Roundtable on Sustainable Palm Oil - TÜV Rheinland · 2. FGVPM (Felda Global Ventures Plantations...

Roundtable on Sustainable Palm Oil

Annual Surveillance Audit Report Report no.: ASA2_18501694

Surveillance assessment against the

RSPO Principles & Criteria Malaysia National Intepretation year 2010

Felda Global Ventures Plantations (Malaysia) Sdn. Bhd.

Lok Heng Palm Oil Mill Kota Tinggi, Johor, Malaysia

Date of assessment: 19 to 21 February 2014

Report prepared by: Dian S. Soeminta

(RSPO Lead Auditor)

Certification Body: TUV Rheinland Malaysia Sdn. Bhd.

No. 26 – 32, Jalan Perindustrian USJ 1/6, Taman Perindustrian USJ 1,

47600 Subang Jaya, Selangor Darul Ehsan, Malaysia.

Tel: +6 03 8024 2400 Fax: +6 03 8023 1505

www.tuv.com

TABLE OF CONTENTS

1.0 SCOPE OF ANNUAL SURVEILLANCE AUDIT .................................................... 3

1.1 National Interpretation Used ........................................................................................................... 3 1.2 Type of Assessment ....................................................................................................................... 3 1.3 Certification Details ......................................................................................................................... 3 1.4 Location and Maps ......................................................................................................................... 3 1.5 Organisational Information / Contact Person .................................................................................. 6 1.6 Description of Supply Base ............................................................................................................. 6 1.7 Actual production volumes, tonnages and projected outputs. ......................................................... 7 1.8 Dates of Plantings and Replanting Cycles ...................................................................................... 7 1.9 Area of Plantation (Total, Planted and Mature) ............................................................................... 8 1.10 Progress Against Time Bound Plan .............................................................................................. 9 1.11 Compliance to Rules for Partial Certification ............................................................................... 10 1.12 Progress of associated smallholders or outgrowers towards RSPO compliance ........................ 11 1.13 (Revised) Approximate Tonnages Certified ................................................................................ 11

2.0 ASSESSMENT PROCESS .................................................................................. 12

2.1 Certification Body .......................................................................................................................... 12 2.2 Qualifications of Lead Assessor and Assessment Team .............................................................. 12 2.3 Assessment Methodology & Agenda ............................................................................................ 13

3.0 ASSESSMENT FINDINGS ................................................................................... 16

3.1 Summary of Findings .................................................................................................................... 16 3.2 Status of Previously Identified Non-conformities ........................................................................... 32 3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions ..................... 41 3.4 Description of Supply Chain Management System ....................................................................... 53 3.5. Follow Up action from previous audit findings. ........................................................................ 55 3.6. Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions .......................................................................................................................... 56 3.7. Noteworthy Positive Components ............................................................................................ 57 3.8. Issues Raised by Stakeholders and Findings Pertaining to Issues ............................................. 58

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL

RESPONSIBILITY ............................................................................................... 60

4.1 Date of Next Surveillance Visit ...................................................................................................... 60 4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client ............................... 60

APPENDICES ............................................................................................................ 61

Appendix 1: Revised RSPO Certificate ............................................................................................... 61 Appendix 2: List of Abbreviations ........................................................................................................ 64 Appendix 3: List of Stakeholders Interviewed and Contacted ............................................................. 65 Appendix 4: Observations and Opportunities for Improvement ........................................................... 66

RSPO Annual Surveillance Audit Report

- Lok Heng Mill – FELDA Johor

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1.0 SCOPE OF ANNUAL SURVEILLANCE AUDIT

1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Malaysia National Intepretation year 2010 of the RSPO Principles & Criteria.

1.2 Type of Assessment

The annual surveillance certification assessment was carried out on one mill and 4 smallholder scheme under FELDA owned by FELDA Palm Industries Sdn. Bhd. The date of certification of this unit was 2012-04-16.

1.3 Certification Details

The details of RSPO certification of Lok Heng Mill are as per the table below Table 1: RSPO Certification details of Lok Heng Mill

1.4 Location and Maps

Table 2: GPS locations for all estates and mills included in annual surveillance assessment

RSPO Membership no.: 1-0013-04-000-00

RSPO Certificate no.: 824 502 14015

(Replaces previous certificate no. 18501694 001)

Date of first RSPO certificate & validity: 2012-04-16 until 2017-04-15

Date of certification audit: 21 - 26 March 2011

Date of previous surveillance audit: 11 – 12 March 2013

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

Validity of revised certificate remains the same as the initial certificate issued

CPO tonnages claimed: 12,371.74 tonnes

PK tonnages claimed: 3,198 tonnes

Name of mill / es-tate

Location GPS locations

Latitude Longtitude Lok Heng Palm Oil Mill

P.O. Box 55, 81907 Kota Ting-gi, Johor

1o 41’15’’N 104o 07’ 19’’E

Lok Heng Timur Kota Tinggi, Johor, Malaysia 0141’58.6”N 10406’38.7”E

Lok Heng Barat Kota Tinggi, Johor, Malaysia 0142’03.7”N 10406’36.2”E

Lok Heng Selatan Kota Tinggi, Johor, Malaysia 0143’49.5”N 10405’52.4”E

Papan Timur Kota Tinggi, Johor, Malaysia 0136’45.6”N 10419’09.1”E



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Figure 1: Location of Felda Lok Heng Complex in Peninsular Malaysia

Lok Heng Complexes location



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Figure 2: Locations of FELDA Lok Heng estates within the state of Johor, Malaysia

Papan Timur

Lok Heng Timur

Lok Heng Barat

Lok Heng Selatan



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1.5 Organisational Information / Contact Person

1.6 Description of Supply Base

There are 8 types of FFB supplier types for FELDA Palm Industries Sdn. Bhd. (FPISB), consisting of the follow-ing:

1. FELDA schemes, which is made up of smallholder schemes with dependents (settlers) 2. FGVPM (Felda Global Ventures Plantations Malaysia Sdn. Bhd) consisting of FELDA’s owned commercial oil

palm plantation. 3. FTPSB (Felda Technoplant Sdn Bhd), a division of FELDA, which manages replanting and ongoing manage-

ment of plantations owned by FELDA scheme smallholders 4. Other estates: Commercial oil palm plantations belonging to independent outgrowers 5. Independent FFB Agents (Dealers) 6. FELDA settlers, whom choose to be independent. They carry out replanting and manage their estates by

themselves and sell the FFB to FELDA mills. 7. Cooperatives, which act like FFB agents established by Felda’s smallholders 8. Independent suppliers Table 3: FFB Supply Information for Lok Heng Mill

FFB Contributors FFB supplied

Tonnes %

FELDA Scheme:

FELDA 31,093.23 16.61

FGVPM 2,975.89 1.6

FTPSB 79,156.23 42.3

Outgrowers:

Cooperation 19.16 0.01

Dealer 59,222.4 31.7

Estate 14,542.6 7.8

Individual 99.56 0.05

TOTAL 187,109.1 100

Company Name: FELDA (Adela Mill)

Address: Adela Palm Oil Mill, P.O. Box 73, 81930, Bandar Penawar, Kota Tinggi, Johor, MalaysiaHead office: Felda Global Ventures Plantations (M) Sdn Bhd Tingkat 8, Balai Felda, Jalan Gurney Saturday 54000 Kuala Lumpur

Contact Person: Mr. Anthonius Sani

Telephone/fax: + 603-26005200/ +60193087544

Email: [email protected]

Website: www.felda.net.my



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1.7 Actual production volumes, tonnages and projected outputs.

Actual FFB processed in year 2013 is explained on the table below:

Table 4: Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and PK production from Lok Heng Mill

1.8 Dates of Plantings and Replanting Cycles

The company follows a replanting cycle of 30 years( average). Information on the dates of plantings are as per the table below. Table 5: Age and year of plantings of company estate supplying to Lok Heng Mill Oil palm planted area at each es-

tate (Ha)

Age & year of Plantings (ha)Total planted

area (ha) 2009- 2013

2004 -2008

1999-2003

1994-1998

1989- 1993

Lok Heng Barat (Scheme)

1,953.22 - - - - 1,953.22

Lok Heng Timur (Scheme)

2,334.2 - - - - 2,334.2

Lok Heng Selatan (Scheme)

310.98 1421.00 - - - 1,731.98

Papan Timur (Scheme)

- 2,176.30 - - - 2,176.30

Total 4,598.4 3,597.3 - - - 8,195.7

Table 6: Planned and actual oil palm replanting activities for Lok Heng Complex

Total planned re-planting area for each estate (ha)

Total planned area (ha)

Year/ha Actual total area replant-

ed (ha) 2011 2012 2013 2014 2015

Lok Heng Barat (Scheme) 357.08 - - 357.08 - - 357.08Lok Heng Timur (Scheme) 1177.1 - 1177.1 - - 1177.1Lok Heng Selatan (Scheme) 310.98 - - 310.98 - - 310.98Papan Timur (Scheme) - - - - - - -

Amount (MT)

CPO PK

Certified tonnages claimed 12,371 3198

Total product tonnages sold* 34,638.67 10,191.85

Certified product tonnage sold (January to De-cember 2012)

Certified tonnages purchased* - -

Actual Production year 2013*** 36,832.33 9982.53

Closing stock product by end of year 2012 (De-cember 31,2012)

436.52 90

Projected output for next 12 months (year 2014) 56,897.5 14,850



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1.9 Area of Plantation (Total, Planted and Mature)

Table 7: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for FELDA-Lok Heng Complex

Estate Name Total area

(ha)

Oil Palm Planted area

(ha)

Mature (Production)

area (ha)

Immature (Non-production)

area (ha)

FFB Production

(tonnes)

Average yield/ ha*

Lok Heng Barat 2,107.94 1,953.22 1297.27 655.95 24,112.86 18.59Lok Heng Timur 2,875.06 2,334.2 1,157.1 1177.1 17,149.74 14.82

Lok Heng Selatan 1,834.98 1,731.98 1,421.00 310.98 21,061.08 14.82 Papan Timur 2,447.64 2,176.30 2,176.30 - 32,255.61 14.82

TOTAL 9265.62 8195.70 6,051.67 2,144.03 94,579.29 15.63

* Company data on average yield per ha is calculated over total oil palm planted area of each estate.

Table 8: Land use data for FELDA-Lok Heng Complex

Estate Name Total area

(ha)

Rubber

Planted Area (ha)

Oil Palm Planted Area

(ha)

HCV/

Potential HCV

areas* (ha)

Land used for other purposes (ha)

Housing Other Land

Use

Lok Heng Complex Lok Heng Barat (Scheme) 2,107.94 - 1,953.22 - 154.72 -

Lok Heng Timur (Scheme) 2,875.057 - 2,334.2 - 452.41 88.447

Lok Heng Se-latan (Scheme) 1,834.498 - 1,731.98 - 103.00 -

Papan Timur (Scheme) 2,447.64 108.05 2,176.30 - 163.29 -



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1.10 Progress Against Time Bound Plan

The following is FELDA’s listed of certified units to date and time bound plan at time of 2nd surveillance audit of Lok Heng palm oil mill and complex. Table 9: Felda Management Units which have to audited and certified to date

No. Complex Date of Audit Date of Certification Certificate expiry date1 Kota Gelanggi 29.09.2009 22.07.2010 21.07.2015 2 Lepar Utara 06 29.09.2009 22.07.2010 21.07.2015 3 Jengka 21 09.07.2011 14.01.2013 13.01.2018 4 Jengka 3 28.03.2011 13.12.2012 12.12.2017 5 Jengka 8 28.03.2011 13.12.2012 12.12.2017 6 Lepar Utara 04 04.07.2011 12.09.2012 11.09.2017 7 Jengka 18 13.07.2011 16.01.2013 12.01.2018 8 Padang Piol 28.03.2011 13.12.2012 12.12.2017 9 Adela 21.03.2011 16.04.2012 15.04.2017 10 LokHeng 21.03.2011 16.04.2012 15.04.2017 11 Semenchu 06.06.2011 25.07.2012 24.07.2017 12 Waha 21.02.2011 31.05.2012 29.05.2017 13 Bukit Kepayang 27.12.2011 07.01.2013 06.01.2018 14 Bukit Mendi 19.10.2011 05.12.2012 04.12.2017 15 Kemasul 19.12.2011 20.12.2012 19.12.2017 16 Tementi 19.12.2011 09.09.2013 08.09.2018 17 Triang 19.12.2011 15.10.2012 14.10.2017 18 Fajar Harapan 21.10.2013 27.02.2014 26.02.2019 19 Baiduri Ayu 21.10.2013 14.04.2014 13.04.2019 20 Penggeli 06.12.2012 14.04.2014 13.04.2019 21 Bukit Besar 03.12.2012 28.03.2014 27.03.2019 22 Kulai 05.12.2012 14.04.2014 13.04.2019 23 Lepar Hilir 18.12.2012 14.04.2014 13.04.2019 24 Bukit Sagu 20.12.2012 12.02.2014 11.02.2019 25 Belitong 10.12.2012 13.06.2014 12.06.2019 26 Kahang 12.12.2012 13.06.2014 12.06.2019 27 Nitar 17.12.2012 13.06.2014 12.06.2019

Table 10: Original time bound plan for certification of all Felda’s Management Units



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Table 11: Revised time bound plan in year 2014

No Mill complexes to be audited in the respective year

2009 2010 2011 2012 2013 2014 2015 2016 2017

1 K. Ge-

langgi Jengka

21 Adela Belitong Palong Timor Neram Krau Chalok Aring A

2 L. Utara 6 Jengka

3 Lok Heng

Bukit Be-sar

Serting Hilir Pancing Mempaga J. Barat Aring B

3

Jengka 8 Semencu Kahang Maokil Besout Serting J. Baru Ciku

4

L. Utara 4

Waha Kulai Tenggaroh Trolak Pasoh Kertih Kema-

hang

5

Jengka 18

B. Kepa-yang

Nitar T.Timor Keratong 2Selancar

2ASelendang Tersang

6

Padang Piol

Bukit Men-di

Penggeli Kechau A Keratong 3Selancar

2BJ.Bistari Cini 2

7

Kemasul Lepar Hilir Kechau B Sg Tengi N. Permata Kalabakan Cini 3

8

Tementi Bukit Sagu Keratong 9 Embara

BudiH.Badai Umas Sampadi

9

Triang F. Harapan L. Kemudi

Pontian

10

Baiduri AyuKembara

Sakti

11

M. Puspita

Certified 2 6 9 8 2 0 0 0 0

Plan 2 6 9 8 10 11 8 8 9

Total 2 8 17 25 37 46 54 62 71

*As of year 2014, there are 27 Felda Complexes which have been RSPO certified (highlighted in green)

**In 2017, there is additional one mill (Pontian)

As seen in the plan above, there were 8 management units planned to be audited in year 2013, i.e. Palong Ti-

mor, Serting Hilir, Maokil, Tenggaroh, T.Timor, Kechau A, Kechau B and Keratong 9. However, due to suspen-sion of the certification body engaged by Felda to conduct these audits, the certification audits for these pro-jects have been postponed to year 2014.

1.11 Compliance to Rules for Partial Certification

Compliance of the uncertified management units of FELDA against the rules for partial certification according to RSPO Certification System clause 4.2.4 was assessed by reviewing information stated on document Information for “Unassessed Management Units for RSPO Self Assessment” issued by TUV Rheinland. A summary of find-ings is as stated below:

Partial Certification Requirements Audit Findings

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

FELDA is RSPO member with membership no. 1-0013-04-000-00

(b-d) A challenging time-bound plan for certi-fying all its relevant entities is submitted to

There is timebound plan is as stated under Section



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the Certification Body (CB) during the first certification audit. The time-bound plan should contain a list of subsidiaries, estates and mills.

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

1.10 above

(e) No replacement of primary forest or any area identified as containing High Conserva-tion Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. Any new plantings since Janu-ary 1st 2010 must comply with the RSPO New Plantings Procedure

As found during the previous surveillance audit, there are new development areas under FELDA’s group i.e. PT Citra Niaga Perkasa, Sebangkit Dis-trict in Landak Regency, West Kalimantan Indone-sia with total area 14,385 ha. According to HCV as-sessment that conducted by Faculty of Forestry Bogor Agriculture Institute there are 7 types of HCV area with total 14,385 ha.

The New Planting Procedure assessment was conducted by certified RSPO certification body i.e. PT Mutuagung Lestari.The NPP notification letter is available on the RSPO website and dated on Jan-uary 09, 2013 signed by RSPO team leader and Citra Niaga General Manager. No other cases of replacement of primary forests or HCV areas were found being carried out by Felda since then

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

There is no identified land conflict in all FELDA’s certified management unit and uncertified man-agement unit.

(g) Labour disputes, if any, are being re-solved through a mutually agreed process, in accordance with RSPO criterion 6.3.

There is no identified labour dispute in all FELDA’s certified management unit and un certified man-agement unit.

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

Some legal non compliance as stated on the NCR below.

1.12 Progress of associated smallholders or outgrowers towards RSPO compliance All smallholder schemes under Felda Lok Heng are already included in the scope of the certified unit.

1.13 (Revised) Approximate Tonnages Certified

The approximate tonnages certified shall be the same as per the original certificate, which is as follows Crude Palm Oil (CPO) : 12,371 tonnes Palm Kernel (PK) : 3,198 tonnes



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2.0 ASSESSMENT PROCESS

2.1 Certification Body TUV Rheinland Malaysia Sdn. Bhd. is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 500 locations in 65 countries on all five continents. TUV Rheinland Malaysia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, and SA 8000. TUV Rheinland Malaysia’s office is located in Shah Alam, Selangor, Malaysia.

2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this surveillance audit that were part of the same assessment team for the certification audit are as follows: 1) Dian S. Soeminta (Lead Auditor) 2) Carol Ng (Environment & Best Practices) 3) Azizan bin Zakaria (OSH) New assessment team members that were not part of the previous assessment team are as per the table be-low:

Name Position Qualifications / Experience

Yusof Nizar Auditor (OSH

& Environ-ment)

Education: Diploma in Public Administration- MARA Institute of Technol-ogy, Malaysia (1991). Certificate of Safety and Health Officer-Malaysian Insurance Institute (2003). Bachelor of Corporate Administration (Hons)-MARA University of Technology, Malaysia (2003), Master of Science in Occupational Safety and Health Management-Northern University of Ma-laysia (2011), Candidate for Phd in Occupational Safety and Health Man-agement-Northern University of Malaysia. Trainings attended: ISO 9001:2000 IRCA/IATCA Lead Auditor Training-International Management & Technology Limited (Kuala Lumpur), ISO 14001:2004 IEMA Approved EMS Advanced Lead Auditor Training Course-Aspects Moody Certification Ltd (United Kingdom). OH&SMS IRCA Certified Lead Auditor Training Course-Moody International (Kuala Lumpur). MS 1722 Lead Auditor Training-Niosh Certification (Kuala Lum-pur) Working experience: Experience in managing, consulting, training and auditing quality, environmental, occupational safety and health manage-ment systems such as ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, MS1722:Part 1:2005 from 1996-Current. Contract Trainer of OSH & Environmental Legal & Other Requirements Lead Auditors course for SIRIM Training Services Sdn Bhd & NIOSH Certification Sdn Bhd. Contract Auditor for Environmental Management System for Sirim QAS International (2006). Department of Occupational Safety and Health Ma-laysia (DOSH) Registered Safety and Health Officer (2003-2006). Ap-proved Human Resources Development Fund (HRDF) Trainer (2011). Assessor for Prime Minister’s Hibiscus Award and involving assessment for oil and gas companies, plantations industries, manufacturings, utilities, cleaning and transportations services (2003-2011). OSH and Environ-mental Auditor for TUV Rheinland Malaysia RSPO Principles & Criteria.

Irpan Kadir Auditor (Social)

Education: Bachelor of Agriculture, Department of Social and Economic of Agriculture, Bogor Institute of Agriculture.

Trainings attended: Sustainable Natural Production Forest Management



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(Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indo-nesian Ecolabel Institute (LEI).

Working experience: Experienced as external auditor of PT TUV Inter-national Indonesia for RSPO Principles & Criteria since year 2009 and Sustainable Forest Management auditor since year 2003. Has experience in conducting assessments of performance and social mapping for mining and forestry companies. He also has experience as a senior social re-searcher since year 2000 to 2005 and is currently a CSR consultant and trainer at A + CSR Indonesia since year 2006.

Dr. Savinder

Gill

Auditor (Social, HCV & Land is-sues)

Education: Bachelor of Engineering (Hons) (Civil Engineering), Universiti Sains Malaysia (1999); Master of Science in Highway and Transportation Engineering, Universiti Sains Malaysia (2000) and Ph.D. in Environment & Resource Studies, Mahidol University, Thailand (2008). Trainings attended: November 2010: Auditor’s Training Course on the Malaysian Criteria and Indicators 2002 (Malaysian Timber Certification Council); May 2012: Auditor’s Training Course on the Malaysian Criteria and Indicators (Natural Forest) (Malaysian Timber Certification Council); September 2012: Lead Auditor’s Training Course for Roundtable on Sustainable Palm Oil (RSPO) (Proforest and WildAsia); November 2012: ISO 14001 Lead Auditor’s Training Course (by SGS (M) Sdn. Bhd.)

Working experience: Worked as a consultant/project highway and trans-portation engineer from 2000-2004 (Maunsell Sharma & Zakaria and Scott Wilson Pavement Engineering Sdn.Bhd.); Experience in project administra-tion and community development with the Indigenous Knowledge Network Project (2004); Co-ordinated social development/sustainable livelihood pro-jects as Consultant Environmental Sociologist for Orang Asli in Pahang under the United Nations Development Programme (UNDP)/Global Envi-ronment Facility (GEF) (2004-2007); Contract Social auditor/technical ex-pert for sustainable forest management (Malaysia Criteria and Indicators (MC&I )(Natural Forest) & Forest Stewardship Council (FSC) and Roundtable for Sustainable Palm Oil (RSPO) for SGS (M) Sdn. Bhd. (2006-present). Consultant Environmental Sociologist for due diligence, social impact assessments for sustainable forest and oil palm management and has worked with various rural communities in Malaysia and Indonesia on High Conservation Value Forest assessments (HCVF) with Malaysian Environmental Consultants (MEC) Sdn.Bhd (2006-2011). Social Screening Consultant for the Sarawak Railway Screening Project-Social Screening Social commissioned by the Bintulu Development Authority, Sarawak and assisted in APEC Transboundary Marine Spatial Planning and Manage-ment Project (with Sea Resources Management (SRM) Sdn. Bhd. from 2010-2011. Conducted Participatory Needs Analysis for Local Community Oil Palm Mill in Telupid, Sabah with Alter Palm Oil Trade, Japan (2010-2011). Trainer for social impact assessment for PACOS Trust, Sabah. Registered HCV assessor with RSPO (2010). Social and HCV Auditor for TUV Rheinland Malaysia RSPO Principles & Criteria (2014-)

2.3 Assessment Methodology & Agenda The surveillance assessment was conducted betwen 19 to 21 February 2014 as per the assessment program below. The assessment was carried out in accordance with TUV Rheinland Malaysia’s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland asses-sors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings.



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Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com-promising the integrity of the assessment in anyway. All 4 smallholders schemes and one mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and spe-cific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certi-fication body 30 days after the closing meeting. Verification of closure of major non-conformances was con-ducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next suriveillance audit. The surveillance assessment agenda is as explained below. 2nd Surveillance Audit Agenda.

Date Location/ Main sites

Main activities

16/2/2014 Sening Hall

Opening Meeting - Presentation by Felda - Finalization of audit plan

19/2/2014 Lok Heng Barat Lok Heng Timur Lok Heng Selatan

On site visit: Spraying area at Peringkat 4 (Lok Heng Barat), Block 12 (Lok Heng Barat) for harvesting activity, chemical store, chemical mixing area, fertilizer store, Klinik kesihatan Desa, Interview: Managers, Asst Managers, Supervisors, Stock Clerk, Mandores, Sprayers, Harvesters, Driver, Occupational Health Doctor, Medical Assis-tant Document Review: Medical Surveillance Report, JKKP 6, JKKP 8, Document Review: Policy (social, worker, environment), social impact as-sessment document, communication log book On-site visit: housing of migrant worker, working area at the field, Replant-ed area and application of zinc plates for wild boar management – Block 17, Level 2 EFB Application area – block 12, level 2 Small river/ drain – block 9 & 5

Interviews: migrant worker: working condition, working contract, facility for migrant workers

Document Review: Peat soil area, workers’ contracts, pay slips, check-roll, HCV/SIA management plans, minutes of meetings for GPW, gender com-mittee & JCC, insurance records, CSR program records. On-site visit: Boundary stone, workers’ housing Interviews: Leader of Lok Heng Selatan Smallholders, GPW chairwoman, Women’s Development Assistant, foreign workers (Eight male Indonesian workers and six male Indian workers)

20/2/2014 Lok Heng Mill

Site visit: Mill compound, loading ramp, EFB shredder construction site, in-cinerators, workshop, Palm Oil Mill Effluent Treatment ponds, security post, bridge scales, chemical store, scheduled waste store, water treatment plant Interviews: Grader Supervisor: FFB reception, grading process, employ-ees; Truck driver: child labour, FFB reception; Mill Manager, Assistant Mill Manager, Supervisors Workers, Quality Supervisor, Operation Supervisor, Foreman. Chief Clerk On-site visit: Clinic Interviews: Clinic Staff: diseases types and accidents frequency of Felda Lok Heng employees, especially migrant workers, health facilities and safe-ty for employees; Head of Worker Union Lok Heng Mill: working condition, working agreement, grievance mechanism, clerk (Gender Committee)



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Document Review: Workers’ contracts, pay slips, check-roll, HCV/SIA management plans, minutes of meetings for GPW, gender committee & JCC, insurance records, CSR program records, Register of Legal and Oth-er Requirements, Laporan HIRARC, permits for certificated machinery (PMD, PMT), Emergency Preparedness and Response Procedure, First Aid training records. Audiometric Test Report, Noise Mapping Report and license for drivers, PPE Issuance record, Pengenalpastian Hazad, Penilaian Risiko dan Penentuan Kawalan General SCC requirement -Management representative job description - SCC management system -Incoming FFB procedure - Production process -Incoming order -Product Dispatch

21/2/2014 Pulai De-saru Sening Hall

Preparation for closing meeting Closing meeting and presentation of findings

Verification of closure of major non-conformances was conducted on-site 1 month after the closing meeting of the surveillance assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The verification audit team members comprised of: 1) Carol Ng 2) Yusof Nizar 3) Dr. Savinder Gill The on-site verification audit agenda was as below:

Date Location/ Main sites Main activities1/4/2014 Sening Hall Opening meeting and finalization of verification audit plan

2/4/2014 Lok Heng Mill Verification of all open Major NCs for P&C and Supply Chain

Lok Heng Selatan Verification of all open Major NCs for P&C

3/4/2014 Lok Heng Barat, Lok HengTimur and Papan Timur Sening Hall

Verification of all open Major NCs for P&C Closing meeting and explanation of further evidence required



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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings The following is a summary of findings during this surveillance audit for the criteria listed in the RSPO Principles & Criteria Malaysia National Interpretation year 2011.

Principle 1: Commitment to transparency

Criteria assessed: CR1.1, CR1.2 Criteria not assessed: - Findings: CR1.1 Lok Heng mill, Lok Heng Barat and Lok Heng Timur still consistently documented requests for infor-mation and responses in the communication log books. Based on examination of the log book in Lok Heng Mill, there is visits report from the Department of Environment on 25 November 2013 requesting updates a number of documents, namely: 1) effluent discharge record, 2) the record of the ambient wa-ter. Update has been reported and documented. CR1.2 According to Section 7 of the Standard Operating Felda (RSPO) -Manual Lestari (ML-1A/L2-PR3(0) dat-ed March 2012, titled Consultation Involvement and Communication Procedures (“Prosedur Komunikasi Penglibatan Dan Rundingan”) the documents which are to be made publicly available (with permission from the management) are as follows: a. Internal Circulars and Memo b. Monthly Management Minutes of Meeting c. Minutes of Meeting of Occupational Health and Safety Committee d. Suggestions from Staff e. Written comments from relevant external stakeholder f. Complaints Investigation Report g. Written feedback/responses from interested parties h. Records of internal/external communication for mill/estates i. Land titles/User rights j. Health and Safety Plan k. Plans and impact assessments relating to environmental and social impacts l. Pollution prevention plans m. Details of complaints and grievances n. Negotiation procedures o. Continuous improvement plan p. List of stakeholders - Procedure for calculating prices, and for grading, FFB is based on MPOB. However, the FFB price (based on 1% OER) is displayed at the mill sign boards and the weighbridge ticket. There is no evidence that Lok Heng Mill has a safety and health plan for the year 2013 or 2014. Simi-larly, the most recent plan and impact assessment document in respect of environmental and social was created in 2013, while no document is available for 2014. Meanwhile, evidence of continuous im-provement plan documents made by Lok Heng Mill was also not available. In an effort to provide information to settlers, Felda provides Stakeholder Booklets displayed as sighted in Lok Heng Barat and Lok Heng Timur. The Stakeholder Booklet contains Felda policies related to the development and management of settlers’ plantation. Felda also provides information on plantation ac-tivities and financial statements for each settler. Each of the settlers got the receipt of income every month containing the crops, revenue, deductions (of paid loans, insurance, JKKR contributory, staple



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loans and cash). Settlers can also ask for interim debt balance statement documents each month to the management. Each of the settlers has a copy of contract for the transfer of land to be undertaken by Felda. Compliance status: Non-compliance NCR No. 2014-01 of 19 Lok Heng Mill Management does not have the following documents prepared and so these documents are not yet made publicly available: i) Safety and health plan for year 2014

ii) Plans and impact assessments relating to environmental and social impacts for year 2014

iii) Pollution prevention plans for year 2014

Principle 2: Compliance with applicable laws and regulations

Criteria assessed: CR2.1, CR2.2, CR2.3 Criteria not assessed: - Findings: CR2.1 There is evidence of non-compliance to legal requirements, but follow-up action was taken by the organi-zation to resolve these non-compliances, i.e. the mill was still using their incinerators even though the lo-cal Department of Environment no longer permits usage of incinerators. To resolve this, Felda headquar-ters had issued a letter in year 2012 to all mills with incinerators stating that they are no longer permitted to use incinerators from 1 January 2013 in accordance with the regulation. Lok Heng Mill had submitted a letter of request to the Head of Felda Palm Industries Sdn. Bhd. (FPISB) requesting for extension of permit for contractor to continue operations of the incinerators and ash bagging works, but this request was denied as seen from a response letter from FPISB. However, there is evidence that incinerator op-erations and ash bagging continued in year 2013 and was approved by FPISB, i.e. Work Order for bag-ging of ash from July until October 2013. Due to complaint from smallholders on open burning, Lok Heng mill was issued a total of 6 compounds of RM2000 each on 13 September 2013 by the Department of Environment, and evidence of payment was sighted. Since then, the mill has stopped incineration and al-so recently started construction of a bunch shredder on 16 February 2014, from which shredded bunches will be used in the boiler and no longer sent for incineration. Since the mill has already taken corrective action and paid the compound issued, this is noted as an observation. Some mill licenses were checked and found to be valid, e.g.: - MPOB license valid from 1 April 2013 to 31 March 2014 - DOE compliance schedule no. 002123 valid for 1 July 2013 to 30 June 2014, states maximum pro-

cessing capacity of 40 MT/hour of FFB and requirements for treated effluent - Permit for purchase of diesel, amount of 16,500 litres, 5 April 2013 - 06 April 2014 - Mill licenses for machinery used issued by DOSH, all valid until 18 June 2014 At Lok Heng Barat, evaluation of compliance was not done properly such as requirements for the Oc-cupation Safety and Health Act (OSHA) 1994 and its regulations, Factories and Machineries Act (FMA) 1967 and its regulations and Environmental Quality Act (EQA) 1974 and its regulations were not evalu-ated. In Lok Heng Selatan, sighted a list of Laws and Requirements Related to the Determination of Compliance with RSPO (‘Senarai Undang-Undang dan Keperluan yang Berkaitan dengan Penentuan bagi Pematuhan RSPO’) dated 8th January 2013. OSHA 1994 and FMA 1967 and their regulations were not included in the evaluation. Lok Heng Mill, the list of Legal and Other Requirements (FPI/L4/QOHSE-2.1 Pind.0) revised 15th March 2013 shows that Section 49A under EQA 1974 (rev. 2012) evaluated as complied even actually not complied as there is no competent person available to manage scheduled waste. There is a Register Of Legal And Other Requirements (Mekanisma Pengesanan Perubahan Undang-Undang) (FPI/L4/QOSHE-2.1) which lists down the relevant legislation and a description of the legisla-tion (observed at Papan Timur). Random checks of pay slips of workers (local and foreign) and staff in-dicate that the company has endeavored to comply with the Minimum Wage Order 2012 whereby all workers are paid no less than RM900/month for 26 days of work in a month. There is a Standard Oper-ating Procedure for tracking the changes in the laws, dated March 2012 (ref: (SOP) ML-1A/L2-PR2(0)),



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titled, “Mekanisma Pengesanan Perubahan Undang-Undang”, the implementation of which has been observed in Lok Heng Selatan and Papan Timur. In Lok Heng Barat, Legal and Other Requirements Compliance Register was found not having infor-mation related to requirements of OSHA 1994, FMA 1969, EQA 1974 and their related regulations. While in Lok Heng Selatan, The Legal and Other Requirements Compliance Register found under Cri-teria 2.1 (undated) not details enough to explain every related section requirements, just an abstract. For example OSHA 1994, FMA 1967 and EQA 1974. At Lok Heng Mill, the Legal and Other Require-ments Compliance Register for FMA 1967 last revised 26th February 2013, OSHA 1994 last revised 26th February 2013 but did not contain latest Occupational Safety (Classification, Labeling and Safety Data Sheet) Regulation 2013 (CLASS 2013). While for EQA 1974 last revised was on 15th March 2013 and Section 49A (revised 2012) was also included at page 8 of 18. At Lok Heng Barat, it was found that EQA 1974 revised 2012 and CLASS 2013 were not updated as the system for tracking changes not implemented and effective in detecting any changes. While in Lok Heng Selatan, there was a table Legal Changes Tracking System but the system fails in detecting the legal changes such as EQA 1974 revision 2012 and CLASS 2013 as sampled. CR2.2: The company is able to demonstrate legal ownership of the land including history of land tenure, e.g. in land title (leasehold) by the Johor State Government to Felda Lok Heng Selatan in a document dated 29 March 1984 (ref: No. Pemberitahuan Warta 299) from the Kota Tinggi District Land Administra-tion Office, titled, “Borang 5EK (Jadual Keempat Belas): Pajakan Mukim: Hakmilik No: 2389—Pengisytiharan Rezab Melayu Dalam Kawasan Gugusan Felda Lok Heng.” Scheme members have indi-vidual land titles which are registered under the names of the individual smallholders. An example of an individual land title is “Borang 5EK (Jadual Keempat Belas): Pajakan Mukim: Hakmilik No: 2389—Pengisytiharan Tanah Berkelompok Dalam Kawasan Rancangan L.K.T.P. Lok Heng Selatan” (ref: No. Pemberitahuan Warta 1293) dated 30 May 2012 sighted at Felda Lok Heng Selatan. A copy of the indi-vidual land titles are kept in the scheme office and a copy are retained by the individual smallholder.

CR2.3

The land occupied by Felda is a leasehold which is outside of Orang Asli reserves/areas and forest re-serves. Orang Asli, the only indigenous peoples in Peninsular Malaysia do not have rights to land tenure-ship as per Aborigines Peoples Act, 1954 (pertaining to Aboriginal Areas (Section 6) Reserves (Section 7). Therefore, Lok Heng Complex, according to the law, has no issues with customary rights. As such, there are no land disputes recorded which does not necessitate participatory mapping or land acquisition.

Compliance status: NCR No. 2014-02 of 19 Legal Requirements related to RSPO was found not having details and complete informations such as specific requirements of Occupational Safety and Health Acts 1994 and its Regulations, Factory Ma-chinery Act 1967 and its Regulations, Environmental Quality Act 1974 and its Regulations, only listed the main acts with an abstract and general information about the acts. NCR No. 2014-03 of 19 Evaluation of compliance was not done properly and covering all relevant sections such as requirements from Occupational Safety and Health Act 1994 and its regulations, Factories and Machinery Act 1967 and its regulations and Environmental Quality Act 1974 and its regulations as found in Lok Heng Barat and Selatan in list of Laws and Requirements Related to the Determination of Compliance with RSPO (‘Senarai Undang-Undang dan Keperluan yang Berkaitan dengan Penentuan bagi Pematuhan RSPO’). Only the 3 Acts mentioned and evaluated but their relevant regulations were not included and evaluated accordingly. While in the Lok Heng Mill, the List of Legal and Other Requirements (FPI/L4/QOHSE-2.1 Pind.0)” revised 15th March 2013 shows that Section 49A under EQA 1974 (rev. 2012) was ticked as complied even actually not yet complied as there is no competent person available to manage scheduled waste. Location: Lok Heng Barat, Lok Heng Selatan, Lok Heng Mill



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NCR No. 2014-04 of 19 The tracking mechanism for changes of law (‘Sistem Pengesanan Perubahan Undang-Undang’) is not effectively implemented as found Environmental Quality Act 1974 (revised 2012) not updated at Lok Heng Barat and Lok Heng Selatan. While new regulation Occupational Safety (Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 was also not updated at Lok Heng Barat, Lok Heng Selatan and Lok Heng Mill.

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

Criteria assessed: CR3.1 Criteria not assessed: - Findings: Lok Heng Timur has a budget with minimum two year projection until December 2015. The budget covers estimatation of costs for all major estate activities including management of immature plantings, drainage and harvesting paths maintenance, IPM, weeding, manuring, etc. The estate has no replanting program as all area has already gone through first round of replanting for all of the scheme’s area in year 2007 (estate level 1) and year 2012 (estate level 2 and 3) and has no further plans for replanting. Lok Heng mill still using 5 year business plan for period (2011 to 2015), information on this plan consist of projection of FFB purchased for 5 years until 2015, and projected oil extraction rate (OER) and ker-nel extraction rate (KER) for 5 years. A detailed financial analysis which includes information about profit and loss, product processed and sold, revenue, sales cost, processing cost etc., is clearly deter-mined on FELDA Palm Industries Budget for year 2013 and this document is made annually by FELDA headquarters. Profit and loss information for year 2013 is only available for FELDA corporation in gen-eral, no specific information for the mills. Documented management plans for most smallholder schemes for 2 years for years 2014 and 2016 now available, the plan will be shared to scheme smallholders or their elected representatives, infor-mation about management plan will be provided through regular meeting between scheme manager and elected smallholder representative. However in Lok Heng Selatan budget plan for year 2014 to year 2016 has not include information about budget plan for Plantation Maintenance program, harvest-ing activity. The budget only for supporting activities such as housing expenses, staff salary, training, and donation. This is raised as non conformity Compliance status: Non-compliance NCR No. 2014-05 of 19 It was found on Lok Heng Selatan budget plan for year 2014 to year 2016 has not include information about budget plan for Plantation Maintenance program, harvesting activity. The budget only for supporting activities such as housing expenses, staff salary, training, and donation Location: Lok Heng Selatan

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

Criteria assessed: CR4.1, CR4.2, CR4.3, CR4.4, CR4.5, CR4.6, CR4.7, CR4.8 Criteria not assessed: - Findings: CR4.1 The company applies an updated sustainability Manual with 3 main sections, i.e. Felda Global Ventures Manual for Sustainable Oil Palm, 2nd edition dated February 2012; Section 1 – Immature oil palm, Sec-tion 2 - Mature Oil Palm, and Section 3 – Replanting. Section 1 on immature oil palm includes SOP for replacement of planted seedlings, installation of tree protection, application of EFB, installation of Felda



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Mulch (sheet placed around seedlings to prevent weed from growing), weeding of LCC area, ablation, basal pruning, scout harvesting, census for Ganoderma inoculum and planting of beneficial plants. Sec-tion 2 on mature oil palm includes including SOPs for rat baiting, weeding at mature area, pruning, cir-cle racking, harvesting and collection of FFB at the loading ramp, management of loose fruits after havesting, FFB grading at the field, transportation of FFB to the mill, tree netting, road maintenance, bunch census, selective weeding. Section 3 on replanting, includes SOPs for census and management of Ganoderma infected trees, installation of boundary stones, management of rhinoceros beetles, pre-lining, weeding, cutting and felling old palms, road construction on flatlands, and hilly areas, terracing, drainage and boundary drains, planting of LCC, transportation of seedling to the field, rat baiting during replanting process, installation of barn owl boxes. There is evidence of implementation of the SOPs, i.e. rat baiting is done annually with follow-up census as required in the SOP as seen from records as Lok Heng Timur estate. Records of FFB harvested by daily basis, manuring records, spraying and pes-ticide control are kept. CR4.2 There is evidence of regular soil and tissue analysis conducted, i.e. sighted a letter from an operations officer for Felda Technoplant to all Felda Schemes dated 8 October 2013 requesting data for leaf and soil sampling required to be conducted, and additional data in the form of list of blocks from Lok Heng Timur identified for soil and leaf sampling. Felda Technoplant then produces fertilizer recommendations based on the results of the leaf and soil analysis which is sent to each scheme. However, it was noted as an observation that the estates do not maintain results of the soil and leaf sampling. CR4.3 There is evidence that the schemes still maintain soil maps, e.g. Lok Heng Barat has a detailed soil map for the entire estate. According to the map and data sheet on the estate soil type and topography, the estate does not have any fragile or marginal soil and no peat. The soils of the estate consist of ap-proximately 80% renggam soil and 20% local alluvium soil. The estate consists of 30% flat soils, 40% undulating soil, and 30% hilly soils. There is no evidence of bare or exposed soils in the estates and roads sighted during field visit to Lok Heng Timur scheme are well maintained. CR4.4 Adela mill sends samples of mill effluent for chemical analysis once a month to Penggeli Analytical La-boratory and analysis includes BOD, COD, total solids, suspended solids, oil and grease, ammoniacal nitrogen and total nitrog Checks of the latest 3 certificates of analysis show that the BOD analysis re-sults for October and November 2013 had exceeded the legal limit as defined in the mill’s DOE license. The mill has identified the issue that BOD was exceed and issued the a Corrective Action form for Con-trol of Complaints and Non-compliances dated 16 October 2013 with corrective action to be taken to control the exceeding of BOD. The corrective actions were effective to reduce the BOD as seen from final discharge analysis records for December 2013 and January 2014, the BOD of the samples taken were below the legal limit of 100pm. In addition, it was found that Penggeli Analysis Lab is not yet an accredited laboratory but has under-gone an accreditation audit by the Department of Standards Malaysia on 7 January 2013 as seen from letter from the department, but approval of accreditation has not yet been received by the lab. This was raised as an observation. Lok Heng mill maintains records of mill water usage per tonne FFB in monthly quality monitoring re-ports, however the mill does not conduct analysis of water usage to determine months where water us-age is high and implement measure to reduce water usage. As comparison, water usage in November 2013 was high at an average of 1.83 tonnes water per tonne FFB for 15210 MT processed but in June 2013, average was only 1.2 tonnes of water usage per tonne FFB for 22,480 MT of FFB processed, but no documented analysis done for why there is such a difference in water usage per tonne FFB. This is raised as an observation. CR4.5 During 1st surveillance audit, it was found that there is no SOP or work instruction for management of nettle caterpillar or bagworms which defines when census and at what rate of pest attacks (biological and chemical) are required to be conducted. At time of this 2nd surveillance audit, it was found there



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was still no SOP for census and definition of rate of pest attacks (biological and chemical) are required to be conducted, however during the audit week, the company produced two SOPs, one for “Manage-ment of bagworms through monitoring and census”, one for “Control of Leaf Eating Pests and the Es-tates”. It is raised as an observation that the SOP was not made available previously, however based on earlier interviews with estate staff, implementation is according to the requirements of the new SOP and this is not deemed a major issue since bagworm attacks are relatively low. The company conducts rat baiting for 100% of their company’s area annually and census is conducted after rat baiting to determine if follow-up baiting is required for areas found with attack rates above 20%. Sighted from sample Lok Heng Timur census records for Level 01 of the estate (the only area of the scheme with mature plantings) in July 2013, after rat baiting all blocks had attack rates from 32%-55%, so follow-up rat baiting was conducted At replanted areas adjacent to protected forest reserves, there are occasional attacks of wild boars. This is managed through installation of zinc plates or wire fencing material around each individual planted seedling and wrapping with reused fertilizer bags, as seen as replanted areas of Level 2 and 3 of Lok Heng Timur estate. CR4.6 At Lok Heng Barat, the medical surveillance was conducted for 10 workers (Sprayer) on 13th April 2013 by a licensed Occupational Health Doctor. It was found one sprayer at Division 4 was not sent for the medical surveillance. According to supervisor, they only sent representatives of the workers due to budget limitation and 12 sprayers were not included in the medical surveillance. The estate manage-ment made a letter dated 18th March 2011 requesting for budget to conduct medical surveillance for sprayers of FTPSB Lok Heng Barat from Head of Plantation Unit to Executive Director. In 18th June 2013 another application was made by Estate Manager to JCC Chairman Lok Heng Barat Mill for budget on medical surveillance. While in Lok Heng Selatan, the medical surveillance was conducted for only 15 Sprayers only on 25th April 2013. At Lok Heng Barat during sampling, there was no lady sprayer employed and stock clerk (who is a la-dy) was interviewed and found to have understanding about the requirements regarding not dealing with pesticides if she got pregnant or breastfeed baby. While in Lok Heng Selatan, there are no lady workers employed related to pesticides activities.

For Lok Heng Barat, there was evidence on training of PPE usage done on 2 March 2013 with partici-pants from the staff, supervisor, workers includes local and foreign workers. At Lok Heng Selatan, fire drill trainings and training on fire extinguisher handling been conducted on 13 Feb 2014 attended by the workers. Photos also included in the report. However, there is no training plan been sighted for 2014 with last training plan available was in 2013. At Papan Timur estate, training on the safety and health for sprayers was done on 5 April 2013 with participants from the workers, including the supervi-sors. However, no chemical handling training was conducted in 2013. The training plan also did not in-clude chemical handling. As this was raised as a non-conformity during previous surveillance audit, this was raised to Major NC during this audit. CR4.7 At Lok Heng Barat, Felda Technoplant's Safety and Health Policy signed by Executive Director dated 11th January 2013 displayed at office. At Lok Heng Mill, found at notice board displaying Felda Global Venture (FGV) Safety and Health Policy Signed by Executive Director dated 04th January 2013. At Lok Heng Selatan, the hazards identification was last updated on 15th January 2013 in Hazard Iden-tification, Risk Assessment and Risk Control Report (HIRARC). It was noted that the classification sys-tem of significant and non-significant risks may not be appropriate. Activities that score between 0-12 are not significant and more than 12 is significant. Only 4 activities were considered significant and all related to pesticides handling (score 16). While spraying activity, mixing chemical premix to pump were scored 8 and Not Significant. Overturn tractor also considered as Not Significant, whereas these risks should have been considered as significant. The format used was also not clear on how the score tabu-lated and there was no proper risk assessment example: (Probability X Severity). Also the HIRARC used the terms Aspects and Impacts instead of the correct terms, i.e. Hazard and Risk. In Table 3, Ac-tion Plan Schedule, it was found that all implementation dates for Action Plan Schedule (2013) were left blanks. For year 2010, a different format was used (FELDA-P4/C4.7/4.7.1 Hazard Identification, Risk Assessment and Risk Control prepared by a Supervisor on 11th May 2010. Lok Heng Mill, observed



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the form was revised 12th March 2013. Found that issues related to physical hazard (noise) was not properly identified in activities that done at noise level above 85 decibel as reported in the Additional Noise Exposure Monitoring Under Regulation 12 conducted at 1st September 2010. Related activities are Boiler Station, Installation of Softener, Thresher/PH Cooker/Conveyor, Pressing, Depericaper, Boil-er/Engine Room- Start up and operation, Monitoring process of Deaerator/Softener/ Overhead water tank. While control measures should be more detailed such as for noise hazard above 90 decibel, pro-posed only wear ear plugs while there are others to be included such as training, warning sign, audio-metric test. At Lok Heng Barat, observed in Division 4, sprayers using PPE such as Helmet, Safety Glass, Chemi-cal Mask, Apron, Gloves and Safety Shoes. While for Harvester, found 2 workers using helmet and safety boots. Lok Heng Mill, there were record books for issuance of PPE (Helmet and Ear plug). At Lok Heng Selatan, clear responsibility related to OSH such as chairman is the Manager, employer representatives and employee representatives. At Lok Heng Mill, found organization chart for Safety and Health Committee (SHC) was established for 2014. Chairman is the Mill Manager and the Secre-tary is the Assistant Manager, employer representatives consist of 10 staffs and employee representa-tives consist of 8 workers only. At Lok Heng Selatan, found the minutes of meeting for Safety and Health Committee dated 17th Octo-ber 2013, 18th February 2013, 28th December 2012. It should be regularly conducted or at least once in every 3 months. In Lok Heng Mill, the minute of meeting of Safety and Health Committee conducted on7th October 2013 attended by 18 staffs, 27th July 2013 attended by 13 staffs, 16th June 2013 at-tended by 14 staffs, 6th April 2013 attended by 13 staffs, 13th February 2013 attended by 14 staffs. For 2014 meeting conducted on 5th January 2014. At Lok Heng Barat, fire drill training was conducted on 13 Feb 2014 which includes using of fire extin-guisher and assembly. At Lok Heng Selatan, fire drill training and fire extinguisher handling been con-ducted on 13 Feb 2014 attended by the workers. However, fire extinguisher used at chemical store and office are obsolete (blue color) not accordance to the Malaysian Standard 2013. Safety and health plan for Papan Timur estate was established for 2014 which includes spraying, harvesting, manuring and safety and health in general. As sampled in Lok Heng Mill, there was a Manual Procedure for Management of Quality, Environmen-tal, Saefty and Health (QOHSE) - FPI/L2/QOHSE-22.0, Complaints, Nonconformity, Incident Investiga-tion and Corrective Action. Revision 3. This explained control related to accident and emergency. At Lok Heng Selatan, there was no training evidence for first aid training conducted as planned in the Training Plan for 2013. While in Lok Heng Mill there were training certificate for First aid training from Malaysian Red Crescent Society (MRCS) on 27th February 2013 attended by staffs in the mill. At Lok Heng Barat, in Division 4, found one mandore not having the first aid boxes, which according to the mandore, he had left it at home. While at Block 12, another mandore was not around as he has to attend a function. No first aid box also available for his group of workers. While in Lok Heng Selatan found 3 first aid boxes in the office not having sufficient contents and no proper record of issuance to mandore as well. Lok Heng Mill, found first aid box at the electricity room near workshop not having sufficient contents and need to be improved. This was raised as an observation. The office first aid box contents were found to be adequate. At Lok Heng Mill, found past accident reported using form JKKP 6 to Department of Occupational Safe-ty and Health (DOSH) involving one worker on 27th December 2013. Form JKKP 8 was also sent for year 2013 as reported to DOSH. The worker from Lok Heng Mill that had accident according to acci-dent report and checked through found that he is covered by government insurance scheme under So-cial Security Organization (SOCSO). Claimed was made accordingly for medical leave not covered by employer. Compliance status: Non-compliance NCR No. 2014-06 of 19 The scheme established sampling point to monitor water table only. There are 2 sampling point in Lok



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Heng Selatan however only one point has been monitored, the data other sampling point is not availa-ble. Company has no established yet sampling point to monitor subsidence level. NCR No. 2014-07 of 19 At Lok Heng Barat, the medical surveillance was conducted for 10 workers (Sprayer) on 13th April 2013 by a licensed Occupational Health Doctor. It was found one sprayer at Division 4 was not sent for the medical surveillance. According to supervisor, they only sent representatives of the workers due to budget limitation and 12 sprayers were not included in the medical surveillance. While in Felda Lok Heng Selatan Medical surveillance was only conducted for only 15 Sprayers on 25th April 2013. NCR No. 2014-08 of 19 1) There was no evidence training for first aid conducted for workers and mandores as planned in the Program Latihan 2013. 2) No evidence of letter signed by the mandore and lorry driver that they receive first aid kits as stated in previous year’s corrective action Location: Lok Heng Selatan NCR No. 2014-09 of 19 There is still no evidence of training on chemical handling been conducted. Discussion with smallholder and contractor on chemical handling in the JKKR/JKKK meeting was also not highlighted. The discus-sion is more to safety and health such as PPE and cleanliness in the meeting dated 14 November 2013, 11 July 2013 and 8 March 2013. Location: Papan Timur

Principle 5: Environmental responsibility and conservation of natural resources and biodiversi-ty

Criteria assessed: CR5.1, CR5.2, CR5.3, CR5.4, CR5.5 Criteria not assessed: CR5.6 Findings: CR5.1 Lok Heng Mill is ISO140001 certified and has an Identification of Environmental Aspects and Impacts Evaluation of Significance document which includes identification of aspects and impacts related to all mill activities. However, the mill had just recently started constructions of a bunch shredder but EAI evaluation for this new bunch shredder, including construction activities, was not yet done. In addition, the EAI is dated 30 August 2010, although explained by management that they do review the appropri-ateness of the EAI and only update the document when there are changes to their operations and ac-tivities. This was raised as an observation. At Lok Heng Barat, the aspect impact assessment for the estate was last assessed and reviewed dated 14 Dec 2012. The assessment includes maintenance of roads, irrigation system and re-planting as well. During the previous surveillance audit, it was found that the EIA at estates was not prepared correctly and there was lack of training of staff on how to prepare the EIA. During this surveillance audit, for Lok Heng Barat and Lok Heng Selatan, it was found that the non-compliance was not closed, as there is no evidence that training on aspect impact assessments been provided or that EIA prepared previously had been corrected, e.g. sighted at Lok Heng Selatan’s EIA, some of aspects of land clearing for re-planting and drainage or irrigation system were not included. The report of aspect and impact from plantation activity, waste and pollution is not updated since 15 Jan 2013. (Doc: 1/2010). CR5.2 The company has conducted an identification and assessment of HCV habitats and protected areas for Lok Heng complex in a document titled, “Laporan Pengenalpastian Nilai-Nilai Pemuliharaan Tinggi (HCV), Biodiversiti dan Pelan Pengurusanya Di Kompleks Felda Kompleks Lok Heng” (dated 04 May 2011), pre-pared by the Sustainability Department of Felda Agricultural Services Sdn.Bhd. The document has identi-fied the following HCV attributes within the Lok Heng complex, i.e. watersheds and rivers, i.e. Sungai Se-



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dili Kecil, Sungai Lukah and Sungai Papan (riparian reserve, 40m on either side:HCV 4). The HCV 6 val-ues identified within Lok Heng complex are graveyards. The HCV assessment was conducted in conjunc-tion with the SIA assessment whereby a standard questionnaire survey was conducted involving various levels of internal and external stakeholders. The HCV component was included at the final portion of the questionnaire. The HCV report was prepared internally using the MR 5.2/100 Standard Operating Proce-dure on the identification of HCV attributes (1-6) titled, “Pengenalpastian Kawasan Pemuliharaan Tinggi dan Tindakan Pemuliharaan”. The HCV assessment also included relevant wider landscape-level consideration, i.e. the assessment captured HCV habitats and protected areas surrounding Lok Heng complex, specifically primary peat swamp forests (HCV 1), Sungai Lukah and Sungai Sedili Kecil (HCV 4). The HCV document also includes a management plan for HCV habitats (including ERTs) and their con-servation. A management plan for duration of 12 months (for 2011 only) is available for each estate and mill within the Lok Heng Complex. The company is in the process of updating the management plan for 2014. The company has erected signboards in each of the estates to discourage any illegal or inappropriate hunting, fishing or collecting activities. Interviews with workers confirm that the company conducts regular briefings on the prohibition of hunting during the daily morning muster/roll call. However, there is no evi-dence of programmes to regularly educate the workforce about the status of the RTE species at Lok Heng Selatan and Papan Timur (requirements of the P&C 2013). This was raised as an observation. The status of HCV and RTE species (IUCN and national status, according to the Wildlife Conservation Act 2010) that are affected by plantation or mill operations is reported in the Appendices of the HCV report for Lok Heng Complex. However, the HCV report presented to the auditors is outdated, e.g. the HCV 1 identified in HCV report in 2010 is no longer applicable as the surrounding forested area has been converted to oil palm estate belonging to MADOS Holdings Sdn.Bhd. Nonetheless, he current management plan is still being updated. The audit team observed that there are no monitoring plans to support the management prescriptions listed in the HCV report for Lok Heng complex. This was raised as an observation. The outcomes of monitoring of HCV attributes in Lok Heng Complex will only be re-flected once the revised management plan for 2014 is completed.

CR 5.3

At Lok Heng Barat 3R plan has been established dated 24 December 2013 for fertilizer bags re-use, plastic, glass, metal is recycle, paper recycle, used PPE, used tyres, empty pesticide containers and organic rubbish as well. Guidelines for recycle of empty pesticide container established on 2 January 2009 and are being implemented. At Lok Heng Barat, empty pesticide containers are 3x rinse and punctured holes at the bottom before sent to supplier. In 2013, total of 713 pcs have been disposed ac-cordingly. However, for Lok Heng Selatan, no appropriate implementation for 3R been conducted. No records of implementation been sighted for such activities of recycle paper, tyres and used PPE. This was noted as an observation. Empty pesticide containers which are scheduled waste were not dis-posed accordingly to the license contractor and no records/inventory is available or kept. This was raised as a nonconformity.

CR 5.5

There is no evidence of land burning carried at in the field. However, open burning of domestic wastes was sighted near the office of Lok Heng Barat and Lok Heng Selatan Compliance status: Non-compliance NCR No. 2014-10 of 19 1) There is no evidence that training on aspect impact assessments been provided or that EIA pre-pared previously had been corrected, e.g. sighted at Lok Heng Selatan’s EIA, some of aspects of land clearing for re-planting and drainage or irrigation system were not included. 2) Lok Heng Mill has an Identification of Environmental Aspects and Impacts Evaluation of Significance document which includes identification of aspects and impacts related to all mill activities. However, the mill had just recently started constructions of a bunch shredder but EAI evaluation for this new bunch shredder, including construction activities, was not yet done.



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NCR No. 2014-11 of 19 Empty pesticide containers which is schedule waste were not disposed accordingly to the license con-tractor and no records/inventory is available/kept. NCR No. 2014-12 of 19 Open burning is sighted near the office of Lok Heng Barat and Lok Heng Selatan

Principle 6: Responsible consideration of employees and of individuals and communities af-fected by growers and mills

Criteria assessed: CR6.1, CR6.2, CR6.3, CR6.4, CR6.5, CR6.6, CR6.7, CR6.8, CR6.9, CR6.10, CR6.11 Criteria not assessed: - Findings: CR6.1 There is a social impact assessment for Lok Heng Complex, titled, Social Impact Assessment for Lok Heng Complex (“Laporan Penilaian Impak Sosial Kompleks Lok Heng”). The report includes a profile of the Lok Heng Complex, assessment methodology (with internal and external stakeholders) and identifi-cation of positive and negative social impacts. A standard questionnaire was used to elicit information from respondents. The SIA report was prepared internally using the ML-1A/L3-GP7 (0) Standard Oper-ating Procedure on the identification of social impacts titled, Identification of Social Impacts or “Pengenalpastian Penilaian Impak Sosial” dated March 2012. There is evidence that the assessment has been done with the participation of various levels of employees. The data collection was done through a questionnaire survey involving each category of internal and external stakeholders, i.e. staff, workers (local/foreign), supplier, contractors, scheme participants (smallholders) and their families as well as external government agencies The gender dimension was also included in the sampling. All stakeholder related to Felda Lok Heng were also notified via posters at the office/mosque notice board of the SIA in progress, inviting all to participate in the SIA. This was demonstrated through a notice dat-ed 8 September 2010 at Lok Heng Selatan, titled, ‘Notice-Social Impact Assessment (SIA) to be carried out for Lok Heng Selatan which is open to all parties’ (“Notis-Penilaian Impak Sosial (SIA) sedang dijal-ankan di Rancangan/Projek Lok Heng Selatan dan Ianya Terbuka Kepada Semua Pihak”). This was raised as a positive observation. However, the SIA did not adequately capture the responses of foreign workers, especially those who are not conversant in the local language. Also, the SIA relied solely on questionnaire and did not consider stakeholders who are illiterate/not conversant in Bahasa Malaysia. This was raised as a negative observation. In Lok Heng Mill, the most recent SIA assessment was done in 2013. Evidences in the form of com-pleted survey forms and photos of the form filling activities are available. In 2013, all issues emerged were entirely resolved, i.e. reports of the damage on rural roads, drinking water quality, fencing dam-age, and unresolved placement of migrant workers’ shelter. However, updates on social impact man-agement plan for 2014 could not be obtained. Meanwhile in Lok Heng Timur, the most recent SIA doc-ument was created in 2011, there is just no monitoring plan was made either for 2013 or 2014. This was raised as an nonconformity. CR6.2 Felda applied Communication, Participation and Consultation procedures; Doc. No: ML-1A/L2-PR3 (0) which took effect in March 2012 as a guideline. There are also several media to communicate and consult with stakeholders, i.e. there is a Joint Consultative Committee (JCC) at Felda Lok Heng which is a platform for consultation and communication between the different schemes and estates. There are other platforms for scheme participants (smallholders) such as the Jawatankuasa Kemajuan Rancangan (JKKR), Felda smallholders cooperative and a united women’s movement for female scheme participants and their dependents (Gerakan Persatuan Wanita / GPW). There is documented evidence of these meetings being held, samples include: minutes dated 29 August 2013 at Papan Ti-mur estate, titled, Felda Papan Timur GPW Committee Meeting Minutes or “Minit Mesyuarat AJK GPW Felda Papan Timur”.



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In Lok Heng Mill, the latest JCC forum was performed in January 22, 2014. The forum has become the media to discuss problems related to FFB inflowing. While in Lok Heng Barat, JKKR documents were checked are for September, October, November and December. In Lok Heng Mill, based on Reference Letter (008) 4031/LH/850/04 dated January 6, 2014, two officers were appointed to be in charge on the negotiation process between suppliers, local communities, contractors and other related parties. As well as in the Lok Heng Timur, two officers were appointed to be in charge for community relations. Each estate under Felda has a Social Development Assistant (SDA) who is responsible for engaging with stakeholders and dealing with social issues within the estate, including women’s issues. The SDA also acts as company representative in the women’s movement (GPW). Issues related to workers are handled by Technoplant while issues related to the smallholders are dealt by Felda. There is no evidence of records of confirmation of receipt and efforts to ensure that foreign workers un-derstand their terms and conditions of employment and company policies (Lok Heng Selatan). This was raised as an observation. CR6.3 Each of the estates and the mill has a grievance mechanism which is documented. There are several methods whereby a grievance can be channelled to the relevant authority at the estates and mill. There are two Standard Operating Procedures related to grievance mechanism, i.e. Communication, In-volvement and Consultation Procedure or “Prosedur Komunikasi, Penglibatan dan Rundingan” (ref: ML-1A/L2-PR3(0) and Procedure for Handling Complaints and Grievances or “Prosedur Menangani Aduan dan Rungutan” (ref: ML-1A/L2-PR4(0). Among the methods to channel complaints is via the morning muster/roll call, via respective supervisors (mandores), direct to the manager, in a complaints box located at the entrance to each estate/mill office or a standard form which is filled by workers to re-port about their housing/work conditions. The standard form is also available as a Standard Operating Procedure (ref: 105 FPI/L4/QOHSE-22.1 Pind 1, titled, Felda Palm Industries Sdn. (FPISB) Form for Grievance Control and Corrective Action (“Felda Palm Industries Sdn.Bhd. (FPISB). Borang Kawalan Rungutan Keingkaran Dan Tindakan Pembetulan”) dated 7 February 2011) which is applicable for all estates and mill at Lok Heng Complex. There is also a dedicated complaints book for staff, workers and smallholder (suppliers and contractors, wherever applicable). This was evident from a document titled, Complaint Records Book for Felda Lok Heng Selatan settlers or “Buku Rekod Aduan Peneroka Felda Lok Heng Selatan” sighted at Lok Heng Selatan estate. The grievance records are kept for at least three years. In addition, at the management level, the Joint Consultative Committee (JCC) is the plat-form for the grievance resolution at the highest level of Lok Heng Complex, which is a body consisting all estates and mill. The grievance mechanism for smallholders include the complaints box, meeting with the managers or SDA and visits by the estate manager to the settlement to elicit smallholders’ grievances, as seen in a document at Papan Timur estate titled, “Rekod Lawatan Rumah Peneroka Felda Papan Timur Januari-December 2013 oleh Pengurus Felda Papan Timur Mahmood Bin Omar”. The system is open to all in-ternal stakeholders, i.e. all workers (local and foreign), staff, contractors, suppliers and smallholders. The company has a record of stakeholders’ complaints. Based on the examination on the complaints record book in Lok Heng Timur, there is a record of complaint dated January 30, 2014 from a settler in Block 20 which stated that cultivation in his farm was not performed and the fruit bunches were not dealt with. The letter was responded on the next day, January 31, 2014. Another complaint request was about the request to take over the palm oil land to be managed independently, from a settler in Block 20, dated November 12, 2013. Felda has responded by saying that the process may take 6 months. Felda will not prevent settlers who want to plant independently. So far, settlers who were conducting independent planting were still sell their FFB to Felda and pay their dues for maintenance of every road to their plantations. Meanwhile, interviews with the Head of the Workers Union stated that they did not have written records of complaints. Any complaint will be delivered to the Head of the Workers Union. During 2013, there were no incoming complaint. In Lok Heng Barat Dormitory, Felda displayed the name and phone number of officers to be contacted by migrant workers for complaints. This was con-firmed by the dormitory residents, that they can contact the officers to report. However, despite there being a system for dealing with complaints and grievances for foreign workers, the system/grievance mechanism is not understood by foreign Indian workers. The grievance mecha-nism for Indian foreign workers is ineffective due to language barrier. An interview with Indian workers



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at Lok Heng Selatan on 19 February 2014 revealed that workers have many grievances regarding pay, working conditions and housing due to lack of understanding of terms and conditions of employment (terms and conditions of employment not explained in appropriate language). This was raised as non-compliance. CR6.4 There is a procedure for identifying legal and customary rights, as reflected in the Standard Operating Procedure (SOP), or more specifically, Manual Lestari dated March 2012, titled, Procedure for Identifi-cation of Customary Laws and Rights or “Prosedur Mengenalpasti Hak Perundangan dan Adat” (ref: ML-1A/L2-PR12(0)). This manual also includes identification of people entitled to compensation. Note that the Orang Asli, the only indigenous peoples in Peninsular Malaysia, do not have rights to land ten-ureship as per Aborigines Peoples Act, 1954 (pertaining to Aboriginal Areas (Section 6) Reserves (Sec-tion 7). Therefore, Lok Heng Complex, according to the law, has no issues with customary rights. There is a Standard Operating Procedure (SOP) for calculating and distributing fair compensation, i.e. Manual Lestari dated March 2012, titled, “Prosedur Penghitungan Dan Pengagihan Pampasan” (ref: ML-1A/L2-PR13(0)). Felda Lok Heng Selatan has demonstrated equal opportunities provided to both male and female heads of households to hold land titles in smallholder schemes. This was raised as a positive observa-tion. There are no land claims which necessitate compensation to date at Felda Lok Heng Complex. CR6.5 Lok Heng Barat, Lok Heng Timur, as well as Lok Heng Mill are documenting wages and work condi-tions. The audit team observed that there are employment contracts for local workers and staff at Lok Heng Complex. In Lok Heng Mill, working relationship was arranged in a Joint Agreement, which is re-newed every three years. Document that is currently in effect is for the period 2013-2015, but the HQ is yet to give a copy to the employees. Amendments in the new agreement is on increment of wages for general worker level, from RM520-RM1,065 to RM900-RM1,650. Examination on the slip salary of the general level of employee in Lok Heng Mill in January 2014 showed no wages below the minimum standard of wage condition. Workers’ pay slips are based on the check-roll which is filled in by the re-spective supervisors of the workers (local and foreign) whereas staff have a fixed monthly salary, the amount is stated in the employment contract. For migrant workers, rights and obligations of the workers have been set forth in the Employment Con-tract Agreement document. For Indonesian migrant workers, the document is written in Malay, while for Nepalese migrant workers, the document is in English and Nepali. There is also evidence to show that the migrant workers are legalised, i.e. through random checks on migrant workers’ passports (work permits). Workers work eight hours a day for 6 days a week. The audit team confirms that workers do not work on public holidays and week off days and that the overtime working hours and payments are in accord-ance with the Employment Act 1955. Foreign workers are insured under the Workmen’s Compensation Act 1952 (Act 273) whereas local workers and staff have social security (SOCSO) deductions, in ac-cordance with the Employees Social Security Act 1969 (Amended 2003). The audit team also confirms that the local workers and staff and the employer also contribute to the Employees Provident Fund (EPF), in accordance with the Employees Provident Fund Act 1951 (Act 272). The company also provides adequate housing, water (from Syarikat Air Johor) and electricity (from Tenaga Nasional Berhad, TNB) for its workers, in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446). Foreign workers are housed according to their ethnicity and religious beliefs and have adequate beds, running water from taps, kitchen and toilet facility. There is regular solid waste disposal system and routine maintenance for the upkeep of the linesite/housing. Based on information from a migrant worker, electricity and water costs around RM33, divided evenly for each occupant. During the placement of migrant worker in Lok Heng Estate, FTP manager will pro-vide an introduction regarding tasks, work location, scope of work, salary, and dormitory. Whereas training for safety and working techniques will be given in the next day. Usually, the introduction is de-livered in a Rollcall, but there is no written record related to the orientation program. There is also a special labour policy, titled, Foreign Worker Employment Policy, or “Polisi Pengambilan



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Pekerja Asing” (dated 28 June 2011) stating non-discriminatory practices. There is evidence of post ar-rival orientation program conducted at the headquarters (FGV) in Kuala Lumpur upon arrival in Malay-sia as well as briefing by the respective estate managers, with specific focus on safety, work scope and labour laws, as confirmed by migrant workers interviewed on 19 February 2014. However, the effec-tiveness of the post arrival orientation is questionable as foreign workers continue to voice out griev-ances pertaining to work conditions and entitlement. For example, workers allege that their wages are not calculated fairly and that water and electricity bill charges are over-deducted. Inspection of the pay slips and check-roll at Lok Heng Selaran reveal that the company is fairly calculating the wages. With regard to erratic water deductions, interviews with the management reveal that the water is supplied by Syarikat Air Johor and the bills are not sent on a regular basis, sometimes once in three months, hence, the deductions are a result of accumulation of past months’ bills. The audit team traced the source of most work-related grievances to ambiguities and discrepancies in the employment contract and the company’s lack of effective communication of the employment contract (especially pertaining to wage calculations, medical benefits, entitlement and utility deductions) to its workers (e.g. ineffective post-arrival orientation due to inappropriate language). The following are the findings related to em-ployment contracts for Lok Heng Complex which were raised as non-conformity (Major): 1. Contracts for foreign workers signed on 18 Feb 2014 are not in appropriate language. According

to an interview with 7 Indian national workers on 19 February 2014, these workers were made to sign employment contracts without knowing/understanding content of contract (no Free, Prior and Informed Consent). Moreover, contract substitution is observed whereby workers were promised works in factories instead were brought to work in an oil palm estate. Workers were also promised higher wages than wages currently received. Workers have many grievances regarding pay, work-ing conditions and housing due to lack of understanding of terms and conditions of employment (terms and conditions of employment not explained in appropriate language). There is a need for FELDA to monitor and regulate agents and revamp system of recruiting foreign workers to curb contract substitution and exploitation of foreign workers by agents.

2. Direct contracts of employment are not available for foreign workers at the at the FTPSB Papan Timur office. Only a template is available, not actual signed contracts. (Papan Timur)

3. Employment contracts for local workers employment by Technoplant (Felda Global Ventures Plan-tations Malaysia Sdn.Bhd.) only stipulate the pay, working hours, termination/dismissal period of notice and deductions such as SOCSO and EPF. There is no mention of bene-fits/allowance/insurance, holiday entitlements, overtime, sickness, maternity leave. (All FTPSB).

4. Employment contracts for Felda Technoplant (Felda Global Ventures Plantations Malaysia Sdn.Bhd.) staff only mentioned about pay and termination/dismissal period of notice. There is no mention of working days/hours; benefits/allowance/insurance, holiday entitlements, overtime, sick-ness, maternity leave or deductions such as SOCSO and EPF (how much contributed by employer and how much contributed by employee). There is also no reference to a Technoplant manual should there be any changes in the future). (All FTPSB)

5. Employment contracts for Felda staff only mentioned about pay, deductions such as SOCSO and EPF and retirement age. There is no mention of working days/hours; bene-fits/allowance/insurance, holiday entitlements, overtime, sickness, maternity leave termina-tion/dismissal period of notice. (All Felda)

6. Employment contracts for Bangladeshi and Indian workers are not in appropriate language (ob-served at Papan Timur and Lok Heng Selatan respectively ) Papan Timur and Lok Heng Selatan

CR6.6 There is a union for staff called Workers Union of Felda Global Ventures Plantations (Malaysia) Sdn.Bhd. and a Workers Union Felda Palm Industries Sdn.Bhd. Peninsular for all workers and staff. Nonetheless, there is no specific union for Technoplant (FTPSB) staff. These staff have the option to join the larger Felda workers’ union as the requirement for a union is 500 persons. As per immigration department rules, foreign workers are not allowed to join unions. There is documentation, dated 15 April 2013 (ref: (358)KPF/IP/6Bhg.II) to show that staff and local workers at Lok Heng Complex are members of the union, titled, Confirmation of Application to become a Felda Workers Union Member or “Pengesahan Permohonan Menjadi Ahli Kesatuan Pekerja-Pekerja Felda”. In addition, there is also workers’ union handbook, sighted at Felda Papan Timur, titled, Regulations And Workers Union Consti-tution of FELDA, Registration no. 455 or “Peraturan-Peraturan Dan Perlembagaan Kesatuan Pekerja-Pekerja FELDA No: Pendaftaran: 455”. However, local workers and staff at the estates are not well-informed about the worker’s union. Some local staff are members of the union, with RM6 deducted from salary but they have no information about activities of the union and are not involved in the work-



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ers’ union. The union representative at the scheme level is not known. This was raised as an observa-tion. Felda also could not provide the document from the immigration stating that foreign workers are not allowed to join unions. There is a published statement in Bahasa Melayu (dated 28 June 2011) sighted at Lok Heng Selatan and Papan Timur recognizing freedom of association, titled, Freedom of Association in un-ions/volunteer services or “Polisi Kebebasan Mengganggotai Kesatuan/Khidmat Sukarela”. CR6.7 Child labor policy contained herein the Sustainable Manual 1A No ML-1A/L2-PO9 (0) which took effect since March 2012. The document is yet unchanged. Based on interviews with selected employees and examination on the list of local and foreign workers, as well as passport documents, there are no work-ers aged less than 18-years-old. There is also documented evidence that minimum age requirement is met. Random checks of staff and local workers’ employment contracts and personal details as well as passports of foreign workers at Lok Heng Selatan and Papan Timur demonstrate compliance to the minimum age requirement of Malaysia, i.e. 16 years. Moreover, Felda, in a document dated 20 De-cember 2010, titled, Policy for Underaged Workers “Polisi Pekerja Kanak-Kanak” clearly stipulates that children under the age of 17 are not permitted to work in the estate. CR6.8 Equality of Opportunities Policy is referred to the Policy No. ML-1A/L2-PO10 (0) which took effect since March 2012. The document is displayed on the information board. Upon interviews with local employees, there are no complaints of discriminatory practices, for example in the promotion opportunities as well as in the training opportunities. Migrant workers receive the same employment benefits such as pay, holiday entitlement, working hours as local workers. Foreign workers have the Workmen Compensation insurance in lieu of the SOCSO for local workers. Interviews with six migrant workers (Indian) at Lok Heng Selatan estate on 19 February 2014 confirm that migrant workers are recruited based on their skills (especially for harvesters) and medical fitness. CR6.9 There is a policy on sexual harassment, titled, “Polisi Gangguan Seksual (Seksyen 22, Kod Etika dan Tatalaku Petugas)“ dated 20 December 20 sighted at Lok Heng Selatan and Papan Timur estate. There is also a Standard Operating Procedure (Manual Lestari) for the grievance mechanism pertaining to sex-ual harassment dated March 2012 titled, “Prosedur Menangani Aduan Oleh Gender Committee“ (ref: ML-1A/L2-PR10(0)). There is also a guideline on dealing with sexual harassment at the workplace by the Jabatan Tenaga Kerja Semenanjung Malaysia (Department of Human Resources Peninsular Malaysia), titled, “Kod Amalan Untuk Mencegah dan Membasmi Gangguan Seksual Di Tempat Kerja/Code of Prac-tice on the Prevention and Eradication of Sexual Harassment in the Workplace”. There is a dedicated gender officer at Lok Heng Selatan but no gender committee. Papan Timur has a gender committee but no gender officer. There is also a Gender Committee at the Regional level (Johor Bahru) as demonstrated in the minutes of meeting dated 28 October 2013, titled, “Minit Mesyuarat Ahli Jawatankuasa Bertindak Wanita (RSPO) 2/2010-Felda Wilayah Johor Bahru.” However, the sexual harassment policy is not ade-quately implemented and communicated to all levels of staff. The grievance mechanism is available but not effectively communicated to all levels of workforce. These were collectively raised as non-compliance at the criterion level. The details of the non-conformity (Major) are as follows:

Sexual harassment policy not adequately implemented and communicated to all levels of staff. There is no Gender Committee at Lok Heng Selatan, only a gender officer appointed in 2010.

There has not been any training on women’s rights or counselling or any awareness-raising on gender issues.

There is a gender committee at FTPSB Papan Timur but there is no evidence of any activity. The committee activities and its members list, including its affiliation with the Wilayah and Lok Heng JCC Gender Committees is not updated. There is also no coordination/cooperation be-tween FTPSB and FELDA on gender issues,

New female staff are not sensitised on the sexual harassment policy, not appointed to the ex-isting gender committee at Papan Timur.

There is no monitoring on the implementation of the sexual harassment policy as the gender committees remain dormant at Lok Heng Complex (Lok Heng mill and all schemes)

There is no grievance mechanism for gender issues, i.e. pertaining to sexual harassment and/or wom-



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en’s reproductive rights at Lok Heng Selatan (based on interview with Hjh.Rubishah Binti Mesran (19 February 2014), gender officer at Lok Heng Selatan). CR6.10 FFB extraction rate FFB is determined by considering the crop age, bunch weight and plantation loca-tion (Semenanjung or Sabah/Serawak). While fruit prices are determined by MPOB announced and in-cluded in the system each day. In the front of the fruit reception area, Lok Heng Mill displayed an information of fruit prices for the day and the previous day. Fruit prices are classified into A (for the fruit from Felda’s plantation) and B (for the fruit from external suppliers). During the audit, FFB price dated February 20, 2014 for FFB A was RM29.50 and for FFB B was RM28.80. While the price on the previous day for FFB A was RM29.00 and for FFB B was RM28.30. For external FFB purchase, Lok Heng Mill imposed specific conditions i.e. extraction rate value, deduc-tion for transportation, and processing fee. In the offering document, the FFB price calculation formula is also presented. There is evidence of payment of FFB purchase from external supplier for FFB deliv-ery date on February 10, 2014 and was paid on February 11, 2014 at the amount of RM46,381.85. CR6.11 Felda has a document of social activity agenda. Findings in Lok Heng Timur Estate showed that Felda supports settler’s activities which include: Islamic religious feast, edible garden program, as well as the Independence Day celebration. Felda also developed an annual plan for community activities in 2013 which included: routine meeting with settlers (monthly), health and safety program, loans for college admission fee, study tutoring for students. Compliance status: Non-compliance NCR No. 2014-13 of 19 There is no evidence that management has made an SIA monitoring plan for year 2014. In addition man-agement is also not able to show the progress of settlement of issues / impacts that have been identified in the SIA document for year 2012. Location: Lok Heng Timur, Lok Heng Barat, Lok Heng Mill NCR No. 2014-14 of 19 The system for dealing with complaints and grievances for foreign workers are not understood by foreign Indian workers. Thus, the grievance mechanism for Indian foreign workers is ineffective due to language barrier. An interview with Indian workers at Lok Heng Selatan on 19 February 2014 revealed that workers have many grievances regarding pay, working conditions and housing due to lack of un-derstanding of terms and conditions of employment (terms and conditions of employment not explained in appropriate language). NCR No. 2014-15 of 19 1) It was still found that foreign employees working in the plantation have not received copies of their em-

ployment contracts which states the terms and conditions of employment. Interviews with these foreign employees revealed that they do not know their terms and conditions of employment such as the an-nual leave and medical leave they are entitled to.

2) Employment contracts sighted also do not state benefits/allowance/insurance, holiday entitlements, overtime, sickness, maternity leave.

3) There is still evidence of contract substitution for foreign workers, where the contract held by workers stated a 2 year working plan but the contract made by FELDA for the same workers stated 3 years. In addition, workers were promised work in factories instead were brought to work in an oil palm estate. Workers were also promised higher wages than wages currently received.

4) Contracts for Bangladeshi and Indian foreign workers signed on 18 Feb 2014 are not in appropriate language. According to an interview with 7 Indian national workers on 19 February 2014, these work-ers were made to sign employment contracts without knowing/understanding content of contract (no Free, Prior and Informed Consent).



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NCR No. 2014-16 of 19 Nepalese Workers can show a copy of the employment contract. However foreign worker from Indonesia claim that they do not have a copy of their employment contract. Location: Lok Heng Timur NCR No. 2014-17 of 19 Sexual harassment policy not adequately implemented and communicated to all levels of staff, with evi-dence as below:

1. There is no Gender Committee at Lok Heng Selatan, only a gender officer appointed in 2010. There has not been any training on women’s rights or counselling or any awareness-raising on gender issues. 2. There is a gender committee at FTPSB Papan Timur but there is no evidence of any activity. The committee activities and its members list, including its affliation with the Wilayah and Lok Heng JCC Gender Committees is not updated. There is also no coordination/cooperation between FTPSB and FELDA on gender issues. 3. New female staff are not aware on the sexual harassment policy, and not appointed to the existing gender committee, e.g. at Papan Timur. 4. There is no monitoring on the implementation of the sexual harassment policy as the gender commit-tees remain dormant at Lok Heng Complex. NCR No. 2014-18 of 19 There is no grievance mechanism for gender issues, i.e. pertaining to sexual harassment and/or wom-en’s reproductive rights at Lok Heng Selatan (based on interview with the gender officer at Lok Heng Selatan).

Principle 7: Responsible development of new plantings

Criteria assessed: - Criteria not assessed: CR7.1, CR7.2, CR7.3, CR7.4, CR7.5, CR7.6, CR7.7 Findings: Principle 7 is not applicable as there are no new plantings within Lok Heng complex. All areas replant-ed since year 2005 were already previously planted with oil palm and had only undergone replanting. Compliance status: Not Applicable

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

Criteria assessed: CR8.1 Criteria not assessed: - Findings: Lok Heng Mill has since end of year 2013 started operating a new bunch shredder installed by supplier Diamatix Resources & Engineering, contract no. FPISB 197/2013 for purpose of extracting additional oil from the EFB and also to use the shredded EFB for the boiler to produce renewable energy. Addi-tional EFB will also be used for mulching at the estates. The mill has a documented list of objectives for Quality, Environment and OSH improvement, dated 05.02.2014. Objectives for environmental im-provement include reducing discharged effluent BOD reading to below 50ppm, to stop completely the use of incinerator, construction of sump and regular cleaning of the sump pond, and installation of T pipe at trap no. 9. There are records of monthly monitoring. However, it was found that Scheme Managers currently do not have action plan for continual improve-ment in a participatory manner with their organized smallholder representatives, based on considera-tion of the main social and environmental impacts and opportunities for improvement. For example, at



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Lok Heng Selatan, the continual improvement is not updated for 2014. Activities of minimise usage of pesticides, pollutions prevention plan and social impact were not conducted. Sighted only a draft action plan dated until May 2013 without approval by the management. This was raised as a non-conformity. There is no mechanism to capture the performance and expenditure in social aspects. Lok Heng Se-latan and Papan Timur. This was raised as a non-conformity. Compliance status: Non-compliance NCR No. 2014-19 of 19 1) Scheme Managers currently do not have action plan for continual improvement in a participatory man-ner with their organized smallholder representatives, based on consideration of the main social and envi-ronmental impacts and opportunities for improvement. 2) The schemes have no mechanism to capture the performance and expenditure in social aspects.

3.2 Status of Previously Identified Non-conformities

During the 1st surveillance assessment in year 2013 for Felda Lok Heng, a total of 15 nonconformances were identified. These consisted of 2 major non-conformities and 13 minor non-conformities. During this surveil-lance assessment, it was found that there was insufficient evidence for closure of all non-conformities, and some nonconformances raised previously were raised to major during this surveillance audit with follow-up audit conducted one month after the audit in order to verify closure of all major nonconformities raised. The following is a description of the evidence of action taken to close the non-conformities raised during the previ-ous assessment, as well as auditor’s conclusions on the status of the non-conformities.

Criterion 2.1. (Major indicator 1) Evidence of compliance with relevant legal requirements.

Non-conformance 2013-01 of 15 (Major non-conformity) Procedures on compliance with relevant legal requirements were documented and evidence of compli-ance was evident. However the implementation of compliance were found short addressing the follow-ing: 1. Three (3) employees of Lok Heng Mill were working more than 12 hours per day in one to three cer-

tain days in a month. For e.g. one employee was working for two shifts to due to second shift employ-ee was on emergency leave and (total hours worked recorded 15.5 hours) and another employee with total hours of worked recorded 14 hours on 3rd Dec, 2012, this is inconsistent with Employment Act 1955.

2. Deduction of wages from local employees for Great Eastern Insurance Scheme premium repayment and water and electricity usage exceeding the subsidized amount from foreign employee’s wages without approval from Labour Dept, as found on payment slips, at Lok Heng Mill.

3. Minimum wage of all estate workers was not implemented in accordance with National Minimum Wage Act year 2013, e.g. RM 800 plus as review on the payslip while in the regulation stated RM 900.

4. Management of scheduled waste at Lok Heng Mill is not in accordance with Environmental Quality (Scheduled Wastes) Regulations 2005 in, e.g.: a) Some scheduled waste (used batteries, paint tins, contaminated rags) is stored at the large mate-

rial store instead of at the scheduled waste store. Some paint tins were also sighted disposed into the mill’s EFB pile, instead of managed as scheduled waste

b) Some schedule waste also found stored with no evidence of collection for more than 180 days, i.e. oil filters (SW410), paint tin cans (SW418), used batteries

Corrective Action: 1. The mill has contacted the Johor Labour Department to get clarification on the issue of working

hours exceed 12 hours a day. It was informed that employee can work more than 12 hours a day if his services are required by the employer to do so. This is based on evidence in the Employment Act 1955 (Act 265) section 60A (2) (a) - (f) where an employee may be required by his employer to



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exceed the limits of time and work on a rest day in the case of (a) - (f). However, it should be con-trolled and can not happen on a regular basis and should be treated as overtime. The most im-portant thing to observed by the employer is not to allow an employee to take an overtime more than 104 hours per month. Lok Heng mill has a written permission from the labor department to al-low employees to take overtime up to 120 hours per month.

2. Wages deduction for Great Eastern Insurance scheme is individual based. This Great Eastern in-surance scheme also does not involve all staff and staff who are interested only just joined. The employer never issued any instruction on salary deduction for this insurance scheme. To facilitate the monthly payment is done, the staff will personally make an application letter to the employer so that it is made by salary deduction. Sample of application latter from the employee enclosed. This is the same as the salary deduction for Haj scheme, ASB, Bank Loan and etc. The use of electricity and water is depend on the staff house itself. The employer only make a salary deductions based on the total bills incurred by TNB and SAJ. This is intended to avoid any outstanding bills and other problems that may arise if staff make payments on their own This issue is not related water and electricity usage exceeding the subsidized amount from foreign employee’s wages as issued by auditor.

3. Minimum wage of all estates are implemented in Felda commencing March 2013. The evidence of

Circular letter regarding Felda Workers Salary & Workers Minimum Wage and Payments Rates in 2013 is enclosed.

4. (a) All the scheduled waste (used batteries, paint tins, contaminated rags) at the large material

store will be stored at the scheduled waste store. All paints that were found at EFB pile area was collected back and stored at the schedule waste store. The mill also will inform all employees to keep the scheduled waste stored only. (b) All the schedule wastes were disposed on 10/05/2013 by Kualiti Alam Sdn Bhd. Evidence en-closed.

Auditor Conclusions: Closed 1. It was confirmed that Lok Heng mill has a written permission from the labor department to allow em-ployees to take overtime up to 120 hours per month, and sample checks of worker’s overtime records show that their overtime hours did not exceed the maximum permitted overtime hours stated in the mill’s permit. 2. Headquarters of Labour Dept (16)dlm.BSM.7/2/35/68 Bhg.1 dated 25 October 1996 and the Employee Wage Deduction Permit clearly state the type of deduction that can be deducted. The approval letter dan permit are still valid. 3. Thorough checks of payslips against the checkrolls at Lok Heng Selatan and Papan Timur indicate full compliance to the Perintah Upah Minimum 2012 (Minimum Wages Order 2012). 4. Management of schedules wastes at the mill has improved and scheduled waste are collected within 180 days in accordance with the requirements of the EQA Scheduled Wastes Regulations 2005.

Criterion 2.1. (Minor indicator 3) A mechanism for ensuring that they are implemented.

Non-conformance 2013-02 of 15 (Minor non-conformity) Lok Heng Selatan has a documented list of legal requirements and conducted a check of compliance to legal requirements on 8 January 2013. However, the list is not complete with all applicable legal regula-tions, e.g. the Occupational Safety Act 1994, Children and Young Persons Employment Act 1966 and applicable amendments. In addition, the check does not cover assessment of compliance to all clauses under these regulations

Correction: Project : Lok Heng Selatan 1) The annual checking on compliance to cover on all applicable legal regulations. Corrective action: Project : Lok Heng Selatan 1) The mill manager to ensure that the officer appointed to evaluate the relevant legal requirement done



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the evaluation by covering the other entire relevant legal requirement such Occupational Safety Act 1994, Children and Young Persons Employment Act 1966 and all clauses under these regulations Auditor Conclusions: Open The documented list of legal requirements has been amended to include the Occupational Safety Act 1994, Children and Young Persons Employment Act 1966. However, the legal compliance checklist has not been updated since 8 January 2013. The newly updated legal compliance checklist also did not include the Young Persons Employment Act 1966. As the list of legal requirements did not contain spe-cific information about specific requirements to be complied with, this was raised to Major Non-conformity 2014-02 of 19. In addition, evaluation of compliance was still not done properly and not covering all relevant sections such as requirements from Occupational Safety and Health Act 1994 and its regulations, Factories and Machinery Act 1967 and its regulations and Environmental Quality Act 1974 and its regulations as found in Lok Heng Barat and Selatan in list of Laws and Requirements Related to the Determination of Compliance with RSPO (‘Senarai Undang-Undang dan Keperluan yang Berkaitan dengan Penentuan bagi Pematuhan RSPO’). Only the 3 Acts mentioned and evaluated but their relevant regulations were not included and evaluated accordingly. This was raised to Major Non-conformity 2014-03 of 19.

Criterion 2.1. (Minor indicator 4) A system for tracking any changes in the law.

Non-conformance 2013-03 of 15 (Minor non-conformity) There is evidence that mechanism or tracking system for identifying legal changes is poorly imple-mented. For example, Environmental Quality Act 1974 was revised in August 2012 and Solid Waste and Public Cleansing Management Act was gazetted in 2007, however these legal requirements were not included in the ’List of Regulations and other RSPO Requirements’ dated 13/12/12. Correction: Project:Papan Timur 1) The scheme will refer to Felda Headquarters on updating the revised acts and amended laws accord-ingly and being included inside the’List of Regulations and other RSPO Requirements’.

Corrective action: Project: Papan Timur 1) Annual monitoring by mill’s manager to ensure that the legal requirement being updated and being implemented according to new ammendments and revision of Malaysia Laws and Acts. Reference with the Felda Headquarters be made to update accordingly with the company’s policies Auditor Conclusions: Open The tracking mechanism for changes of law in Sistem Pengesanan Perubahan Undang-Undang not ef-fectively implemented as found Environmental Quality Act 1974 (revised 2012) not updated at Lok Heng Barat and Lok Heng Selatan. While new regulation Occupational Safety (Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 was also not updated at Lok Heng Barat, Lok Heng Selatan and Lok Heng Mill. This was raised to Major Non-conformity 2014-04 of 19.

Criterion 4.2. (Minor indicator 3) Monitor area on which EFB, POME and zero-burning replanting is applied.

Non-conformance 2013-04 of 15 (Minor non-conformity) EFB sighted in the field at Block 7 of Lok Heng Timur was applied in a row with two layers. This is not in compliance with Felda's Sustainable Estate Operational Manual for October 2007, which states that application shall be in 3 circles around each tree and in one layer Correction: Project: Lok Heng Timur 1) In block 7 of Lok Heng Timur,on next EFB application the implemention will be corrected in 3 circles around each tree and in one layer.



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Corrective action: Project: Lok Heng Timur 1) Scheme would conduct the EFB application record monitoring in 3 circles around each tree and in one layer for next EFB application. The mechanism was explained to smallholder during JKKK monthly meeting. Auditor Conclusions: Closed with observations Felda Global Ventures has produced a revised estate sustainability manual in year 2012 which states clearly that application of EFB in one layer in a circle around trees is only for recently planted and im-mature trees. For the mature trees, there is no SOP for the method for EFB application but EFB is ap-plied when available to areas which are found to be less productive.

Criterion 4.3 (Minor indicator 4) Subsidence of peat soils should be minimised through an effec-tive and documented water management programme.

Non-conformance 2013-05 of 15 (Minor non-conformity) Lok Heng Selatan has no established sampling point for subsidence monitoring and does not maintain water table monitoring reports Correction: Project : Lok Heng Selatan The scheme to established sampling point for subsidence monitoring and maintain the water table moni-toring reports.

Corrective action: Project : Lok Heng Selatan 1) Implementation Measurement of Peat Subsidence and Water Management to be annually moni-tored by scheme appointed officer. Manager to have assured the record updated accordingly.

Auditor Conclusions: Open The scheme established sampling points to monitor water table only. There are 2 sampling points in Lok Heng Selatan however only one point has been monitored, the data for the other sampling point is not available. The company still has no established yet sampling point to monitor subsidence level. This was raised to Major Non-conformity 2014-06 of 19.

Criterion 4.5. (Minor indicator 2) Monitoring extent of IPM implementation for major pests.

Non-conformance 2013-06 of 15 (Minor non-conformity) There is no SOP or work instruction for management of nettle caterpillar or bagworms which defines when census and at what rate of pest attacks (biological and chemical) are required to be conducted. At some estates, there was no records of census done to determine if rates of rat attacks are above 5% to justify usage of chemicals to manage these pests, as required in Felda's Sustainable Estate. Correction: Project: All Schemes 1) Reference with Felda Agricultural Services (R&D), on the SOP of nettle caterpillar or bagworms. 2) The rat census will be done annually in determining the rat attacks are above 5% to justify usage of chemicals. Corrective action: Project: All Schemes

1) Reference made with Felda Agricultural Services(R&D),there is still no SOP management of nettle caterpillar and bagworms but there is guideline in refer to “Risalah Kawalan Tanaman” as for Felda Group reference.



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Auditor Conclusions: Closed with observations 1) At time of this surveillance audit, it was found there was still no SOP for census and definition of

rate of pest attacks (biological and chemical) are required to be conducted, however the company produced two SOPs, one for ”Management of bagworms through monitoring and census”, one for ”Control of Leaf Eating Pests and the Estates”. It is raised as an observation that the SOP was not made available previously, however based on earlier interviews with estate staff, implementation is according to the requirements of the new SOP.

2) The company conducts rat baiting for 100% of their company’s area annually and census is con-ducted after rat baiting to determine if follow-up baiting is required for areas found with attack rates above 20%. Sighted from sample Lok Heng Timur census records for Level 01 of the estate (the only area of the scheme with mature plantings) in July 2013, after rat baiting all blocks had attack rates from 32%-55%, so follow-up rat baiting was conducted. This non-compliance is closed.

Criterion 4.6. (Major indicator 5) Annual medical surveillance as per CHRA for plantation pesti-cide operators.

Non-conformance 2013-07 of 15 (Major non-conformity) There is no evidence that annual medical surveillance for chemical levels in blood has been done annually for all plantation pesticide operators at all estates in accordance with the CHRA, which requires medical checks for exposure to chemicals Ecomax, Ally 20DF Herbicide and CSH paraquat. Correction: Project: All Schemes 1) Medical Surveillance has been done. Corrective action: Project: All Schemes 1) The schemes manager to inform the Felda Teknoplant Wilayah JB related to Medical Surveillance to be done before due 1 year. 2) Felda Teknoplant Wilayah JB to make arrangement with the DOSH appointed clinic on Medical Surveillance checkup every year. Auditor Conclusions: Open At Lok Heng Barat, the medical surveillance was conducted for 10 workers (Sprayer) on 13th April 2013 by a licensed Occupational Health Doctor. It was found one sprayer at Division 4 was not sent for the medical surveillance. According to supervisor, they only sent representatives of the workers due to budget limitation and 12 sprayers were not included in the medical surveillance. While in Felda Lok Heng Selatan Medical surveillance was only conducted for only 15 Sprayers on 25th April 2013. This was maintained as Major Non-conformity 2014-07 of 19. Criterion 4.7 (Minor indicator SS) Scheme and Group Managers should implement a health and safety plan for their organized smallholders that include agrochemical use and fire drills. The management should keep records of all accident and review them periodically. If records are not easily available, the management has to show evidence of measures adopted to seek such records. Non-conformance 2013-08 of 15 (Minor non-conformity) There are aspects of OSH which are not adequately implemented, i.e.: 1) Chemical sprayers at Lok Heng Timur estate still bring their PPE home after work and there is no designated separate area for washing of sprayers PPE to reduce occurence potential chemical contamination. 2) Lok Heng estate has no updated safety and health plan for smallholders including agrochemical use and fire drills. 3) No records of accidents that occured are maintained at Lok Heng Selatan estate.

Correction: Project: Lok Heng Timur 1) Memo instruction to the chemical sprayers on the restriction of bringing PPE back to their hostel. 2) Refer to Felda Wilayah JB on the designated separate area for washing of sprayers PPE.



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3) The health and safety plan updated annually especially the training on agrochemical used and Fire Drill. Project : Lok Heng Selatan 3) Accident Record updated quarterly by appoointed scheme’s officer. Corrective action: Project: Lok Heng Timur & Lok Heng Selatan 1) Briefing to chemical sprayers on PPE usage and management. Designated separate area for washing of sprayers PPE to be considered with small holder consultation.

2) Annual monitoring on plan and safety health by assistant manager updated with training record of Agrochemical Used and Fire Drill. Project: Lok Heng Selatan 3) Accident Records to be maintained and updated quarterly.

Auditor Conclusions: Open 1) At Lok Heng Barat and Lok heng Timur, the separate room for washing of sprayer’s PPE were al-

located. This non-conformity is closed. 2) At Lok Heng Barat, fire drill training was conducted on 13 Feb 2014 which includes using of fire ex-

tinguisher and assembly. At Lok Heng Selatan, fire drill training and fire extinguisher handling been conducted on 13 Feb 2014 attended by the workers. Photos also included in the report. However, There is still no evidence of training on chemical handling been conducted specifically for small-holders. Discussion with smallholder and contractor on chemical handling in the JKKR/JKKK meet-ing was also not highlighted. The discussion is more to safety and health such as PPE and cleanli-ness in the meeting dated 14 Nov 2013, 11 July 2013 and 8 March 2013. This was raised to Major Nonconformity 2014-09 of 19.

3) Lok Heng Selatan and Lok Heng Barat now maintains their accident records such as evidence of form JKKP 8 sent to Department of Occupational Safety and Health. This non-conformity is closed.

Criterion 4.7 (Minor indicator SS) Scheme and Group Managers should implement a health and safety plan for their organized smallholders that include agrochemical use and fire drills. The management should keep records of all accident and review them periodically. If records are not easily available, the management has to show evidence of measures adopted to seek such records. Non-conformance 2013-09 of 15 (Minor non-conformity) Workers who have potential risk for exposure to chemicals such as Stock Clerk/ Incharge for Chemical Store, mandores and sprayers were found not attended training related to chemicals handling as re-quired Correction: Project: Lok Heng Barat & Papan Timur Chemical handling training to mandore and sprayers to be conducted.

Corrective action: Project: Lok Heng Barat & Papan Timur 1) Training on mandore and sprayers on chemical handling will be discussed in JKKR/JKKK meeting with smallholder and contractor. Auditor Conclusions: Closed At Lok Heng Selatan, sighted evidence of training session entitled ‘Weed and Pest Management in the Estates’ conducted on 26th February 2013 and attended by 20 workers including stock clerk and man-dores. At Lok Heng Barat there was a photo of training on chemical handling involving sprayers. Criterion 4.7 (Minor indicator SS) Scheme and Group Managers should implement a health and safety plan for their organized smallholders that include agrochemical use and fire drills. The management should keep records of all accident and review them periodically. If records are not easily available, the management has to show evidence of measures adopted to seek such records.



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Non-conformance 2013-10 of 15 (Minor non-conformity) Found mandores, contractor’s lorry driver not having 1st aid kit at worksite and no evidence of training related to first aid being conducted for mandore, estate supervisor and workers involve with chemicals at worksites. Correction: Project: Lok Heng Barat & Papan Timur 1) First aid kit given to mandore and lorry driver. Letter of receiving, sign by them in evidence. 2) For next First aid training, both mandore and lorry driver to be included and attendance of training to be view. Corrective action: Projek: Lok Heng Barat & Papan Timur 1) Memo by schemes management to mandore and lorry driver to carry first aid at working place. 2) The mandore and lorry driver to be included in the first aid training. Training record to be monitor annually

Auditor Conclusions: Open At all schemes, there was documented evidence of provision of first aid kits to mandores to be used in the field, however there was evidence found that implementation of requirement to have the kits availa-ble on-site requires improvement. For example, at Lok Heng Barat, in Division 4, found one mandore not having the first aid boxes, which according to the mandore, he had left it at home. While at Block 12, another mandore was not around as he has to attend a function. No first aid box also available for his group of workers. While in Lok Heng Selatan found 3 first aid boxes in the office not having suffi-cient contents and no proper record of issuance to mandore as well. Lok Heng Mill, found first aid box at the electricity room near workshop not having sufficient contents and need to be improved. In addition, there was no evidence training for first aid conducted for workers and mandores as planned in the Program Latihan 2013 in Lok Heng Barat. Also, there was no evidence of letter signed by the mandore and lorry driver that they receive first aid kits as stated in previous year’s corrective action. This was raised to Major Nonconformity 2014-08 of 19. Criterion 5.1. (Minor indicator SS) Scheme Managers should undertake and document aspects and impacts risk assessment, developed with the participation of the representatives of orga-nized smallholders that sets out appropriate management planning and operational procedures for each impact identified. For significant impact time bound action plans and operational pro-cedures should be drawn to mitigate the negative impacts. The impact assessment should cover: - Building and maintenance of roads to service smallholdings and provide access to mills - Putting in drainage or irrigation systems. - Replanting or expansion of smallholdings. - Clearing of remaining natural vegetation and the need to avoid the use of fire (see 5.5). Non-conformance 2013-11 of 15 (Minor non-conformity) The responsible persons for preparing the aspect impact assessment at all schemes was not well trained to conduct the assessment. This has been confirmed with discussion with the persons-in-charge that there is no proper training being done and seen from aspect impact assessments for some estates which were done incorrectly, stating occupational safety hazards and risks, instead of environmental re-lated impacts.

Correction: Project: Lok Heng Barat,Lok Heng Timur & Papan Timur 1) Person incharge on EIA will be send EIA training. 2) Correction on aspect impact assessments for some estates which were done incorrectly, stating occupational safety hazards and risks, instead of environmental related impacts.

Corrective action: Project: Lok Heng Barat,Lok Heng Timur & Papan Timur 1) Consultation with Felda Wilayah JB on EIA training on person incharge for schemes. Proceed with EIA training after the endorsement by Felda Wilayah JB.



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2) EIA to be reviewed annually and correction to be as soon as possible. Auditor Conclusions: There is no evidence that training on aspect impact assessments been provided or that EIA prepared previously had been corrected, e.g. sighted at Lok Heng Selatan’s EIA, some of aspects of land clear-ing for re-planting and drainage or irrigation system were not included. This was raised to Major Non-conformity 2014-10 of 19.

Criterion 5.3 (Minor indicator 2) Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution.

Non-conformance 2013-12 of 15 (Minor non-conformity) The chemical mixing was done on lorry, which is not in accordance to the Environmental Management Plan which required mixing chemicals at premix area before can be used at the plantation. Correction:

Project: Lok Heng Barat & Papan Timur 1) Warning letter on prohibition of chemical mixing done on the lorry to the contractors and smallholders based on Environmental Management Plan Corrective action: Projek: Lok Heng Barat & Papan Timur 1) Training and briefing of on chemical mixing to the contractors and smallholders to be included in training plan and organised yearly.

Auditor Conclusions: Closed At Lok Heng Barat and Lok Heng and Lok Heng Selatan during interviewed with sprayers, mentioning that mixing of chemicals were done at chemical mixing area at office complex.

Criterion 5.5. (Minor indicator 3) No evidence of burning waste (including domestic waste).

Non-conformance 2013-13 of 15 (Minor non-conformity) Workers housing at Lok Heng Timur estate was visited and found that domestic waste is disposed in nearby drains or open land area with evidence of burning.

Correction: Project: Lok Heng Timur 1) The warning signboard of no dumping inside the drains and no burning of waste on open land to be

constructed at the possible location Corrective action: Project: Lok Heng Timur 1) Provide garbage bin near workers housing

2) The warning signboard of no dumping inside the drains and no burning of waste on open land has been constructed

Auditor Conclusions: Closed - Signboard on the prohibition of littering inside the drain and no burning waste seen already

installed at workers housing. - Felda also provide garbage bin at workers housing. - The workers informed that Felda has given an explanation about the prohibition of littering or

burning trash.

Criterion 6.3. (Minor indicator 3) The system is open to any affected parties.



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Non-conformance 2013-14 of 15 (Minor non-conformity) There are some complaints from migrant workers in several estate but not documented yet Correction: Project:Lok Heng Timur 1) Complaints and Grievances Record Being updated.

Corrective action: Project:Lok Heng Timur 1) Complaints and Grievances Record monitored yearly by person in charge and update accordingly.

Auditor Conclusions: Closed - Felda allows migrant worker to report any complaints or information request to management. Sight-

ed that some requests from migrant workers for dormitory facilities repair were documented. - The appointment of special officer to manage of any kind complaints / requests from migrant work-

er. Management also provides a phone number to call directly to the officer in case of any requests or complaints from workers.

Criterion 6.5. (Minor indicator 2) Labour laws, union agreements or direct contracts of employ-ment detailing payments and conditions of employment (e.g. working hours, deductions, over-time, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit. Non-conformance 2013-15 of 15 (Minor non-conformity) Foreign employees working in the plantation have not received copies of their employment contracts which states the terms and conditions of employment. Interviews with these foreign employees revealed that they do not know their terms and conditions of employment such as the annual leave and medical leave they are entitled to. For example: 2 harvesters from Lok Heng Timur estate and 3 harvesters from Lok Heng Selatan, also for employees from Bangladesh and India. There was found evidence of contract substitution for foreign workers, where the contract held by workers stated a 2 year working plan but the contract made by FELDA for the same workers stated 3 years. Correction: Project:Lok Heng Timur dan Lok Heng Selatan 1) Briefing on Contract and Entitlement of foreign workers provided by scheme management to workers. 2) A session of discussion and understanding on contract between scheme manager and worker to ensure their understanding on the contract with Felda now. Corrective action: Projek: Lok Heng Timur dan Lok Heng Selatan 1) Scheme manager a session with the worker to ensure their understanding on the contact. Meeting with the foreign workers representatives will be organised annually.

Auditor Conclusions: Open There is a document letter No. (05) dated February 15, 2011 883197000/7/13 from Lok Heng Timur to Felda Head Quarter, contained a request for copies of letter employment agreement for migrant workers from Indonesia but no written response. Nepalese Workers can have a copy of the employment contract. Checks on the document copy of letter employment agreement of the 12 Nepalese workers. But for foreign workers from Indonesia, they did not maintain a copy of their employment contract. Contracts for foreign workers signed on 18 Feb 2014 are not in appropriate language. According to an interview with 7 Indian national workers on 19 February 2014, these workers were made to sign em-ployment contracts without knowing/understanding content of contract (no Free, Prior and Informed Consent). Moreover, contract substitution is observed whereby workers were promised work in facto-ries, but instead were brought to work in an oil palm estate. Workers were also promised higher wages than wages currently received. Workers have many grievances regarding pay, working conditions and housing due to lack of understanding of terms and conditions of employment (terms and conditions of employment not explained in appropriate language).



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This was raised to Major Nonconformity 2014-15 of 19.

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

During this surveillance assessment, a total of 19 nonconformances were identified. These consisted of 14 major non-conformities and 5 minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances within 60 days of completion of the assessment, and this was verified by the audit team through documents submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

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 envi-ronmental or social outcomes. This concerns management documents relating to environmen-tal, social and legal issues that are relevant to compliance with RSPO criteria. Non-conformance 2014-01 of 19 (Minor non-conformity) Lok Heng Mill Management does not have the following documents prepared and so these documents are not yet made publicly available: i) Safety and health plan for year 2014

ii) Plans and impact assessments relating to environmental and social impacts for year 2014

iii) Pollution prevention plans for year 2014 Correction: 1) Document the Health & Safety Plan for 2014 2) Update the SIA report for the year 2014 3) Have a pollution prevention plan in 2014 Corrective Action: 1) Appointment of officers specifically to prepare the documents required to be made publicly available 2) Information in the documents made publicly available to be updated every 6 months by the man-agement. Auditor Conclusions: Correction & Corrective action plan accepted. Implementation to be veri-fied at next surveillance audit.

Criterion 2.1 (Minor indicator 2) A documented system, which includes written information on legal requirements.

Non-conformance 2014-02 of 19 (Raised to Major non-conformity from previous surveillance) Legal Requirements related to RSPO was found not having details and complete informations such as specific requirements of Occupational Safety and Health Acts 1994 and its Regulations, Factory Ma-chinery Act 1967 and its Regulations, Environmental Quality Act 1974 and its Regulations, only listed the main acts with an abstract and general information about the acts. Correction: 1) Update the list of laws related to RSPO requirements 2) List of new legislation to be updated & put into RSPO File 2.2.2 Corrective Action: 1) Appoint an officer to update the list of laws.



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2) Updated the list of legal requirements annually. 3) RSPO internal audit to be conducted every year by FGV officer to ensure that the plan complies with the requirements of the RSPO. Verification: Lok Heng Mill: Sighted revised List of laws and requirements related to compliance with RSPO (’Senarai Undang-undang dan Keperluan yang berkaitan bagi pematuhan RSPO’) revised on 02/04/14 containing detailed information of regulations under OSHA 1994 and FMA 1967.

Lok Heng Selatan: Sighted appointment letter for person-in-charge of legal issued on 02/04/14 to the G17 supervisor from Lok Heng Selatan estate manager. Sighted revised list of laws and requirements related to compliance with RSPO (’Senarai Undang-undang dan Keperluan yang berkaitan pematuhan RSPO’) included regulations that was made available as issued by the Sustainable Palm Oil Unit, PSQM Department (FGVPMSB) on 23 March 2014 Auditor Conclusions: Closed Date of closure: 2 April 2014

Criterion 2.1 (Minor indicator 3) A mechanism for ensuring that they are implemented.

Non-conformance 2014-03 of 19 (Raised to Major non-conformity from previous surveillance) Evaluation of compliance was not done properly and covering all relevant sections such as requirements from Occupational Safety and Health Act 1994 and its regulations, Factories and Machinery Act 1967 and its regulations and Environmental Quality Act 1974 and its regulations as found in Lok Heng Barat and Selatan in list of Laws and Requirements Related to the Determination of Compliance with RSPO (‘Senarai Undang-Undang dan Keperluan yang Berkaitan dengan Penentuan bagi Pematuhan RSPO’). Only the 3 Acts mentioned and evaluated but their relevant regulations were not included and evaluated accordingly. While in the Lok Heng Mill, the List of Legal and Other Requirements (FPI/L4/QOHSE-2.1 Pind.0)” revised 15th March 2013 shows that Section 49A under EQA 1974 (rev. 2012) was ticked as complied even actually not yet complied as there is no competent person available to manage scheduled waste. Location: Lok Heng Barat, Lok Heng Selatan, Lok Heng Mill Correction: 1) Update the list of laws related to RSPO requirements 2) Make a checklist evaluation of legal compliance to Malaysian laws 3) Results of the evaluation to be included in the RSPO file 2.2.2 4) To request for course on management of Scheduled Wastes 5) To conduct training course for representatives of FGV Palm Oil Mills in Johor (regarding competent person to manage scheduled waste) Corrective Action: 1) Appoint an officer to update the list of laws. 2) Updated the list of legal requirements annually. 3) RSPO internal audit to be conducted every year by FGV officer to ensure that the plan complies with the requirements of the RSPO. Verification: Lok Heng Mill: Appointment letter was issued to appoint the assistant manager as PIC for legal dated 02/04/14 by Mill Manager.A letter was sent to PQE Unit requesting for sending 2 staffs to attend training for becoming competent person for scheduled waste dated 04/04/14, i.e. the Assistant Manager and Lab Analyst. The related List of laws and requirements related to compliance with RSPO (’Senarai Perundangan dan Keperluan Pematuhan RSPO’) was revised accordingly particularly for Section 49A dated 02/04/14 shown not compliance status and action to comply as explained was included. Lok Heng Barat: Sighted an appointment letter dated 13/02/14 appointing the supervisor of FTPSB Lok Heng Barat the manager of Lok Heng Barat estate as person-in-charge for legal compliance.



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Lok Heng Selatan: Appointment letter for legal person-in-charge issued on 02/04/14 to G17 Supervisor by Lok Heng Selatan estate manager. Revised evaluation of compliance on 31 March 2014 evidence of evaluation of compliance was done on List of laws and requirements related to compliance with RSPO (’Senarai Undang-undang dan Keperluan yang berkaitan pematuhan RSPO’) included regulations that was evaluated in the previous findings. Auditor Conclusions: Closed Date of closure: 2 April 2014

Criterion 2.1 (Minor indicator 4) A system for tracking any changes in the law.

Non-conformance 2014-04 of 19 (Raised to Major non-conformity from previous surveillance) The tracking mechanism for changes of law (‘Sistem Pengesanan Perubahan Undang-Undang’) is not effectively implemented as found Environmental Quality Act 1974 (revised 2012) not updated at Lok Heng Barat and Lok Heng Selatan. While new regulation Occupational Safety (Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 was also not updated at Lok Heng Barat, Lok Heng Selatan and Lok Heng Mill. Correction: 1. PSQM Department to issue notification letter to all Felda projects to updated their system for tracking changes to legal requirements. 2. To update the system for tracking changes to legal requirements. Corrective Action: 1. Monitoring by managers after update of legal requirements register by legal officer 2. Checks done through Internal Audit by PSQM Department Sustainable Palm Oil Officer, HQ. 3. Update of RSPO files to be done by appointed law officers once every 6 months or every time there is a change in legal requirements 4. Conduct a workshop to review the list of legal requirements annually at HQ level Verification: During the verification audit, it was sighted at Lok Heng Mill & Lok Heng Barat an email FGVPMSB- South Zone on 30/03/14 including attachment 2.1.2a on List of compliance, which was updated to include the Environmental Quality Act amendments in 2012 (’Senarai pematuhan, Akta Kualiti Alam Sekeliling pindaan 2012’) and CLASS 2013. Felda also conducted a Workshop for Discussion of Policies and checking of Legal Compliance, PSQM Department done on 9 May 2014 with 11 participants from the PSQM department. The agenda for the workshop included briefing to all participants about the system for tracking changes to legal require-ments implemented at Felda and Felda Holdings level, where any changes to legal requirements are to disseminate from regional level to all Felda projects, mills and estates. The agenda also included an update on latest revised legal requirements, including CLASS 2013, Classification, Packaging and Labelling (CPL) 1997, revisions to Environmental Quality Act 2012, Minimum Wage Act 2012, and Workers’ Minimum Standards of Housing and Amenities 1990. The signed attendance list for this workshop was sighted. Another workshop at PSQM department level was held on 5-6 June 2014 for 22 members of the de-partment regarding checking of the safety manual, Quality, Occupational Health and Safety, and Envi-ronment (QOHSE) manual), policies and checking of legal compliance. The agenda included briefing on the current system for tracking changes to legal requirements and and handover of the latest update legal requirements register applicable for the organization. The attendance list of the workshop and photos were sighted. Auditor Conclusions: Closed Date of closure: 9 May 2014

Criterion 3.1 (Major indicator 1) Annual budget with a minimum 2 years of projection.



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Non-conformance 2014-05 of 19 (Major non-conformity) It was found on Lok Heng Selatan budget plan for year 2014 to year 2016 has not include information about budget plan for Plantation Maintenance program, harvesting activity. The budget only for supporting activities such as housing expenses, staff salary, training, and donation Location: Lok Heng Selatan Correction: 1) To prepare a proposed budget plan from year 2014 to 2016 2) To ensure all activities costs are identified in the budget Corrective Action: Ensure that each Felda project is responsible for monitoring of the budget each year Verification: The budget for plantation maintenance programs and estate activities for smallholder lots as well as planted lots not owned by smallholders was sighted for year 2014, 2015 and 2016. The budget covered main estate activities such as harvesting, spraying, manuring, field maintenance, drainage maintenance, cover crops, and workers. Auditor Conclusions: Closed Date of closure: 2 April 2014

Criterion 4.3 (Minor indicator 4) Subsidence of peat soils should be minimised through an effec-tive and documented water management programme.

Non-conformance 2014-06 of 19 (Raised to Major non-conformity from previous surveillance) The scheme established sampling point to monitor water table only. There are 2 sampling point in Lok Heng Selatan however only one point has been monitored, the data other sampling point is not availa-ble. Company has no established yet sampling point to monitor subsidence level. Correction: To carry out sampling at the established sampling point where sampling is currently not yet done Corrective Action:

1) To identify an officer responsible for monitoring of the sampling point 2) To prepare a monitoring action plan for when sampling will be carried out

Verification: Water level monitoring data for two sampling points established in Division 02 of Lok Heng Selatan estate for year 2013 up until March 2014 was sighted, with water table ranging from 60cm to 120cm. Sighted photographic evidence of a subsidence monitoring point established at Division 02 of Lok Heng Selatan estate and first monitoring data recorded for April 2014. However, no schedule for subsidence monitoring is established yet. Auditor Conclusions: Closed with observations Date of closure: 2 April 2014

Criterion 4.6 (Major indicator 5) Annual medical surveillance as per CHRA for plantation pesti-cide operators.

Non-conformance 2014-07 of 19 (Maintained as Major non-conformity from previous surveil-lane) At Lok Heng Barat, the medical surveillance was conducted for 10 workers (Sprayer) on 13th April 2013 by a licensed Occupational Health Doctor. It was found one sprayer at Division 4 was not sent for the medical surveillance. According to supervisor, they only sent representatives of the workers due to budget limitation and 12 sprayers were not included in the medical surveillance. While in Felda Lok Heng Selatan Medical surveillance was only conducted for only 15 Sprayers on 25th April 2013.



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Correction: 1) To list names of all workers involved in spraying work 2) To carry out medical surveillance for all sprayers which have not undergone it 3) Update the RSPO file with information on all sprayers and medical surveillance reports Corrective Action: 1) Assistant Manager to ensure all workers recommended in the the CHRA to undergo medical sur-

veillance 2) Prepare sufficient annual budget for medical surveillance 3) Internal audits to be conducted by RSPO FGV to ensure the plan is carried out Verification: Lok Heng Barat: Invoice to Klinik Dhilon no 005/14 on Medical surveilance conducted for 30 workers carried out on 8,10,11 and 12 March 2014. Reported in the summary that no workers has been found to have any occupational illness.

Lok Heng Selatan: Evidence sighted of name list of those who work related to chemicals that required to be sent for Medical Surveillance 20 workers (all Indonesian) A letter dated 03/04/14 to Klinik Dhilon requesting to conduct Medical Surveillance in April 2014 by Lok Heng Selatan estate was sighted. Records of medical surveilllance conducted were sighted with no workers found with illneses. Auditor Conclusions: Closed Date of closure: 9 April 2014

Criterion 4.7 (Major indicator 1h) Workers trained in First Aid should be present in both field and mill operations.

Non-conformance 2014-08 of 19 (Maintained as Major non-conformity from previous surveil-lane) 1) There was no evidence training for first aid conducted for workers and mandores as planned in the Program Latihan 2013. 2) No evidence of letter signed by the mandore and lorry driver that they receive first aid kits as stated in previous year’s corrective action Location: Lok Heng Selatan Correction: 1) To carry out first aid training for workers 2) To prepare a first aid kits for the following workers /locations:

Assistant Manager Supervisor Mandore Every estate vehicle Offices Chemical Store Fertilizer store

3) To record all distribution of first aid kits Corrective Action: 1) Manager to ensure first aid training to be carried out at least 2 years once 2) Continued enforcement

Verification: 1) Evidence of first aid training conducted on 14 to 15 April for 30 participants from Lok Heng complex

as well as Adela complex (another management unit of Felda) was sighted, including attendance lists and photos.

2) The mill has prepared a list of all mandores and truck divers that has received the first aid kits, and



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the list of signed off as acknowledgement of receipt by each personnel. According to the list, 9 mandores and 3 truck drivers received the first aid kits.

Auditor Conclusions: Closed Date of closure: 15 May 2014

Criterion 4.6 (Scheme smallholder guidance) Scheme Managers should provide regular training to their organized smallholders on agrochemical use.

Non-conformance 2014-09 of 19 (Raised to Major non-conformity from previous surveillance) There is still no evidence of training on chemical handling been conducted. Discussion with smallholder and contractor on chemical handling in the JKKR/JKKK meeting was also not highlighted. The discus-sion is more to safety and health such as PPE and cleanliness in the meeting dated 14 November 2013, 11 July 2013 and 8 March 2013. Location: Papan Timur Correction: To carry out training on chemical management for all smallholders and related contractors Corrective Action: To ensure that involved officers prepare records and carry out continuous monitoring Verification: Papan Timur: Evidence of Training on Management and Use of Chemicals (’Latihan Pengurusan dan Penggunaan Bahan Kimia’) was conducted on 07/02/14 to sprayer and smallholder. 12 participants were involved. Trainer is Hamendan b. Rahamat. A letter to call for a meeting to discuss on chemical handling was prepared and planned to be held in 14/ 04/ 14. Verification: Papan Timur estate provided evidence of Training on Management and Use of Chemicals (’Latihan Pengurusan dan Penggunaan Bahan Kimia’) which was conducted on 07/02/14 for sprayers and smallholder. 12 participants were involved. A letter to call for a meeting to discuss on chemical handling was prepared and planned to be held in 14.04/14. Auditor Conclusions: Closed wih observations Date of closure: 3 April 2014

Criterion 5.1 (Major indicator 1) Documented aspects and impacts risk assessment that is peri-odically reviewed and updated

Non-conformance 2014-10 of 19 (Maintained as Major non-conformity from previous surveil-lance) 1) There is no evidence that training on aspect impact assessments been provided or that EIA pre-pared previously had been corrected, e.g. sighted at Lok Heng Selatan’s EIA, some of aspects of land clearing for re-planting and drainage or irrigation system were not included. 2) Lok Heng Mill has an Identification of Environmental Aspects and Impacts Evaluation of Significance document which includes identification of aspects and impacts related to all mill activities. However, the mill had just recently started constructions of a bunch shredder but EAI evaluation for this new bunch shredder, including construction activities, was not yet done. Correction: 1) To update the EIA every year 2) To carry out EIA evaluation for land clearing for replanting or for irrigation systems 3) To carry out EIA evaluation for the new bunch shredder, including construction activities Corrective Action: Assistant Manager to ensure the environmental aspects and impacts are identified for any new activi-



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ties annually Verification: 1) Lok Heng Selatan provided an updated Environmental Aspects and Impacts Assessments which

included identified aspects and impacts for land clearing an irrigation related activities. Not evi-dence of training evident as it was informed that the EAI was done at PSQM level and dissem-minated to all Felda projects, so training is not done to the estate level staff. This was noted as an observation.

2) Lok Heng Mill has identified Environmental Aspects and Impacts of the operations of the bunch shredder, but not construction of the shredder. Since the shredder constructiond is completed, this is noted as an obervation.

Auditor Conclusions: Closed with observations Date of closure: 5 May 2014

Criterion 5.3 (Minor indicator 2) Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution.

Non-conformance 2014-11 of 19 (Minor non-conformity) Empty pesticide containers which is schedule waste were not disposed accordingly to the license con-tractor and no records/inventory is available/ kept. Correction: 1) Maintain records of triple rinsing (in accordance with Department of Agriculture statement that

chemical containers are not classified as scheduled wastes if triple rinsed) 2) Maintain records of collection of empty chemical containers Corrective Action: Store Clerk to update the records of empty chemical containers Auditor Conclusions: Correction & Corrective action plan accepted. Implementation to be veri-fied at next surveillance audit.

Criterion 5.5 (Minor indicator 3) No evidence of burning waste (including domestic waste).

Non-conformance 2014-12 of 19 (Minor non-conformity) Open burning is sighted near the office of Lok Heng Barat and Lok Heng Selatan Correction: 1) Maintain records of training on the prohibition of the burning of open to local residents 2) To establish a patrol schedule Corrective Action: 1) Patrols to be done by officers to ensure there are no open burning every 4 months. 2) To ensure that the training is carried out at least 2 years once. Auditor Conclusions: Correction & Corrective action plan accepted. Implementation to be veri-fied at next surveillance audit.

Criterion 6.1 (Major indicator 1) A documented social impact assessment including records of meetings.

Non-conformance 2014-13 of 19 (Major non-conformity) There is no evidence that management has made an SIA monitoring plan for year 2014. In addition man-agement is also not able to show the progress of settlement of issues / impacts that have been identified in the SIA document for year 2012. Location: Lok Heng Timur, Lok Heng Barat, Mill Lok Heng



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Correction: 1. Prepare monitoring plan SIA for year 2014. 2. Prepare a document or minutes of meetings recording proof of actions taken to resolve is-sues/impacts identified during the SIA 2014 Corrective Action: 1. Monitoring and review by the Manager at least once a year. 2. Checks to be done during Internal Audits by the PSQM Department Sustainable Palm Oil Officer, HQ Verification: For Lok Heng Mill, there is evidence sighted of actions takens to resolve negative impacts identified in SIA for year 2012-2013, e.g. in response to complaint regarding poor mill water quality, the mill installed a new water clarifier. There is also photographic evidence of road repairs done and repair of a broken fence at srap metal storage area after complaints made. In response to complaint from mill workers regarding disruptive foreign workers at their housing, the foreign workers were relocated as confirmed through interviews with mill staff. The mill has also created a new SIA monitoring plan for year 2014 based on the SIA analysis results, including monitoring schedule and person-in-charge. The issues identified include waste collection, ensuring there is no waste burning or clogged drains, and no EFB discarded within the mill area. At Lok Heng Barat estate and Lok Heng Timur estates, there is a documented SIA management plan for year 2014 and evidence of progress in settlement of issues / impacts that have been identified in the SIA document for year 2012 was sighted. Auditor Conclusions: Closed Date of closure: 15 May 2014

Criterion 6.3 (Minor indicator 2) The system resolves disputes in an effective, timely and appro-priate manner.

Non-conformance 2014-14 of 19 (Minor non-conformity) The system for dealing with complaints and grievances for foreign workers are not understood by foreign Indian workers. Thus, the grievance mechanism for Indian foreign workers is ineffective due to language barrier. An interview with Indian workers at Lok Heng Selatan on 19 February 2014 revealed that workers have many grievances regarding pay, working conditions and housing due to lack of un-derstanding of terms and conditions of employment (terms and conditions of employment not explained in appropriate language). Correction: 1. Provide re-briefing to the employee's complaint process. 2. To prepare a complaint box at the office and dormitory and record complaints and grievances. 3. Record all complaints and grievances as well as take action to resolve them within 14 days. 4. Conduct continuous checks of the complaints record book. Corrective Action: 1. Enforcement of the usage of the book for recording complaints and grievances. 2. Periodic Review by the management of each Felda project to ensure that actions have been taken to resolve all complaints and grievances Auditor Conclusions: Correction & Corrective action plan accepted. Implementation to be veri-fied at next surveillance audit. Criterion 6.5 (Minor indicator 2) Labour laws, union agreements or direct contracts of employ-ment detailing payments and conditions of employment (e.g. working hours, deductions, over-time, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit.



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Non-conformance 2014-15 of 19 (Raised to Major non-conformity from previous surveillance) 1) It was still found that foreign employees working in the plantation have not received copies of their

employment contracts which states the terms and conditions of employment. Interviews with these foreign employees revealed that they do not know their terms and conditions of employment such as the annual leave and medical leave they are entitled to.

2) Employment contracts sighted also do not state benefits/allowance/insurance, holiday entitlements, overtime, sickness, maternity leave.

3) There is still evidence of contract substitution for foreign workers, where the contract held by workers stated a 2 year working plan but the contract made by FELDA for the same workers stated 3 years. In addition, workers were promised work in factories instead were brought to work in an oil palm es-tate. Workers were also promised higher wages than wages currently received.

4) Contracts for Bangladeshi and Indian foreign workers signed on 18 Feb 2014 are not in appropriate language. According to an interview with 7 Indian national workers on 19 February 2014, these workers were made to sign employment contracts without knowing/understanding content of contract (no Free, Prior and Informed Consent).

Correction: 1) - Provide re-briefing to employees regarding terms and conditions of the agreement which they

have signed - Prepare a list of attendance and briefing report as evidence of employees were briefed on the relevant terms and conditions of work contract.

2) Attach terms and conditions of work with all employment contracts when making a job offer 3) Attach the contract document which has been reviewed by FTPSB human resources unit 4) - Appoint a translator from among foreign workers who understand Malay or English

- Provide re-briefing to employees regarding terms and conditions of the agreement which they have signed

- Prepare a list of attendance and briefing report as evidence of employees were briefed on the relevant terms and conditions of work contract.

Corrective Action: 1) All newly arrived employees will be briefed again on the contract of employment before they start-

ed work 2) A copy of the employment contract signed will be given to the employee and a copy kept by the

estate management 3) Monitoring and enforcement by the management and HR Verification: 1) Felda Technoplant has revised and standardised its contract for foreign workers. Lok Heng Selatan recruits workers under Technoplant. The new contracts have been initiated for new workers and foreign workers without contracts in the past. 2) There is a Guide to the Management Regulations and the Employment of Local Plantation Workers (’Panduan Peraturan Pengurusan Dan Penggajian Pekerja Ladang Tempatan’) (Bil.03/2012) (Techno-plant) & Terms of Service for Local Employees of Estate Operations (‘Syarat-syarat Perkhidmatan Pekerja Operasi Ladang Tempatan’) Felda Global Ventures Plantations (Malaysia) Sdn.Bhd. (FGVPMSB) which stipulates the terms and conditions of employment (e.g. benefits, insurance, leave, wages, EPF, SOCSO) which is supposed to be appended with the work contracts of the employers. It will be verified at next surveillance audit if the terms and conditions are appended to new employment contracts as stated in the corrective actions. For Technoplant and FGV of staff, there is a standard practice to sign the handbook “Syarat-syarat perkhidmatan petugas syarikat” (Enforced on 1 January 2010) whereby each staff is provided with the staff handbook and a signed copy detached from the handbook is kept at HQ as proof that staff have understood their terms and conditions of employment. For Felda (which is a government entity), the letters of appointment of staff has a reference to a government circular ref:Pekeliling Perkhidmatan Bil.4 Tahun 2002) which stipulates the terms and conditions of employment as civil servants bound by the Public Services Department (JPA). 3) As stated above, Felda Technoplant has revised and standardised its contract for foreign workers. Lok Heng Selatan recruits workers under Technoplant. The new contracts have been initiated for new workers and foreign workers without contracts in the past. However, the company will retain the contracts for existing foreign workers.



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4) The company provided evidence of briefings conducted for all foreign workers located at each estate or scheme regarding the terms of their employment contract, including payment of electricity and water, responsibility of employees (housing and employer’s responsibilities, work contract duration, working hours, discipline and behaviour, maintenance of work equipment, levis and temporary work passes, annual leave), employer’s responsibility (ensuring job opportunities, housing and transport, foreign worker’s insurance scheme (‘Skim Pampasan Pekerja Asing’ or SPPA), medical check-ups for workers, medical exams, etc). Foreign workers who understood Malay were appointed as translators as seen from sample appointment letters, in order to assist other workers to understand the briefing. Photo-graphic evidence of the briefings done and attendance lists were also sighted. The workers also signed a statement that they have attended the briefing, understood what was explained during the briefing and received a copy of their contracts. As the company has many workers, evidence that employment contracts have been signed will be sampled and checked during next surveillance audit. Auditor Conclusions: Closed with observations Date of closure: 16 April 2014 Criterion 6.5 (Scheme smallholder guidance) Where temporary or migrant workers are em-ployed, a special labour policy should be established. This labour policy would state the non discriminatory practices; no contract substitution of original contract, post arrival orientation program to focus especially on language, safety, labour laws, cultural practices etc; decent liv-ing conditions to be provided. Migrant workers are legalised, and a separate employment agreement should be drawn up to meet immigration requirements for foreign workers, and in-ternational standards, if ratified.The Managers should educate the participants on legal obliga-tions in employing workers on their plot/land. Non-conformance 2014-16 of 19 (Major non-conformity) Nepalese Workers can show a copy of the employment contract. However foreign worker from Indonesia claim that they do not have a copy of their employment contract. Location: Lok Heng Timur Correction: Get contracts for Indonesian workers Corrective Action: Continuous monitoring by the estate management and human resources department. Verification: Felda Lok Heng provided documented evidence of a list of 56 Indonesian workers who have received a copy of their employment contracts and signed off that they have received their contract. However, the office, in the process of handing over the contracts to the worker, has not retained any copies of the contract for office records. Auditor Conclusions: Closed with observations Date of closure: 16 April 2014

Criterion 6.9 (Major indicator 1) A policy on sexual harassment and violence in the workplace and records of implementation.

Non-conformance 2014-17 of 19 (Major non-conformity) Sexual harassment policy not adequately implemented and communicated to all levels of staff, with evi-dence as below:

1. There is no Gender Committee at Lok Heng Selatan, only a gender officer appointed in 2010. There has not been any training on women’s rights or counselling or any awareness-raising on gender issues. 2. There is a gender committee at FTPSB Papan Timur but there is no evidence of any activity. The committee activities and its members list, including its affliation with the Wilayah and Lok Heng JCC Gender Committees is not updated. There is also no coordination/cooperation between FTPSB and



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FELDA on gender issues,. 3. New female staff are not aware on the sexual harassment policy, and not appointed to the existing gender committee, e.g. at Papan Timur. 4. There is no monitoring on the implementation of the sexual harassment policy as the gender commit-tees remain dormant at Lok Heng Complex. Correction: - Update the list of gender committee members - Make training courses - Will make updates to activities for local community development - Assessment to be included in file C6.11. - Explanation will be given to all female staff and the local community about the company’s sexual har-assment policy Corrective Action: - Monitoring to be done by the province of Johor Bahru and gender committee member list to be up-

dated every year. - To set up a women's committee at each zone to be monitored by the regional management - Checks during RSPO internal audits to be done by FGV officers to ensure that projects comply with

the RSPO requirements - To provide explanation about the sexual harassment policy to new female employee and new local

community members. Verification: Closed with observations A) Evidence of communication of sexual harassment policy and grievance mechanism: There is evidence of briefing conducted on the sexual harassment policy and its associated grievance procedure during a meeting held on 31 March 2014 involving 59 members and female representatives from all schemes/estates (see minutes of meeting) at the Wilayah (Regional) level (attendance sheet is also attached with the minutes). Appointed representatives are responsible to disemminate information received during the meeting to the other women located at their area, however there is inadequate evidence that this is done. Dissemination of information will be verified at next surveillance audit.

B) Evidence of implementation of sexual harassment policy: - A new gender committee was formed during the meeting (rendering all previous gender committees at schemes/estates obsolete). The committee is divided into three zones and each scheme/estate has a representative in the committee. - A list of committee members is recorded in the minutes of meeting. - Letters of appointments of the newly-formed gender committee (regional level) were sighted. - There is a suggested activities program for women regional level developed at regional level, where suggested activities include training on dealing with sexual harassment, briefings to be done for all levels of female staff, workers and scheme smallholders and a seminar on dealing with sexual harassment of children Auditor Conclusions: Closed Date of closure: 5 May 2014

Criterion 6.9 (Major indicator 2) A specific grievance mechanism is established.

Non-conformance 2014-18 of 19 (Major non-conformity) There is no grievance mechanism for gender issues, i.e. pertaining to sexual harassment and/or wom-en’s reproductive rights at Lok Heng Selatan (based on interview with the gender officer at Lok Heng Selatan). Correction: Disclosure methods and procedures for handle complaints for gender issues to the members of the committee. Corrective Action:



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Ongoing monitoring of each gender committee activity Verification: A) Evidence of communication of sexual harassment policy and grievance mechanism: There is evidence of briefing conducted on the sexual harassment policy and its associated grievance procedure during a meeting held on 31 March 2014 involving 59 members and female representatives from all schemes/estates (see minutes of meeting) at the Wilayah (Regional) level (attendance sheet is also attached with the minutes). Appointed representatives are responsible to disemminate information received during the meeting to the other women located at their area, however there is inadequate evidence that this is done. Dissemination of information will be verified at next surveillance audit.

B) Evidence of implementation of sexual harassment policy: - A new gender committee was formed during the meeting (rendering all previous gender committees at schemes/estates obsolete). The committee is divided into three zones and each scheme/estate has a representative in the committee. - A list of committee members is recorded in the minutes of meeting. - Letters of appointments of the newly-formed gender committee (regional level) were sighted. - There is a suggested activities program for women regional level developed at regional level, where suggested activities include training on dealing with sexual harassment, briefings to be done for all levels of female staff, workers and scheme smallholders and a seminar on dealing with sexual harassment of children Auditor Conclusions: Closed with observations Date of closure: 5 May 2014 Criterion 8.1 (Scheme smallholder guidance) Scheme Managers should develop an action plan for continual improvement in a participatory manner with their organized smallholder repre-sentatives, based on consideration of the main social and environmental impacts and opportu-nities for improvement. Non-conformance 2014-19 of 19 (Minor non-conformity) 1) Scheme Managers currently do not have action plan for continual improvement in a participatory manner with their organized smallholder representatives, based on consideration of the main social and environmental impacts and opportunities for improvement.

2) The schemes have no mechanism to capture the performance and expenditure in social aspects. Correction: 1) Have a program/meeting with scheme smallholder representatives, contractors and other parties in

order to discuss the plan of continuous improvement, especially in terms of social and environmental aspects.

2) Update files with evidence of achievements and expenses in social aspects Corrective Action: 1) To regularly update the RSPO 8.1 file (continuous improvement) 2) Ongoing monitoring by manager 3) Checks done through Internal Audit by PSQM Department Sustainable Palm Oil Officer, HQ. Auditor Conclusions: Correction & Corrective action plan accepted. Implementation to be veri-fied at next surveillance audit.



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3.4 Description of Supply Chain Management System

The following is a description of the findings pertaining to the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company and their out-sourced third parties to RSPO SCCS requirements:

Module E – CPO Mills: Mass Balance

E.1. Documented procedures

Findings: There are no changes on company’s procedures for implementation of SCCS requirement. As stated on FELDA Agriculture Service FPISB Kilang Sawit “SOP Perkilangan untuk pematuhan Sistem Persijilan RSPO SCCS’ FGVPM-RSPO SCCS issued No. 2.0 dated July 2013. Company implement quality man-agement system ISO 9001:2008 as a part of compliance to this standard company has to establish com-plete and up to date standard operation procedure. The Mill Manager having overall responsibility for and authority over the implementation of SCCS require-ments and compliance with all applicable requirements. Job description has been made for Mill operator who will implement SCCS. However Implementation of the SCCS is not in accordance with the SOP, i.e. the job description for Assistant Mill Managers states that they are responsible for conducting annual audit 3 months before the RSPO SCCS third party audit. The mill assistant is also responsible to check that the SCC system is properly implemented and all documents required for mass balance tracking, delivery, etc are in place. However, there is no evidence that the mill does such checking of SCC implementation or in-ternal auditing with 3 monhtly base as required in the SOP. This is raised as non conformity during 2nd sur-veillance audit. Compliance status: Non Compliance. NCR SCCS No. 2014-01 of 04 There is no evidence internal audit has been done with 3 monhtly base by Mill Assitent manager, as deter-mined by FGVPM-RSPO SCCS rev 2 page 3 of 10 regarding job decriotion for Assistant Manager.

E.2. Purchasing and goods in

Findings: Lok Heng Palm Oil mill has mechanism to receive FFB both from certified sources and non certified sources. The procedure has clear information regarding definition of FFB from certified source that will be claimed as certified material and the condition that will make certified FFB become non certified FFB. All FFB from Lok Heng complex as certified scheme were categorized as certified FFB, and FFB from other complexs were categorized as non certified. Incoming FFB from Smallholder Lok Heng Complex such as (Lok Heng Timur scheme, Lok heng Barat Scheme, Lok Heng Selatan Scheme and Papan Timur) accompanied by document “FFB Delivery Note” which includes Project code, Smallholder name, field code, driver name, the document state including wet stamp from the origin estate and certified code. Receiving FFB in Weigh Bridge will be recorded on GatePass (which includes Project code, Smallholder name and code, field code; driver name; Vehicle number, date of FFB transported, and IC number of driver.) and form FFB Receipt Account including information about quantity and quality FFB, grading re-sult. According to the procedure all information about MB certification status must be attached on the docu-ment both document from smallholder and incoming FFB documents issued by the mill. However during the 2nd surveillance audit, it was found there is no evidence that delivery note FFB from Lok Heng Scheme estate has indicate certification status as required by FGVPM-RSPO SCCS page 6 of 10. Compliance status: Non compliance NCR SCCS No. 2014 – 02 of 04



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There is no evidence that delivery note FFB from Lok Heng Scheme estate has indicate certification status as required by FGVPM-RSPO SCCS page 6 of 10.

E.3. Record keeping

Findings: The company has established a mechanism for control and maintenance of the document and data control procedure as stated on FGVPM-RSPO SCCS page 7 of 8 the retention time for all records and reports has been defined for at least for ten (10) years. The storage and maintainance of documents is the responsibility of the respective departments. The list of records stated on the procedures. The mill has record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO on daily basis; including record for PK production on “Laporan Penerimaan BTS dan Operasi Pada Harian” (report incoming FFB and daily operation) ; Laporan Daily Figure Produk Sampingan (co product daily figure) on January 06, 2014 and Daily Figure ISCC/RSPO report (BTS, CPO, Ker-nel) as sampled on December 30, 2013. The company has defined method for mass balance calcula-tion, the formula for MB calculation has been determined on the procedure considers actual condition of certified FFB and non certified FFB processed. Spreed sheet form to records material and produc-tion balance has no longer used since July 2013 replaced by “ Daily operation Figure ISCC/RSPO (BTS,CPO, Kernel) ” PIMP739. Information about mass balance percentage has been included on the figure including information about quantity of incoming certified and non certified FFB. All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios. The procedure require material balance have to show deliver prod-uct sales from a positive stock. The company has establish mechanism to indicate selected supply chain model in all purchase and sale contracts documents, this is raised as non conformity during this audit. There is no outsourced process in Lok Heng Mill. Compliance status: Full Compliance.

E.4. Sales and goods out

Findings: The sales and goods out mechanism of the company are described in their procedure of sales of palm oil. Records for next CSPO and CSPK product sold are recorded in material balance sheet All product dispatched from Lok Heng transported to FOD (Felda Oil Depot); DOP (Delima Oil Product Refinary); FOP (Felda Oil Product). All refinaries are located in Pasir Gudang. Weigh bridge tickets (CPO Delivery Account) also include data on contract number, date of issue, de-livery order number, buyer name including the address of buyer, the quantity of the products delivered and references to related transport documentation such as: - Gate Pass CPO Delivery - MPOB form L-3 (Malaysian Palm Oil Board Act 1998) - Delivery Order already inform about buyer address Transports documents issued by the administration staff. The Mass balance calculation for certified product has been considering actual condition of incoming certified material. The information can be seen on the Daily operation Figure ISCC/RSPO (BTS,CPO, Kernel) ” PIMP739. During 2nd surveil-lance audit, Lok Heng mill can not provide information about total outgoing certified PK to their cus-tomer with 3 monthly basis for period January to December 2013. Daily Figure ISCC/RSPO for year 2013 was not recorded completely. Compliance status: Non Compliance NCR SCCS No. 2014-03 of 04 Lok Heng mill can not provide information about total outgoing certified PK to their customer with 3 monthly basis for period January to December 2013. Daily Figure ISCC/RSPO for year 2013 was not recorded completely.



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E.5. Training

Findings: Lok Heng Mill has training procedure and annual training program for their employee, training has been conducted on February 01, 2013 by Unit RSPO FELDA. The training was attended by two Lok Heng Mill personnel in charge for SCCS implementation. Lok heng Mill has new mill head, according to the existing procedure all personal who will involve for SCCS implementation have to involve the relevant training, however there is no training evidence for new mill head and Laboratory assistant as the person who has responsibility to records product movement. This is raised as non conformity. Compliance status: Non compliance. NCR SCCS No. 2014-04 of 04 There is no training evidence for new mill head and Laboratory assistant as the person who has re-sponsibility to records product movement.

E.6. Claims

Findings: According to product traceability instruction, the mill will only make claims regarding the use of or support of RSPO certified palm oil that are in compliance with the RSPO Rules for Communication and Claims after SCCS certificate issued. Company has established specific procedure for claim and communication as guidance for their worker especially for their CSPO/CSPK administratin staff to handle communication about certified product. Compliance status: Full Compliance.

3.5. Follow Up action from previous audit findings.

SCCS Non-conformance 2013-01 of 03: E.2 The SCCS procedure has no clear information regarding definition of FFB from certified source that will be claimed as certified material and the condition that will make certified FFB become non cer-tified FFB. There is also no specific mechanism to inform certification status attached on the document both document from smallholder and incoming FFB documents issued by the mill. Evidence of Correction/Corrective Action: The company provided their revised SCCS procedure FGVPM- RSPO SCCS, the procedure has in-clude information regarding claim for certified material and condition become non certified, as stated on page 4 and 5 of 9 of the SCCS procedure The SCCS procedure has been updated with the definition of FFB from certified source that will be claimed as certified material has been highlighted with green color. Tho inform certification status on the document from smallholder will put “certified stamp” on each incoming FFB document. The condi-tion that will make the certified FFB downgrade to non certified FFB also has been highlighted with green color. Auditor Conclusions: Closed SCCS Non-conformance 2013-02 of 03: E.4 Sustainable verification Information Spreed Sheet record already includes information about actu-al daily percentage of MB crop however no information regarding amount of incoming certified FFB and Non Certified FFB. Evidence of Correction/Corrective Action: Spreed sheet form to records material and production balance has no longer used since July 2013 re-placed by “ Daily operation Figure ISCC/RSPO (BTS,CPO, Kernel) ” PIMP739. Information about mass



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balance percentage has been included on the figure including information about quantity of incoming certified and non certified FFB. Auditor Conclusions: Closed. SCCS Non-conformance 2013-03 of 03: E.5 Formula to calculate mass balance product is not considering actual weight of incoming certified material in the SOP. Evidence of Correction/Corrective Action: The company provided their revised SCCS procedure FGVPM- RSPO SCCS, the procedure has in-cluded information regarding calculation of mass balance including information regarding actual condi-tion of incoming certified material. The formula to calculate mass balance product has been unpdated inside the SCCS procedure and been highlighted with yellow color. Auditor Conclusions: Closed

3.6. Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Audi-tors Conclusions

During 2nd surveillance audit there are 4 NCR raised according to RSPO supply chain certification system in Lok Heng mill, as explained below:

SCCS Non-conformance No. ASA1 – 2014 -1 of 04: There is no evidence internal audit has been done with 3 monthly basis by Mill Assistant manager, as determined by FGVPM-RSPO SCCS rev 2 page 3 of 10 regarding job description for Assistant Manag-er. Correction: 1) The manager issued a directive to the mill assistant manager to perform duties in accordance with the SCCS SOP 2) Maintain records of SCCS internal audits carried out by the mill assistant manager. ** An SCCS internal audit has been carried out by AM plants with officers SPO on 01/06/2014 Corrective action: 1) Continuous monitoring by the Mill Manager 2) Checking during Internal Audits done by the Officer of Sustainable Palm Oil (SPO) Department, PSQM, HQ 3) To regularly update RSPO SCCS file with latest related information Auditor Conclusions: Closed The mill provided a document with results of internal audit conducted on 6 January 2014, but (the evidence was misplaced during the time of the audit). The audit was done by a Sustainability officer from Felda’s PSQM unit as well as the assistant manager of the mill. SCCS Non-conformance No. ASA2– 2014- 2/ -1 of 04: There is no evidence that delivery note FFB from Lok Heng Schme estate has indicate certification sta-tus as required by FGVPM-RSPO SCCS page 6 of 10. Correction: To carry out SCCS re-training to inform on this requirement



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Corrective action: Regular monitoring by management and SPO officers Auditor Conclusions: Closed The mill does not stamp certification status on the delivery notes as the mill’s system automatically classifies FFB received as RSPO certified or non-certified accordingly depending on the source.

The mill’s SOP FGVPM-RSPO SCCS page 6 of 10 states the weighbridge tickets for FFB diverted from other mills must include “RSPO Certified FFB” stamp. The SOP does not require FFB from mill’s regular supply base to have the RSPO status stamp. Since year 2013, Lok Heng mill has not received any diverted FFB from other mills, but the mill occasionally diverts their crop to other mills, as seen from diversion delivery note dated 31 March 2014 for 30.59 tonnes of FFB from Lok heng mill to Waha mill. The delivery note has an attached letter stating “Certified FFB” SCCS Non-conformance No. ASA2– 2014- 3 of 04: Lok Heng mill can not provide information about total outgoing certified PK to their customer for period January to December 2013. Daily Figure ISCC/RSPO for year 2013 was not recorded completely. Correction: To list the amount that has been confirmed by PK logistics department. Corrective action: To establish an automatic system for separation of certified and non-certified PK figures in year 2014 Auditor Conclusions: Closed with observations The mill provided a summary of all RSPO certified non-certified PK despatched on a monthly basis for January to December 2013. It was confirmed that the figures were extracted from actual mill daily figures. However, the figure for January to May 2013 (all non-certified PK) were manually extracted while from June to December, the figures for RSPO certified and non-certified PK were derived from an updated weighbridge system that did not require manual extraction but automatically updated according to RSPO certification status of the FFB source. SCCS Non-conformance No. ASA2– 2014- 4 of 04: There is no training evidence for new mill head and Laboratory assistant as the person who has re-sponsibility to records product movement. Correction: To provide records of SCC training conducted for the new mill head and laboratory assistant Corrective action: To conduct regular training on SCCS Auditor Conclusions: Closed There is evidence of SCC training done for the mill laboratory assistant on 10 September 2013, and training conducted for the new mill head conducted on 21 May 2014 as sighted from training attendance list records.

3.7. Noteworthy Positive Components



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Criterion -

Findings: Good responsiveness and cooperation in locating and receiving documents from staff of Lok Heng Mill and Lok Heng Timur

Criterion 6.1.2 Evidence that the assessment has been done with the participation of affected parties.

Findings: There is evidence that the assessment has been done with the participation of various levels of em-ployees, i.e. staff, workers, settlers, contractors and suppliers. The gender dimension was also included in the sampling. A standard questionnaire was used to elicit information from respondents. Criterion 6.4.2 A procedure for calculating and distributing fair compensation (monetary or oth-erwise) is established and implemented. This takes into account gender differences in the pow-er to claim rights, ownership and access to land; and long-established communities; differ-ences in ethnic groups’ proof of legal versus communal ownership of land.

Felda Lok Heng Selatan has demonstrated equal opportunities provided to both male and female heads of households to hold land titles in smallholder schemes.

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 provide decent living wages.

Findings: In addition to their normal salary, workers are provided an incentive of RM150 per month known as AIPS incentive, of which 50% is banked into worker’s accounts with their salary and another 50% is kept as savings for the workers. Workers are allowed to take out these savings once a year.

3.8. Issues Raised by Stakeholders and Findings Pertaining to Issues

No. Issues Raised Audit Verification

1.

DOE officer which conducted inspection in Lok Heng mill was contacted and officer provided the following information: 1) DOE received a complaint from small-

holders regarding open burning from the mill, DOE investigated and re-quested for the mill’s written approval to incinerate, which the mill was una-ble to produce. DOE then issued a compound of RM12,000 which the mill has paid.

2) DOE receives reports regularly from Lok Heng Mill and in one report in year 2013, the mill reported that their BOD of effluent treated had exceeded the legal standard of 100ppm, and were taking measures to reduce the BOD. DOE had not yet followed up on this matter.

1) Felda headquarters had issued a letter in year 2012 to all mills with incinerators stating that they are no longer permitted to use incinerators from 1 January 2013 in accordance with the regula-tion. Lok Heng Mill had submitted a letter of re-quest to the Head of Felda Palm Industries Sdn. Bhd. (FPISB) requesting for extension of permit for contractor to continue operations of the incin-erators and ash bagging works, but this request was denied as seen from a response letter from FPISB. However, there is evidence that incin-erator operations and ash bagging continued in year 2013 and was approved by FPISB, i.e. Work Order for bagging of ash from July until Oc-tober 2013. Lok Heng mill was issued a total of 6 compounds of RM2000 each on 13 September 2013, and evidence of payment was sighted. Since then, the mill has stopped incineration and also recently started construction of a bunch shredder on 16 February 2014, from which shredded bunches will be used in the boiler and no longer sent for incineration.

2) It was confirmed from the BOD analysis certifi-cates that BOD levels of discharged effluent had exceeded 100ppm in October and November 2013. The issue was identified in October, with corrective actions taken by the mill, and subse-



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quently it was found from BOD analysis results for December 2013 and January 2014 that the BOD level was below the legal limit.

2. Foreign workers are unhappy with the wages and do not understand the terms and conditions of their employment.

This was raised as non-compliance no. 2014-15 of 19. See Section 3.3 above.

3. Foreign workers are unhappy with slow follow-up on worker’s housing repairs (Lok Heng Selatan)

An interview with the Indian workers Lok Heng Selatan on 2 April 2014 (verification audit) con-firms that the management has conducted the necessary repairs for the workers.

4. The plantations have large undergrowth as a result of non-usage of pesticide.

The mill has stopped buying FFB from unauthor-ized individuals.

5. Foreign workers are unhappy that their wages are paid in cash and not banked-into their accounts.

Lok Heng Selatan complex is waiting for the Bank Rakyat branch to op The bank branch is currently installing its computer system.

6. Foreign workers complained about the wa-ter quality in their housing.

An interview with the Indian workers Lok Heng Selatan on 2 April 2014 (verification audit) con-firms that the management of the water quality has improved.

7. Foreign workers complained that inade-quate medical attention was given for skin disease.

Felda Lok Heng Selatan management has on several occasions sent the worker to the clinic but the worker refused further treatment on his own accord.



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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance visit is planned for March 10, 2015

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content. Signed on behalf of FELDA …………………………………………. Name: Position: Date:

Signed on behalf of TUV Rheinland Malaysia …………………………… Dian Susanty Soeminta Lead Auditor Date: 29 October, 2014

Anthonius Sani Sustainability Manager PSQM, FGVPM 20 November 2014



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APPENDICES

Appendix 1: Revised RSPO Certificate The certificate was reissued under name of TUV Rheinland Indonesia as the newly accredited RSPO Certifi-cation Body under TUV Rheinland Group. The previous certificate was issued under TUV Rheinland Malay-sia.



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Appendix 2: List of Abbreviations

AIPS Approved Incentive Payment SchemeBOD Biological Oxygen Demand CHRA Chemical Health Risk Assessment CLASS Occupational Safety (Classification, Labelling, Safety Data Sheet of hazardous

Chemicals) Regulations CPL Classification, Packaging and Labelling CPO Crude Palm Oil CSDS Chemical Safety Data Sheet DOE Department of Environment DOSH/ JKKP

Department of Occupational Safety and Health/ Jabatan Keselamatan dan Kesihatan Pekerja

EFB Empty Fruit Bunches

EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health EQA Environmental Quality Act FFB Fresh Fruit Bunches FMA 1967 Factories and Machinery Act 1974 FOMEMA Foreign Workers Medical Screening FPISB FELDA Palm Industries Sdn. Bhd. FPSB Felda Plantation Sdn. Bhd FTSB Felda Technoplant Sdn. Bhd FTPSB Felda Techno Plant Sdn Bhd GPW Gerakan Persatuan Wanita / United Women’s Movement HCV High Conservation Value HIRARC Hazard Identification, Risk Assessment and Risk Control HQ Headquarters

IPD Ibu Pejabat Polis (Police Headquarters)

IPM Integrated Pest Management JCC Joint Consultative Council JKKR Jawatan Kuasa Kemajuan Rancangan (Plan Development Committee) JKKP Jabatan Keselamatan dan Kesihatan Pekerjaan (Department of Occupational

Safety and Health) KER Kernel Extraction Rate LTA Lost Time Accident MSDS Material Safety Data Sheet MBFM Majlis Belia Felda Malaysia (Felda Malaysia’ Youth Council) MPOB Malaysian Palm Oil Board NADOPOD

Notification of Accident, Dangerous Occurrence, Occupational Poisoning and Occu-pational Disease Regulations 2004

NCR Nonconformity report NGO OER

Non-Government Organization Oil Extraction Rate

OSH Occupational Safety & Health OSHA Occupational Safety & Health Act PKO Palm Kernel Oil PMD Pendaftaran Mesin Dandang (Steam Machine Registration) PMT Pendaftaran Mesin Tekanan (Pressure Machine Registration) POME Palm Oil Mill Effluent PPE Personal Protective Equipment



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QOHSE Quality, Occupational Health and Safety, and EnvironmentRKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) RSPO Roundtable for Sustainable Palm Oil SDA Social Development Assistant SIA Social Impact Assessment SOCSO Social Security Organization SOP Standard Operating Procedure SPPA Skim Pampasan Pekerja Asing (Foreign Worker’s Compensation Scheme) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) USECHH Use and Standard of Exposure of Chemical Hazardous to Health

Appendix 3: List of Stakeholders Interviewed and Contacted

No. Name of

Stakeholder Institution - Address Remark

Stakeholders Interviewed On-Site

1. Mohd Firdaus Bin Ismail

Department of Environment Johor

2. Mohd Zin

Lok Heng Mill boiler chargeman

3. Visvanathan

Contracted worker for EFB shredder construction

4. Mahyudin Indonesia Migrant Worker/Harvester

Lok Heng Timur

5. Hafiz Indonesia Migrant Worker/Sprayer

Lok Heng Timur

6. Ramli Indonesia Migrant Worker/ Lok Heng Timur 7. Amiza Clinic Staff Lok Heng

8. A. Rahman Security staff Lok Heng Mill

9. M. Rizalee Truck Driver of D. Reztu Enterprise

Lok Heng Mill

10. Kelesa Kanteen Lok Heng Mill

11. Suhaimi Grader Supervisor Lok Heng Mill

12. Md Safuan Madio Head of Worker Union Lok Heng Mill

Lok Heng Mill

13. Mohd. bin Bakar Ketua Peneroka (Leader of Smallholders)/Assistant Chairman of JKKR Lok Heng Selatan

Male Smallholder

14. Siti Hawa binti Kadiman

GPW Chairwoman Female Smallholder

15. Rubishah Mesran Pembantu Pembangunan Masyarakat Wanita (Women’s Development Assistant)

Felda Lok Heng Selatan staff (female)

16. Purwadi Harvester Male foreign worker (from Indonesia)

17. Masdin Harvester Male foreign worker (from Indonesia)

18. Usman Jayadi Harvester Male foreign worker (from Indonesia)

19. Abdul Maad Adnan Harvester Male foreign worker (from Indonesia)

20. Jaswadi Harvester Male foreign worker (from Indonesia)

21. Andi Harvester Male foreign worker (from Indonesia)



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22. Maliki Harvester Male foreign worker (from Indonesia)

23. Sahirudin Harvester Male foreign worker (from Indonesia)

24. Bairwa Babulal Sprayers Male foreign worker (from India)

25. Bhoma Ram Sprayers Male foreign worker (from India)

26. Bairwa Banwari Sprayers Male foreign worker (from India)

27. Salim Khan Sprayers Male foreign worker (from India)

28. Dilshad Khan Sprayers Male foreign worker (from India)

29. Irfan Khan Sprayers Male foreign worker (from India)

30. Suhaila bt.Abdul Aziz Clerk Female employee (Felda Papan Timur)

31. Mahmud Ibrahim Manager/Lok Heng Barat

32. Kamarul Hilmi Supervisor-Lok Heng Barat

33. Dolmat Ismail Mandore-Lok Heng Barat

34. Dr. Bjinder Singh A/L Jagjit Singh

Medical Surveillance Doctor

35. Amir Poji Harvester-Lok Heng Barat

36. Mahyudin Harvester-Lok Heng Barat

37. Amiza

Medical Assistant-Klinik Kesihatan Desa

38. Abu Hassan b. Ashari

Manager-Lok Heng Selatan

39. Juraimi b. Jais Supervisor-Lok Heng Selatan

40. Bukhari b. Mat Noh Supervisor-Lok Heng Selatan

41. Mohd Nasir b. Munajat

Manager-Lok Heng Mill

42. Samad b. Othman

Asst Manager (Operation)-Lok Heng Mill

43. Ruzi b. Abdullah Chargeman-Lok Heng Mill

44. Shahbudin Stock Clerk-Lok Heng Mill

Appendix 4: Observations and Opportunities for Improvement

No. Observations / Opportunities for Improvement Criteria1. Felda Lok Heng implements a filing system for RSPO related documents, but most

of the filed sighted on-site were not up-to-date with the latest information -

2. Management has not provided a report of HCV; Human Rights Policy; and Public summary of certification assessment report to be known by stakeholders

1.2

3. Lok Heng mill was still using their incinerators up until October 2013 and stopped usage after issuance of compound by DOE. The mill must ensure usage of incin-erators is completely stopped.

CR2.1

4. There is evidence that soil and leaf analysis is done for the schemes by Felda Technoplant, however Felda schemes do not maintain a copy of the results. They only receive a copy of the fertilizer application recommendations produced from the analysis results.

CR4.2

5. It was observed at Lok Heng Timur estate, that EFB is dumped in piles which may encourage breeding of orytes.

CR 4.2



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6. Penggeli Analysis Lab which is used for analysis of effluent sample from Lok Heng mill is not yet an accredited laboratory but has undergone an accreditation audit by the Department of Standards Malaysia on 7 January 2013 as seen from letter from the department. Approval of accreditation has not yet been received by the lab

CR 4.4

7. Lok Heng mill maintains records of mill water usage per tonne FFB in monthly quality monitoring reports, however the mill does not conduct analysis of water us-age to determine months where water usage is high and implement measure to reduce water usage.

CR4.4

8. During the audit time, the company produced two SOPs, one for “Management of bagworms through monitoring and census”, one for “Control of Leaf Eating Pests and the Estates” which has yet to be disseminated and applied at all estates. Im-plementation will be verified during the next surveillance audit. It is also noted that the SOPs are not dated.

CR 4.5

9. There is no evidence of review or update of Lok Heng mill’s EAI document as the last sign-off date of the document was 30 August 2010. It was explained by man-agement that they do review the appropriateness of the EAI and only update the document when there are changes to their operations and activities. As per RSPO P&C 2013 requirements, the EAI shall be reviewed at least once every 2 years

CR5.1

10. No programmes to regularly educate the workforce about the status of the RTE species.

IN 5.2.3

11. No monitoring plans to support management prescriptions listed in HCV report for Lok Heng/Adela complex.

IN 5.2.4

12. The company has no written policy committing to a code of ethical conduct and in-tegrity in all operations and transactions, which shall be documented and commu-nicated to all levels of the workforce and operations.

P&C 2013

CR1.3

13. The schemes do not have a documented business or management plan (mini-mum three years) which includes a business case for scheme smallholders

P&C

2013

CR3.1

14. There is no formal training programme in place that covers all aspects of the RSPO Principles and Criteria, and that includes regular assessments of training needs and documentation of the programme. Records of training of each em-ployee are not maintained.

P&C

2013

CR4.1

15. The SIA did not adequately capture the responses of foreign workers, especial-ly those who are not conversant in the local language. Also, the SIA relied sole-ly on questionnaire and did not consider stakeholders who are illiterate/not con-versant in Bahasa Malaysia.

CR 6.1.2

16. Management cannot provide the monitoring of SIA result which considers the promotion of positive impact.

P&C 2013 6.1.3

17. Management does not yet have a policy that the monitoring plan of SIA is re-viewed and updated at least once every two years

P&C 2013 6.1.4

18. Recordings response communications with stakeholder has not included evi-dence that stakeholders have received the answer

6.2.3

19. There is no policy and program from management to monitor and improve work-ers’ access to adequate, sufficient and affordable food.

6.5.4

20. Felda Lok Heng provided documented evidence of a list of 56 Indonesian workers who have received a copy of their employment contracts and signed off that they have received their contract. However, the office, in the process of handing over the contracts to the worker, has not retained any copies of the contract for office records.

6.5

21. Some local staff are members of trade union, with RM6 deducted from salary but they have no information about activities of the trade union and are not involved

CR 6.6



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in trade union. Union representative at Scheme level is not known.

22. Management has not been able to show the minutes of a meeting between un-ion workers with management

6.6.2

23. There is no policy to protect the reproductive rights of all, especially women. CR 6.9

24. Management of Smallholder Scheme has not been able to show evidence (doc-umentation) that they have programs to improve smallholder productivity.

6.11.2

25. Management has not conducted a review and identification of practical forms of forced or trafficked labor and contract substitution

6.12

26. Management has yet to make and communicate human rights policy 6.13

27. All estates and schemes have yield targets, but no plan for optimizing the yield of the supply base.

P&C 2013

CR8.1

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