Malaysian Sustainable Palm Oil Certification

Some of the opportunities for improvement of the results provided by the MUTU auditor to the management unit and the subject results will be checked in the next evaluation phase. Chalok Palm Oil Mill – Felda Palm Industries Sdn Bhd has been found by MUTU to comply with MS Malaysian Sustainable Palm Oil (MSPO) Part 4: General Principles for Palm Oil Mills. The course of the annual implementation starts from the establishment of the audit schedule → the selection of the audit team → the preparation of the audit plan → the implementation of the audit - the reporting of the findings.

Internal audit findings effectively addressed root causes with a corrective action plan in the NCR findings matrix. During a visit to the mill, it was observed that EFBs were filled outside the fenced area close to the watercourse. Based on the time-bound plan for FPISB, Chalok POM is slated to obtain fire certification by 2021. The plant management launched a fire certification application in August.

The progress will be verified in the next assessment as this is required by the Environmental Quality Act 1974 (Act 127), Section 49A. 1) An owner or occupier of premises shall employ a person certified by the Director General as a competent person to carry out all or any of the following activities (b) the management of schedule- waste. Quarterly Return Form as per First Schedule of the EQ (Prescribed Premises) (Crude Palm Oil) Regulations, 1977 – report to DOE viewed for 1st Q 2018 [ref. The identification of changes is the responsibility of PSD in HQ who will notify the estate representatives in writing of the changes which would normally be directed to Chief Clerk.

Figure 1. Location Map of Chalok Palm Oil Mill

Indicator 4: Where there are, or have been disputes, documented proof of legal acquisition of land title and fair compensation that have been or are being made to previous owners and occupants; shall be made available and that

Criterion 3: Customary land rights

Indicator 1: Where lands are encumbered by customary rights, the company shall demonstrate that these rights are understood and are not being threatened or reduced

Indicator 2: Maps of an appropriate scale showing extent of recognized customary rights shall be made available

Indicator 3: Negotiation and FPIC shall be recorded and copies of the relevant agreements should be made available

PRINCIPLE 4 : SOCIAL RESPONSIBILITY, HEALTH, SAFETY AND EMPLOYMENT CONDITION .1 Criterion 1: Social impact assessment (SIA)

Indicator 1: Social impacts should be identified and plans are implemented to mitigate the negative impacts and promote the positive ones
Criterion 2: Complaints and grievances

Indicator 1: A system for dealing with complaints and grievances shall be established and documented
Indicator 4: Employees and the surrounding communities should be made aware that complaints or suggestions can be made any time
Indicator 5: Complaints and solutions within the past 24 months shall be documented and be made available to affected stakeholders upon request

Criterion 3: Commitment to contribute to local sustainable development

Indicator 1: Palm oil millers should contribute to local development in consultation with the local communities

Criterion 4: Employees safety and health

Indicator 1: An occupational safety and health policy and plan which is in line with Occupational Safety and Health Act 1994 and Factories and Machinery Act 1967 (Act139) shall be documented, effectively communicated and
Indicator 2: The system shall be able to resolve disputes in an effective, timely and appropriate manner that is accepted by all parties
Indicator 2: The occupational safety and health plan shall cover the following

Criterion 5: Employment conditions

Indicator 1: The management shall establish a policy on good social practice regarding human rights in respect of industrial harmony. The policy shall be signed by the top management and communicated to the employees
Indicator 4: Management should ensure employees of contractors are paid based on legal or industry minimum standards according to the employment contract agreed between the contractor and his employee
Indicator 7: The management shall establish a time recording system that makes working hours and overtime transparent for both the employees and employers
Indicator 8: The working hours and breaks of the individual worker indicated in the time records shall comply with legal regulations and collective agreements. Overtime shall be mutually agreed upon and shall meet the legal requirement
Indicator 9: Wages and overtime payment documented on the pay slips shall be in line with legal regulations and collective agreements
Indicator 10: Other forms of social benefits should be offered by the employer to employees, their families or community such as incentives for good work performance, bonus payment, support of professional development, medical
Indicator 11: In cases where on-site living quarters are provided, these quarters shall be habitable and have basic amenities and facilities
Indicator 12: The management shall establish a policy to prevent all forms of sexual harassment and violence at the workplace
Indicator 13: The management shall respect the right of all employees to form and join trade union and allow workers’ own representative(s) to facilitate collective bargain in accordance with applicable laws and regulations

Criterion 6: Training and competency

Indicator 2: Training needs of individual employees shall be identified prior to the planning and implementation of the training programmes in order to provide the specific skill and competency required to all employees based on their job
Indicator 3: A continuous training programme shall be planned and implemented to ensure that all employees are well trained in their job function and responsibility in accordance to the documented training procedure

It was confirmed during the interview with workers and stakeholders (contractor and school teacher) that they were aware and understood the complaint and grievance mechanism, including the person in charge to handle the complaint and timeframe for response. This is possible due to the location of the mill which is surrounded by FGV and/or Felda management of plantations. Mill showed evidence that the policy was socialized to the workers with the attendance list on 27 May 2018 to all workers.

Regulation 1997 and Occupational Safety and Health (Use and Standard of Health Exposure to Hazardous Chemicals) Regulation 2000 .. f) Management appoints responsible person(s) for worker safety and health. A mill can display a worker and contractor training program that describes, for example, a training schedule, station management training for workers every 6 months, hazardous waste management training for workers once a year, chemical management training every 6 months, and contractor training in relation to the General Safety Rules every 6 months. Based on the results of field visits to the chemical warehouse, it is established that there is a label and a sign in accordance with the regulations.

There are 10 workers with audiometric results according to the standard, the mill has shown a letter on July 17, 2018 regarding the reorganization of the audiometric test. For the realization of the policy, FGV is committed to consider the requirements of human rights in the structuring of the manual, procedures and other policies of the company. The policy is communicated to the employee by posting it on the Police Sustainability notice board.

From the interview with the workers, no problems related to discriminatory and social issues in the operation of the mill were found. FGV Complex Chalok (including Chalok Mill) has conducted stakeholders meeting including contractors on 18th June 2018 which explain about all policies in the mill including MSPO policy and MSPO requirement including worker payment. Based on the interview with the contractor (Koperasi Felda Chalok Rahmat), it is explained that the contractor's workers were paid the minimum legal standard (RM1,000).

A copy of employment contract will be made available to each employee indicated in the employment records. Employees will be given freedom to join trade unions relevant to the industry or to organize themselves for collective bargaining.

PRINCIPLE 5: ENVIRONMENT, NATURAL RESOURCES, BIODIVERSITY AND ECOSYSTEM SERVICES .1 Criterion 1: Environmental management plan

Indicator 1: An environmental policy and management plan which shall be in line with the relevant country and state environmental laws shall be established, effectively communicated and implemented
Indicator 2: The environmental management plan shall cover the following
Indicator 3: An environmental improvement plan to mitigate the negative impacts and to promote the positive ones, shall be developed, effectively implemented and monitored
Indicator 4: A programme to promote the positive impacts should be included in the continual improvement plan
Indicator 5: An awareness and training programme shall be established and implemented to ensure that all employees understand the policy, objectives and management plans and are working towards achieving the objectives
Indicator 6: Management shall organize regular meetings with workers where concerns of workers about the environmental quality are discussed
Criterion 2: Efficiency of energy use and use of renewable energy

Indicator 2: Palm oil millers shall estimate the direct usage of non-renewable energy for their operations, including fossil fuel, and electricity to determine energy efficiency of their operations
Indicator 3: The use of renewable energy should be applied where possible

Criterion 3: Waste management and disposal

Indicator 1g: All waste products and sources of pollution shall be identified and documented
Indicator 3: The palm oil mill management shall establish Standard Operating Procedure for handling of used chemicals that are classified under Environment Quality Regulations (Scheduled Waste) 2005, Environmental Quality Act,
Indicator 4: Domestic waste should be disposed as such to minimize the risk of contamination of the environment and watercourse

Criterion 4: Reduction of pollution and emission including greenhouse gas

Indicator 1: An assessment of all polluting activities shall be conducted, including greenhouse gas emissions, particulate and soot emissions, scheduled wastes, solid wastes and effluent
Indicator 2: An action plan to reduce identified significant pollutants and emissions shall be established and implemented
Indicator 3: Palm oil mill effluent (POME) shall be treated to ensure compliance with standards as stipulated in the relevant Environmental Quality (Prescribed Premises) (Crude Palm Oil) Regulations 1977. POME discharge limits and

Criterion 5: Natural water resources

Indicator 1: The management shall establish a water management plan to
Indicator 2: Where open discharge of POME into water course is practiced, mills should undertake to gradually phase it out in accordance to the applicable state or national regulations
Indicator 3: Palm oil mill effluent (POME) shall be treated to ensure compliance with standards as stipulated in the relevant Environmental Quality (Prescribed Premises) (Crude Palm Oil) Regulations 1977. POME discharge limits

Training for contractors related to the General Safety Regulations every 6 months The mill shows evidence of training for safety, for example:. Seeing the meeting was done along with safety meeting, maintenance of mill operation, safety on the mill operation. The mill used the flare method in relation to the biogas methane capture to reduce the BOD at the final discharge.

I also noticed a mass balance record for fiber and husk in the mill that was recorded. Observed identification of the source and type of planned waste in the plant and unclassified waste classified as planned waste - plant operation [PPE used - soil, water contamination in the air, used chemical container / used paint container, used hydraulics / filter , used lamps, electronic waste and batteries - from vehicles and plants]. Waste management i.e. household waste and disposal for 2018, which includes mill operation → Sarung tangan/ tayar/ besi buruk → glove removal / latihan pemanganan sisa domestic dan bahan buangan kepada tukku dan penjaja → mengajurkan program keceriaan→.

Considerations for the mill to improve the lubricant deposit and the planned waste area for the installation of bunds. Looked at the SOP of the mill for scheduled waste “Procedura Pengendalian Bahan Buangan Terjadual” reference FPI / L2 / QOHSE – 9.0 -date 15 September 2014 FPISB which includes objective, object of procedure, responsibility, reference, procedure, handling and disposal of waste planned (empty bins), the treatment of planned waste using the pump and the planned waste disposal area at the request of the General Director. According to the waste record in the mill, the mill had made a daily record of the collection of shovel inside the mill based on the circular dated January 17, 2018 approved by the manager.

Have a competent person (CEPPOME) to handle mill effluent, air pollution and waste planning. Remembered June 2018 water management plan including management at the mill - identification of water sources → river, water use efficiency - zero, identification of renewable sources, monsoon drainage blocked action plan - drain / pit cleaning - Person in charge – mill management, marked to receive – SPK wilayah. KKS Chalok had developed a conventional POME treatment system pond that will phase out the runoff at the mill.

The factory had also installed the biogas plant that will capture and flare the methane. I saw that the mill had done the water result analysis for the final discharge of POME at pond #8 to waterways.

PRINCIPLE 6: BEST PRACTICES .1 Criterion 1: Mill management

Indicator 1: Standard operating procedures shall be appropriately documented and consistently implemented and monitored
Indicator 2: All palm oil mills shall implement best practices
Criterion 2: Economic and financial viability plan

Indicator 1: A documented business or management plan shall be established to demonstrate attention to economic and financial viability through long-term management planning

Criterion 3: Transparent and fair price dealing

Indicator 1: Pricing mechanisms for the products and other services shall be documented and effectively implemented
Indicator 2: All contracts shall be fair, legal and transparent and agreed payments shall be made in a timely manner

Criterion 4: Contractor

Indicator 1: In case of the engagement of contractors, they shall be made to understand the MSPO requirements and shall provide the required documentation and information
Indicator 2: The management shall provide evidence of agreed contracts with the contractor
Indicator 3: The management shall accept MSPO approved auditors to verify the assessments through a physical inspection, if required

It is shown that each price in the work contract is negotiated. 34;Pengakuan Rundingan Pemborong" for thickness test for chimney and boiler made on 09 April 2018 which explains that the price is mutually agreed. FGV Chalok Complex (including Chalok Mill) has held stakeholder meeting including the contractors on 18 June 2018 which explains about all policy in the mill including MSPO policy and MSPO requirements.

The mill has proven that the work contract has been agreed with the contractor. The document is signed by the representative of the contractor (Kejuruteraan Tahir (M) Sdn. Bhd) and the mill. The mill was audited by MUTU MSPO auditors with full cooperation from the management units.

As agreed, the respective operating units will accept the MUTU MSPO auditors to verify through a physical inspection if necessary for audit purposes.

Identification of findings, Corrective actions, observations, opportunity for improvement and noteworthy positive components

Identification of Non-conformity at Stage-2 – One (1) major, two (2) minor non-conformities were raised

There is no person in charge to monitor inventory and register of Scheduled Waste Lack of Knowledge from staff to determine and manage scheduled waste disposal

Copy of Scheduled waste that has been registered 2. Training record in handling scheduled waste

Appointed person in charge to monitor inventory and registration of scheduled waste Identify and register scheduled waste

Requirement: 4.3.1.1 Indicator 1: All operations are in compliance with ratified local, state, national and international laws and international regulations.

The management shall periodically review the continuous suitability, adequacy, and effectiveness of the requirements for effective implementation of MSPO and decide on

Summary of Arising Issues from Public, Management, and Auditor Response Public Issues

He had been under contract with the FGV property for ten years and so far from the interview the method of payment, the conclusion of the contract and the welfare of the workers had been a priority concern of the FGV management. Seeing no complaint has been logged against FGV Management and the contractor is satisfied with FGV Management's handling of the contract. FGV management also gave information to the workers during the signing of the contract that the workers had to comply with the company policy, code of conduct and everything had been kept in a booklet sent to the contractors and a copy of the contract is also kept by the contractor.

Every single policy and legal requirement is clearly stated in the contract and adhered to by the contractor. The company will continue to maintain a good relationship between contractors and Koperasi Felda Chalok Rahmat and also further engagement will be increased from time to time. They work as harvesters on properties, spraying and also fertilizing express their satisfaction working in the company.

Few issues had arisen regarding the house salary but based on the cross check with the property management the issues had been clarified and information regarding the information will be provided from time to time. They all expressed good feelings towards management and were satisfied with the way management treated them fairly on the estate between each other and the local workers. The company had also provided a van to go to the nearest town and provided them with suitable accommodation to stay in while work was being done on the estate.

Also see the nearby store for grocery shopping and the basic amenities have been provided by FGV Management. FGV Management will maintain a good relationship especially with the foreign workers representative of FGV Estate Setiu 01. Based on the meeting and feedback, the representative expressed satisfaction with FGV Management especially mill in relation to the rating of FFB and OER of the mill.

FGV Management will maintain a good relationship with Felda Techno Plant's staff and will continue the collaboration. Based on the interview, the local people had expressed satisfaction with the management of property Setiu 01, which handled the local people from the village.

CERTIFIED ORGANISATION'S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

Prepared by Mutuagung Lestari for Chalok Palm Oil Mill – Felda Palm Industries Sdn Bhd Appendix 1.