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MY02517

Summary Report against RSPO MYNI Requirement for

Asia Production Unit : Asia Oil Palm Mill & estates

1

Project Nr: MY02517

Certificate Nr:

SGS-RSPOPM-MY13/01090

Validity Period:

31st January 2013 to

30th January 2018

Report Ref #: MY02517 Report

Client: CAROTINO /JC Chang Group

RSPO membership #: 200290600000

Web Page: www.carotino.com

Parent Company

Address:

Unit 30-01, Mail Box 300, Menara Landmark, No.12, Jalan Ngee Heng, 80000, Johor Bahru, Johor

Contact: Mr Seow Chee Chiang

Country: Malaysia

Plantation Unit being Evaluated

Asia Production Unit :

Asia Palm Oil Mill and its supply base plantations comprising of Asia Oil Palm Estate 2, Hwa Li Estate 3 and Melewar Estate 2 in Lahad Datu, Sabah

Total Plantation Area 9,325 ha

Company Contact Person:

Mr Tee Swee Kee, Plantation Director

Mr Seow Chee Chiang , Estate-cum-Sustainability Manager

Address:

Mill: Asia Palm Oil Mill Km 45 Off Jalan Lahad Datu – Sandakan Lahad Datu,91100

http://www.carotino.com/

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Sabah

Tel: 089-567012 ( Mill )

07-2231633 ( HQ, Johor )

Fax

089-563091 ( Mill )

07-2241546 (HQ, Johor )

Email: [email protected]

[email protected]@jcc.com.my

Evaluation dates:

Main Evaluation 10th – 14th October 2011

Surveillance 1

Surveillance 2

mailto:[email protected]

mailto:[email protected]

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Table of Contents

i) List of Abbreviations ………………………………………………………………………………………………. …05

1. INTRODUCTION……………………………………………………………………… 07

2. BRIEF COMPANY BACKGROUND…………………………………………………08

3. ASSESSMENT PROCESS……………………………………………………………14

4. OTHER VERIFICATION REQUIRMENTS………………………………………….. 15

5. FIELD ASSESSMENT PROGRAMME……………………………………………….16

6. ASSESSMENT FINDINGS…………………………………………………………….17

7. CHAIN OF CUSTODY………………………………………………………………….54

8. RECORD OF CORRECTIVE ACTION REQUEST ( CARs) ………………………56

9. SUMMARY : ISSUANCE OF NON-COMPLIANCES……………………………….57

10. ASSESSMENT DECISION……………………………………………………………. 60

11. CERTIFIED ORGANISATION ACKNOWLEMENT OF INTERNAL

RESPONSIBILITY………………………………………………………………………………………………….. ..61

List of Tables

Table 1: Mill information…………………………………………………………………………………………………………………………09.

Table 2: Individual estates of Asia Production Unit…………………………………………………………………………….09

Table 3: Other PMUs under Carotino Sdn Bhd / JC Chang Group…………………………………………………………….10

Table 4: Auditor working experience……………………………………………………………………………………………………….14

Table 5: Time Bound Plan…………………………………………………………………………………………………………………………15

Table 6: Assessment Itinerary………………………………………………………………………………………………………………….16

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Table 7: Level of Non-Compliance based on RSPO requirement…………………………………………………………..17

Table 8: RSPO Principle & Criteria Assessment Findings.........................................................................18

Table 9: Records of Corrective Action Requests (CARs)…………………………………………………………………….….56

List of Maps

Map 1: Location of Asia Production Unit……………………………………………………………………………………..…11

Map 2: Location of the Unit estates…………………………………………………………………………………………………..…12

Map 3: Asia Oil Palm Estate 2……………………………………………………………………………………………………………….12

Map 4: Hwa Li Estate 3……………………………………………………………………………………………………………………13

Map 5 : Melewar Estate 2……………………………………………………………………………………………………………………..14

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LIST OF ABBREVIATIONS

AOPE2 Asia Oil Palm Estate 2

APOM Asia Palm Oil Mill

BOD Biological Oxygen Demand

CAR Corrective Action Request

CHRA Chemical Health Risk Assessment

CPO Crude Palm Oil

DOE Department of Environment

DOSH Department of Occupational Safety and Health

D x P Oil Palm seedling : Obtained through hybridization of elite Dura and

Pisifera palms.

EFB Empty Fruit Bunch

FFB Fresh Fruit Bunch

HCV High Conservation Value

HL3 Hwa Li Estate 3

IPM Integrated Pest Management

JCC Joint Consultative Committee

JKKP Jabatan Keselamatan dan Kesihatan Perkerjaan ( DOSH )

K Potassium

KER Kernel extraction Rate

kg Kilogramme

Kg Kampung or Village

ME2 Melewar Estate 2

Mg Magnesium

MSDS Material Safety Data Sheet

MT, mt Metric tonne

N Nitrogen

NGO Non Governmental Organisation

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OER Oil Extraction Rate

OSH Occupational Safety & Health

P Phosphate

PK Palm Kernel

PMU Plantation Management Unit

POME Palm Oil Mill Effluent

PPE Personal Protective Equipment

Sdn Bhd Sendirian Berhad

SEIA Social & Environmental Impact Assessment

Sg Sungai which means river in the our local language ( Bahasa Malaysia )

SGS Societe Generale de Surveillance

SOCSO Social Security Organization

SOP Standard Operating Procedures

APU Asia Production Unit

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1. INTRODUCTION

The purpose of the evaluation was to evaluate the operations of JC Chang Group’s Asia Palm Oil Mill, its supply base estates located in Kinabatangan, and Lahad Datu Districts in Sabah, Malaysia, against the requirements of the QUALIPALM Programme, the SGS Group’s verification programme for compliance to RSPO P&C MYNI 2010 requirement.

.

1.1 CERTIFICATION BODY

SGS Group is the world’s largest auditing, inspection, testing and verification organisation founded in 1878. SGS Group is able to provide its international clientele with a comprehensive range of services in more than 145 countries from a unique international global network of more than 1180 offices, 321 laboratories and 65,000 full time staff. SGS has no manufacturing, trading or financial interests which could compromise its independence and biasness in the audit process. It guarantees independence, its reputation for professionalism, integrity and impartiality.

QUALIPALM programme of SGS Group’s Oil Palm certification programme has been accredited by RSPO to provide certification services both against the RSPO P&C and the RSPO supply chain. To date, SGS has conducted various RSPO related audits in Malaysia, Indonesia, Colombia and Thailand and has issued at least 5 RSPO certificates to three different companies.

1.2 SCOPE OF MAIN ASSESSMENT FOR CERTIFICATION

The scope of the assessment covers one palm oil mill managed by Asia Oil Palm Sdn Bhd and

three oil palm plantations (Total title area of 9,325 ha) within the districts of Kinabatangan and

Lahad Datu, Sabah, owned by the JC Chang Group of companies.

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2. BRIEF COMPANY BACKGROUND

Carotino is a member of the vertically integrated J.C. Chang Group of companies with interests

in plantations, palm oil mills and downstream processing activities that practices sustainable

agriculture.

In its downstream activities , Carotino is one of the major player in the oil palm industry

producing oil palm-based products for the consumer in the food service and Industrial

products, neutraceuticals, animal feed, oleochemicals and biodiesel.

The group owns and manages oil palm plantation known as Production Units. Asia, Carotino,

Melewar and Takon production units are all members under Carotino Sdn Bhd.

In this RSPO P& C certification , the Asia Production Unit will be audited. The Asia Production

Unit comprises 3 oil palm plantations and 1 mill sited in the same location in the State of Sabah,

Malaysia, covering a total land area of 9,325 hectares with 8,348 Ha planted mature hectares.

The Mill’s MPOB licence allows a processing capacity of 240,000 MT FFB yearly . During the

financial period FY2010/2011, the mill processed a total of 229,329.9 MT FFB yielding 48,471.9

MT CPO and 12,275.5 MT of PK. The mill receives crop from their own supply base estates,

other Carotino/JC Chang estates and also from outsiders / smallholders.

Presently, APU is claiming certification for their own supply base estates amounting to 43,663.44

MT of CPO and 10,633.13 MT PK .

The Carotino Production Unit comprises 1 palm oil mill and 5 oil palm plantations sited in 3

locations in the State of Pahang, Peninsular Malaysia, covering a total land area of 10,243

hectares with 7,754 planted mature hectares and 1,200 hectares of immature

replants.Currently, the plantations produced a combined total of about 200,000 mt FFB per

year while the mill processes about 150,000 mt FFB yielding some 30,375 mt CPO and 8,250 PK

per year giving an average OER of around 20.25% and KER of 5.5%. Due to the far distance from

the mill, 50,000 MT of FFB were sent to other mill for processing

Carotino Production Unit has since been certified.

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The Melewar Palm Oil Mill and its FFB supplying plantations under the JC Chang group will be seeking for RSPO certification in December 2012. Together, The Melewar Production Unit comprises 5 oil palm plantations and 1 mill sited in the same location in the District of Kinabatangan, State of Sabah, Malaysia, covering a total land area of 12,980 hectares with 11, 284 planted mature hectares. Currently, the plantations produced a combined total of about 338, 520 mt FFB per year while the mill processes about 384,000 mt FFB yielding some 80,000 mt CPO and 20, 800 mt PK per year giving an average OER of around 21% and KER of 5.40%.

The Takon Palm Oil Mill and its FFB supplying plantations under the JC Chang group will be

seeking for RSPO certification in June 2013. Together, The Takon Production Unit comprises 3

oil palm plantations and 1 mill sited in the District of Lahad Datu, State of Sabah, Malaysia,

covering a total land area of 5,736 hectares with 4,897 planted mature hectares. Currently, the

plantations produced a combined total of about 146, 900 mt FFB per year while the mill

processes about 216, 000 mt FFB yielding some 47,500mt CPO and 11,000 mt PK per year giving

an average OER of around 22% and KER of 5%

In line with its commitment to RSPO, the production units are being audited against the RSPO

Principles and Criteria for sustainable palm oil production.

Table 1: Mill Information

Mill : Asia Palm Oil Mill

Mill Location Asia Palm Oil Estate 2, Lahad Datu 5.30°N 118.21°E

Capacity: 40 MT/hr MT ( for FY 2010/2011)

Source

FFB

CPO

PK

APU

205,236.91

43,663.44

10,633.13

Other JC Chang Group estate 934.14 182.859 50.269

Outside Crop

23,158.8

4,625.614

1,592.086

Total

229,329.9

48,471.9

12,275.5

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Table 2: Individual estates of Asia Production Unit

NAME OF HOLDING LOCATION

PLANTATION AREA FY2010/2011 ANNUAL

PRODUCTION OF FFB

(MT)

Planted

(ha)

Other

(ha)

Asia Oil Palm Estate 2

5.30°N 118.20°E

Lahad Datu,

Sabah

2,726.26

297.74

65,940.16

Hwa Li Estate 3

5.34°N 118.31°E

Lahad Datu,

Sabah

3,851.56

426.04

93,895

Melewar Estate 2

5.26°N 118.15°E

Lahad Datu

Sabah

1,770.41

252.99

45,401.75

Total

8,348.23

976.77

205,236.91

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Table 1: Other PMUs under Carotino Sdn Bhd / JC Chang Group

NAME OF THE PLANTATION MANAGEMENT UNIT: UNDER JC CHANG GROUP OF COMPANIES MANAGEMENT

Estates Size (ha) Location Other information

Carotino mill and estates 10,243

Pahang, Peninsular Malaysia

100 % FFB sourced from own estates. The Unit has been certified since April 2010

Melewar Mill & Estates

12,980

Lahad Datu, Sabah

Small percentage of FFB coming from a few outgrowers and smallholders.

Takon Mill & Estates

5,736

Tungku. Sabah Substantial crops from

smallholders and

outgrowers.

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Map 1: Location of Asia Production Unit

GPS of Asia Palm Oil Mill : 5°17'29.49"N 118°12'21.17"E

sandakan

Lahad Datu

Asia Production Unit

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Map 2: Location of the Unit estates

Map 3: Asia Oil Palm Estate 2

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Map 4: Hwa Li Estate 3

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Map 5: Melewar Estate 2

Location Of Melewar Estate 2

Melewar

Est.2

Sandakan-

Lahad Datu

highway.

Melewar Estate 2 is situated 22km east of the Lahad Datu – Sandakan Highway.

Access to the estate is by gravel road through Melewar Estate 1 at Kilometer 45

GPS : 5.26o N, 118.15o E

.

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3. ASSESSMENT PROCESS

3.1 AUDIT TEAM A brief working experience of the auditors is given in Table 4.

TABLE 4: AUDITOR’S WORKING EXPERIENCE

Audit Team Brief Working Experience

Lead Auditor James S H Ong is an agronomist by training. He has many years experience in the agriculture sector in Malaysia having worked as Assistant Plantation Manager in a number of estates in Malaysia. He is well versed with agro chemical and fertiliser applications. Has undergone ISO and RSPO Lead Auditor training and has been involved in a number of audits on oil palm plantations

Auditor Abdullah Din, is a forester by profession with 7 years experience in forestry certification.. As a trained assessor, he has been involved in forest certification and chain of custody for the last 4 years. He is also a Lead Auditor for Forestry Chain of Custody. In addition , he is a Lead Auditor for RSPO ,trained by RSPO for auditing against RSPO P&C and involved in a number of plantation assessments and audit of palm oil mill.

Auditor Rick Gregory, M.Sc., has worked in Malaysia for nearly 20 years in the environmental sector. Trained as a forester, he has experience with certification schemes in forestry, including Forest Management Units and chain of custody, and has been involved in several oil palm plantation assessments against RSPO P&C.

3.2 30 DAYS STAKEHOLDER NOTIFICATION

The 30 days stakeholder notification was published in the RSPO website on 26th April 2011. Similarly, Carotino Sdn Bhd had published the same notification in their website. Until the end of audit there were no stakeholder feedbacks received.

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4. OTHER VERIFICATION REQUIREMENTS

4.1 TABLE 5: TIME BOUND PLAN

NAME OF THE PLANTATION MANAGEMENT UNIT: UNDER JC CHANG GROUP OF COMPANIES MANAGEMENT

Production Unit Size (ha) Location Plan for Certification

Carotino Production

10,243 Pahang, Peninsular Malaysia

100 % FFB sourced from own estates. The Unit has been certified since April 2010

Asia Production Unit 9,325

Lahad Datu, Sabah

2011

Melewar Production Unit

12,980

Lahad Datu, Sabah

2012

Takon Production Unit 5,736

Tungku. Sabah 2013

5. FIELD ASSESSMENT PROGRAMME

The summary of assessment is shown in Table 5.

TABLE 6: ASSESSMENT ITINERARY

Date Time Assessment Carried Out

10/10/2011 Travelling to Sandakan

- Arrive Sandakan

Lunch Travel to Location in Kinabatangan Opening Meeting at Asia Palm Oil Mill Briefing by SGS Briefing by Carotino Audit Scheduling

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11/10/2011 Visit to Asia Palm Oil Mill & Visit to Asia Oil Palm Estate 2

8.30a.m. to 5.00 p.m

Mill Document Review Mill Visit Reviewed Estate documents Field Operations Document reviews on licenses, safety and health, environmental impact assessment and management plans, social impact assessment and management plans, Chemical Health Risk Assessment (CHRA) grievance settling mechanism and training documents. Interviews with scheme smallholders and independent smallholders. Inspection to scheme chemical store, chemical mixing store and fertilizer store, oil mill premise inspections.

12/10/2011 Melewar Estate 2

8.00a.m. to 5.00p.m

Document review Field Operation - Weeding Field operation – Manuring Interview with Stakeholders Chemical & Fertiliser Store Linesite

13/10/2011 Hwa Li 3

8:00a.m. to 5.30p.m

Estate Document review Field operation ( Manuring and Harvesting) , Buffer zones, Ground covers. Linesites, Humana school and chemical and fertiliser store

14/10/2011 Closing meeting End of audit

10.00a.m. to 12.30p.m.

Presented the non-compliances, findings and recommendation to the Asia Oil Palm Business Unit & management

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6. ASSESSMENT FINDINGS

EVALUATION RESULTS

Results of the evaluation are tabulated below. The findings made under each criterion are discussed where non-compliances are raised against individual indicator of the MYNI 2008.

Non-Compliance to the RSPO requirement is categorised as follows:

TABLE 7: Level of Non-Compliance based on RSPO requirement

Level of Non Compliance

Minor CAR The management system applied complies with parts of the requirement or the system was inconsistently implemented. Improvements are required.

Minor non compliance to the stated requirement

Inconsistencies in documentation and implementation

Will not prohibit recommendation for certification

Major CAR The management system failed to comply with the requirement or the written policy, procedures etc were not implemented.

o Major non conformance resulting in breakdown of the whole system

Major failure in documentation and implementation

Will prohibit recommendation for certification

Findings related to the general MYNI 2010

Summary of the assessment findings under each criteria were presented to the company

management at a closing meeting. Follows are detailed findings that described the compliance

and non-compliances (raised as a CAR) under each criterion

TABLE 8 : RSPO Principle &Criteria Assessment Findings

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Principle 1: Commitment to transparency

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 and forms to allow for effective participation in decision making.

Findings Asia Production Unit under the Carotino /J C Chang Group Group has a website www.carotino.com for the promotion of its products. The website also contains information about the company’s corporate structure, its policy and management objectives.

During the assessment, it was observed that the company has compiled a list of stakeholders that may be relevant to the APU operation. The stakeholder list include estate group, school , local communities, statutory bodies, contractors, FFB supplies, visitors, neighbouring plantations and NGOs.

It is a requirement under the MYNI 2008 that growers and millers respond constructively and promptly to requests for information from stakeholders. The company has documented a ‘Guidelines on mechanism for information request’ that defines the responsibilities and actions required for receiving, recording and responding to enquiries and requests from stakeholders.

The 23/12/2008 guideline version was revised on 25/01/2011. Information on environment, social and legal was included. The guideline identified the person responsible for handling the stakeholder input at estate/mill level (also relevant to 6.2.2). In AOPE2, Rudy Low How Eng (Asst Mgr) is appointed as the person responsible. Posted on the noticeboard outside the office are details on the time (Office hours 3.30-5.00 pm daily with contact number and email) the stakeholder can raise their concern.

The company maintained both soft and hard copy record and evidences of communication with stakeholders. The APOM Stakeholders Request file has been maintained since 16/7/2009. Stakeholders have a choice of both verbal and written request. It was also observed that a joint consultative committee (JCC) has been established to handle internal stakeholders (i.e. workers).

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


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Findings As mentioned above, management documents and policy are publicly available at the website www.carotino.com . Policies, SOPs, work instructions are also posted on notice boards at the estate and mill for workers and public view

The following documents are publicly available:

Land titles/ user rights

Safety and health plan

Plans and impact assessment relating to environment and social impacts

Pollution prevention plans

Details complaints and grievances

Negotiation procedures

Continuous improvement plans It was observed during assessment the Unit has clear land titles on all the land/estates involved. Examples : Land title for AOPE2 : CL 095317373, Sg Tenegang, Kinabatangan , Jln Sandakan – Lahad Datu,Sandakan , Sabah and for Hwa Li 3 has the following land titles : CL 95324502 ( 4047ha till 2092 ) and CL 095327138 ( 230.60ha till 2097).

Some relevant standard operation procedures, documents and information pertaining to the Plantation Management Unit management are available as required by the criteria for public viewing on their website.

The company has for example adequately documented their health and safety plan( OSH plan ver.2). Action for improvements in documentation for social engagement are also in place.

There are also plans for social and environmental impact assessments and procedures for pollution prevention, community negotiation and continuous improvement plan are documented

As far as details of grievances and negotiation procedures are concerned these are available upon request.

Principle 2: Compliance with applicable laws and regulations

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

Findings

The Unit maintain copy of relevant laws and legislation pertaining to palm oil mill and the plantation operation. The Unit was observed to have the necessary renewable permits pertaining to crop production and milling which are displayed in the form of certificates, licences and permits in mill and estate offices. Legal requirements for machinery maintenance and power generation


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have also been complied with.

Among the licenses/permits maintained under file ‘Detail of Licenses/Permits &

Insurances’ include:

o Weighbridge stamping o Workers permits and insurance o Genset o Trading licenses o MPOB license o EPF/SOCSO contribution o Health, safety, accident and diseases o Schedule waste disposal o Machinery licenses

Evidence of subscription to the www.lawnet.com.my on latest publication / revision in laws. SOP on Mechanism to track changes in the legal requirement is found in Doc. Ref No: E/005-03/2011 ver.3. The Estate Department Cum Sustainability Manager based at the Group’s HQ is

responsible for monitoring the changes in law and distributing the information

to the mill and plantations.

For APOM,, some of the legal evidences are listed below:

Jabatan Alam Sekitar ( Department of Environment ) Llicence No: 001191 MPOB Licence : 500143104000 for Asia Oil Palm Sdn Bhd , 330,000MT ( 1/12/2010 – 30/11/2011) Jabatan Tenaga Kerja ( Deparment of Labour ) No: B-0063/11 ( till 25/1/2012) Trading Licence F763092 EPF/SOCSO KWSP ( Employer Providence Fund ) No: 601078309 DOSH/ JKKP permits for Machinery Licences Lesen bagi Pepasangan Persendirian Lesen ( Electrical Installation Licence ) No : SSD 083/2011 ( 9/3/2011 – 8/3/2012) In HL3 some of the licences verified are Trading licence F 777036, MPOB Licence 503266302000, Quit Rent, Permits for storage of diesel, fertilizer chemicals, generator set ,etc are all up-to- date

Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by

http://www.lawnet.com.my/

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local communities with demonstrable rights.

Findings The land titles are viewed. There are clear land tenureship documents for all

estates under the group. For example :

1) Hwa Li 3 Land titles : CL 95324502 ( 4047 ha till 2092 ) and CL 095327138 ( 230.60 ha till 2097.

2) AOPE2 land title : CL 095317373, Sg Tenegang, Kinabatangan , Jln Sandakan –Lahad Datu,Sandakan , Sabah

The survey title maps for both piece of land are available e.g. for AOPE2 the land survey map S44/89 Revision 4, Nov 1989 was viewed. The document recorded that the type of use if for cultivation of agricultural crop,” “The said land is demised hererein expressly and only for the purpose of the cultivation of an agricultural crop of economic value”. As for Melewar Estate 2, the ownership is under Melewar Properties Sdn Bhd, a subsidiary of JC Chang group. The 2,023.4 ha land is under title no. 095311201, also a leasehold property with expiry on 31 Dec 2077. The land is only for the purpose of Cocoa and /or agricultural crop of economic value. Previous owner was Firm Corporation Sdn Bhd that has planted the land with cocoa. The audit team observed adequate physical demarcation on the ground where some boundary stones are visible. These markers were enhanced with painted red-white pipes and poles for easier visibility from the roadside. Evidence found in field for 921/883 in G14 96, next to Genting Plantation. Estate has no boundary conflict or dispute with all surrounding neighbours or conflict of land use as per land title

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

Findings All the three estates are with proper legal title. The establishment of the plantations do not diminish legal or customary rights of any communities. As described earlier, the land is with clear and undisputed boundaries.

Clear physical boundary demarcation with legally recognized plan is observed

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during site visits. In addition there are no dispute/claims by the neighbors on the estate’s land.

Principle 3: Commitment to long-term economic and financial viability

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

Findings Annual budgets for the mill and estate operations are available. Annual crop budget and operation budgets have been projected till 2014 - 2015 The plan is based on estimate of yield/production. Budgets included allocations for social & environmental/biodiversity conservation programme. The plantation is currently at prime age between 6 – 15 years. As for the replanting programme , APU plans to replant when the palms are about 24 years old. Replanting programme will start in Oct –Dec 2020 for HL3, for AOPE2 in 2015 for field 91A , ME2 will commence in 2019 in Field 95A. In their replanting programme, APU plan to plant 20% seedling and 80 % clones.

Principle 4: Use of appropriate best practices by growers and millers

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

Findings The following policy, SOPs and guidelines are documented at the mill.

Polisi Keselamatan dan Kesihatan Kumpulan JC Chang

Asia Palm Oil Mill Safety (Machinery) Operation Procedure (10 Jan 2010)

Asia Palm Oil Mill Standard Operation Procedure (V1-08/08/2011)

JC Chang Group Safety and Health Manual (13 Feb 2007)

The Mill SOP include procedures at Reception station, Grading station, Threshing Station, Pressing station, Clarification station, Depericarper, Nut and Kernel , Boiler, WTP, Loading Ramp, Steriliser station and Hoisting Station. The Grading Station SOP implementation was verified at the mill reception station. Similarly the quantity and chemical used in the SOP of the water treatment plant was also checked and was found to be in compliant. SOP for the plantation operation is in the SOP Masterfile. They are in English and in Bahasa Malaysia. A pictorial SOP is available in the training file. Examples of estate SOP viewed are Buffalo management, Pest and disease management

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OSH Estate, and fertiliser application. The company also issues Memos and guidelines if there are changes into the SOP. These memos are used as the latest changes for the estates to comply. They have a Safe Operating Procedure file that emphasises safety guidelines and procedures

Records of monitoring at the mill and estates are available.

Mill:

FFB input and CPO, PK and EFB output

Energy generation by the boiler

Water consumption, diesel usage

POME land application – just started in Aug 2010 (620 m3/day at 17 ppm BOD)

Submissions of monthly report to Jabatan Alam Sekitar (DOE) Negeri Sabah are

evident. Reports submitted include information on:

EFB disposal

Effluent flow meter reading & weekly effluent sampling results

Schedule waste inventory & stack emission sampling

At the estates, the following monitoring records are available:

FFB production

Fertiliser application

Pest Census

Weeding

Road maintenance

Planting of beneficial plants

Monitoring of the correct procedure for Operating Procedures are also

recorded in a checklist eg ‘Pemeriksaan keselamatan harian untuk penjaga ramp

loading, Penabur baja, sprayer gang , Lorry etc.

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

Findings The fertilizer recommendations were based on leaf and soil analysis. Leaves and

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soil are sampled periodically to monitor palm nutrient level and soil fertility. Evidences of analysis are available.

Ref:KDC Lab Ref Soil analysis : ME2/H107/1011-01/TGT/aa ( 9/4/2011) Report No: R11/4/74 For leaf analysis KDC Report No: R11/4/125 The analysis will form the basis of the fertiliser recommendation by the agronomist Mr Tan Ah Aia. The estates will follow the recommendation in their application plan. For example, in Melewar 2, the recommendation was an application of 3 kg of NK Mix (10.5%N: 30%K2O) fertiliser in Jul – Sep and an application of P/Mg Mix(19.6% P2O5: 7.85% MgO) in Jul – Sep of 2 kgs for Block 95A6. During field visit, NK Mix was being applied @ 3 kg dosage. The delay in application is due to rainfall and acute labour shortage during 2011 in Sabah. In HL3 : NK Mix was also applied @ 3 kg as recommended in the fertiliser recommendation by the Agronomist. In AOPE2 , POME for Land Application monitored in field E6,7,8,9,11,13 ( 110 ha ). Yields of the fields are monitored as well as amount of effluent discharged from the mill is recorded. No EFB and POME are applied in ME2. In HL3 : EFB is only applied on the areas where the beneficial plants Turnera sp and Cassia are planted along the roadside. A map is available to show areas where the plants are planted. 4.2.1 Non -compliance Melewar Estate - workers were applying fertiliser inconsistent quantity due to lack of supervision.

( Minor CAR – 01 )

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

Findings The Unit has SOP documents for erosion control known as “Guidelines on soil and water conservation”. Slope and soil maps are available. In HL3 the following were identified:

River floodplains : 23.22%

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Moderate Hills 10°-20° : 29.7%

Very low Hills <15° : 5.6%

Low Hills, Minor flats <15: °

Fresh water swamp : 0.96%

Evidences of erosion control were observed through terracing, frond stacking, setting up of silt traps and planting of leguminous cover crops during replanting. Circle weeding is practiced to minimized bare and exposed soil and to ease operation like manuring and to facilitate harvesting.

In mature areas, the policy is to maintain non-competitive “soft weeds” in the inter-rows to maintain ground cover. Frond heap stacks and “soft weed” rows (harvester paths) provide significant ground cover minimising exposed extent of soil. Where available, EFB mulching both in replanting and mature areas also act as erosion control measures. Non-competitive “soft weeds or grasses ” and ferns are also maintained in bare areas as a form of erosion control Road grading and drainage activities were also practiced to minimize soil run-off and gully erosion.

In steeper areas, contour terracing has been implemented where possible and frond stacking along the contour terrace edges makes erosion control more effective. The general practice of bunding in terraces is also in place.

Roads are maintained and compacted on a regular basis. The existence of an annual road maintenance budget ensures that roads do not become a source of erosion in all the estates. In HL3, for 2010/2011 RM 117,688.88 was spent for the soil and water conservation.

Based on the soil maps, there are no peat area. The ultrabasic soils were identified as fragile soil. These ultrabasic soils and rocky outcrop in HL3 and in ME2 have poor soil properties resulting in bare and expose condition. To avoid erosion, efforts have been made by the Unit to vegetate by planting ground covers around the area to protect the soil .

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

Findings Guidelines on Establishment of Riparian Buffer zone ( C/001-02/2009 established in 16 Feb 2009 ) following the recommendation of the consultant WildAsia. It includes identification of Riparian Zone, Demarcation of Wetland area, soil and

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water conservation measures, no bund and weir construction, monitoring of water in main river and monitoring of domestic usage

Riparian reserves are mapped and protected with supplemental plantings of tree species to protect riverbanks and improve the habitat. These activities are covered under the Unit’s long term conservation budget planning.

Riparian reserves in all estates are properly designated with yellow boundary

markers to indicate no spraying and manuring zones. During field visit no

evidence of spraying activities were found within the reserve areas.

For example in Hwa Li 3, both Guatamala grass and Ipil-Ipil were also planted along streams with eroded banks to establish ground cover and stabilize the soil. Further discussions with relevant authorities has recommended the Unit to changed the emphasis from planting exotic species (e.g. Ipil-Ipil) to more indigenous or local species (e.g. Ficus). This was also a suggestion from the WildAsia study for environmental impact assessment and improvement AOPE2 has mapped all riverine reserve areas (39.23 ha) and have 5 year conservation plan on river riparian zone with 5 year budget. Manual weeding is done at water catchment areas on estates. Palms planted on

the slopes of the drainage area are not sprayed with chemicals and all fertilizer

application is only by the subsoil method, not surface applied method.

There was no evidence of any construction of dams or weirs to obstruct the natural flow of water passing through the estates. Rainfall is being recorded daily, monthly and yearly records are kept. There was no drainage into protected area as the surrounding areas comprised of oil palm estates either belongs to other plantation companies or smallholders. Volume and quality of water used in the estates as well as the mill are monitored. Water sampling is conducted at each estate to monitor the quality of water entering the estates from neighbouring sources, as well as, at exit points.

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Evidence of water sampling points at water catchment areas and other water sources was seen at both Melawar 2 and Hwa Li 3 estates. At Melewar 2, water samples were sent out for analysis on 7 March, 2011 and on Sept 2011, with results still pending for the latter. The March results were as follows: KL-Kepong Sabah, KDC Laboratory Report No. R11/3/180 Date: 16/3/11 Ref. ME2/WST-001/TGR/aa The 3 samples from Melewar 2 were deemed to have satisfactory results, according to the WQI classification for the parameters pH, BOD, COD, ammoniacal nitrogen, suspended solids and dissolved oxygen.

In HL3, river A,B,C are sampled twice per year. The latest result done in Dec 2010 that reported the water is slightly polluted. The sample sent during Sept 17, 2011 is awaiting the result. In HL3, domestic water usage monitored and summarised monthly . In Jan –Sept 2011 the monthly average usage per person was 62 litres / person. Good rainfall contributed to the low usage. Similar monitoring is also done at the mill. For the mill, wastewater is monitored , analysed and result submitted to the DOE every quarterly. Presently their licence is for Land application ( Pengairan Ladang ) and to comply with the following parameters : BOD 3 days, 30°C < 20 mg/l Suspended solids/ pepejal terampal <200mg/l, O&G < 20mg/l, Am-Nitrogen<150mg/l, Total Nitrogen: <200 mg/l, pH not more than 9.0 and not less than 5.0 and for the temperature of the sample at the point of final discharge to be less than 45°C. The Mill has an authority approval for the construction of a wastewater treatment plant to address discharge issues as well as a composting plant for the management of POME and EFB. The “Sijil kelulusan bertulis bagi pembinaan rawatan effluent” dated 27th August 2010 includes the ‘Sijil kelulusan bertulis ( pindaan) bagi loji kompos bagi pelupusan POME & EFB ‘ No . Sijil : SPE-023/2010 were viewed . During the recent environmental submission to Jabatan Alam Sekitar ( DOE) , the BOD for July to Sept 2011, the BOD was 30, 74,43 mg/l . The quantity of POME at the influent and the effluent /outgoing/final discharge is monitored using a flowmeter. The influent on the 7/10/11 is 757m3 and the

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effluent on 6th is 1,383 m3. Water monitoring is also done monthly in the mill. In Aug 2011, to process 22,748.37 MT FFB , the boiler uses 18, 520 m3 and the processing used 20,773 m3. Total usage per MT FFB is 1.73 m3. Total domestic water usage for the mill site: 4,720 m3.

Rainfall is being monitored and records are kept. Guidelines for water management plan are documented in C/004-01/2008.

The operation in the estate and mill uses surface and ground water and the volume used is monitored. APU also harvest rain water to reduce the requirements on river water

A new reservoir is being constructed in AOPE2 without damming any river. The area that is going to be inundated is existing plantation without any stream running through. The dam/reservoir is part of the mill expansion plan. There was no drainage into protected area as the surrounding areas comprised of oil palm estates either belongs to other companies or smallholders.

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

Findings Documented guidelines procedure on IPM on rats, leaf-eating caterpillars, rhinoceros beetle and disease management like Ganoderma are in place.

The introduction of biological control is being promoted where it was observed that beneficial plants such as. Tunera subulata, Cassia cobannensis and Antigonon leptopus, were planted throughout the estates.

The only active IPM is the rat management. The baiting and census procedure is documented in the SOP. Young palm census is done monthly. For mature palms, census is done on the fresh damage on palms or harvested bunches. Census done on 10% of the mature palms. Nevertheless, it was found that monitoring for rat damage and the effectiveness of protocols to reduce the use of rat baiting chemicals is not consistent among the estates. Each estate seems to use different means to determine when to

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stop applying rat baits based on reduced damage. Census forms for measuring rat damage versus the uptake of rat baits are not separated, thus causing confusion in data recording. The form measures rat damage (old + new) based on the 5% threshold, while the same form is used as a census for rat bait uptake (a totally different measurement). These two measurements do not prove the effectiveness of the rat baiting program, since there was never a post-rat damage census to verify if the damage was under the 5% threshold. Overall adherence to SOP protocols is not being done by all estates. More clarity is needed on using the standard protocols versus using alternative methods to determine whether rat baiting has been effective. Each manager tends to determine rat baiting programs based on partial use of SOP protocols for damage over 5% and experience based on visual observations and other means. Baiting carried out in 2010 based on visual census. No rat baiting in 2011 due to reduction in rat population, but no verification of effective use based on rat damage census under threshold of 5%. Procedures for rat baiting mentioned the use of 1st generation baits, but records only shows the usage of 2nd generation. Use of barn owl in Sabah is subjected to the authorities and (require special approval from the Sabah authorities to bring in barn owl (Tyto alba) as this owl is not found in Sabah.

Monitoring records to determine effectiveness of rat baiting program not accurately represented in data forms. (i.e. pest damage census)


Monitoring of pesticide usage units per tonne FFB is done. For example, in Hwa Li Estate 3, the average usage of glyphosate 0.1 g a.i /mt FFB. In case of Ally 20DF, average use is 0.01 g a.i /mt FFB .Graph showing trend of used on monthly basis and yearly trend are available for monitoring. In ME 2, since the introduction of the planting of beneficial plants, no outbreaks of leaf eating caterpillar were observed during the 2008/9 till 2010/2011 period. So no chemical was used. Expenditure for the planting of these beneficial plants was also documented. Records of areas where pesticides have been used are also recorded. For example, the last usage of rat bait was in Aug 2009 in Field PM97B, where Storm baits were used, with 1 round and 30.26 ha treated. Expenditure was recorded : RM 206.50

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Hunting is discouraged by signage that shows the prohibition of hunting of certain animals and by requesting outsiders to provide personal details for entry.

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

Findings Justification for weedicide and insecticide usage is found in the SOP file. Doc B/009-04/2011 for weedicides( 13/9/2011) and Doc B/008-05/2011 for insecticides, fungicides, rodenticides ( 17/08/2011) It provides the recommendation of a certain product for particular problem. Different dosage recommendation are documented for the different weeds ( eg Clidemia sp , wild yam etc ) , different spray operations ( circle , spot or strip ) and different equipment and spray volume ( conventional knapsack sprayer or control droplet applicator ) All the pesticides used in the Unit are registered under the Pesticide Board of Malaysia. Chemical storage and mixing/washing area are observed to be satisfactory according to the Malaysian Occupational Safety, Health Act 1994 ( Act 514) and Regulations and Orders and Pesticide Act 1974 ( Act 149 ) and Regulations requirements. SOPs exist for chemical storage and handling. Chemicals are placed in secured storage area located away from habitation and watercourses. The chemical are stored on shelves with granular-based chemicals placed on the upper rack. Storage of knapsack sprayers is also done with the necessary care to prevent unnecessary contamination. The various safety signages at store, exhaust fans, MSDS for chemicals and

fertilizers in dual language version are displayed. The agrochemicals are

arranged according to the pesticide toxicity colour code.

Room for washing and keeping of PPE are available, Wash and Bath area for

sprayers and manuring workers are available and the showerhead are in good

working condition. Emergency showers and eye wash are available next to the

chemical store in case of accidental chemical contact. Chemical spillage

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containment pits are also available. Empty chemical containers are kept in

separate store after triple rinsing and pierced at the bottom

Safety briefing before entering store and the provision of PPE was given before

entering chemical store.

All chemical are pre-mixed before sending to the field. All empty containers used for chemical premix are labelled ‘Racun’ ( Poison ) . Risk Assessment on impact on health and environment documented in O/001-05/2011,

CHRA was carried out and the reports are available. Estates conduct annual medical surveillance for workers involving in spraying activities There is evidence that at Asia Oil Palm Estate 2, workers participated in a medical check-up in May 2011 at the Fajar Poliklinik in Lahad Datu. In ME2 , for example sprayers Hartina, Dina, Mappe, Reni, Saharia, Satriani, Rupie records were checked and it was documented that on on 14/2/2011 medical surveillance was conducted at Poliklinik Fajar by Dr Gofri Neughilon, Pengarah Urusan KPWSB. Evidence of CHRA done at Melewar Estate 2 - include: Form A – list of chemicals Form B – Work unit description Form C – Workplace assessment Form D – Workplace assessment result Form E – Risk matrix Form F – Actions to be taken In AOPE2 -- Awareness level among women workers was high in regard to policy against working during pregnancy. In ME2 , records of negative pregnancy results for sprayers done on 29/9/2011 were also documented. Based on records, the herbicide Paraquat was last used in ME2 in 2009 and for HL3 in Sept 2010. As described earlier, records of pesticide used are maintained. These records showed various pesticides active ingredients and their use for over a 5-year period There was no application of aerial spray of chemical and there was no request by from buyers for testing for chemical residues in CPO. In today’s spraying operation in ME 2, Metsulfuron 20% + adjuvant was used in controlling Clidemia and wild yam according to recommended in SOP.

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HL3 for circle or strip spraying, herbicide Glyphosate 60ml + Metsulfuron 3g + Adjuvant 15 ml / 16-18 lit. CKS was used. 4.6.10 Record of usage monitored per block/field , per ha and per MT FFB and this has been recorded since 2008 4.6.10 Evidence of use patterns was seen for the estates visited. These records showed various pesticides active ingredients and their use for over a 5-year period.

Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and Implemented

Findings The company has a documented policy and SOPs for occupational health and

safety, and signs were put in place to remind workers on safety aspects. Policy,

SOPs and guidelines for Health and Safety are in place. The Health and Safety

plan is also available. The following are available in the plan:

Polisi Keselamatan dan Kesihatan Kumpulan( Safety and Health Policy ) JC Chang

Safety and Health Committee Organisation Chart

Occupational Safety and Health (OSH) plan

Guidelines on health and safety instructions to contractors. Ref M/014-02/2011 ( reviewed 18/4/2011 )

Guidelines on accident investigation procedure. Ref M/015-01/2008 (reviewed 12/01/2011). An accident investigation procedure flowchart is included.

Guidelines on fire extinguisher selection, placement, use, maintenance, inspection and records/fire drills

The OSH plan ver. 2 was documented M/013-02/2011 ( 9/2/2011). It includes the policy and frequency of meetings. Risk assessment of major work operations are identified eg spraying, mixing pesticide, manuring ,harvesting, appropriate PPE used are also assessed. Each estate management and oil mill management formed safety committee with representatives from the workers, settlers, staff and executives. Appointment letters to the safety committee members are available in the respective offices. Safety committee members conduct regular quarterly safety

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meetings. Safety meeting minutes are available For Asia Palm Oil Mill, the person responsible for OSH is the Mill Manager, Mr Chong Chung Wai. Another 2 staff identified for the Safety and Health during the shifts are En Aliumar Iskandar ( 9/10/2011) and Samsi Laipan. Risk assessment for the mill includes assessment for the WTP, workshop operator, kernel plant etc. Training on first aid has been provided for every estate and there is training records available. Records of accidents documented in the OSHA file. Records of accidents are documented in JKKP 6 and JKKP 8 forms are official forms released from DOSH which is mandatory to report when accidents occur and is reported annually . In 2010, 4 accidents were recorded and in 2011 till September 1 accident was recorded. Quarterly meeting were done, the latest was conducted 15/9/2011. For serious accidents like for En Paturusi Baco, an immediate meeting was done and a report is submitted to JKKP ( Jabatan Keselamatan dan Kesihatan Perkerjaan) ( Department of Occupational Safety and Health ). In ME2, records of accidents and diseases were reviewed to show incidences 2009 – July 2011. Accident Registers are also available to account for accidents on the estate like AOPE2 and are recorded by the estate clinic. The Estate Manager signs the register each month for review and accidents are discussed at the daily muster to alert workers of key issues (eg 2 accidents, cut by machete and fell off from tractor on 6-9-11). The local workers are covered by SOCSO while the foreign workers are covered by workmen compensation scheme Evidence of insurance cover was also assessed. APOM foreign workers are covered by LONPAC insurance Bhd ( 1/7/2011 – 30/6/2012) under the foreign workers compensation scheme. Policy No: J/11/WF00/026080/JHR-04 Covers Workmen compensation as per workmen compensation Act 1952, repatriation expenses and Personal accident ( off work hours ) for 80 workers. Similar schemes are also available in the estates eg like ME2, there are SOCSO file, Staff insurance file and the Foreign Worker compensation scheme file.

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Motor fan belt at the Water Treatment Plant are running without cover Faulty electrical switch at Humana School ( HL3) Evidences of smoking at the non-smoking area ( i.e cigarette butts

- Water Treatment Plant ( Mill) - Diesel Pumping Station ( HL3 Division 02 office)

( (Observation 01) – Criterion 4.7

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

Finding 4.8.1 Training plans for 2010 and 2011 has been drawn up for both workers and staff. Annual training programmes were available that highlighted various technical and awareness courses conducted for staff, workers and contractors throughout the year. These included topics such as spraying, manuring, buffer zone awareness, open burning, fire drills, gender issues and others. Training was provided to staff and workers according to the schedule. The trained workers and staff will be subjected to written examination and field work competency tests. If the worker performed below 60% ( or sometimes 70% ) in the written or field work then re-training will be conducted. In the recent 2011 assessment, out of 66 workers, 65 workers passed .Training notes and attendees records are available. Training records were kept for each worker in their individual file that listed all training programs attended and for use in further evaluation of training needs. Records of training kept to show subject and attendees. For example, training refresher; 5-9-2011; by trainer Pn. Malini Bolakan (HA) with list of 20 workers, plus training evaluation marks with passage marks all above 70% (so no new training). Personal training records for each worker lists all types of training with trainer, subject, dates with reference code to training record book (ie. ME2120711 for PPE on 12-7-11 for Aisah Usman (sprayer), checked and cross ref with training book) In HL3 on 12/9/2011 a driving training programme was conducted, a list of

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attendees was available, an evaluation was done on the 17/9/11. Drivers Dominikus, Bakri, Jerico all passed the ‘exam’. In AOPE2 , assessment form for each trainee for understanding procedures with test after training – Examples from Lili Tawile on 12.08.11 for ‘Latihan Pembajaan dengan selamat ‘ In ME2 Training records were found in the Training Record File ( H106) Training Material File ( H106A) Individual Worker Training Record ( D108-D113) And the SOP Monitoring File ( E102d) On the 19/9/11 the lab personnel were trained for effluent sampling. First Aid training refresher was conducted on 5-9-2011 by trainer Hospital Assistant Pn. Malini Bolakan with list of 20 workers, plus training evaluation marks with passing marks all above 70% (so no new training required) . Even contractors like Kejuruteraan Sawit Timur , PW Biotech on July 2011 and 29/5/2011 respectively were given RSPO Principles awareness briefing by JC Chang staff.

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity

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

Findings Wild Asia conducted an SEIA study on July 13, 2011 that documented the aspects of environmental impacts used by the estates to then compile a 5 Year Environmental Improvement Plans. The Environmental Improvement Plan is designed to mitigate negative impacts and to promote the positive ones.All areas require improvements are identified, correction actions are planned, Actions carried out are reviewed annually. Reviewed result is utilized to generate next improvement plan.) There are specific actions for both the mill and estates to take in regard to water

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quality, soil erosion and pollutions. The plans also consider the loss of biodiversity through loss of natural areas and means to enhance riparian reserves and other habitats. Carotino / J C Chang Group has prepared the 5 Years Environmental

Improvement Plan for Asia and Melewar Production Units -- Doc Ref. N/05-

01/2011; 8 Oct 2011 that has specific actions for Mill and Estates. It identifies

the impacts and threats on water resources and aquatic environments,

contamination of soil and water from pollution sources, air pollution and loss of

biodiversity through hunting and loss of connectivity.

Improvement plans to mitigate negative impacts and promote positive ones are

based on activities carried out in phases for 1, 3 and 5-year scenarios. The plan is

subjected to an annual review to check on implementation progress with actions

recorded in the Review Record Form upon assessment. The next review date is

scheduled for August 2012.

Waste are identified under the ‘Waste and Waste products Identification and Disposal Plan for Estates and mill. A Tabulated format that identifies the 1) Area or site for example office, dispensary, Store, workshop, estate Operation Waste, Mill processing waste, housing area and Lab ) 2) major waste identified ( plastics, metal, agrochemical container, fertilizer bags,Drums,Paint tins, PPEs, Used oils, 3) Handling method 4) Disposal plan and mode In the estate for buffalo ( used for transport ) that dies the carcass will be sprayed with disinfectanct and buried at site away from flooded , watercourse or source, away from residence. They will be buried in-situ and the buried point marked by GPS for recording buffalo ‘gravesite’ Monitoring of waste is based on the their Scheduled Waste records: Cahajasa Sdn Bhd identified by the DOE as a Scheduled Waste collector ( Licence No: 000729 ). Cahajasa is an approved Schedule Waste collector for DOE . Used oil quantity is recorded. Usage of used oil for lubrication by the estate as well for sale are recorded. Records shows the allocation of the used oil purpose. For example on 23/9/2011, 20 litres used at the Cracked Mixture elevator and 15 litres for the Fiber Shell airlock roller chain sprocket lubrication.

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On the 7/10/11 , 1,000 lits sold to Cahajasa Sdn Bhd with a remaining stock of 2,754 lits. Other waste like scrap iron sales is also recorded. Similar records for e.g empty chemical containers , Lubrication container, tyre, battery and filter records are documented

Budget for RSPO improvement plan for estate for current fiscal year based on

continuous improvement 8.1.1

Criterion 5.2 The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations.

Findings 5.2.1 The Wild Asia study has identified and assessed potential HCV habitats in

each estate and environmental management plans (Doc Ref: c/019-01/2011

date 5-8-2011) are in place to serve as the overall plan for all estates. In

addition, each estate has riparian reserves that are protected. There are no

surrounding natural forest areas bordering the estates.

The Wild Asia study in July 2011 also identified bird species of importance to

the estates with a few endemic or threatened species noted. However, there are

no real HCV habitats of major importance for ERT species. Of the 24 bird spp

identified by Wild Asia with only one is endemic to Sabah , the white-crowned

sharma and one rare , the chinese pond heron.

In Melewar 2, an area was identified as HCV4 , an area that provide basic

services of nature in critical situation eg water shed protection or erosion

control. This area was found to be steep in nature and has ultrabasic soils which

resulted in poor vegetation. The threat identified that the exposed surface on

steep slope would result in high water runoff during the rainy season that may

eventually cause erosion at the base of the slopes. ME2 Mgmt Plan for this area

was to make efforts to try to plant some leguminous cover crop around the area

so that these covers will creep over the bare surface area to reduce impact of

the rain.

Hunting is prohibited in all plantation areas and there are sufficient signboards

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to dissuade this activity. In some water catchment areas ‘No fishing ‘ signs are

also found.

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

Findings Each estate has developed a plan for waste management that includes waste and waste product identification and plans for disposal. A separate plan deals with sources of pollution

5.3.2 Operational plans are developed for wastes and pollutants under the Environmental Improvement Plans. There are separate plans for wastes and pollution sources. Pollution reduction plan is in placed.

These plans are reviewed annually to check the progress of implementation. At present only the pollution plan has undergone a review process in July 2011. This resulted in the Pollution Mitigation Plan for Estates to reduce pollution and emissions. Mitigation measures included maintenance to diesel storage areas and workshops, prevention of spillage in chemical pre-mix areas, and soil conservation protection by planting riparian buffers and leaving narrow ravines unplanted

Melewar2 -- Guidelines on waste management plan for estate include scheduled waste and non-scheduled waste. They include used lubricants and filters, hydraulic oils, plastic agrochemical containers, empty fertiliser bags, scrap iron, old tyres, old batteries, old computer parts, waste from linesite. (DocRef: f/001-02/2009; 5-7-2009)

Waste and Waste Products Identification and Disposal Plan for Estate (Doc Ref: f/007-01/2010; date 3-9-10). Identifies area, wastes, handling methods and disposal plan or mode.

Recycling programme is also actively practiced. In HL3 – Recyclables material are brought by workers from linesite. The Estate will buy these materials like iron, plastic, glass or tin at local rates.

EFB and POME are applied back to the estate fields where applicable. ( Cross ref

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C 4.2 )

The following were found to be non-compliance:

Mill : Schedule Wastes products ( Oil drums ) found in the Scrap iron heap.

Mill : Agrochemical containers reused as lubricant oil container without marking.

ME2 : Motor Oil leaking from parked farm tractors

HL3 : Empty agrochemical container found at the backyard of the line site

(Minor CAR- 03)

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

Findings APOM uses renewable source of energy mainly from the use of mesocarp fibre and kernel shells. APOM has monthly records of shell and fibre used in the oil mill . It also quantifies the amount of oil palm by- products and waste like nut, fibre, shell and kernel quarterly produced .

During the latest quantification, the allocated percentages for FFB processing are EFB ( 24.30%) , nut( 8.22%), kernel(4.96%), shell( 3.73%) and mesocarp fibre ( 11.97%)

The usage of fibre and shell for renewable energy for the period Jul 2010 – Jun 2011 : 0.98 MT / MT CPO

5.4.2 Monitoring of direct fossil fuel used is also available in the Environmental Responsibility file. During Jul 2010- Jun 2011 the energy used is 44.72kW / MT FFB

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

Findings Asia Production Unit advocates a no burning policy in their replanting programme. Use of fire for waste disposal is also prohibited and warning signs are found erected at the workers linesites. However, on one occasion there was open burning carried out on the Melewar Estate2 to accommodate a request during

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the festive season.

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

Findings 5.6.1 Refer to 5.1. Oil mill and estate management have documents to identify pollutants and waste products. For example, in ML2 the Estate Pollution Mitigation Plan for Estate (Doc f/009-02/2010; date 27-7-2011) is documented. Cross ref to the SEIA report by WildAsia. The pollution mitigation plans were reviewed 27th July 2011 with next annual review due in July 2012. Action plans are listed in the review. They include plans for improvement at the diesel storage tank and dispensing pump area, vehicle repair, generator, store, housing sites, planting areas, waste disposal . An example was cited. In the workshop the metal trays that were used to collect lubricant drip during maintenance oil change was inconsistently used during vehicle repair. A recommendation was raised to purchase lighter suitable tray and for the workshop workers to have more awareness training to avoid oil spillage No peat soils are identified in Melewar2, HL3 and AOPE2.

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

Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings A Social Impact Assessment has been carried out by the consultant Wild Asia ( Malaysia ) Sdn Bhd.

The report “ Social & Environmental Impact Assessment including Preliminary Management Review” dated 13 July 2011 was viewed during the audit.

Records of meeting with stakeholders are available. For example:

1)Date : 5 April 2011

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Participant : Ramli B. Syam

Relation : Stakeholder - Communities

3) Date : 8 April 2011

Participant : 6 smallholders from Sg. Koyah B and 1 from Kg Paris

Relation : Stakeholder - Communities

Issues discussed:

- water pollution of Sg Koyah

- safety and health issues

The SEIA report showed that the assessment has involved affected parties such as :

- Consultation with internal staff ( Stakeholder -staff)

- Consultation with Asia Production Unit (Men and Women)

- Consultation with Melewar Production Unit ( Men and Women)

- Consultation with smallholders

Based on the SEIA report, the Unit has established “ 5 Years Improvement Plan For Asia and Melewar Production Unit “ ( N/006-01/2011) dated 11/08/2011.

Key aspects that require plans are as below:

- Traffic and transportation safety - Job Opportunities

- Pay and decent living wages

-Employment conditions

-Living conditions

-Health & Safety in the workplace

-Public health & safety

-Communication with management

The timetable with responsibilities for mitigation and monitoring are documented in their 5 years action plans designed for implementation in 3 priority phase:

Phase 01 : to be discussed and implemented within one year period of the above document date.

Phase 02 : to be discussed and implemented progressively within 3 years

Phase 03: to be discussed and implemented progressively within 5 years of this document date.

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

Findings SOP on Mechanism for Communication and Consultation ( Doc Ref no. E/004-02/2010 dated 05 Oct 2010).

1. Mechanism 01 : Joint Consultative Committee ( JCC )

2. Mechanism 02 : Complaints and Grievance Procedure

3. Mechanism 03 : Suggestion Box

4. Mechanism 04 : Nominated Officer Responsible for Communication and Consultation

5. Announcement On the Channel 0f Communication and Consultation

For the mill , Mr. Mohd Faisal B. Awang Amit ( Admin Officer) has been appointed as the person responsible in receiving complaints.

- Mr. Chong Chun Wai ( Mill Manager) and Mr. Philip V.Ating ( Mill Assistant) has been appointed as the personnel alternative handling these issues.

Similarly appointment were nominated in the estates, for example in Hwa Li 3 Estate, Mr. Ian Ng Yee Ann ( Main Division) and Mr. Law Chai Poh ( 2nd Division ) was appointed Alternate Official ) as the person in charge on behalf of Mr. Lee Min Khin ( Estate Manager) .

The Unit also maintain a list of both internal and external stakeholders.

There are appointed JCC members , Complaints & grievances procedures and suggestion boxes found in each estate and mill.

List of stakeholders record are maintained.

- Stakeholders List ( Local Communities)

- Stakeholders List ( Contractors)

- Stakeholders List ( FFB Suppliers to Asia Palm Oil Mill)

- Stakeholders List ( Neighbouring Properties)

- Stakeholder List ( Sister Estates & Mills)

- Stakeholders List ( NGO)

- Stakeholders List ( Suppliers)

Record of communication with stakeholders are maintain under the SEIA report file.

From the records, Hwa Li 3 does not have affected local communities.

Mr. Wahap was person appointed as JCC Chairman in July 2011. Meetings are recorded and filed ( 21/09/2011, 07/07/2011 ) . Gender committee is also in place.

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Lack of proper communication records with external stakeholders (

evidences of meeting and consultation only based on photos and survey ) 6.2.3

(Minor CAR-04)

Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

Findings The Unit maintains a complaints and grievance procedure that is specified in its SOP documentation, ( E/001-02/2010). A complaint flow chart was available.

The Complaints and Grievances Register file records information of complaint/grievances, details of complainants, details of recipients’ action taken, and date informed complainants

In the mill, Mr. Chong C.S and Mr. Philip V. Ating has been appointed as the personnel responsible in recording the complaint received.

A sample was taken from Hwa Li 3 Estate , e.g.

Nature : Grievances

Name of Complainant: Ani Patah ( Worker Sect. B)

Details of Recipient : Name : Mr. Lee Min Chin ( Manager)

(Suggestion/Complaint Box)

Date received : 20/06/2011

Date informed to complainant : 20/06/2011

Manager meets the worker on 26/06/2011.

Manager agree to the worker’s request . Ani has been transferred to Loose Fruit Picker with immediate effect on 01 July 2011.

Based on the Stakeholder Complaints Register records , for the period from Jan 2010 to Sept 2011 , a total of 11 complaints/ request recorded and action taken has been maintained.

For Melewar estate, 6 complaints and actions taken were recorded.

Discussions and interviews during the assessment revealed no major issues with workers or the surrounding communities.

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Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Findings Procedure for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation is available (Doc. Ref: RSPO Criterion 6.4 – Ver. 1, dated 1 Oct 2008) is documented. There were no indigenous communities within or surrounding the plantations. The Unit has a SOP for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation that include identification procedure, calculating and distributing fair compensation procedure and documentation on outcome of compensation. This Unit do not have any customary rights issues with the local communities.

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Findings 6.5.1

Pay slip copies were viewed as evidence of monthly payment to employees both local and foreign workers at Asia Palm Oil Mill. All workers are paid in cheques for security purposes. The pay meets the industry minimum standard.The pay slip contains information of working days, public holiday, overtime, deduction etc.

Hwa Li Estate 3

E.g. of pay slip reviewed:

General Workers payslip : RM 1000 to RM 1500.00

Details of term and conditions of employment are described in their offer letter. For the mill the Guidelines on term & conditions of Employment for Sabah Mill’s Workers is available. For the estate, Guidelines on terms & conditions of employment for Sabah Estate’s Workers ( E/009-01/2011).

In Melewar Estate as well as the Mill, the employee contract agreement is available in Bahasa Malaysia. The employment contract contains:

- Period of Contract ( Tempoh Perjanjian)

- Position ( Jawatan Pekerja)

- Duties and Responsibilities of Employee ( Tugas dan Tanggungjawab Pekerja)

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- Basic pay and allowances ( Gaji dan Elaun Pekerja)

- Working hours and Overtime ( Masa Kerja dan Ketentuan Lebih Masa)

- Employee Public Holiday ( Hari Cuti Am Pekerja)

- Annual leave ( Cuti Tahunan Pekerja)

- Insurance ( Insuran Pekerja)

- Medication/ Hospitalisation and Health Screening Checkup (Perubatan dan Fomema)

-- Repatriation guidelines (Penghantaran Pulang Pekerja ke Negara Asal)

- Emergency leave ( Cuti Kecemasan )

- Contract Renewal and Termination (Penamatan Kontrak)

etc

E.g. of contract :

Name : Nawaria Bt Rubba

Date join : 08/10/2005

New Agreement date : 06 Aug 2011

Position: Loose Fruit Collector

Yahya Noni

Date Join : 18/11/2009

Position : Harvester

Employee Personel record of the employee has been reviewed.

The Estate has established the “Perjanjian Pekerjaan” effectively implemented on 01 Aug 2011.

Housing with water supplies is provided to all staff and worker at no cost.

- Humana school and school bus is provided for school going children. The estate has a crèche and child care for babies and young children.

- some of the Welfare programme conducted by the Unit

- 29/09/2011 - Program Imunisasi Measles - children under 15 years old. Evidence of photos.

- Kawalan penyakit Malaria - 14/12/2010 - from Hospital Kinabatangan

- Majlis Penyerahan Kelambu - 14/07/2011 from Hospital Kinabatangan

- Kawalan Penyakit Taun - from Hospital Kinabatangan - 14/05/2010.

-Pap smear campaign by Officer From Jabatan Kesihatan Bukit Garam

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The Units are also equipped with their own Clinic, Mosque/Surau , sundry shop, multi-purpose hall / dewan, playing field and playground for children.

They have an education Aid for staff and worker’s dependant for their school going children . Annual Sport Day, New Labour Quarters

Hwa Li 3

- Estate bus school to children :

- Humana school

- Estate crèche

-shops

- Multi purpose sport field

- estate playing ground

In HL3 – Recyclables are brought by workers from linesite to store once per week for storage and sale to estate and bought at local rates (iron=RM0.50/kg; glass=RM0.30/kg; plastic=RM0.20/kg; tin=RM2.50/kg

An observation of the payment records for recycling of waste products at Hwa Li 3 indicated that past payment was lacking for a few estate workers. There are no receipts for the purchase of recyclables to check, so the Recycle Book is the only way to verify full payment to estate individuals.

.

Payments not reconciled for purchase of recyclable materials by the estate ( HL3)

Panjilareas owed RM455.00 for 910 kg of besi

Adi owed RM9.50 for 4 kg besi and 3 kg tin (Observation 02)

Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

Freedom of Association Policy dated 1 Oct 2009 is documented and circular freedom of association for workers posted on the notice board. Bahasa Malaysia version is also available.

It was evidence that the company does not provide any restriction for workers to

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form workers union however evidence showed there are no unions in the estates and mill.

The Joint Consultative Council was established in 22 June 2010. Five personnel from employee are elected as representative.

Minutes of JCC meeting are maintained:

- 15/09/2011 - attended by 25 committee member.

- Chaired by Mr. Chong Chung Wai ( Manager)

Issues - Housing facilities

-Staff Welfare

- Rungutan/Grievances

- 30/06/2011 - attended by 20

15/03/2011 attended by 16 personnel

In Melewar 2 Estate , the following are the meetings:

Chairman of JCC : Tan Gee Tan

Secretary : Chong Kian Sen

13 management representative

6 Workers Leaders

6 Workers Representative

Last meetings were conducted on 05/09/2011, 28/06/2011 , 15/03/2011.

Minutes of meeting are maintained.

Hwa Li Estate 3

- JCC chaired by Mr. Wahab Hamid

- Gender Committee Meeting - chairman : Nurliza Mohamed

- meeting conducted on 21 sept 2011, 07/07/2011 and 14/03/2011.

Issues discussed:

Social and Environmental

Melewar Estate 2

Evidence of published statement for the workers the freedom of association and to form or join union are available at office main entrance in Malay language.

Gender Committee Meeting

Meeting conducted on 13 June 2011 - sexual harassment was one of the issues being discussed during the meeting.

6 personnel from the management and 2 personnel represent workers

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attended the meeting.

Criterion 6.7Children 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 APU comply both to the Malaysian Labour Ordinance and the Sabah CAP.67 Labour Ordinance concerning the employment of workers .

The company has the copy of the policy posted on notice board in the offices of the estates and mill that Carotino/J C Chang does not employ persons under 16 years old. Personal information of workers showed that all workers are above 16 years old. There is no evidence of use of children employed both in the mill or estate operations.

6.7.1 Policy on under age available.

Employment record show that the minimum age of employee is 19 years old .

e.g.In ME 2 , Azuwan Jaffar ( Malaysian). Date of birth: 01.04.1992

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 There is evidence that the company does not engage or support discrimination based on race, caste, national origin, religion or gender. So far there have been no allegations of discrimination observed. Equal Opportunity Policy (Polisi Kesamaan Peluang) dated 25th May 2011 is available. In HL 3 , it was posted at the main office entrance.

Sexual Harassment Policy dated 15 Aug 2011 together with SOP on mechanism for the prevention and eradication of sexual harassment and violence in the workplace (October 2008) are also available

The Unit has records on the number of workers, male & female ratio, national origin etc. For example, Hwa Li 3 there are:

Indonesian : 570

Filipinos : 39

Malaysians : 5

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.

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Findings

For example at the APOM, the Policy on Sexual harassment is made publicly available, dated 15 Aug 2011. signed by Mill Director ( Tay Chwee Leong)

Mechanism for the Prevention and Eradication of Sexual Harassment and Violence in the Workplace (Doc. Ref: RSPO Criterion 6.9 – Ver.1, dated 1 Oct 2008) and had been placed in the notice board.

In our interview with female workers in ME 2 and AOPE2 show that there were no reported cases of sexual harassment during their work at the Unit.

The Gender Committee Meeting conducted on 13 June 2011 - sexual harassment was one of the issues being discussed during the meeting was viewed. Six personnel from the management and 2 personnel represent workers attended the meeting.

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

Findings 6.10.1

The company has established Sales and Purchase Agreement as the mechanism on FFB pricing.

The Sales and Purchase Agreement contains information :

1.0 Quantity

2.0 Delivery

3.0 Quality

4.0 Weights

5.0 FFB Price Calculation

6.0 Payment

7.0 Insurance

8.0 Legislations/Rules/Guidelines/Schemes

9.0 Force Majeure

10.0 Warranty

11.0 Notice

12.0 Duration

Current and past prices paid for FFB has been made for available at the mill.

Copies of Sales and Purchase Agreement signed by both the supplier and the buyer is made available for verification during audit. An example is a.signed

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agreement between one of the ( smallholders) Juliah Mohd Taju as the SELLER and the APOM the BUYER dated 23 Aug 2011. Evidence of payment made to the seller is also available.

The agreement is explained by representative from APU . Once they accept the agreement, and when they find the APU contract to be fair , the supplier will sign the documents as a proof of acknowledgment. There are other mills around the area and suppliers are free to decide where to send their crop.

Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate.

Findings 6.11.1 Based on SEIA report, the plans has been developed with local communities.

Evidence of contribution to local development are available.

- Aug 2010 - Donation to Persatuan Bekas Kakitangan Imigresen”

- Wakaf Project at Sekolah Kebangsaan Paris 3, Kinabatangan in July 2009

- Humana Learning Charges - Monthly charges

- School Bus Subsidies - Monthly charges

- Financial Aids - Monthly charges

-

In Hwa Li 3 Estate, examples of communities contributions were

1) Wakaf Project at Sekolah Kebangsaan Paris 3 Kinabatangan ( Ref no. GE/IE/04/1209) date 8th Dec 2009

2) Donation to Diabetic Diagnose Worker - 16 Aug 2011

3) Education Aid

4) Condolence Money

5) Humana School

Contributions to local development need to be based on the results of consultation with local communities.

(Observation 03)

Principle 7: Responsible development of new plantings

Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

Findings No new plantings in the Unit

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

Findings (Refer to criterion 7.1)

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


Criterion 7.4 Extensive planting (to be determined by SEIA) on steep terrain and/or marginal or fragile soils is avoided.


Criterion 7.5 No new plantings are established on local people’s land without free prior informed consent, dealt through a documented system that enables indigenous people, local communities and other stakeholders to express their views through their own representative institutions.


Criterion 7.6 Local people are compensated for any land acquisitions and relinquishment of rights, subject to their free, prior informed consent and negotiated agreement.


Criterion 7.7 Use of fire in the preparation of new planting is avoided other than specific cases as identified in the ASEAN guidance or other regional best practices.


Principle 8: Commitment to continuous improvement in key areas of activity

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

Findings Asia Production Unit has demonstrated commitment towards continuous improvement. As part of the Carotino / J C Chang Group Group, Asia Production Unit monitors the performance of its mill as well as the estates through their crop and mill records as well as their regular visits by their mill and plantation advisers.

In the plantations, the estates has plans to intensify their IPM practices by looking in to the introduction use of barn owls ( not found in Sabah ) for rat control as well as the continual cultivation of beneficial plants to counter leaf- eating insects.

In the weeding programme, discrete and selective spraying practices of palm circles and interrows is conducted. Fields will be visually assessed before spray. The estate also practices the maintenance of soft grasses on the interrows. Quality herbicides and adjuvants will be used. In Melewar2, the usage of paraquat was eliminated in May 2009. For the FY2010/11 to FY 2011/12, based on reducing use of circle spraying from 3 rounds to 2.5 rounds and selective

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spraying from 2 to 1.5 rounds, weeding cost is projected to be reduced from RM 38,100 to RM 33,464 which is a savings of about 11%.

In HL3, the reduced strip spraying rounds from 3.5 to 3.0 rounds and for selective spraying from 2.5 to 2 rounds is projected to reduce the weedicide programme budget by 29%.

On environmental impacts Asia Production Unit has followed recommendations by the consultant Wild Asia concerning EIA and HCV mitigation measures and have plans for 1) Establishment of Riparian Zones 2) Biodiversity conservation 3) Water conservation and Erosion control 4) Enhancing fertility through introduction of earthworms.

In Melewar Estate 2, some of the continous improvement plans documented are tanks for rain water harvest for workers, road maintenance and run-off side drains, compost application to reduce inorganic fertilisers, re-marking riparian reserves, planting more jungle trees on hill slopes and reserves/conservation areas.

In HL3, the commitment to reduce inorganic fertiliser with compost application will reduce fertiliser application cost budget by about 8% . In addition they will continue their EFB mulching application as well as the planting of beneficial plants on the open areas along the roads.

The Mill is in the process of streamlining their wastewater treatment by the construction of the Effuent treatment plant ( ETP) , desilting/desludging, as well as the construction of the Compost plant that uses POME and EFB for composting. Zero discharge shall be achieved by land application with the permitted BOD of 20mg/l

The document on Waste Management plans Doc. Ref. No. RSPO Criterion 5.3 Ver 1 dated 5/2/2009 contains procedures, methods, plans and guidelines how to continuously improve the handling, recycling and minimising of waste generated both in the mill and estates. This will be reviewed periodically at yearly interval for improvement.

Examples are found in Melewar Estate 2 and HL3 where there are regular recycle campaigns for theemployees to encourage segregation of recyclable waste.

Other identified wastes generated like waste oil, used lubricants and used filters are gathered and recorded by the estates and mill and disposed off by approved licensed collector. During the audit, it was reported that APU is still

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searching for collector for chemical containers, fertiliser inner liner bags, scrap iron, batteries and computer equipment.

At the linesite , chemical storage and workshop areas, some of the pollution control measures that are in progress are upkeep of linesite septic tank and latrine, chemical trap maintenance, replace old tractors and lorries, construct vehicle washing area with proper sand and oil trap.

On social continuous improvement , the Unit is following recommendation by WildAsia and areas of improvements are identified and also documented . Examples are 1) Guidelines on workers Employment Terms and conditions 2) Mechanism for communication and Consultation 3) Assessment of Occupational Safety Risk and Hazards 4) Wages and Working conditions

Some of the linesite improvement plans that are in progress are repainting houses; renovating the wooden crèche, provision of water tank to catch rainwater and upgrading of the sewage system.

In HL3 some of the social improvement are repainting linesite and bungalow; provided school education aid for staff and workers; OSH training and PPE; transport bus allowance for kids; public donations

At six monthly interval , the Plantation Adviser / Controller during their periodic visit will assessed and include in their report the implementation of the Unit’s continuous improvement plan.

The expenditure is captured in their budget under the expenditure codes GC 3131 for environmental conservation and biodiversity and 3132 for Social & Communities contribution. Example , for HL3 the expenditure for environment in 2010 was RM 125,515 and in 2011, RM 55,195 was spent. The expenditure for social in 2010 was RM 22,019 and in 2011 RM 34,930 was allocated.

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7. CHAIN OF CUSTODY

As described in the earlier sections of this report, Fresh Fruit Bunches (FFB) produced by the plantation are transported to and processed at Asia Palm Oil Mill which is located within the Asia Oil Palm Estate 2. The mill with a capacity of 40 metric tonne FFB per hour receives and processes raw materials from Asia Production Unit’s estates, other Carotino/JC Chang estates (90%) and outsider crop from neighbouring plantation and smallholders (10%) .

From the three plantations – AOPE2, HL 3 and ME 2 - the FFB are delivered where details on the delivery documents allow traceability of the FFB to a group of harvesting blocks in each estate or sector. Records of FFB deliveries and input into the processing line are well maintained by the company. Similarly, records of CPO and palm kernel output are also maintained on a daily basis.

Records for the outside crop are similarly kept .

As far as chain of custody is concern, the mill (and the plantation) currently does have a document standard operation procedures (SOP) that identify the critical control points (CCPs) and described the method used in identifying, segregating and recording at each point identified. The document need to identify the person in charge (or the management representative) responsible for the implementation and maintenance of the whole system and ensuring its integrity.

The mill now has CPO storage tanks to store CPO produced. The company also maintains clear records of incoming and outgoing through stock control. All CPO are dispatched to buyers via truck / tanker with proper sales and delivery documents in place. Each truck / tanker was properly sealed prior to leaving the mill. The seal number is recorded in the delivery document together with the volume and the buyer’s name.

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8. TABLE 9 : RECORD OF CORRECTIVE ACTION REQUESTS (CARs)

Organisation: Asia Production Unit Project Nr: MY02517

Assessment: Main Assessment of RSPO P & C Date: 10th – 14th Oct 2011

Lead Assessor: James S H Ong Auditor: Abdullah Din,

Rick Gregory

CAR #

Indicator

CAR Detail

01

4.2.1 Date Recorded>

10 Oct 2011

Due Date>

Next Surv Date Closed>

Non-Conformance:

Records of requests and responses are not adequately maintained

Objective Evidence:

4.2.1 Non -compliance Melewar Estate 2 - workers were applying fertiliser inconsistent quantity due to lack of supervision.


Close-out evidence:

CAR #

Indicator

CAR Detail

02


10 Oct 2011

Due Date> Next surv Date

Closed>

Non-Conformance:

Poor monitoring of IPM implementation for rat.

Objective Evidence:

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CAR #

Indicator

CAR Detail

Monitoring records to determine effectiveness of rat baiting program not accurately represented in data forms. (i.e. pest damage census)


Close-out evidence:

03 5.3.2 Date Recorded>

12 Oct 2011

Due Date> Next

surveillance Date Closed>

Non-Conformance:

Waste is not reduced, recycled, re-used and disposed off in an environmentally and socially responsible manner

Objective Evidence:

Mill : Scheduled Waste products ( Oil drums ) found in the Scrap iron heap.

Mill : Agrochemical containers reused as lubricant oil container without marking.

ME2 : Motor Oil leaking from parked farm tractors

HL3 : Empty agrochemical container found at the backyard of the line site

(Minor CAR- 03)

Close-out evidence:

04 6.2.3 Date Recorded>

13 Oct 2011

Due Date> Next

surveillance Date Closed>

Non-Conformance:

Some records of communication with stakeholders especially with the photo evidence did not include documented evidence.

Objective Evidence:

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CAR #

Indicator

CAR Detail

Lack of proper communication records with external stakeholders ( evidences of meeting and consultation only based on photos and survey ) 6.2.3

(Minor CAR-04)

Close-out evidence:

Obs 1


10 Oct 2011

Due Date>

Next surveillance Date

Closed>

Non-Conformance:

Safe working practices were lacking

Objective Evidence:

Motor fan belt at the Water Treatment Plant are running without cover Faulty electrical switch at Humana School ( HL3) Evidences of smoking at the non-smoking area ( i.e cigarette butts)

- Water Treatment Plant ( Mill) - Diesel Pumping Station ( HL3 Division 02 office)

( (Observation 01) – Criterion 4.7

Close-out evidence:

Obs 2


12 Oct 2011

Due Date>


Closed>

Non-Conformance:

Discrepancies in documentation of recyclable material payment to workers

Objective Evidence:

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Payments not reconciled for purchase of recyclable materials by the estate ( HL3)

Panjilareas owed RM455.00 for 910 kg of ‘besi ( scrap iron )’

Adi owed RM9.50 for 4 kg ‘besi (scrap iron )’ and 3 kg tin

(Observation 02)

Close-out evidence:

Obs 3


12 Oct 2011

Due Date>


Closed>

Non-Conformance:

Demonstrable contributions to local development were not based on the results of consultation with local communities

Objective Evidence:

Contributions to local development need to be based on the results of consultation with local communities.

(Observation 03)

Close-out evidence:

9. SUMMARY : ISSUANCE OF NON-COMPLIANCE

Four Minor CARs and three observations were issued as a result of the audit. The non-

conformances are as tabulated as above section of this report.

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10. ASSESSMENT DECISION

With no outstanding Major CAR, the Asia Production Unit of Carotino / J C Chang Group management of Asia Palm Oil Mill and its supply base estates Lahd Datu, Sabah, Malaysia, is now recommended for the certification against the RSPO P&C MYNI 2010. The issues highlighted as Minor CARs and observations must be adequately addressed and the adequacy of the actions taken will be verified during the first surveillance visit to be conducted within 12 months from the date of certificate issued..

11. CERTIFIED ORGANISATIONS ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

It is acknowledged that the assessments cited in this main assessment report have been carried

out as stipulated and we confirm the acceptance of the assessment report contents including

assessment findings.

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Sign on behalf of:

Asia Production Unit - Carotino / J C Chang

Group

………………………………

Mr Seow Chee Chiang, Estate Dept Cum

Sustainability Manager

SGS-RSPOPM-MY13/01090 Nr · SGS Group is the worlds largest auditing, inspection, testing and...

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