Report number: 816254RSPOCUCRPT -2010-01-AS

RSPO Assessment Report PUBLIC SUMMARY

Kuala Lumpur Kepong Berhad Kekayaan Palm Oil Mill, Johor, Malaysia. This public summary has been prepared in accordance with RSPO requirements and the information included is the result of a full RSPO assessment of the Mills and supply base as included in the scope of the certificate.

Report prepared by: A. Senniah (Lead assessor). Certification decision made by: Gerben Stegeman.

Control Union (Indonesia) Jl Kramat 3A, Cilandak Timur Jakarta Selatan 12560 Phone: 062-21-7884 2016 [email protected]

Control Union (Malaysia) S/B Persiaran Raja Muda Musa, Off Jalan Sg Berith, Teluk Gadong, 41100, Klang, Selangor. Malaysia. Phone 03-3377 1600 / 1700 [email protected]

Control Union Certifications. (Head office) Meeuwenlaan 4-6, P.O. Box 161. 8000 AD Zwolle. The Netherlands. [email protected]

Phone: 0031 38436 0100 Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, Eurepgap, HACCP, BRC, GMP and GTP. CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

www.controlunion.com

Public summary. RSPO. KLK Berhad.

Page 1 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS 1. Scope of the Certification Assessment................................................ 3 1.1 1.2 1.3

1.4

1.5 1.6

1.7

National Interpretation used................................................................... 3 Assessment type. (estate and mill)............................................. .......... 3 Location map......................................................................................... 3 1.3.1 Location address of the mill and approximate tonnages certified. (CPO and PK)..................... 4 Description of supply base...................................................................... 4 1.4.1 General description................................................................. 4 1.4.2 Location of the supply base including..................................... 4  Control Union code for the certificate.  Location address.  GPS reference. 1.4.3 Statistics of supply base including........................................... 4  Control Union code for the certificate.  Area of oil palm.  Mature area.  Estimated annual FFB production in tonnes.  Planting years.  Replanting Cycle. Organisational information/contact person.............................................. 5 Audit against the rules for partial certification......................................... 5 1.6.1 Introduction............................................................................. 5 1.6.2 Assessment Agenda.............................................................. 5 1.6.3 Audit findings in relation to the rules for partial certification.. 5 Date certificate issued and scope of certificate....................................... 6

2. Assessment Process................................................................................... 7 2.1 2.2

2.3

2.4

2.5

3

Assessment Findings................................................................................. 12 3.1 3.2 3.3 3.4

4

Certification body..................................................................................... 7 Qualifications of the assessment team.................................................... 7 2.2.1 Qualifications of the lead assessor.......................................... 7 2.2.2 Qualifications of the assessment team.................................... 7 Assessment methodology........................................................................ 8 2.3.1 General overview..................................................................... 8 2.3.2 Assessment agenda including................................................. 10  Assessment dates.  Sites visited.  Main activities.  Total number of person days spent on site. Stakeholder consultation......................................................................... 11 2.4.1 Summary of how stakeholder consultation was organised..... 11 2.4.2 List of National and International stakeholders consulted....... 11 Date of next surveillance visit.................................................................. 11

Lead assessor’s summary and recommendation for certification........... 12 Summary of the findings by criteria......................................................... 12 Non conformity registers......................................................................... 22 Issues raised during stakeholder consultation and company responses.. 25

Certified organisation's acknowledgement of Internal Responsibility ............................................................................................ 26 4.1

Formal sign-off of the assessment findings............................................. 26

List of Abbreviation.................................................................................................. 27 Appendix-A ……………………………………………………………………………… 28

Public summary. RSPO. KLK Berhad.

Page 2 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

1.

SCOPE OF THE CERTIFICATION ASSESSMENT. 1.1 National Interpretation used.

The management of the Palm Oil Mill(s) and associated suppliers of FFB were assessed for compliance against the International RSPO criteria as interpreted and endorsed for Malaysia.

1.2 Assessment type. (Estates and Mill). Certification unit, Kekayaan Palm Oil Mill located at HS (D) 519, Block 5, Mukim Nyior, 86609 Paloh, Kluang, Johor and the estates are owned by Kuala Lumpur Kepong Berhad, located at Johor, Malaysia.

1.3 Location map. (Johor, Malaysia) Please refer to Appendix “A”, for the individual estate maps of Landak, Kekayaan, Paloh, Voules, Fraser, Ban Heng, New Pagoh, Sg. Bekok. See Sun and Sg. Penggeli, Johor, Malaysia.

Public summary. RSPO. KLK Berhad.

Page 3 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

1.3.1 Location address of the mill and approximate tonnages certified. (These figures exclude any output product from non-certified suppliers). Name of Mill Location address GPS reference Kekayaan Palm Oil Mill

HS(D) 519, Block 5, Mukim Nyior, 86609 Paloh, Kluang, Johor.

Annual output (mt) CPO Palm Kernel 85,217 19,544

E 103º16’ N 2º 12’

1.4 Description of supply base. 1.4.1 General description. The certification unit and the supply base are the 10 estates that make up the KLK South region, located in the state of Johor, Peninsular Malaysia. There are no plans to expand the land holding and therefore Principle 7 is not applicable to this Assessment. All the 10 estates are owned by Kuala Lumpur Kepong Berhad. Kuala Lumpur Kepong Berhad owns and operates 20 palm oil mills for processing the crop from its 76 oil palm estates located in both Malaysia and Indonesia, as well as the FFB that it purchases from small holders. Kuala Lumpur Kepong Berhad is a pioneering member of RSPO and has been actively involved in the Roundtable process from its inception. Kuala Lumpur Kepong Berhad is implementing a programme to achieve RSPO Certified Palm Oil for all its production.

1.4.2 Location of the supply base. CU Code PO1 PO2 PO3 PO4

Estate name Landak Kekayaan Paloh Voules

PO5 PO6

Fraser Ban Heng

PO7

New Pogoh

PO8 P09 P10

Sg. Bekok See Sun Sg. Penggeli

Address. K/B 108, KM11, Jalan Paloh, 86609 Paloh, Johor. K/B 107, KM11, Jalan Paloh, 86609 Paloh, Johor. K/B 106, KM11, Jalan Paloh, 86609 Paloh, Johor. K/B 506, KM1, Tenang Station, Jalan Segamat, 85009 Segamat, Johor. K/B 102, KM 7, Jalan Inas, 81000 Kulai, Johor. K/B 102, Batu 24, KM38, Jalan Pagoh, Labis, 84600 Pagoh, Johor. K/B 505, KM1, Tenang Station, Jalan Segamat, 85009 Segamat, Johor. KM2.5, Jalan Haji Eskanin, 86500 Bekok, Johor. K/B 108, KM4 Rengam, 86300 Rengam, Johor. K/B 108, KM32 Kulai, 81440 Kulai, Johor.

1.4.3 Statistics of the supply base. CU Name Area (ha) Code Oil Palm Mature Immature

PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8 P09 P10 Total

Landak Kekayaan Paloh Voules Fraser Ban Heng New Pogoh Sg. Bekok See Sun Sg. Penggeli

4304 4290 1943 1266 2802 621 1194 631 577 966 18,610

Public summary. RSPO. KLK Berhad.

3702 3841 1752 1134 2489 577 1142 542 577 966 16,722

602 449 191 132 313 44 52 89 1,872

GPS reference Longitude Latitude 0 0 E 103 17’ N 2 16’ 0 0 ' E 103 28' N 2 18 0 0 E103 11.98’ N2 12.09’ 0 0 E 102 49' N 2 30' 0

N1 42’ 0 N 2 13’

0

N 2 30’

0

0

N 2 18’ 0 N 1 55' 0 N 1 54'

E 102 49’

0

E 103 07’ 0 E 103 38' 0 E 103 58'

Estimated Annual FFB (mt)/year (2011) 99652 107614 49095 24457 64165 15308 27022 15183 15068 27479 445,043

0

E103 36’ 0 E 102 49’

Planting years

Replanting Cycle (years)

1983-2010 1998-2009 1981-2010 1976-2010 1985-2010 1990-2010 1995-2010 1993-2008 1985-2007 1989-1990

25 25 25 25 25 25 25 25 25 25

Page 4 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

Percentage of planted areas of different ages. CU Code PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8 P09 P10

Name Landak Kekayaan Paloh Voules Fraser Ban Heng New Pogoh Sg. Bekok See Sun Sg. Penggeli

Before 1990 0.35 14.05 0.32 41.54 6.00 46.97 100.00

1991 – 1995 0.12 23.78 20.45 13.00 6.40 29.32 -

1996-2000 38.47 34.83 32.27 43.05 11.96 20.00 53.00 31.22 29.63 -

2001 – 2005 47.07 54.70 20.07 45.02 14.88 32.00 32.00 25.36 11.61 -

2006 – 2010 13.99 10.47 9.83 11.61 11.17 29.00 8.60 14.10 11.79 -

1.5 Organisational information and contact person: Company name: Business address: Group name if applicable: Office telephone: Contact person: Mobile telephone: Fax: e-mail: Web site: RSPO membership number:

KL – Kepong Berhad 1, Jalan S. P. Seenivasagam, 30000 Ipoh, Perak. Not applicable. +605 2417844 Mr Sin Chuan Eng. +60195120900 +6052535018 [email protected] www.klk.com.my 1-0014-04-000-00 [ Old membership number: 050-04(O)]

1.6 Audit against the rules for Partial Certification 1.6.1 Introduction. Control Union Certifications awarded an RSPO certificate to the KLK (Sabah) Tawau Region in Sabah on 4th March 2009 and KLK (Sabah) Lahad Datu Region on 6th July 2010. The total area of oil palm audited and certified amounts to around 40,000ha of the KLK oil palm plantations. Site visits have been made to plantations in Kalimantan and Belitung Island and compliance with the rules for partial certification were noted. Again during this main assessment visits to uncertified holdings in Central Region, Peninsular Malaysia were carried out. The audit team are satisfied that the company conforms with the RSPO requirements for partial certification as laid out in the Final RSPO Certification Systems document, June 2007, section 4.2.4 Progress will be verified and reported in subsequent surveillance visits.

1.6.2 Assessment agenda. (Partial certification audit). Date 28 April 2011 29 April 2011

Location Pahang Bahau

Agenda Verifying Legal Documents, Surrounding stakeholder interview, Meeting labour union committee members and workers, Discussion with management on time bound plan and partial certification rules.

1.6.3 Audit team findings in relation to the rules for partial certification. 1a. The organisation is a member of RSPO: KLK has confirmed membership of the RSPO (as per in section 1.5 above). 1b. A time-bound plan for achieving certification of all relevant entities: The time frame laid out below is considered to be both challenging and realistic. General Area Summary Name of plantation. Location Total (HA) Planted (HA) KLK Bhd and POM’s. Malaysian KLK – Indonesia operations Indonesia and POM’s. 1c. i. There are no significant land conflicts.

64,517 93,152

45,643 43,932

Compliance found. Compliance found.

Time bound timetable for certification December 2011. December 2013.

Compliance found. Evidence: On site interviews with management and local stakeholders satisfied the audit team that there are no significant land conflicts. Land compensation in operating units in Indonesia is being resolved through agreed compensation procedures and FPIC process.

Public summary. RSPO. KLK Berhad.

Page 5 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS Compliance found. Evidence: Documented evidence shows that there is no replacement of primary forest or area containing HCVs since November 2005. Compliance 1c. iii. No labour disputes that are not being resolved through an agreed process. found. Based on the sampling check on the estates own by KLK, it is noted that no issues that are not being resolved through an agreed process. Confirmed by interview with labour union representatives, labour department, workers representatives, workers, staff and managers. Compliance 1c. iv. No evidence of non-compliance with law in any of the non-certified holdings. found. Land records were inspected and a sample of documents noted to demonstrate compliance with the requirement of law. NGO report on KLK's operating unit in Indonesia was checked and verified as well.

1c. ii. No replacement of primary forest or any area containing HCVs since November 2005. (Or 2007 according to National Interpretations).

1.7 Date certificate issued and scope of certificate Name of Client: Client number: Certificate number: Certification Decision Date: Issued by Address Telephone Fax Email Website Scope Name of Mill: Scope (Summary of suppliers of FFB):

Projected mass balance CPO and PK: Certificate registration code: Type of certification: Certifier (contact person) Signature

Public summary. RSPO. KLK Berhad.

KL - Kepong Berhad. CU 816254 CU Control Union Group scheme: Yes Certifications Meeuwenlaan 4-6 8025 BS Zwolle 0031 (0) 38 426 0100 0031 (0) 38 423 7040 [email protected] www.controlunion.com/certification

Kekayaan Palm Oil Mill  PO1 Landak  PO2 Kekayaan  PO3 Paloh  PO4 Voules  PO5 Fraser  PO6 Ban Hing  PO7 New Pagoh  PO8 Sg. Bekok  PO9 See Sun  P10 Sg. Penggeli CPO = 85,217 tonnes and PK = 19,544 tonnes CU- D01 Single site: Yes Group scheme: Yes Gerben Stegeman.

Page 6 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

2.

ASSESSMENT PROCESS.

2.1 Certification Body. Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, Eurepgap, HACCP, BRC, GMP and GTP. CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

2.2 Qualifications of the assessment team. 2.2.1 Qualifications of the lead assessor: A. Senniah REQUIREMENT A minimum of post high school (post secondary school) training in either agriculture/forestry, environmental science or social sciences; At least 5 years professional experience in area of work relevant to the assessment (e.g., palm oil management; agriculture/forestry; ecology; social science); Training in the practical application of the RSPO criteria, and RSPO certification systems; Successfully completion of an ISO 9000:19011 lead assessors course; A supervised period of training in practical assessmenting against the RSPO criteria or similar sustainability standards, with a minimum of 15 days assessment experience and at least 3 assessments at different organisations.

QUALIFICATIONS Post graduate qualification in human resource management with more than 10 years working experience in plantation.

Compliance Yes

Yes

More than 10 years working experience in plantation. Involved in RSPO auditing since April 2009. Fully trained in similar agriculture certification programmes such as RSPO SCCS, Global Gap, ISCC and GMP. Involved in RSPO assessment since April 2009. Member of CUC RSPO audit team. Involved in audits conducted in Malaysia and Indonesia. Completed ISO 9001:2008 lead auditor course in September 2009. Member of CUC RSPO audit team since April 2009. Involved in audits conducted in Malaysia and Indonesia since April 2009 in 8 different companies in Malaysia and Indonesia.

Yes

Yes Yes

2.2.2 Qualifications of the assessment team member. RSPO Requirement Fluent in main local languages and English.

Assessor A. Senniah Muhammad Haris Sahathevan

Field working experience in the palm oil sector, or a demonstrable equivalent.

A. Senniah

Muhammad Haris Sahathevan

Good agricultural practices (GAP), integrated pest management (IPM), pesticide and fertilizer use.

A. Senniah

Muhammad Haris Sahathevan

Health and Safety

A. Senniah

Public summary. RSPO. KLK Berhad.

Qualification Able to understand local language and English. Able to understand local language and English. Able to understand local language and English. Working experience in palm oil plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009. Working experience in palm oil plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009. Working experience in palm oil

Compliance Yes

Page 7 of 35

Yes Yes Yes

Yes Yes

Yes

Yes Yes

Yes

Report number: 816254RSPOCUCRPT -2010-01-AS assessment on the farm and in processing facilities. (For example OHSAS 18001 or occupational. Health and safety assurance system).

Muhammad Haris Sahathevan

Workers welfare issues and social assessment experience. (For example with SA8000 or related social or ethical accountability codes).

A. Senniah

Environmental and ecological assessment. (For example experience with organic agriculture, ISO 14001 or environmental management systems).

A. Senniah

Economic issues.

A. Senniah

Muhammad Haris Sahathevan

Muhammad Haris Sahathevan

Sahathevan

plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009. Working experience in palm oil plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009. Working experience in palm oil plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009. Working experience in palm oil plantation. Involved in RSPO audits since April 2009. Working experience in palm oil plantation. Involve in RSPO auditing since May 2009.

Yes Yes

Yes

Yes Yes

Yes

Yes Yes

Yes

Yes

2.3 Assessment methodology. 2.3.1 General overview. The assessment was carried out in conformity with the procedures as laid down in the CUC RSPO Procedure Manual and the program manual for the assessor and certifier. During the assessment the qualified CUC assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Beside the audit at this certification unit, partial certification audit conducted in end of April to check compliance with Final RSPO Certification Systems document, June 2007, section 4.2.4 as per in section 1.6 above. Palm Oil Mills, in general, have more than one estate as a supply base and it is normal that one estate (or plantation) is considered to be the “main estate”. This is normally the location for the opening and closing meetings and for the open stakeholder meeting held during a main assessment. Following the opening meeting the audit team conducted a field inspection of this main estate to include:  Chemical stores. Storage. MSDS leaflets. Herbicide mixing areas. PPE. Ventilation. Security.  Field inspections. Herbicide application programmes. Harvesting sites and efficiency. Fertilising operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.  Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness.  Re-planting sites. Zero burn.  HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation.  Riparian zones. Width. Current and future management. Non maintenance regimes.  Water management. Water courses. Water monitoring.  Road maintenance. Run off.  Social amenities. Social Impact Assessments.  Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures.  Work shops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management.  Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal.  Documentation review.

Palm Oil mill audits include:  Mill and workshop inspections. Documentation. Worker interviews.

Public summary. RSPO. KLK Berhad.

Page 8 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS  Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage.  OSH. Training. Management structure. First aiders.  Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of RSPO P&C’s applicable.  Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Document review for the main estate and at least one POM: Principles 1 to 8. We considered each and every applicable RSPO principle and criteria for the main estate and at least one POM. The client was asked to ensure that all documents, procedures, maps and records referred to in the standard are available. The list below is a summary of the records and management plans, but we will also needed to see company policies, budgets, and management plans etc. Verification. Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarised above. Sampling. Having considered principles 1 to 8 in detail for one estate and mill, it is not then necesssary to consider them all again for each estate as many policies and SOP’s will be applicable to all estates and mills. The audit team sought compliance by filed audits and by reviewing the following site specific information and records.  Records of requests and responses.  2.1 Evidence of compliance with relevant legal indicators.  2.2 The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights  2.3 Records of negotiated agreements.  3.2 Annual replanting programmes.  4.1 Records of monitoring.  4.2 Fertilizer records. POME and EFB application records.  4.3 Soil maps and general description of the soils.  4.4 Protection of watercourses.  4.4 Water management plans.  4.4 Monitoring of effluent BOD.  4.4 Water usage in mill per tonne of FFB processed.  4.5 IPM plans.  4.5 Pesticide toxicity records.  4.6 Pesticide and herbicide records.  4.6 Disposal of agrochemical waste materials.  4.7 OSH plans. Gender committee etc.  4.7 Accident records.  4.7 OSH training records.  4.8 Training records.  5.1 Environmental Impact assessments and plans.  5.2 HCV / RTE species assessments and management plans.  5.3 Documented sources of pollution and management plans.  5.4 Energy use.  5.6 Plans to mitigate all polluting activities.  6.1 Environmental and social impact assessments and plans.  6.2 Communications and stakeholder lists.  6.3 Dispute resolution procedures.  6.4 Compensation payments for loss of customary rights.  6.5 Pay and conditions.  6.5 Housing and other social facilities.  6.6 Minutes of meetings.  6.7 Implementation of child policy.  6.8 Evidence of equal opportunities.  6.9 Proof of implementation of policy to protect woman.  6.10 FFB pricing mechanism and fair deals for suppliers.  6.11 Records of contributions to local communities.  7.1 Social and environmental impact assessments and management plans.  7.2 Soil suitability for new planting.  7.3. No replacement of HCV or primary forest.  7.4 Identification of fragile soils.  7.5 Confirmation of Free prior and informed consent.  7.6 Identification and compensation for the loss of customary rights.  7.7 Clear evidence of no burning for new planting. Public summary. RSPO. KLK Berhad.

Page 9 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS  8.0 Commitment to continual improvement in key areas.

2.3.2 Assessment agenda. Date

Estate and POM

29th Nov 2010 (Monday)

Paloh Estate

Paloh Estate Kekayaan Estate Sg. Bekok Estate

30th Nov 2010 (Tuesday)

Landak Estate Club House Landak Estate Kekayaan POM

1st Dec 2010 (Wednesday) 2nd Dec 2010 (Thursday) 3rd Dec 2010 (Friday)

Voules Estate New Pagoh Estate Ban Heng Estate Fraser Estate Sg. Penggeli Estate See Sun Estate KPOM

Main activities 09.30 Opening meeting. Ladang Paloh Chaired by the audit team leader.  Introduction by team leader.  Presentation by respective managers.  Presentation of Oil Mills source of FFB by respective manager. Field operations and Document Audit.  Worker interviews.  OSH  Chemical stores.  Workshops.  Housing  Medical.  Schools.  Local communities.  Environmental.  Field inspection  POME, EFB  Document audit 09.30 Open stakeholder meeting at Ladang Landak (Any issues raised during the open stakeholder meeting is discussed separately with the management) Field operations and Document audit (As above for estate). Kekayaan Palm Oil Mill Audit. Mill inspection and Document audit.  Workshops.  Stores.  POME and EFB management  Housing  Workers interview  Environmental issues  Water treatment  Store  OSH  Document audit Field operations and Document audit (As above for estate). Field operations and Document audit (As above for estate). Document audit - Continue. (As above for mill). Preparation for closing meeting. Additional field visits and meetings with managers as necessary. Closing meeting Chaired by the audit team leader.  Welcome and introduction by the team leader.  Presentation of findings by the audit team.  Questions and answers.  Final summary by team leader. End of assessment.

Number of assessors participating: 3 Number of days spent for the assessment on site: 5 Total number of person days used for the assessment on site: 15

Public summary. RSPO. KLK Berhad.

Page 10 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

2.4

Stakeholder consultation

2.4.1 Summary of how the stakeholder consultation was organised. As per RSPO requirements, stakeholder announcement was posted on the RSPO website for 30 days prior to the assessment to give stakeholders opportunity to give feedback and comments. In addition a stakeholders meeting was conducted by the auditors on 30th November 2010 in the absence of the management representative. Subsequent to the stakeholders meeting, the surrounding communities were visited and interviewed so as to capture more feedback from the stakeholders. Positive comments were receive during the stakeholder meeting and subsequent interviews with the surrounding communities. Number of stakeholders included in the companies application form to CUC and who were 75 included in the stakeholder consultation process: Number of additional National and International stakeholders identified by the company and by 10 CUC and who were also included in the stakeholder consultation process: Number of responses received: 12 Notification of the planned assessment was also posted on the CUC and RSPO web sites in accordance with the RSPO requirements. All stakeholders were sent a letter which included full details of the company to be assessed, the names and addresses of all the mills and supply base, the dates of the assessment and the date time and place of an open stakeholder meeting. They were invited to make any comments and given the following bullet points to assist them. 1. Do you have any remarks on the RSPO standard? 2. What is your relation with the applicant? 3. Are there any plantation or mill management practices that affect you? 4. Do you consider any management is in conflict with the RSPO principles and criteria? 5. Do you have any suggestions for management? 6. Are you aware of any HCV in the plantations or in adjacent land? 7. Are you aware of any endangered or rare species? 8. Are there any adverse (or positive) effects on local communities? 9. Additional comments. 10. Are you likely to attend the open stakeholder meeting? 11. Do you have any comments about the assessment team and would you like to meet with them? 12. Do you have any comments of the applicants management of any other plantations? Number of persons who attended the open stakeholder meeting: 63 Subsequently to the stakeholder meeting, the audit team discussed the issues raised with management representatives of the company and follow up visits to specific sites were conducted. (See 3.3 below) 2.4.2 List of the National and International stakeholders consulted. Environmental NGO WWF Social Security Organisation (Socso) Environmental NGO Malaysia Nature Society Employee Provident Fund Women Aid Organisation Department of Occupational Safety and Health Tenaganita Department of Labour Wildlife Conservation Society Immigration Department National Union of Plantation Workers Department of Environment

2.5 Date of next surveillance visit:

Public summary. RSPO. KLK Berhad.

One year from the date of certification.

Page 11 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

3.

ASSESSMENT FINDINGS.

3.1 Lead assessor’s summary and recommendation for certification. The operating units demonstrated commitment to the implementation of the principles and criteria of the RSPO P&C NI for Malaysia and this commitment is apparent at all levels of management. Observations were drawn from the assessment carried out through field visits to estates and mill, and interviews with workers and stakeholders as well as visits to the social facilities, infrastructures and document review. The stakeholder announcement was posted on the RSPO website for 30 days prior to the assessment to give stakeholders opportunity to give feedback and comments . Up to the time of finalising this report, there were neither grievances nor complaints received from the stakeholders during this 30 days of public consultation period. A separate session on stakeholders’ consultation meeting was held between the CUC auditors and the stakeholders without the presence of the management representatives on 30th November 2010. This stakeholders' consultation was extensive with a very informative meeting attended by 63 stakeholders comprising representatives from government officials, Village Heads, surrounding communities, state workers union representative and operating units worker union representatives. No complaints or grievances were raised. Positive comments were receive during the stakeholder meeting. Subsequent to the stakeholders meeting, the surrounding communities were visited and interviewed so as to capture more feedback from the stakeholders. There were neither grievances nor complaints received from the communities during the interviews. The feedbacks from the stakeholders were presented to the management and this is summarised in section 3.4 below. The Kekayaan palm oil mill and all estates have demonstrated compliance with all applicable laws and regulations that are relevant to the estate and mill operations. Evidence of compliance with the regulations including permit requirements, regulations on environmental, worker issues and tax payment inspected during the audit. The evidence is well documented and maintained. It is summarised in section 3.2 below. There is a commitment from the management for continuous improvement. There is a budgeted plan available to further improvement in key area such as social and environmental. There is a Sustainability Department fully involved in supporting the management teams in fulfilling the requirements of the RSPO P&C and internal control system whereby sustainability management systems are in place. The audit team found that overall compliance is found against the RSPO P&C approved for Malaysia. Therefore the recommendation of the lead assessor that:  A certificate of compliance is awarded to Kekayaan Palm Oil Mill and the supply base; Signed:

Name: A. Senniah Date: 22nd July 2011

3.2 Summary of the findings by criteria: Principle 1: Commitment to Transparency Criteria 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 decision making. Findings: Comments: Compliance Yes All records of meetings, requests for information  Records of all requests for and responses are maintained as per stakeholder information are maintained. consultation log book/requests and response log  Records of responses to those book. Each book also contains an example of how requests are maintained and the to handle and record a request. action taken, dates and persons involved.  The above records are maintained for a minimum period as defined by the company.

Criteria 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. Public summary. RSPO. KLK Berhad.

Page 12 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS Findings: Comments: Compliance Yes  Public documents are available and No restriction as to the documents that are publicly available with the exception of confidential include legal, social and commercial information. Publicly available environmental documents and documents are Land Titles/user rights, Plans and current and past FFB prices. impact assessments relating to environmental and  The process and outcome of any social impacts, Pollution prevention plans, Details compensation claims are of complaints or grievances, Negotiation procedure, documented and are also made Continuous improvement plans. publicly available as applicable.  Commercially sensitive documents are not available as verified by the audit team. 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: Comments: Compliance Yes  Clear compliance with the law in all RSPO “Applicable Laws and Regulations”. No evidence of non-compliance to all laws and areas sampled.  Good systems in place to track and regulations. i.e. OSHA regulation 1994 (Act 514), Factories regulation (Act 139), National land code implement changes in the law. (Act 1965), Environmental Quality Act, Pesticide  The laws affecting the oil palm Act, Industrial relation Act, Solid waste industry are listed and available to management, Employment Act 1955 (act 265), all managers. workers Minimum Standard of Housing and Amenities Act 1990, Workmen compensation Act 1952, Trade Union Act 1959, Land Acquisition, Children and young person (Employment) Act 1966, Employee Social security Act, Estate Hospital Assistant )Registration) Act 1965, Immigration Act 1959/63 (Act 155), land conservation Act 1960, MPOB Act, Petroleum (Safety Measures) Act 1984, Police Act 1952 to appoint Auxiliary Police, Protection of wild life Act 1987, Road Transport Act 1987, Building Act 1974, Wages council Act 1947, Water Act 1929 to protect waterways; 26 permits and licenses are there for mills. MDC Publishers Sdn Bhd sends out periodical revisions on laws. Beside this Head Office will track any changes in law and keep all estates informed by internal circular and memorandums. Criterion 2.2: The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights Findings: Comments: Compliance Yes Land titles inspected for all estates and the mills.  Land titles / country leases for all Boundary stones and markers checked and verified properties in accordance with the in the field. Copies of land titles are held on file. All law of the land.  Legal boundaries are identified and land use entitlements were checked and comply with the term. i.e “The said land is demised herein confirmed on site. expressly and only for the purpose of cultivation of  The company has mechanism for oil palm and/or an agricultural crop of economic the resolution of conflicts and value”. And “Special terms and conditions: The said where there have been disputes; land is expressly and only for the Palm Oil Mills”. there is proof of progress in an The GPS maps clearly identify the boundary stones acceptable manner to all parties.  Land acquisition has been with free and the boundary stones and markers were physically verified. prior and informed consent.

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

Page 13 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS Findings: Comments: Compliance Yes Not applicable because there were no customary  There is no lands encumbered by rights issues raised by the by internal and external customary rights. The Land is stakeholders during the open stakeholder meeting originally from the government and during the visit to surrounding communities. land.  Copies of land titles confirm this. 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: Comments: Compliance Yes Financial planning with a 5 year projection.  The company has a documented Area of mature and immature crops. Mt/ha yield of working plan that covers a FFB. Five years replanting plan is available. minimum period of 5 years projection from the date of the assessment. It includes crop yield projections; OER trends; costs and income.  There is a replanting programme projected for a minimum of 5 years.  Both of the above are updated on a annual basis. Principle 4: Use of appropriate best practices by growers and mills Criteria 4.1 Operating procedures are appropriately documented and consistently implemented and monitored. Findings: Comments: Compliance Yes Group Policy for all estates. Agricultural Oil Palm.  The company has generic SOP’s, Issued to the estates 20th August 2007. Covers all which are up to date and which best practices. Updates are circulated and then cover all plantation and mill included in the file and implemented. 40 SOP’s activities from seedling to the covering all aspects of plantation management. despatch of CPO and PK or PKO. Mills: SOP’s for mills are the same. 13 operations  The company has comprehensive stages from FFB reception on weighbridge to CPO annual monitoring records. despatch.  The records of operational results are covered by the monitoring records. Criteria 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield Findings: Comments: Compliance Yes Oil palm Manuring recommendations 2010/2011 by  The company has records of Applied Agricultural Resources. The regular soil, leaf and visual field recommendations are followed and records inspection by the agronomist. Leaf analysis is conducted on an annual maintained by field and date of application. Annual soil and leaf sampling carried out to analyse basis to determine fertiliser and determine the soil and palm nutrient level. requirement and recommendation. Based on these result and field visit by the  All fertiliser program are well Agronomist, final fertilizer recommendation is planned; implemented and made. Zero burn policy. EFB application is carried recorded. out in accordance with the recommendations of the  Legume cover crop is used. agricultural research department. Dry decanter  EFB application to areas Cake is used as soil conditioner. determined by the foliar analysis. Actual BOD level is 132mg/L and allowable  POME is used for land application. standard is 1000mg/L . Ground water quality is  Fertiliser application records are monitored and BOD is 15mg/L. comprehensive as per recommendation. Criteria 4.3 Practices minimise and control erosion and degradation of soils. Findings: Comments: Compliance Yes Soil maps show soil types. Predominantly alluvial.  Each estate has soil maps, which SOP 9 covers Erosion control. These detail the identifies fragile soils if applicable.  SOP in place for plantings on steep actions to take to control erosion. In mature fields there are 8 specific action points and these are slopes which includes the use of specific to all plantations. terracing; Biomass recycling (see above) frond stacking and silt pit Most of the operating units are not having (minor NC used to control surface run off. complete programme with detailed location, under 4.3.3)  There is a road maintenance type of work and date. Culvert maintenance and programme but not road side drain upkeep is missing including comprehensive. Public summary. RSPO. KLK Berhad.

Page 14 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS  No peat soil.  SOP includes a documented water management programme.  Other fragile soils have been identified and an SOP is in place for their management.

housing site road maintenance and replanting area road upkeep. Probase road upkeep details in the programme were missing. A minor NC was raised under 4.3.3.

Planting of mucuna is practised, frond staking to stop surface run off, flat and accessible area is maintained with grass cutting at harvesting path and road side, no blanket spray, only selective and circle spray and treated with the right choice of chemicals. Criteria 4.4 Practices maintain the quality and availability of surface and ground water. Findings: Comments: All estates have identified watercourses and the  Watercourses (and wetlands) are appropriate width of buffer zone is established (in identified on maps and accordance to guidelines by the Drainage and management plans are in place for Irrigation Department) and the non-maintenance restoring riparian buffer zones. buffer zone is then implemented i.e. no fertiliser  Water management includes the applications and spraying of agrochemicals within monitoring of all water courses as riparian zones. they enter and leave the estate(s). Water usage monitoring records are in place in the  Water management plan also mill which shows the average use of 1.22 tonnes of includes Drinking water analysis. water per tonne of FFB processed.  BOD levels of effluent are There is a generic water management plan monitored on a regular basis and within standard of below 1000mg/L. covering water source, construction of reservoir and water quality analysis, Protection of water  Water usage per tonne of FFB courses and wetlands. Monitoring of water quality processed monitored in the mill. and usage. Piped water supply and emergency  No drainage into protected areas. response plan available for mitigate any drought.

Compliance Yes

Although most of the operating units are (Minor NC conducting water analysis for drinking water it under 4.4.7) is noted that some of the operating units are not conducting the water analysis as per the Minimum Housing Standard requirement. A minor NC was raised under 4.4.7. Criteria 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate integrated Pest Management (IPM) techniques Findings: Comments: Compliance Yes  Documented and implemented IPM Integrated pest management and pest and disease control. Cultural control. Chipping and pulverizing system. of felled palm trees at the time of re-planting. Use  Monitoring of IPM used, which of biological control. Chemical control. Manual includes the training of staff and control. Census. Monthly census for bagworm, workers. threshold attack more than 5%, of larva population,  Planting of beneficial plants. the treatment is carried out. Rat damage census –  Record of pesticide use per ha. threshold 5%, barn owl occupancy census,  Monitoring of pesticide toxicity rhinoceros beetle census at replanting area and units. immature field. Census result is mapped or tabled and documented. Pre and post treatment census to determine the effectiveness of the action taken. Monitoring the occupancy rate 59%.Identification. Treatment. Evaluation and record keeping. Throughout all estates the use of beneficial plants such as Tunera subulata, Cassia cobanensis, Antigonon spp. are very evident. Replant sites are restructured to allow enough light for these plants. Leguminous cover crops are also well-established to suppress growth of noxious weeds. SOP 3 covers all the documented IPM for major pest, use of biological control, cultural control, surveillance, evaluation, record keeping, Tunera is extensively planted. Barn owl boxes erected at the rate of 1/10ha. Criteria 4.6 Agrochemicals are used in such a way that does not endanger health or the environment. There is no prophylactic use, and where agrochemicals are used that are categorised as World Health Organisation Public summary. RSPO. KLK Berhad.

Page 15 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS 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: Comments: Compliance Yes Chemical stores at all estates and mills were  Written justification for all inspected and found to be in compliance with agrochemicals used. requirements. Well ventilated. Locked. MSDS  All pesticides are officially leaflets. First aid kits. Warning notices. registered. Pre-mixing takes place in bunded areas with  Records of all pesticides used in shower facilities. Inspection of records, interviews accordance with RSPO with the workers and medical staff confirmed that requirements with details of annual checkups take place by registered OSH application. medical practitioner. Female workers are  Records show that the accompanied by female nurse and pregnant and agrochemicals used are in breast feeding woman are assigned to other work accordance with product label not involving agrochemicals. recommendations for target All workers are given PPE by the company and species. confirmed by workers during interview with them in  Chemical stores are well ventilated the field. Paraquat is being eliminated and replaced and secured with MSDS leaflets by glyphosate. and first aid kit available.  All workers are trained in the use of agrochemicals and this training is recorded.  Used containers and other waste materials are stored schedule waste store in a safe way and disposed of in accordance with laws and regulations.  The use of WHO type 1a or 1b chemicals, such as paraquat are being demonstrably reduced.  Annual medical checkups are conducted and recorded.  Records and interviews confirm that no work with agrochemicals for breast feeding or pregnant woman is allowed. Criteria 4.7 An occupational health and safety plan is documented, effectively communicated and implemented Findings: Comments: Compliance Yes OSH Plan, which includes a training programme.  The company has an OSH plan, Action plans with designated responsible person which is being implemented in all identified. estate offices and mills. All occupational hazards and risks have been  OSH committees are identified and assessed and identified. responsible persons for safety Guidelines on accident and emergency procedures. programs are included in Accident records are analysed by the Safety responsibility charts. executive on site and target set is zero. Only minor  The company maintains records of thorn prick cases noted. Accidents details reported all meetings with workers and to DOSH periodically. Safety measures explained minutes show that health, safety to workers and included in all training. Also and welfare issues are included displayed on muster grounds. amongst other matters. Interviews with workers confirmed knowledge of the  Worker accident insurance is in plans and procedures and first aid training records place and up to date. were inspected and also confirmed by interview.  Workers exposed to high risk are Safe working environments observed in mills and identified and records show that places of work. regular health examination takes Accident insurance covers any accidents during place. travelling to work and during work related  Risk assessments include all accidents. identified areas of risk both in the Fire fighting team available in estate and mills. plantations and mills with Training is provided by internal safety executive preventative measures and and external trainers. responsibilities. CHRA was conducted by qualified CHRA officer  All workers have been trained in No. JKKP HIE 127/171-2 (228). Last conducted in OHS and this is regularly updated. 2008 and valid for 5 years. Records include photographic CHRA conducted on December 2008. Another evidence and signed attendance Public summary. RSPO. KLK Berhad.

Page 16 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS sheets. separate risk assessment HIRARC conducted by the OSH department for all the operation chemical  Accident and emergency handling, workshop, field operation and other procedures are included in the general work. Rating is given as low, medium or OHS plans and risk assessments. high. When the risk is high, preventive measures is  Trained First aiders at all work developed to address the risk. sites.  First aid kits at all places of work.  Training programmes.  Accident records are maintained and reviewed at the OHS meetings. Further training and preventative action is then considered and implemented. Criteria 4.8 All staff, workers, smallholders and contractors are appropriately trained Findings: Comments: Compliance Yes Annual training programme for all workers. Regular  Training plans and records are in assessments take place to ensure all workers are place as appropriate for all staff up to date with training. Section 10 of the KLKand workers. RSPO master copy gives details of all training  Contractors and their workers are required for operatives. This is laid out by month. trained in accordance with Training programme includes safe handling of company procedures. chemical, first aid etc. Training for spraying, driver, harvesting and save handling of chemicals record is in place. Mill training covers all the work stations. Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Criteria 5.1 Aspects of plantation and mill management 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: Comments: Compliance Yes Environment impact assessment and pollution  Documented and implemented impact assessments in accordance prevention plans are available. All processes and with RSPO and legal requirements. activities that may pollute are identified with the potential hazard. The level of risk is assessed and  Regular reports are prepared on then a plan is prepared with target date, persons environmental management in responsible and status. accordance with relevant Processes covered: Plantation maintenance of regulations. mature crop. Harvesting in field. FFB collection. Transport to mill. Workshop. Linesite. These activities are sub-divided into activities. Transport Policy is available. Vehicles have permits. Drivers are compulsory to attend competency training conducted by safety executive. Safety helmet requirement complied by motor cycle riders. Mill has pollution control devices such as spill kit, oil trap at all the outlet drains, vehicle washing bay and continuous emission monitoring system. Criteria 5.2 The status of rare, threatened or endangered species 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: Comments: Compliance Yes Management plans for HCV habitats, including  HCV assessments completed, ERTs are in place although there is no ERT is which include the identification of identified in HCV assessment. Within the estate any protected, rare, threatened or there are no ERT because the HCV 4 identified are endangered species. water catchment and stone quarry. Summary of the  Measures to protect any HCV’s, including ERT species and habitats HCV, management and monitoring plan is available. Activities to manage biodiversity along are in place. river riparian are carried out. Person responsible.  Measures taken to protect species and habitats are in accordance with Target date and status is recorded. local relevant laws and the company takes action to control illegal and inappropriate hunting, fishing or collecting activities.  Posters and information regarding protected species are visible in the Public summary. RSPO. KLK Berhad.

Page 17 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS appropriate places.  The company has identified, trained and appointed an individual person from the estates, who monitor plans associated with HCV and ERT species. Criteria 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Findings: Comments: Compliance Yes Documented waste products includes used oil, old  Waste products have been battery, used laboratory chemical, clinical waste, identified and documented.  Plans to avoid pollution are in place effluent, EFB, smoke, dust, fibre and shell, empty chemical container, boiler ash, scrap iron, used tire, to include careful mixing of house old waste, line site waste water. Operational agrochemicals, diesel tank waste products collected and stored in schedule bunding, dedicated waste stores, waste store and disposed through authorised concreted and bunded workshops, collector OLST Petro Chemical Sdn Bhd. oil traps and controlled household waste disposal. Linesite discharge Mitigation plans developed and practised. It is (Minor NC is also included in the plans. noted that there are oil and fuel spillage at most under 5.3.2)  Hazardous waste is stored in a of the operating units which not mitigated to dedicated store and disposed of by avoid pollution as per the plans. A minor NC a licensed company in accordance was raised under 5.3.2. with product label and existing regulation.  There are records of all disposals of waste. Criteria 5.4 Efficiency of energy use and use of renewable energy is maximised Findings: Comments: Compliance Yes Energy use records include accurate  All energy used in the mills is measurements of renewable energy use per tonne monitored. of CPO. Shell and fibre usage is 1.93kWhr/mt.  Fossil fuel records are maintained Fossil fuel usage is 1.54kWhr/mt FFB processed. and trends shown. Company already maximise the renewable energy  CDM project to collect biogas from use. All the shell and fibre is consumed internally. the mill effluent ponds is under consideration by the management as a continuous improvement plan. Criteria 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice Findings: Comments: Compliance Yes Recent re-planting shows that no burning carried  Fire is not used for any land out. Field visit, interview with workers, preparation or for replanting. stakeholders, SOP’s and manager interviews  Photographic records of zero burn. confirm that the previous crop is felled down,  The company has procedures in place to assist in the event of fire in chipped, shredded and spread. No evidence of burning anywhere on any operating units. the field and facilities under Emergency Response Plan. Criteria 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Findings: Comments: Compliance Yes Management of wastes generated by operating  The mill(s) have identified the sources of pollution and emissions. units includes collection, storing and disposing  Various and regular measurements through authorised collectors. Once the polluting activity is identified, it is are taken of the emissions and mitigated or collected and kept in the schedule pollutants. waste store and recycle wherever possible such as  Measurements of emissions Shell, fibre, EFB, effluent is recycled. CDM project obtained are used to develop in the planning. strategies for improvement.  POME is treated in a series of effluent ponds and the final discharge is regularly monitored for BOD levels before goes for land application. No discharge to watercourse. Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills Public summary. RSPO. KLK Berhad.

Page 18 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS Criteria 6.1 Aspects of plantation and mill management 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: Comments: Compliance Yes All social impacts due from estate/mill operations  Documented and implemented have been identified through extensive consultation social impact assessments with relevant stakeholders and mitigation measures prepared in participation with affected parties, for plantations and have been determined. These have been incorporated into the appropriate action plans to be mills. executed by designated personnel within a  Social impacts are both monitored specified timeframe and managed with the participation of local communities.  The schedule for environmental management monitoring and reporting is identified and reports are prepared in accordance with this schedule.  Where there is an out-growers scheme, the company pays attention to the potential social impacts of their activities. Criteria 6.2 There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties Findings: Comments: Compliance Yes The stakeholder meeting and interviews confirmed  Clear and transparent systems of that communications and relationships between the consultation and communication operating units and stakeholders are good. with local stakeholders.  An extensive lists of stakeholders is maintained with names and addresses.  Identified lines of communication.  The company maintains records of meetings with local community representatives and issues raised. The action taken in response to those issues is also recorded.  The company has identified and appointed an executive as the main contact person on social issues and who is responsible for communicating with local communities and stakeholders. Criteria 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: Comments: Compliance Yes Documented evidence was inspected. Confirmation  There is a complaints and dispute by interview with workers and stakeholders that the resolution procedures which is system is accepted and action taken in timely publicly available to all potentially manner. affected parties.  Records of complaints which includes the action taken, the outcome of the action taken and any follow up requirements is available.  Procedures for the identification and calculation of fair compensation for the loss of customary right of the land is publicly available although there is no customary issues.

Criteria 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 stake holders to Public summary. RSPO. KLK Berhad.

Page 19 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS express their views through their own representative institutions Findings: Comments: Compliance Yes Not applicable as no customary rights issues.  The company has procedures in place for the identification, calculation and compensation for the loss of customary rights of the land which include involvement with the community representatives and relevant agencies.  There is no customary issues or land compensation issues. Criteria 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: Comments: Compliance Yes  Contracts of pay and conditions are All pay is documented under monthly checkroll documented and are in compliance payslips system. Workers are given payslip and acknowledge sign by them. There is a permit to with the law. carry out deduction. All terms and conditions of  Workers contract and payment is contract (whether Malaysian on foreign workers) documented. Wages is as per are recorded under Labour Registration Cards. collective agreement with the Direct contracts of employments evident and labour union (NUPW). Payslip is interview with workers confirm that they understand prepared and given workers. what is in the contract. Acknowledge by workers during Two rooms housing complete with kitchen and receiving the wages. toilet is provided. Clean water supply available but  Deduction are with permits and in some operating units inadequate water supply agreed by the employees. was raised (see below for NC). Internal clinic  Housing, water supplies, medical, available for free medical treatment. External doctor educational and welfare amenities visits the operating units. Educational facility is supplied if they are not available provided by the company at kindergarten and by are accessible. Basic amenities the government to the workers children at the include community hall, soccer estate school. Bus is subsidised by the company. field, basket ball court and badminton courts is available. During the interview with workers, issues (Minor NC  The written agreements with related to inadequate water supply was raised. under 6.5.3) contractors specify that contractors Water issue needs attention. Water analysis for must abide by labour laws drinking water is not completed as well. A minor NC raised under 6.5.3. Criteria 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 Findings: Comments: Compliance Yes Meetings with labour union and worker  Published statement recognizing freedom of association is available. representatives is carried out. Minutes of meeting with worker representatives are recorded. Beside  Minutes of meetings with trade labour union meeting, meeting with worker reps is unions and worker representatives through the various committees (e.g.: OSH is documented. Committee and Sexual Harassment Committee). Criteria 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions. Findings:  There is a documented and published company policy on worker ages in accordance with national laws.  The policy is being implemented.

Comments: All policies state minimum age requirement of 16. Reference to Child Employment Policy of the company. No observation of under-aged persons working in the fields and Labour Registration Cards inspected. Interview with stakeholders and labour union confirm that there is no child labour. Child Labour Policy is in place.

Compliance Yes

Criteria 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.

Public summary. RSPO. KLK Berhad.

Page 20 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS Findings:  There is a publicly available equal opportunities policy.  No evidence of discrimination. Workers are treated equally with regard to working opportunities.

Comments: Compliance Yes Policy displayed in office and muster grounds. Wage records inspected and rates confirmed as being the same for male, female workers and migrant workers. Equal opportunities Policy publicly displayed in office and at linesite. Employees aware of this policy. Criteria 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied. Findings: Comments: Compliance Yes Sexual harassment policy publicly displayed in  Policy on sexual harassment and office and at linesite. Policy also documented under violence available and displayed SOP 40. Worker interviews confirmed that no and explained to all employees. sexual harassment takes place. All female  The company has a policy on the employees have direct access to the gender protection of reproductive rights. committee which handles any sexual harassment  The sexual harassment policy is issues. Gender committee formed by the female being implemented through gender staff and workers. committee.  The reproduction rights policy is being implemented. No restriction on pregnancy and confirmed by female employees.  The company has set up a specific gender committee to facilitate the grievance mechanism. Criteria 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses. Findings: Comments: Compliance Yes Although there is no input from outside supply, the  Pricing mechanism for FFB input is mill have SOP which covers the procedure of FFB not applicable because there is no price calculation. Contractual agreements include outgrowers or smallholders contractor’s details, pricing, term and condition for supplying FFB to the mill. work and payment. Interview with smallholders  Contractual agreements are during stakeholder consultation confirmed that they available for mainly construction works and signed by both parties to understand the procedure. All payments are made in a timely manner. indicate understanding and acceptance. Contracts inspected were fair, legal and transparent.  Suppliers and contractors are paid in a timely manner. this was confirmed by contractors during interview with them and inspection of payment records confirmed prompt payment. Criteria 6.11 Growers and mills contribute to local sustainable development wherever appropriate. Findings: Comments: Compliance Yes Contribution through Head Office and internally by  The company makes contributions the operating units. The operating units contribute for local development and records to local development through consultation with are maintained. surrounding community and workers. Mostly assistance given to schools and community by providing transport, permission to use the estate facility and donations. Donations to worshiping places are given. Since most of the operating units are located in the vicinity of township, most of the community have access to government roads and facilities. Principle 7: Responsible development of new plantings. Findings: Not applicable as no new planting.

Comments:

Compliance N/A

Principle 8: Commitment to continual improvement in key areas of activity. Criteria 8.1 Growers and millers regularly monitor and review their activities and develop and implement action Public summary. RSPO. KLK Berhad.

Page 21 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS plans that allow demonstrable continual improvement in key operations Findings: Comments: Continuous improvement programme covers the  Clear evidence of continual following: improvement in key areas. Minimise use of highly toxic herbicides. Paraquat is  Reduction in the use of class 1a being reduced. and class 1b agrochemicals. Maximising recycling and minimise waste by re-use  Environmental impacts. the used herbicide containers for mixing herbicides.  Waste reduction. All the used containers and lubricants are collected  Pollution emissions. at schedule waste store and disposed responsibly  Social impacts. through licensed waste collectors. Recycling was  Records are in place of follow up introduced to workers to recycle domestic waste. actions as a result of both internal Social improvement includes new housing. and external audits. Implementation of safety and health measures enhanced with training and collection of information through internal feedback system to identify training needs. Internal audits by safety executive and RSPO team to ensure continuous improvement and compliance to RSPO P&C.

Compliance Yes

3.3 Non conformity register. This section gives an over view of new or revised non-conformities raised during this assessment and of action taken to close out non-conformities raised during the previous assessments. Major non-conformities raised during a main assessment will prevent CU from making a positive certification decision for the concerned units/products. The NC number is comprised of 2 parts to include the year in which the NC is raised as well as a sequential number. Date: Number settled Number outstanding

3rd December 2010 4

NON CONFORMITY REPORT NC number: 1/2010 Client name: Kuala Lumpur Kepong Berhad Date raised: 3rd December 2010 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 4.3.3 Presence of road maintenance programme Evidence of non-conformity: Most of the operating units are not having complete programme with detailed location, type of work and date. Culvert maintenance and road side drain upkeep is missing including housing site road maintenance and replanting area road upkeep. Probase road upkeep details in the programme were missing

Assessors signature:

Date: 3rd December 2010 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action: Assessors signature: Date:

Public summary. RSPO. KLK Berhad.

Page 22 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS NON CONFORMITY REPORT NC number: 2/2010 Client name: Kuala Lumpur Kepong Berhad Date raised: 3rd December 2010 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 4.4.7 Evidence of water management plans

Evidence of non-conformity: Although most of the operating units are conducting water analysis for drinking water it is noted that some of the operating units are not conducting the water analysis as per the Minimum Housing Standard requirement. Assessors signature:

Date: 3rd December 2010 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action: Assessors signature: Date:

NON CONFORMITY REPORT NC number: 3/2010 Client name: Kuala Lumpur Kepong Berhad Date raised: 3rd December 2010 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 5.3.2 Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution Evidence of non-conformity: Mitigation plans developed and practised. It is noted that there are oil and fuel spillage at most of the operating units which not mitigated to avoid pollution as per the plans.

Assessors signature:

Date: 3rd December 2010 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action: Assessors signature: Date:

Public summary. RSPO. KLK Berhad.

Page 23 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

NON CONFORMITY REPORT NC number: 4/2010 Client name: Kuala Lumpur Kepong Berhad Date raised: 3rd December 2010 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 6.5.3 Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible. (Not applicable to smallholders). Evidence of non-conformity: During the interview with workers, issues related to in adequate water supply was raised. Water issue needs attention. Water analysis for drinking water is not completed as well.

Assessors signature:

Date: 3rd December 2010 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action: Assessors signature: Date:

Public summary. RSPO. KLK Berhad.

Page 24 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

3.4 Issues raised during stakeholder consultation and company responses. (The subjects raised and responses by the company will be reviewed at the first annual surveillance assessment). Subject raised Company response and proposed Assessment team action to be taken. findings One of the worker informed that Scholarship is offered to those qualify and Positive comment. KLK is offering scholarship to those this will continue. qualify. He appreciate that hope KLK will continue to provide scholarship. One of the stakeholders asks the Company agree that they will carry out The role of stakeholder is role of stakeholders in RSPO more briefing to stakeholders on their role explained by the audit team. assessment. in RSPO assessment. What is the benefit for the workers When KLK certified, it is also contribution It is explained that continuous if estate get RSPO certificate? from the workers. We will continue to make improvement is for all level of improvement. people. Benefit to workers is improvement of operational work condition and social benefits. School teacher informed that Management always give assistance where Positive response. RM 10,000 worth of assistance ever possible when requested by school. provided by the estate to the school. Supplier gave positive comment. No issue. Documents assessment Their payments are prompt. confirmed that payments are made promptly. Small holder thank the estate for It is responsibility of the operating units to No issue. allowing them to use the estate ensure smallholders are given access to road. their location and we always keep close relationship with the smallholders. Line side fogging is not carried out. Estates are getting assistance from the During the visit to the housing health department to carry out fogging. area, it was informed by the workers that fogging is carried out by the health department. There is no positive evidence that it is not carried out. Will be continuously verified during annual audit. Mill doesn’t have ambulance. At the moment mill have a 24 hour The emergency transport was transport for emergency. Mill is also getting checked and found that it is a new ambulance. suitable for sending workers to outside medical treatment. Water supply is following schedule. Water supply is given on schedule to Water supply schedule is ensure all the occupants receive water. checked. Interview with the water Houses are given water tank for water pump attendant reveal that there storage as well. is a schedule. Further interview with workers reveal that water is not adequate. NC was raised. Progress will be verified during annual assessment. Company always give contribution Positive comment. to the local community. Stakeholder asked whether any It is possible if the workers are physically No issue. possibility to extend service after healthy, good track record and situation retirement if still fit to work. allows him/her to work. Request for salary increment every Term and contract is as per NUPW/MAPA No issue. three years. collective agreement. Representative from Jabatan Kadi This is regulated by the government No issue. inquire about the total number of authority and inspection is carried out by mosques inside the estates. them. One of the worker asked why the It is not done on purpose but it was No issue. stakeholder meeting is conducted schedule very much earlier. at the end of the month. Head of villager commented that Positive comment. they were invited during the Hari Raya celebration in the estate.

Public summary. RSPO. KLK Berhad.

Page 25 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

4.

Certified organisation’s acknowledgement of internal responsibility

4.1 Formal sign off of assessment findings. Acknowledgement of internal responsibility by the client. I the undersigned, being the legal representative of the inspected company, agree with the contents of this report and accept the liability in execution of the instructions given in the report. Name: Sin Chuan Eng Position: General Manager Signature:

Date:

22nd July 2011

Public summary. RSPO. KLK Berhad.

Page 26 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

List of Abbreviation BRC SCCS ISCC BOD RTE OER PKO DOSH HIRARC CDM CHRA CoC CPO CSR CU CUC DOE EFB EIA ERT EU EUREPGAP FFB FSC FSC COC FSC FM GGL GMP GOTS GSSB GTP GPS HACCP HCV HCVF IPM JAS KDC KLK MDC MSDS NC OE OSH OSHAS P&C PEFC PK POME PPE RSPO RSPO NI SA8000 Sdn SIA SOCSO SOP USDA/NOP WHO

British Retail Consortium Supply Chain Certification System International Sustainable Carbon Certification Bio Oxygen Demand Rare Threatened Endangered Oil Extraction Rate Palm Kernel Oil Department of Occupational Safety & Health Hazard Identification Risk Assessment and Risk Control Clean Development Mechanism Chemical Health Risk Assessment Chain of Custody Crude Palm Oil Corporate Social Responsibility Control Union Control Union Certifications Department of Environment Empty Fruit Bunch Environment Impact Assessment Endangered Rare or Threatened species European Union Euro-Retailer Produce Good Agricultural Practices Fresh Fruit Bunch Forest Stewardship Council Forest Stewardship Council Chain of Custody Forest Stewardship Council Forest Management Green Gold Label Good Manufacturing Practice Global Organic Textile Standard Golden Sphere Sdn. Bhd. Good Trading Practice Global Positioning System Hazard Analysis and Critical Control Point High Conservation Value High Conservation Value Forest Integrated Pest Management Japanese Agricultural Standard Kulumpang Development Corporation Sdn Bhd Kuala Lumpur Kepong MDC Publishers Sdn Bhd ( Company Name)

Material Safety Data Sheet Non Conformity Organic Exchange Occupational Safety and Health Occupational Safety and Health Assessment Scheme Principle and Criteria Programme for the Endorsement of Forest Certification Palm Kernel Palm Oil Mill Effluent Personal Protective Equipment Roundtable on Sustainable Palm Oil Roundtable on Sustainable Palm Oil National Interpretation Social Accountability 8000 Sendirian Social Impact Assessment Social Security Organisation Standard Operating Procedure United States Department of Agriculture – National Organic Program World Health Organization

Public summary. RSPO. KLK Berhad.

Page 27 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

RSPO Assessment Report APPENDIX-A

Kuala Lumpur Kepong Berhad Kekayaan Palm Oil Mill, Johor, Malaysia.

1.3 Location maps. Landak Estate – Home Division

Labis Permanent

Forest Reserve

Labis Permanent

Forest Reserve

Timor Estate

Timor Estate

Public summary. RSPO. KLK Berhad.

Page 28 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

Landak Estate – Sg. Tamok Division

Tereh Selatan (Kulim Group) Felcra Estate Ke Kekayaan Estate

Kekayaan Estate – TERTINGGI DIVISION

Landak Estate (KLKB)

Felcra Sg. Sepuluh

Tereh tara (EPA – Kulim Group)

Tereh Selatan (EPA – Kulim Group)

Public summary. RSPO. KLK Berhad.

Page 29 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

KEKAYAAN ESTATE – HOME DIVISION

Legend

Kampung India

Estate Boundary Field Boundary Field Road Est. Main Road OBK Highway Govt. Road Building Compound Swamp

Makmur Estate (IOI Group)

Public summary. RSPO. KLK Berhad.

Page 30 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

Paloh Estate New Paloh Estate Beradin Estate FELCRA

Small Holder (Mr. Chong)

Small Holder (Mr. Kumar)

Small Holder (Mr. Yee) Small Holder (Kian Ann)

Voules Estate

Small Holder (Chan Hon Ying, Chia Kim Heng) Segamat Estate (IOI) New Pogoh Estate

Felda Cempelak

Public summary. RSPO. KLK Berhad.

Small Holder (Lau Su Ha, Lai Qiu Hong, Tan Mu Fou, Yong Tian Dai Sg. Labis Estate (Sime Darby

Page 31 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

FRASER ESTATE Lee Rubber Oil Palm Small Holder

Oil Palm Small Holder

Amitabha Charity Centre

Small Holder (Er Tian Boon)

Felda Taih Andak Sedenak Estate

Legend Estate Boundary Field Boundary

Kelsa Estate (Sime Darby)

Fish Farm Oil Palm Small Holder Sengkang Village

Field Road Est. Main Road River / Stream Highway Building Compound

Rubber Small Holder

Bridge

Ban Heng Estate Small Holder (Parvathi & Small Holder Small Holder Rangasamy) (Mr. Ah Bang) (Mohd. Amin) Small Holder (Er Tian Boon) Small Holder (Mr. Lau) Small Holder (Lim Lai Son)

Small Holder (Hee Ah Moi) Felda Lenga BT 27

Small Holder (Lee Nai Hai) Small Holder (Govindan Jaganathan)

Small Holder (Ah Chap)

Legend Estate Boundary Field Boundary

Kg. Muhibbah BT.23

MAOKIL Forest Reserve

Field Road Govt. Road Building Compound Overplanted area Culverts

Public summary. RSPO. KLK Berhad.

Page 32 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

New Pogoh Estate

Chua Moh San Estate Voules Estate (KLKB)

Kg. Melayu Raya

Chong Lee Estate

Kg. Sri Dagang

Public summary. RSPO. KLK Berhad.

Page 33 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

SUNGAI BEKOK ESTATE

Nam Gong Sia Kwong Long Ah Goh Rasamanikam

Murthi Selamat Ban Lee

SEE SUN ESTATE

Tabung Haji Plantation

Small Holder

Rengam Estate (Sime Darby Group)

Public summary. RSPO. KLK Berhad.

Page 34 of 35

Report number: 816254RSPOCUCRPT -2010-01-AS

SUNGAI PENGGELI ESTATE

Ladang Agromaju

Small Holder

Small Holder

Public summary. RSPO. KLK Berhad.

Page 35 of 35