution mechanism was im-proved. Criterion 2.3, indicator 2 (Major): Maps of an appropriate scale showing extent of recog-nised customary rights. NCR No. 04 of 20 Non-conformance: There is no map of appropriate scale showing permitted areas for animal grazing by the local communities (one of their traditional activities) within the company’s estates area as agreed during negotiated agreement with the local communities, and maps of an appropriate scale showing extent of recognized customary rights, including the legal internal and external boundaries of others are not available. Corrective Action: To create a map of appropriate scale of animal grazing areas in the company’s estate area, and prepare maps of an appropriate scale showing extent of recognized customary rights Auditor Conclusions: Closed Through interviews during re-audit with secretaries of Dusun Hulu village and Adil Makmur vil-lage, it was found that: Maps of appropriate scale that show areas of traditional rights or customary rights of local

communities within company area are available. The maps cover locations of local com-munity animal grazing areas within the divisions of Dusun Hulu estate.



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The document of negotiated agreement with the local community on animal grazing, in-

cluded the location maps as attachment, is available at Dusun Ulu village and Adil Mak-mur village. The company has informed the local community of Adil Makmur village about these maps through the village office staff. However, the company has yet to inform and explain to the Dusun Ulu villagers about the maps developed based on negotiated agree-ments.

Criterion 3.1, indicator 1 (Major): A documented working plan of the company for a mini-mum of 3 years period. NCR No. 05 of 20 Non-conformance: A documented integrated working plan or management plan demonstrating the sustainability of company’s activities from economical, environmental, social and legal aspects for a minimum of 3 years period has not established. Corrective Action: To revise the RJP document to include Economic, Environmental, Social and Legal aspects, targeted to be completed by September 2009. To also revise the WI – 13-06/01 document (The Company Long Term Plan) to include econ-omy, environmental, social and legal aspects. Auditor Conclusions: Closed with observations The company has prepared an integrated working plan to demonstrate financial and economic viability as explained in their RJP (Rencana Jangka Panjang/long term plan) document for year 2009 to 2013. The company has established a working instruction IK WI-13-01/01 and IK-WI-13-06 as a guidance to develop company’s management plan (RJP), including social, environ-ment, and legal compliance issue. According to this working instruction, the company will re-view their working plan in September every year, and evaluate ongoing annual performance. Criterion 4.1, indicator 1 (Major): Standard Operating Procedures (SOPs) for estates, from land clearing to harvesting. NCR No.06 of 20 Non-conformance: There is no mechanism to control FFB supplied by smallholders to suppliers selling to Sei Mangke Mill, in order to prevent purchase of FFB procured from illegal sources. Corrective Action: To carry out the following:

Develop a mechanism (or Work Instruction) for managing /developing FFB Suppliers and Palm Oil Farmers (smallholders) in accordance with the RSPO P&C and began implementa-tion of the mechanism in the mill

Socialize the mechanism (WI) to all FFB Suppliers. Conduct regular monitoring of all suppliers and their supplying smallholders and carry out a

development program to measure their positive and negative impacts. Create a Development Plan for the smallholders in accordance with the RSPO and imple-

ment them.

Auditor Conclusions: Closed with observations The mill has established a standard operation procedure to control all fruits coming from the smallholders selling to their suppliers The SOP includes requirement for selection and evalua-tion of the performance of smallholders. However the SOP can still be improved by including a sampling method to verify performance of the independent smallholders.



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Criterion 4.3, indicator 1 (Minor): Maps of fragile soils must be available.

NCR No. 07 of 20 Non-conformance: Topography, soil and hydrology maps showing the soil distribution at all estates are not avail-able. Corrective Action: To improve the existing map by including the topography, hydrology, land contours and mar-ginal land areas, and the areas of non-productive land. To develop work instructions for mapping and updating of maps. Auditor Conclusions: Closed The new maps developed by the company include details of topography, hydrology, soil, and land contours. Maps of distribution of marginal land within the 5 estate areas have also been developed and are appropriate. Criterion 4.5, indicator 1 (Minor): Monitoring extent of IPM implementation including training. NCR No. 08 of 20 Non-conformance: No records as evidence of training for IPM implementation were done. Only informal training is carried out. Corrective Action: To make a request to the related company division for (3.08) Documents / Certificates the IPM training results. All the evidence of IPM training that has been conducted shall be documented and properly maintained. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. Training evidence for IPM was provided by PTPN III and evidence included signed attendance lists of participants (attended by all division assistants) and training materials: - In Gunung Para estate, on July 18, 2009 - In Rambutan estate June 12, 2009 a - in Bangun estate , July 10, 2009 Criterion 4.5, indicator 2 (Minor): Monitoring of pesticide toxicity units (a.i. /LD 50 per tonne of FFB or per hectare). NCR No. 09 of 20 Non-conformance: No monitoring of pesticide toxicity units (a.i./LD 50 per tonne of FFB or per hectare). This re-cord was produced for Gunung Para estate only. Corrective Action: To carry out regular evaluation of chemical toxicity and usage trends, and to implement efforts to reduce usage in the estate in accordance with the requirements of RSPO. To also develop a work instruction on chemicals used containing toxic active ingredients and methods to reduce their usage. Auditor Conclusions: Closure of non-conformity to be verified at next surveillance audit PTPN III has provided documentation of recapitulation of chemical material usage for each es-tate. The company provided a summary of agrochemicals used for Jan to June 2009. For ex-



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ample in Gunung Pamela estate, agrochemicals used are Herbicide: Sida Up (active ingredient is Glyphosate) 490 SL 42 g/tree ; Marshal 5G (active ingredient is Carbosulfan 5%) 0.63 - 1.04 g/tree, Ally (a.i. Methyl metsulfuron 20%) 0.01 g/tree, Bayleton 250 EC ltr - 20 cc/tree, Matador 25 cc/tree. However, the calculation of pesticide toxicity units was not performed correctly, ac-cording to a.i./LD 50 per tonne of FFB or per hectare. As this is a minor non-conformity, closure will be verified at next surveillance audit. Criterion 4.7, indicator 3 (Minor): A documented risk assessment for Occupational Health and Safety (OHS). NCR No. 10 of 20 Non-conformance: Several hazardous and high risk activities have not been identified in the risk assessment, in-cluding among others, maintenance activities carried out with heavy machinery, land clearing, and maintenance of drains. Corrective Action: To identify all potential hazards, conduct a full risk assessment and implement controls for all activities that have a particularly high hazard and high risk To revise the risk assessment document (PK-3-03) to include all activities that are highly haz-ardous or have high risk, such as heavy equipment maintenance, land clearing, drainage main-tenance, etc. Auditor Conclusions: Closed The document on identification of potential hazards, risk assessment and how to control poten-tial hazards and risks has been revised to include the previously unidentified hazards and con-trol measures. Criterion 4.7, indicator 6 (Minor): Evidence of OHS and first aid equipments available at worksites NCR No. 11 of 20 Non-conformance: It was found that some workers were not using PPE as required, e.g.: contractor workers that collect empty fruit bunches at the mill were not using shoes and gloves, and some workers at noisy area were not using ear plugs Corrective Action: To ensure contracted laborers use appropriate PPE. All workers and employees of contractors working in potentially hazardous areas are to use PPE in accordance with the procedures re-quired in the company’s document no. PK3-03 (on hazard identification) and be given warnings if reoccurrences of violations occur. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. The company has provided evidence in the form of warning letters to all workers that do not use PPE (personnel protective equipment). The company also provided photographic evidence that workers are using PPE at the mill and estates. Criterion 5.2, indicator 2 (Major): If, rare, threatened or endangered species, or high con-servation value habitats are present, appropriate measures to preserve them are to be taken. NCR No. 12 of 20 Non-conformance: The HCV management plan still does not include plans for all identified HCV and was not re-



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viewed by a technical expert. No communication of the HCV management plan to stakeholders has been conducted, and there is no evidence that identification of ERTs and HCV areas has been conducted for Rambutan estate. Corrective Action: To prepare the participative HCV management plan involving experts/ consultants and the sur-rounding communities. Auditor Conclusions: Closed with observations The HCV management plan was developed for 5 estates and involved input from a technical expert from the Centre for Research of Biological Resources and Biotechnology (“Pusat Peneli-tian Sumberdaya Hayati dan Bioteknologi (LPPM-IPB)”), Natural resources and Biotechnology research center, Bogor Agricultural Institute. The management plan has very recently been pre-pare and is in the early phase of implementation. Company also revised their HCV document through collaboration with LPPM-IPB using initial data from PTPN III flora and fauna identification result and the North Sumatran Natural Re-sources Conservation Department (‘Balai Besar Konservasi Sumber Daya Alam Sumatera Utara’). The company has collated various information regarding HCV habitat and ERT’s spe-cies, including HCV maps. However company should improve its HCV management plan to in-clude information about detailed action plans to maintain and improve HCV habitat condition. Training and or publicization about HCV areas and ERT species should be provided for all staff that has responsibility to monitor and measure action plans relating to HCVs. Criterion 5.2, indicator 2 (Minor): Companies are to appoint dedicated and trained offi-cers to monitor any plans and activities as above. NCR No. 13 of 20 Non-conformance: There is no appropriately trained person assigned to monitor identified HCV areas. e.g. HCV areas located at Gunung Para estate and Dusun Hulu Estate. Corrective Action: To request to the related company department for evidence of RSPO and HCV workshop par-ticipation by personnel. Personnel assigned to implement and monitor the environment management must have com-pletely attended the training. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. PTPN3 management has issued a decree letter regarding assignment of personnel to conduct monitoring and measurement for all action plans to maintain HCV condition in letter no. 3.08/SKPTS/08/2009. The personnel that will perform monitoring and measurement activities for each estate are the Technical Assistants (“Asisten Teknik”). All persons in charge of HCV monitoring were trained on 29-30 July 2009, to improve competency. The company has pro-vided copies of letter of assignment, training plan as well as evidence of the training conducted. Criterion 5.4, indicator 1(Minor): Records of monitoring renewable energy use and its ef-ficiency analysis (energy/ton CPO, or energy/ton palm product). NCR No. 14 of 20 Non-conformance: Records of monitoring renewable energy used and its efficiency analysis were not available at Sei Mangke mill. Corrective Action: To documented the efficiency data for the use of shell / fiber and any analyse the benefits when compared to using energy derived from fossil fuel.



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To maintains records of monitoring the use of renewable energy with periodic analysis of their efficiency. Auditor Conclusions: Closed Records of renewable energy used per tonne CPO were made, based on the assumption that 1 kwh produced requires 25 kg of steam per hour. Records show that 1 kg of fiber generates 2450k.cal and 1 kg of shell generates 3500 k.cal of energy. The amount of fiber and shell used to produce renewable energy is 7434 kg/hr, and to produce 1 ton of CPO, approximately 650 kg of fiber and 176 kg of shell is required. Criterion 6.1, indicator 1(Major): Documented environmental and social impact assess-ment, including details of positive and negative social effects that may be caused by plantations and mills, and documented participation of affected parties and local com-munities. NCR No. 15 of 20 Non-conformance: A social impact assessment has been carried out but the assessment focuses more on commu-nity demographic, structure and activities. The assessment is lacking in evidence of community participation and identification of direct social impacts of the company on the local communities. Corrective Action: To revise the SIA document with the involvement of experts and implement a participatory method. This activity was carried out together with the identification and determination of the traditional rights of local communities. To review the SIA document regularly and synergize it with the company management plan. Auditor Conclusions: Closed with observations The Social impact assessment for Bangun estate, Rambutan estate, and Gunung Pamela es-tate was revised on 22 July 2009 and Social impact assessment for Gunung Para estate and Dusun Hulu estate (including Sei Mangke mill) was revised on 3 August 2009. A participatory method was used for social impact identification however the main results of positive or nega-tive social impact identification needs to be described in more detail. Improvements made to the new document include a village development plan and identification of traditional rights of the community. Documented lists of participants that participated in the social impact assessment activities that were conducted at Bangun estate on 6 July 2009; at Gunung Pamela estate on 9 July 2009, Gunung Para estate on 10 July 2009; at Dusun Hulu estate on 13-14 July 2009, at Rambutan estate on 15-16 July 2009 are available. However, it was observed that only village heads and community leaders participated in the as-sessment, but not representatives from other levels of communities, employees and other stakeholders. Criterion 6.1, indicator 2(Minor): Regular monitoring and management of social impact, with the participation of local communities. NCR No.16 of 20 Non-conformance: There is no action plan for regular monitoring and management of social impacts. Corrective Action: To prepare a representative Social Action Plan in accordance with the results of the Social Im-



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pact Assessment of PTPN III. To manage and monitor the social impacts regularly as per the Action Plan and synergize this with the Management Plan of the company. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. The company has prepared a documented action plan of social impact management to be im-plemented in 2009 for Sei Mangke mill, Dusun Hulu estate and Bangun estate which consists of a list social impacts, action plan and management schedule. However, the plan did not in-clude locations of areas where impacts are to be managed, and standardization of impact indi-cators to managing the positive and negative of impacts. Plans to conduct monitoring of posi-tive and negative social impacts were also lacking. The documented social impacts action plan to be implemented in 2009 for Gunung Para estate and Gunung Pamela estate consist list of activities and action plan, management time and per-son in charge to monitor. There were inconsistencies in the document pertaining to monitoring activities and there are no details on locations of areas where impacts are to be monitored, methods of monitoring the impacts, or indicators for measurement of impacts to monitor the positive and negative social impacts. The action plan also contains insufficient detail on the planned management of positive and negative social impacts. All social action plans have since revised to include the additional information. The implementa-tion of action plans began since January 2010 as allocated in the company’s budget for 2010. Criterion 6.3, indicator 2(Minor): Procedures for the identification and calculation of fair compensation for the loss of legal or customary right of the land, with the involvement of local community representatives and relevant agencies and made publicly available. NCR No. 17 of 20 Non-conformance: There is a procedure for handling complaints for employees and workers. However the proce-dure of identification and calculation of fair compensation for the loss of legal or customary rights was not done transparently with the participation of the affected parties, and there is no evidence of mutual agreement of the procedure with local community representatives and rele-vant agencies. Corrective Action: To identify the traditional rights of local communities during implementation of the SIA. To develop a Work Instruction for identification of traditional rights and fair compensation of lo-cal communities, and informed the local communities of this procedure. Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. Identification of traditional rights of local communities was conducted on July 2009 and docu-mented within social impact assessment documents. The mechanism of identification of tradi-tional rights of the local communities and mechanism for calculation of fair compensation for the loss of legal or customary right has been informed through meetings held with the local community. Documented records of the meeting held for this purpose, including attendance list of participants, are available.

Criterion 6.9, indicator 1(Minor): Proof of implementation of sexual harassment policy.

NCR No. 18 of 20 Non-conformance: There is a policy to prevent sexual harassment and all other forms of violence against women



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within the company. However the implementation is not sufficient as there is lack of awareness of the policy among both male and female workers. Corrective Action: To document activities conducted to create awareness on the sexual harassment policy and clarify the type and handling of sexual harassment in the contractual agreement between the management and labour union (Perjanjian Kerja Bersama – PKB). Auditor Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. The company prepared a documented list of their workers which have been informed on im-plemention of the policy on prevention of sexual harassment The company stated on their NCR report that the policy on prevention of social harassment will be updated also under working regulation of PKB on September 2009. The awareness of the company’s workers on the sexual harassment policy will be verified during next surveillance. Criterion 6.10, indicator 2 (Major): Pricing mechanisms for FFB and inputs/services shall be documented (where these are under the control of the mill or plantation). NCR No. 19 of 20 Non-conformance: FFB prices and pricing mechanism is made available to suppliers. However there is lack of evi-dence that independent smallholders selling FFB to the suppliers also receive transparent in-formation from the mill or suppliers on FFB prices. There is no evidence that both suppliers and their independent smallholder get access to the procedure for handling of complaints. Corrective Action: To developing a Working Instruction for determination and disseminating of FFB prices, which should also contain the procedure on the mechanism for communication between PTPN III, their suppliers (middle men) and farmers (smallholders) selling FFB to the suppliers. To communicate the Work Instruction of management/ guidance communication mechanism to FFB suppliers and their smallholders Auditor Conclusions: Closed The mechanism for dissemination of FFB prices to suppliers as well as their smallholders is documented in work instruction K-3.03-14/07 Rev 00 pertaining to ‘Management of FFB Sup-pliers and Independent Smallholders, which explains about how to calculate FFB price, and how complaints and objections are to be submitted to the company Communication of the new mechanism was carried out and a documented attendance list of smallholders and attendance list of participants who attended the event is available with com-plete signatures of participants. Documentation of event held to communicate the mechanism to suppliers and smallholders is available. The event was been done on 2 July 2009 and 11 vil-lage heads and community leaders attended. Criterion 8.1, indicator 1 (Major): Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations. NCR No. 20 of 20 Non-conformance: There is a monitoring action plan for environmental impacts. However the action plan does not include management of social impacts as pertaining to Criterion 6.1. Corrective Action: To carry out a performance evaluation to cover the environmental and social aspects and their



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conservation. A management review to discuss the company’s performance in environmental and social as-pects and their conservation as well as follow-up actions will be carried out. Auditor Conclusions: Closed with observations The company has developed working instruction regarding monitoring for all company’s activi-ties, and conducts an RTM (Rapat Tinjauan Manajemen/ Management review) as a mecha-nism to evaluate all company’s performance. As stated on the Management review procedure, the RTM will be conducted once a year, which are review the company’s performance in EMS, QMS, OSH and RSPO performance for one year period. The social impact assessment will also include the company’s management review agenda as stated and defined in their standard operating procedure.

Noteworthy Positive Components

Criterion 1.1: Oil palm growers and millers provide adequate information to other stake-holders on environmental, social and legal issues relevant to RSPO Criteria, in appropri-ate languages & forms to allow for effective participation in decision making. Findings : The company provides information to public in a transparent manner, such as having regular updates on their website, a complaints box at all estates, and a company public summary. Criterion 2.2: The right to use land can be demonstrated, and is not legitimately con-tested by local communities with demonstrable rights. Findings: The method to evaluate legal compliance is excellent, well documented and integrated with compliance to RSPO P & C. The evaluation on compliance to legal requirements was conducted by independent lawyer who has a good knowledge on the RSPO P & C and other related laws.

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

Findings: The rubber factory at Gunung Para estate used to use fossil fuel for energy, but as of May 2008, the rubber factory has been burning shell for renewable energy instead of using fossil fuel. Usage of fossil fuel at rubber factory was gradually reduced and now is no longer being used for the operation of the rubber factory

3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues

The following is a list of issues raised by various stakeholders during the stakeholder consultation meet-ing held at Siantar Hotel Pematang, Siantar on 22 June 2009, as well as through interviews with stake-holders held during the audit. The documented response by the management of the company to each issue and details of verification carried out by the audit team for each issue is described and listed be-low.

No. Issues Raised Management Response Audit Verification 1. Communication & Consulta-

tion PTPN III had responded to the stakeholders wishes by having communication and

It was found that PTPN III has a



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No. Issues Raised Management Response Audit Verification Negative comments: • There are no routine Stake-holders Meetings with PTPN III management held, but meet-ings are only held by PTPN III when they wish to convey spe-cific matters. • The management is lacking in openness or transparency in their business activities. More stakeholder meetings are required. • No awareness or knowledge of PTPN III’s policies pertaining to Natural Resource Manage-ment Institution activities. • It is hoped that PTPN III wishes to receive feedback from the local communities. • Interviewee had no previous knowledge of RSPO • There has been no routine contractor’s meetings held with the company • There is routine close coordination with the villages, but these are not based upon any agreement or memorandum of understanding between both parties on what is the purpose of the coordination or meetings. • There are no regular meetings with villages, only occasional meetings due to restrictions on cattle rearing from PTPN III’s Bangun estate, only occur during religious and national celebrations in the vicinity of the estate. • Meetings with PTPN III are not regular, and usually agree are pertaining to recruitment of workers from the local communities. • There has only been one meeting with PTPN III pertaining to RSPO. The organization should have more routine meetings. Positive comments: • There are routine SPBUN (labour union) monthly meetings held with PTPN III and they have an MOU with the company • There are routine meetings held with groups of tillage

consultation through periodic meetings in the form of family or business gatherings, having a suggestion box, and publishing magazines (’Media Nusa Tiga’, and ’Tranformasi Business’) to suit the needs of the stakeholders, however these actions have yet to completely meet the wishes of stakeholders overall in terms of receiving and giving information. Further actions to be taken by PTPN III : - The Communication and Consultation procedure shall be revised to include instructions and a mechanism for: - Having regular meetings with stakeholders - Identifiying surrounding villages and distributing ’ Media Nusa Tiga’ and ’ Transformasi Bisnis’ to the heads of surrounding villages. - Socialization of management policies pertaining to communicatable issues such as policies on quality, environment, identification of environmntal aspects and impacts, important aspects of the environment, management of important aspects in the company, complaint mecanism, and methods for preparing proposals on environmental development. - Conducting regular evaluations on the activities that have been carried out - Respond to all feedback received on information provided by the company. - Record all outside information or feedback given. - Improving records made by the File Clerk on communication letters received and responding to these communications.

mechanism of communication & consultation for stakeholders in place. The mechanism is being implemented for continous improvement. Socialisation activities are carried out to inform the local communities of new regulations



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No. Issues Raised Management Response Audit Verification farmers to discuss problems of thieves, cattle, and land for tillage, and discuss on prob-lems of stolen oil palm fruits. • The company frequently carries out information exchange with community representatives

2 Environmental Issues Negative comments: • Management of environmental impacts is lacking. • There are environmental impacts from the company. Steps that should be taken to solve these: digging drains, acceptance of daily paid workers.

Positive comments: • There is no environmental or social impacts from PTPN III. • There must be environmental impacts from company activities. The company should make efforts to improve relationships • There were environmental impacts, but these were resolved upon the creation of dams. • PTPN III’s policies have relevance to the communities, that is those pertaining to water drainage, which needs to be carried out routinely.

PTPN III is managing environmental impacts from the company’s activities through application of the ISO14001:2004 standard, in the form of identification of environmental aspects and impacts during normal, abnormal or emergency situations in all work activities. These aspects and impacts are handled through work instructions, circulated letters, and company regulations, however these efforts have yet to be communicated optimally to the stakeholders. Further actions to be taken by PTPN III : - To carry out socialization to stakeholders, especially to surrounding communities on the company’s identification of environmental aspects and impacts, as well as management efforts being conducted.

The company has established an environmental management system, which is being implemented. Refer to find-ings for CR5.1 in Section 3.1.

3 Complaints Resolution Mechanism Negative comments: • Certain government officials have no knowledge of the company’s complaint resolution mechanism • Supplier interviewed does not know about the written complaint resolution procedure, but know that any complaints can be made verbally to the manager. • A village head and community leader interviewed is not aware of the company’s complaint resolution procedure.

PTPN III has a complaint resolution mechanism defined in their work instruction doment number, IK-3.09-15/01 (Penyelesaian Konflik). In conflict resolution, efforts should be made to resolve conflicts through non-litigative measures in the form of meetings with affected parties. If no agreement can be achieved through this method, then the matter shall be resolved through litigation. This mechanism, however, has yet to be fully socialized. Further actions to be taken by PTPN III : - To revise the Conflict Resolution work instruction to include instructions and a mechanisms for: - Conflict resolution methods that are acceptable to all affected parties. - Conducting routine socialization on conflict resolution measures.

It was verified that a docu-mented proce-dure of han-dling com-plaints formu-lated as docu-ment procedure “Conflict Reso-lution” No. IK-3.09-15/01 Rev.05/02-06-2009 is avail-able. Refer to findings for CR6.3 in Sec-tion 3.1.



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No. Issues Raised Management Response Audit Verification Positive comments: • SPBUN Labour Union is aware of the complaint resolution procedure and agrees with this procedure. • An NGO representative, supplier, village head and communithy leader interviewed all have knowledge of the complaints resolution procedure.

- Preparing signs displaying the flow process for conflict resolution to be located at areas which can be easily viewed by workers and stakeholders. - Carrying out routine evaluation of these activities conducted - Intensifying security recordings of incoming and outgoing visitors. - Improving records made by the File Clerk on communication letters received and responding to these communications.

4 Transparency of Information Negative comments: • There is difficulty in obtaining information from PTPN III • No requests for information to the company has been made on an organizational level because it is felt that bureaucracy in PTPN III makes it difficult. Verbal requests have been made to the company, however, there was no response. Positive comment: There has been no difficulties in terms of requesting information from PTPN III.

Information on the company can be obtained from the Public Relations section of the Main Administration office, through published media from the company such as ’Media Nusa Tiga’ or their magazine ’Transformasi Bisnis’, or from the company website. At individual districts, estates or units, information may be obtained from the relevant Section Head or the Estate Personnel Assistant. However, stakeholders are still not yet fully aware of this mechanism. Further actions to be taken by PTPN III : - To identify surrounding villages. - To distribute copies of ’Media Nusa Tiga’ and ’Tranformasi Bisnis’ to the heads of villages surrounding estates. - To install signs displaying the flow process for dissemination of information at locations that are easily viewed by the surrounding communities. - To carry out routine socialization.

It was verified that PTPN III has a mechanism of communication & consultation to stakeholders and also a mechanism to provided information to stakeholders.

5 Farmers received no response from PTPN III on requests for seeds

PTPN III manages stocks of seed in accordance with their replanting programme and usually for amount of seeds managed up to 2 to 5%. If there is an excess of seeds, the excess may be sold by forwarding the request letter to the Plants Section of the Main Administration Office. If the request is accepted, it will be forwarded to the Commercial Section for preparation of the Delivery Order (DO). However, this mechanism, is not yet widely known especially to the farmers surroundings estates. Further actions to be taken by PTPN III : - To carry out socialization to farmers and communities surroundings estates on the company’s mechanism for requesting of seeds from PTPN III

Explanation accepted



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No. Issues Raised Management Response Audit Verification 6 Community Development &

Contributions Negative comments: • The company’s policy on distribution of Community Development (CD) funds needs to be improved • The company should check on surrounding communities and the environment and carry out what is necessary for the communities and the environment • PTPN III should provide funding for environmental management and development. • Development of the sur-rounding communities should be increased. • Interviewee requested for help from the company and was treated well, but the process took a very a long time. • Requests for assistance have been made to the company since 2008 but there has been no response (2 similar comments raised) Positive comments: • Interviewee has requested for donations from PTPN III, and they met these requests (4 similar comments) • There must be social impacts from company activities. The company should be proactive in carrying out social relations pertaining to the environment. • PTPN III has provided a lot of assistance to UD Bentasil (a supplier) and assistance to surrounding communities. • The company has social impacts but these were handled well. • The company has social impacts, and steps commonly taken are to give assistance to the surrounding communities. • PTPN III has provided one house to be a the village office • The company has close coordination with the

To minimize negative social impacts to the community, the management is constantly implementing its Environmental Development programme of which the allocated contributions are appropriate to the company’s mechanism. Apart from this, the company is also active in providing assistance in activities held at the estate/unit. PTPN III’s distribution program is in accordance with the regulations and work instructions of the company. Contributions towards improving the environment is prioritized for communities surrounding estates within a 10 km radius. However, this does not adequately meet the needs of the communities. PTPN III has responded to requests to carry out community development by giving train-ings, workshops, and socialization, however these activities are only carried out occasion-ally. Further actions to be taken by PTPN III : - To collect relevant data on surrounding communities - To conduct socialization to the communities on the mechanism for Community Development submissions. - To revise the work instruction for Environmental Development to include and take into account: - Input obtained during communications and consultations held with stakeholders during distribution of CD funds. - Based on the Social Impact Assessment document, to ensure that contributions for environmental management or development sufficiently meets the needs of the communities, and to consider these aspects in the long term plan of the company.

PTPN III has a CSR programme named Small Enterprise Assistance and Environment/Facilities Assistance (Bina Mitra and Bina Lingkungan). Refer to find-ings for CR6.11 in Section 3.1. However, there is no evidence of participation from relevant stakeholder while conduct-ing the social impact as-sessment proc-ess, and moni-toring plan for identified social impacts is still not available. Refer to find-ings for CR6.1 in Section 3.1.



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No. Issues Raised Management Response Audit Verification government. PTPN III always helps to meet the needs of the local communities. • There were social impacts, resolved by having meetings • The company’s policy pertaining to funding for environmental development are relevant to the activities of the surroundings villages. Suggestions: • The company should monitor activities such Posyandu (a medical facility for small villages), religious festivals and celebrations. • Company does have social impacts. Steps that should be taken to resolve these: workers should shop at Senio store, and company should have football facilities.

7 Community Relationships • Management is not concerned about improving the economy of the communities in surroundings estates. • PTPN III is in a good category of government- linked companies, however the manager does not have close relations with the communities.

PTPN III’s management is actually quite concerned about the surrounding communities. This was shown through contributions givem by the company in the form of environmental development, giving trainings to increase ability for development, as well as attending and providing assistance at a number of religous and social events. Further actions to be taken by PTPN III : - The Communication and Consultation procedure shall be revised to include instructions and a mechanism for: - Having regular meetings with stakeholders - Distributing ’ Media Nusa Tiga’ and ’ Transformasi Bisnis’ magazines to the heads of surrounding villages. - Socialization of management policies pertaining to communicatable issues such as policies on quality, environment, identification of environmental aspects and impacts, important aspects of the environment, management of important aspects in the company, complaint mechanism, and methods for preparing proposals on environmental development. - Conducting regular evaluations on the activities that have been carried out

It was found that there is no evidence of participation from relevant stakeholders while conduct-ing the social impact as-sessment proc-ess, and moni-toring plan for identified social impacts is still not available. Refer to find-ings for CR6.1 in Section 3.1.

8 HCV Management • PTPN III’s commitment to conservation is quite high.

No company response since comment is positive

HCV areass have been identified, but the HCV man-agement plan still does not include plans for all identified



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No. Issues Raised Management Response Audit Verification HCV and was not reviewed by a technical expert. Non-conformance was issued. Refer to find-ings for CR5.2 in Section 3.1.

9 Supplier Relationship • Interviewee has attended many meetings with PTPN III because he is a FFB supplier.

PTPN III ensures that supplies of FFB received from suppliers meets their requirements for quality, as described in the contract. To ensure this, PTPN III carries out visits to the collection sites or ramps of suppliers, however, these checks are not carried out intensively. Further actions to be taken by PTPN III : -To prepare work instructions / policy for identifications of farmers and management of FFB suppliers. - To carry out socialization of this policy to suppliers as well as small farmers (plasma).

No verification required since this is a positive comment

12 Job opportunities Negative comments: • The company is not transparent in its method of hiring workers and there are workers from outside of surrounding villages being hired to work at Dusun Hulu estate. • Why are workers being hired from outside the region and not from surrounding areas? The company should prioritize hiring workers from the surrounding villages (at least 4 similar comments from different parties). • Process of recruitment of employees or workers is not transparent because there are collusions to provide more po-sitions to individuals within families of employees. • Interviewee is hoping that there is more work available within the company to reduce unemployment. Positive comments: • The company provides job vacancies, which is a positive social impact • No negative social impacts

PTPN III has a mechanism for recruiting workers, especially harvesters and rubber tappers. Potential employees are to undergo administration tests, written tests, field tests, interviews and health checks to ensure they meet requirements before being accepted as workers. At each stage, there are some workers that fail to meet the requirements. Other parties may not be fully aware of this mechanism. Further actions to be taken by PTPN III : - To carry out socialization of the company’s mechanism and requirements for workers, and to encourage management to allocate a miniumum percentage of acceptance of workers from among workers’ children and from surrounding communities.

Upon auditor verification, it found that the company has a mechanism for recruitment of workers and temporary field workers hired by contractor worker. Allocation of a minimum percentage of acceptance of local workers as part of SIA monitoring will be reviewed during the surveilance audit.



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No. Issues Raised Management Response Audit Verification from PTPN III because many among the local communities are in need of work. Suggestions: Hiring workers from surrounding communities can help to reduce cases of stolen FFB.

13 Worker’s wages Monitoring of wages of daily paid workers has been carried out until now by NGO. The company does not fulfill the Provincial Minimum Wage (Upah Minimum Propinsi – UMP). The regional rate for daily paid workers is RP36,000, but PTPN III only pays RP12,000.

When carrying out works through third parties, PTPN III’s management does this through a contract which has been prepared as appropriate to the type of work. The calculation of wages for work carried out is also in accordance with the Provincial Minimum Wage, however payment to contracted workers is done on a contract basis and this is the responsibility of the contractor. The mechanism for monitoring efforts as part of the company’s social responsibility has yet to be prepared. Further actions to be taken by PTPN III : - To prepare a mechanism for evaluation of wages that is acceptable to contractors as part of the company’s responsibility towards them and to become one of evaluation criteria for contractors.

It found that daily workers work through contractors worker as third parties. Evaluation of workers wages for the contractor will be done by PTPN III. This issue will be reviewed during the next audit.

14 Prevention of conflict Positive comments: • Supplier interviewed has an MOU with PTPN III pertaining to supplies. • The company has a new rule or regulation on the cattle that has been roaming freely in the estate area. To prevent conflict with villagers due to this new ruling, the company has an MOU with the village head regarding rearing of cattle

Pertaining to procurement of supplies, PTPN III has a well established mechanism in their work instructions and manual on procurement of supplies and services. To prevent conflict pertaining to land conflict, the company follows their complaint resolution mechanism by having MOU’s with the village heads.

It found that PTPN III has a MOU on the cat-tle’s grazing with local community in place.

15 Security • There are oil palm mafia gangs that constantly disrupt peace. • The company should closely monitor activities pertaining to estate security, such as theft of FFB from the Dusun Hulu region.

The company coordinates with security to deal with these issues.

It found that PTPN III has Security Staff for estate security. Monitoring of ac-tivities of FFB theft should be coordinated and done in collabo-ration with local villages/ com-munities. This issue will be re-viewed during next audit.

16 Road maintenance • Roads are not maintained well. Whenever the govern-

Repairs of public roads are the not the responsibilty of PTPN III, however maintenance of the roads within estate land is

Explanation accepted. PTPN III has a work



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No. Issues Raised Management Response Audit Verification ment has plans to tarmac the road, the estate management does not permit it. • The company should monitor its activities, especially on the road because the access road leading to the villages crosses the estate road. • It is hoped that PTPN III helps to carry out routine maintenance of the village roads.

done ever year and this in taken into account in the company’s work plans. Further actions to be taken by PTPN III : -To coordiante with the regional authorities on road maintenance.

instruction and program for road maintenance within the estates.

17 Company policies Many of the company policies needs to be improved in order to increase cooperation.

Company policies are evaluated every year for effectiveness of implementation, however this has yet to meet the aspirations of the communities. Further actions to be taken by PTPN III : To review and accept input from communities on company policies deemed to be inappropriate or offensive to the communities.

Explanation accepted.

18 Interviewee is observing PTPN III’s activities to learn the suitable times for fertilizer application to palms and the best type of fertilizer to use.

Fertilizer applications are based on recommendations from the main office, and include types of fertilizer used and dosage applied.

Further actions to be taken by PTPN III : - To carry out socialization to surrounding farmer on good fertilizer application techniques.

No verification required

19 EFB Application EFB applied to fields attracts a lot of flies

Disposal of EFB has been arranged with PTPN III and a contractor and disposal at areas surrounding estate housing areas is not permitted.

Further actions to be taken by PTPN III: To review locations of EFB disposal found to be unsuitable.


20 Scholarships request Interviewee has requested for provision of scholarships for excellent students, and this was provided by PTPN III. Interviewee would also like to request for scholarships for poor students, not only students that perform well.

Provision of aid is only for students that perform well academically. This will also spur these students to perform even better.

Further actions to be taken by PTPN III : -To maintain the current format for supplying scholarships.




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3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client It is acknowledged that the assessment visit was carried out as described in this report and we accept the assessment findings and report content. Signed on behalf of PTPN III …………………………………………. Tio Handako General Secretary, PTPN III Date: 15 August 2009

Signed on behalf of TUV Rheinland Malaysia

…………………………………………. Dian S. Soeminta Lead Auditor Date: 15 August 2009



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APPENDICES

Appendix 1: Details of Certificate

Standard: RSPO Principles & Criteria for Sustainable Palm Oil Production; Indonesian National Interpretation: 2008

Certificate Registr. No.: 01 100 096705

TUV Rheinland Malaysia Sdn. Bhd. certifies:

Certificate Holder: PT Perkebunan Nusantara III, Sei Mangke Palm Oil Mill

Jln. Sei Batang hari No. 2 Medan, 20122 North Sumatera, Indonesia; and its supply base according to the annex.

Scope: Palm Oil Production and Plantation Management System

An audit was performed, Report No. 096705. Proof has been furnished that the requirements according to RSPO Principles & Criteria for Sustainable Palm Oil; Indonesian National Interpretation: 2008 are fulfilled. The due date for all future audits is 16-08 (dd.mm).

Validity: The certificate is valid from 2010-08-16 to 2015-08-15.



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CPO Tonnage Total Productions: PK Tonnage Total Productions: Company Estates FFB Tonnages: Outgrowers FFB Tonnages: CPO Tonnage claimed for certification: PK Tonnage claimed for certification:

40,248 tonnes 8,114 tonnes 120,253 tonnes 9,160 tonnes 37,430 tonnes 7,546 tonnes

GPS locations Name of mill / estate Location

Latitude Longitude Sei Mangke Palm Oil Mill (PSMKI)

Sei Mangke, Bosar Maligas sub-district, Simalungun district.

03º07’ 50.8”

099º20’ 37.9”

Dusun Hulu Estate (KDSHU)

Nagori, Dusun Ulu, Ujungpandang sub-district, Simalungun district, 21184

03º05’ 56.8”

099º28’ 43.9”

Bangun Estate (KBANG)

Nagori Senio, Gunung Malela sub-district, Simalungun district, 21151

02º58’ 27.7”

099º10’ 05.0”

Gunung Para Es-tate (KGPAR)

Gunung Para 2 Village, Dolok Merawan sub-district, Serdang Bedagai district, 20600

03º09’ 53.2”

099º06’ 27.8”

Gunung Pamela Estate (KGPMA)

Gunung Pamela Village, Sipispis sub-district, Serdang Bedagai dis-trict, 20692

03º13’ 19.5”

099º03’ 51.9”

Rambutan Estate (KRBTN)

Payabagas Village, Tebing Tinggi sub-district, Serdang Bedagai dis-trict 20602 & Sei Semujur, Sei Suka sub-district, Batu Bara dis-trict

02º54’ 04.2”

099º34’ 00.2”



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Appendix 2: Certification Audit Plan

Date / Time (1) Organizational Unit and Activi-ties Auditor / Abbrev. Interviewee

Procedure - EM/QM Element -

Standard Chapter Sunday, 21 June, 2009

Traveling Jakarta to Medan to Site By GA . Travel to Siantar

Dian S. Soeminta (DSS), Suseti-yaningsih (SS), Fadli (FA), Agus Salim Alfat (AS) and Carol Ng (CN)

Monday, 22 June 2009

Stakeholder consultation & Opening Meeting

08:30-12:00

Stakeholder Consultation at Siantar Hotel

ALL Invited stake-holders

13:00-15:00

Opening Meeting at Simalun-gun District • Introduction by team leader. • Presentation of estates by re-

spective managers. • Presentation of Oil Mills

source of FFB by respective managers

ALL Top Man-agement & Related Managers

15:00-17:00

• HGU & legal requirements • All related legal requirements

& documentation checking • All procedures or SOP re-

lated operations • Maps of appropriate scale.

ALL Plantation and Palm Oil man-agers

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

18:00 End of 1st day audit

Tuesday, 22 June 2009

Assessment at Dusun Hulu estate (KDSHU) & Bangun estate (KBANG)

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

DSS Plantation Man-ager

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

Environment and Legal Is-sues • Chemical stores • Workshops. • Legal Aspect

CN& AS Plantation Man-ager

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

08:00-12:00 KDSHU as-sessment

Social issues • Labour Union • Contractors • Workers facilities (house, school, transport, sports, etc) • Female workers

SS & FA Plantation Man-ager

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



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Standard Chapter • Sexual harassment policy • Health & Clinic • Land used • Local communities • HCV (if any) • Inspection of related stake-holder issues

12:00 Lunch and Break Environment, Economic and Legal • Field operations. • Worker interviews. • Riparian zones. • HCV

DSS Plantation Manager

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

Environment and Legal Is-sues • Chemical stores • Workshops. • Legal Aspect • OSH

CN& AS Principle 2 Criteria 2.1 Principle 4 Criteria 4.6, 4.7, 4.8 Principle 8

13:30-17:00 KBANG as-sessment

Social issues. • Contractors • Workers facilities (house, school, transport, sports, etc) • Female workers • Sexual harassment policy • Health & Clinics • Land use • Local communities • HCV (if any) • Inspection related stake-holder issue

SS & FA Principle 2 Criteria 2.2, 2.3 Principle 4 Criteria 4.6, 4.7, 4.8 Principle 6 Criteria 6.1 to 6.11 Principle 8

17:00 End of 2nd day assessment

Wednesday, 24 June, 2009

Assessment at Gunung Para estate (KGPAR) & Gunung Pamela estate (KGPMA)

Environment, Economic and Legal Issues

• Field operations. • Worker interviews. • Riparian zones. • HCV

DSS Plantation Man-ager

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

08:00-12:00 KGPAR as-sessment

Environment and Legal Is-sues

• Chemical stores • Workshops. • Legal Aspect • OSH

CN& AS Plantation Man-ager

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



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Standard Chapter Social issues • Contractors • Workers facilities (house,

school, transport, sports, etc) • Female workers • Sexual harassment policy • Health & Clinic • Land used • Local communities • CD & Communication • HCV (if any) • Inspection related stake-

holder issue

SS & FA Plantation Manager


12:00-13:30 Lunch & Break Environment, Economic

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

DSS & AS Plantation Manager

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

Environment and Legal Is-sues

• Chemical stores • Workshops. • Legal Aspect • OSH

CN & FA Plantation Manager

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

13:30-17:00 KGPMA as-sessment

Social issues • Contractors • Workers facilities (house,

school, transport, sports, etc) • Female workers • Sexual harassment policy • Health & Clinic • Land used • Local communities • CD & Communication • HCV (if any) • Inspection related social is-

sue

SS Plantation Manager


17:00 End of 3rd day assessment

Thursday,25 June, 2009

Assessment at Sei Mangke Mill & Rambutan Estate (KRBTN)



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Standard Chapter Economic Issue & Legal • Mill inspection • Workshops. • Stores. • POME application. • Document review.

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

08:00-12:00 Mill as-sessment

Environmental Issue • Mill inspection • Workshops. • Stores. • POME application. • Document review. Social Issue • Workers interview • Document review.

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

KRBTN as-sessment

Social Issue • Contractors • Workers facilities (house,

school, transport, sports, clin-ics, etc)

• Female workers • Sexual harassment policy • Land used • Local communities • CD & Communication • HCV (if any) • Inspection related social is-

sue

SS & FA Manager Principle 2 Principle 6 Principle 8

12:00 Lunch & Break 13:00 Audit of documentations.

• Principles 1, 2 and 3. • Principles 4 and 7. • Principles 5 and 6. • Principle 8.

ALL Manager

17:00 End of 4th day assessment Friday, 26 May, 2009

Final documentation check and Closing Meeting

08:00 Audit of documentation. • Principles 1, 2 and 3. • Principles 4 and 7. • Principles 5 and 6. • Principle 8. Preparation for Closing Meet-ing

ALL Manager

10:00 • Presentation of findings by the audit team.

• Questions and answers. • Final summary by team

leader.

ALL Manager



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Standard Chapter 11:00 End of Audit 11:00-15:00 Traveling to Medan ALL 17:30 Traveling to Jakarta & KL

(CN)

Appendix 3: List of Abbreviations AMDAL Analisis Dampak Lingkungan & Sosial

(Social & Environmental Impacts Assessment) BPN Badan Pertanahan Nasional (National Land Agency) CPO Crude Palm Oil EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health FFB Fresh Fruit Bunches EFB Empty Fruit Bunches HCV High Conservation Value HGU Hak Guna Usaha (Land Use Certificate) HRD Human Resources Department IPM Integrated Pest Management KAB Kabupaten (District) KBANG Kebun Bangun (Bangun estate) KDSHU Kebun Dusun Ulu (Dusun Ulu estate) KEC Kecamatan (Sub-district) KGPAR Kebun Gunung Para (Gunung Para estate) KGPMA Kebun Gunung Pamela (Gunung Pamela estate) KRBTN Kebun Rambutan (Rambutan estate) LTA Lost Time Accident MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health PKB Perjanjian Kerja Bersama (Working Agreement) PKO Palm Kernel Oil POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment PPN Perusahaan Perkebunan Negara (National Plantation Company) PPKS Pusat Penelitian Kepala Sawit (Oil Palm Research Centre) PSMKI Pabrik Sei Mangkei (Sei Mangkei Palm Oil Mill) PTPN PT Perkebunan Nusantara RJP Rencana Jangka Panjang (Long-term Plan) RKAP Rencana Kerja Anggaran Perusahaan (Company’s Budget) RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SIA Social Impact Assessment SOP Standard Operating Procedure UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)

Roundtable on Sustainable Palm Oil...Payabagas Village, Tebing Tinggi sub-district, Serdang Bedagai...

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Transcript of Roundtable on Sustainable Palm Oil...Payabagas Village, Tebing Tinggi sub-district, Serdang Bedagai...