Aspects of plantation and mill management, including replanting, that

SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 43of 77 April 2013 with 8 participants; there is evidence of records of activity. Company has Contractor Selection SOP Memo Internal No.: MI-011MDPROCVI2013 that incorporates company profile and reference requirements to ensure contractor competencies. Where a candidate contractor company is questionable, its competence and legality will be verified. Sample contractor whose competence has been assessed is PT MajuBersama Perkasa as LC Contractor. Compliance status: Compliance 5 ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY

5.1 Aspects of plantation and mill management, including replanting, that

have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate There is impact analysis documentation in EIA report approved by Governor of Central Kalimantan No. 188.442242009 dated 07 August 2009. EIA document is prepared by CV. Cipta Nusantara Indah Konsultan located in Palangka Raya from September 2008 to January 2009. The document still conforms to mill area and capacity. Environmental monitoring program has been established according to RKLRPL. But measurement period should be confirmed against government regulations, for example emission and ambient air measurement. RKLRPL report semester I – 2013 contains as follows: - Liquid waste quality monitoring: records of liquid waste test result in January – June 2013. Measurement results comply with the quality standard stipulated in the regulations. - Hazardous waste monitoring: records of hazardous waste balance and manifest - Solid waste monitoring: records of empty fruit bunch, shell and fiber utilization. - Air quality monitoring: records of emission and ambient air test result in June 2013. Measurement results comply with quality standard set by regulations. - Monitoring of impact affecting flora and fauna: monitoring program every 6 months and signboard installation. - Monitoring of potential land estate fire impact: records of emergency response simulation at mill and estate SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 44of 77 - Monitoring of community anxiety impact: records of CSR realization. Environmental and workplace measurement was just conducted in August 2013 and currently in the process of analysis in the testing laboratory of PT Unilab. Delay in environmental parameter measurementS is due to testing laboratory time restriction. RKLRPL report semester I - 2013 was submitted to Seruyan Regency BLH on 28 August 2012 and Provincial BLH on 9 September 2013. Consistency need to be improved with respect to timely reporting i.e. every 6 months according to applicable regulations. Compliance status: Compliance 5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations The concession area is geographically located at longitude 112 o 18’ 18’ 19’ – 112 o 26’12’’E” east and Latitude at -2 o 51’24-3’08’10’’S until - 3 o 8’ 6.00”, latitude between 0 – 30 above sea level. The type of land use this concession area previously is grass land and bush vegetation secondary swamp forest. The types of soils are sandy loam, mineral and shallow peat. The erosion level of this area is classified as low and at low level of erosion risk. There are 3 river zones: WS Seruyan, Bakung and Kalua. This zona biographically is not counted as important birds area and endemic birds area There are three village around concession i.e Desa Baung, Desa Jahitan dan Desa Muara. The prominent local tribes are MelajoeBandjar and Dayak Ot Datum. The local people live mainly from fishing and farming. Their fishing area located at Seruyan River which connected to the lake of Danau Sembuluh outside of HGU . Based on interview result with the local people there is a decline of their fishing. There is SOP No. TAPSOP120-HCV002 i.e. Identification of Flora and Fauna Protection in plantation environment. Organization has conducted assessment of High Conservation Value. The tim consisted of external and internal personnel, headed by Mr Soetopo from Bogor Agricultural University SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 45of 77 who has expertise in wild live conservation. The organization has established list of fauna and in the surrounding area of planted zone before and after the establishment of plantation. From 26 species of fauna found before establishment of plantation there are only 10 of them found recently and 21 hew species. Reference was taken from local conservation authority BKSDA and government regulation No. 7 1999 about protected flora and fauna. There is the result of identification of high conservation value area conducted internally by HCV Department. Based on identification, data obtained is 1. Water catchment area; 2. Riparian zone; 3. Reservoir area; 4. Local Refugia area. The total area is 470.07 Ha The result of assessment as per HCV can be concluded as follows HCV 1 : For HCV 1 there only HCV 1.2 and 1.3 identified in the planted or surrounding border area. The HCV 1.2 identifed are three critically endangered species i.e shore arugosa, shorea platycarpa, shorea balangeran and three vulnerable species such as nephentes sp, combreto carpusrotundatus, gonystylus bancanus. Identified as well wild animals consist of 3 species of mammals, 42 species of birds, and 3 species of reptile, but none of them categorized as endangered species. The HCV 1.2 is located at swamp area and along side area of Bakung river, The HCV 1.3 identified is swamp area which are inhabited by species explained in HCV 1.2 HCV 2. The forest area in the organization plantation concession is 395.15 ha, the proportion of forest area is 0.00097 compared to the total remaining forest area 30,449,8000 ha in Kalimantan at 2008, there HCV 2.1 assumed as not applicable. In this low land forest area there is no area identified as transition ecosystem HCV 2.2. There are no HCV 2.3 as there no area in the concession inhabited by population of natural survived species. In the concession there is area swamp peat which identified as HCV 3. HCV 4 SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 46of 77 HCV 4.1 Identified in the concession is boundaries of Bakung and Kalua river and secondary peat swamp located at block F 34-35, while there are no important area for erosion prevention identified HCV 4.2. In the location there area secondary swamp peat which functioned as natural separator to prevent escalation of forest and land fire The HCV 4.3 HCV 5 and 6 is not found the location of concession. Planning for managing and monitoring identifie d endangered species was written in “Activity planning for managing and monitoring HCV year 2013” Several measures to preserve identified HCV 1.2 which have taken are placing sign board in th e HCV 1.2 location and socialization the local community at DesaJahitan. Organization has conducted six monthly monitoring to identified HCV, this monitoring is only quantitative monitoring to check the present of those HCV, not a kind of quantitative one to check the quantity of those HCV 1.2. There is a result of high conservation value area identification carried out internally by HCV Department. Data obtained from the identification are 1. Water catchment area; 2. Riparian zone; 3. Dam surrounding area; 4. Local refugee area. The total area is 470.07 Ha. Evaluation to the monitoring and managing HCV is conducted yearly, this year the evaluation was conducted at 07 September 2013. To preserve HCV 1.3 and HCV 3, organization has conducted fire prone area mapping, established patroli route and build 3 observation towers. According to record there were no fire and hunting case found from January until August 2013. Compliance status: Compliance 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner Company has conducted waste and pollution source identification, which is contained in the identification report of 15 May 2013. Sources of waste from mills are such as POME, emission, domestic waste, used oil, and EFB, while from estates are such as used chemical packaging, vehicle exhaust emission, and used lamps. SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 47of 77 Waste management programs have been established such as water air quality monitoring program, routine vehicle maintenance program and hazardous waste disposal to a licensed party. Waste reuse has been implemented by company i.e. the utilization of fiber shell for boiler fuels, and utilization of empty fruit bunch for organic fertilizer. Hazardous waste management is regulated and refers to SHE procedures Chapter VI Environment, Subchapter VI Hazardous Material B3 Handling. The procedure defines methods of hazardous waste storage, label symbol placement, storage area and reporting. To handle spills and outflows there is Hazardous Waste Warehouse work instruction No. IKA-11GBSM2012. Used pesticide container management is regulated in Agrochemical Handling Procedure SHE SOP, Chapter VI Environment, VI.5 Agrochemical Handling, No. TAPSOP120-SHE0001. Containers are washed 3 times in a dedicated place and sent to Hazardous Waste temporary collection site TPS for transfer to licensed third party. Company has Hazardous Waste Temporary Storage Permit i.e. Decree of the Regent of Seruyan No. 3832012 dated 08 October 2012. Hazardous waste transporter and collector company is PT Nazar based on Decree of the State Minister of Environment No. 1222010. Permit of Special cargo transportation to transport hazardous materials by PT Nazar is from the Directorate General of Land Transportation No. SK4532AJ309DJPD203, which is valid until 23 August 2013. The latest hazardous waste transportation was carried out on 1 July 2013; record of activity is hazardous waste manifest No. MI0002454, MI0002455, MI0002456. Inspection of hazardous temporary storage warehouse is carried out periodically and record is available. Hazardous waste transfer was conducted on 17 December 2012 and 01 July 2013. Viewed from hazardous waste balance and hazardous waste manifest evidence, hazardous waste storage has exceeded 90 days. The company has to ensure that disposal is according to applicable permit i.e. 90 days and if required additional time request of 90 days can be submitted. Hazardous waste balance and hazardous waste manifest have been reported every 3 months. The second quarterly report May – August 2013 was submitted in September 2013. Reporting has been made to agencies according to permit requirements, i.e. the Minister of SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 48of 77 Environment of RI Attn. Deputy for Hazardous Material and Waste Division 4 August 2013, Governor of Kalimantan Tengah Attn. KBLHD of Kalimantan Tengah Province 10 September 2013, Seruyan Regent Attn. Seruyan Regency BLH Head 22 August 2013, and Kalimantan Ecoregion KPPLH 20 March 2013. Reporting should be more consistent according to applicable regulations and timely. Measurement and analysis of liquid waste, emission air and ambient air have been conducted periodically. Waste quality monitoring is conducted on a monthly basis to the external laboratory of PT. Unilab Perdana with sampling points at pond 5 and 5A. Testing parameters are BOD, COD, pH, oil-fat, Pb, Cu, Cd, Zn that refer to the Decree of the Minister of Environment No. 282003. The result of test in January – July 2013 shows that BOD pH comply with the quality standard. The measurement of emission air of boiler and genset shows results that are below the quality standard of the Decree of the Minister of Environment KEP-13MENLH32005. The result of ambient air measurement complies with Government Regulation No. 411999. The latest emission and ambient air measurement was conducted on 28 June 2013. Compliance status: Observation No.3 5.4 Efficiency of energy use and use of renewable energy is maximized Solid, boiler ash empty fruit bunch application in 2013 has been recorded but the application should be clear in terms of completion and more accurate in its realization. Records of monthly use of renewable energy of shell and fiber are in the form of Turbine Generator kWh recapitulation. The recapitulation contains total quantity of processed and used shell and fiber. Data of kWhFFB for July is 8.23 and for August is 4.23. For monitoring, monthly use of fossil fuel including estimation for external contractor is evaluated. Chart of the efficiency of fossil fuel use in 2013 up to August 2013 shows that the lowest use occurred in April and the highest in July and then decline in August. A rise in July is due to a drop in fruit production that results in less fuel. Compliance status: Compliance 5.5 Use of Fire for Waste Disposal and for preparing land for replanting is avoided except in specific situation, as identified in the ASEAN guidelines or other regional best practice SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 49of 77 Company has established zero burning policy for land opening. This policy is incorporated into Land Opening procedure and Internal Memo Memo No.: MI-003MDSUSTXI2012, dated 12 November 2012. Company has records of land opening implementation in the form of photos of land opening activity and LC minutes, for example: minutes of the opening of land of Afdeling OZ on 14 June 2013. Company has Wildfire Emergency Response Procedure. There is emergency response equipment in fire equipment warehouse such as akon robin engine, fire hoses, spiral hoses, axes, nozzles and machetes. Estate wildfire emergency response simulation was conducted in 2013. Waste and domestic waste is managed without burning. Company has established SHE SOP GSMSOP120-SHE0001 and signed by Managing Director as per 2232012. Fire mitigation SOP is found in: Sub III.8. “Wildfire Emergency Preparedness Response”, this is only for land and forest fire condition. Wild fire mitigation simulation was carried out during the audit on 11 September 2013 There are 3 locations of fire observation tower, i.e. B-21, I-22, and D-51. Portable fire extinguishers are 2 mobile tanks and 4 sets of portable pump with a capacity of 5000 liter each. Compliance status: Compliance 5.6 Plans to reduce pollution andemissions, including greenhouse gases, are developed, implemented, and monitored. The organization has established Greenhouse Gas Emission Reduction Procedure No. TAPSOP120-HCV004 that comprises identification and efforts Company can be made to reduce greenhouse gas. Identification of greenhouse gas emission sources was carried out on 8 – 10 January 2013. In the report it is identified that the potential sources are land conversion, transportation from Estate to PKS, fertilizer application, pesticide application, diesel fuel use for genset and POMEWWTP. Based on the data, the highest emission is from land conversion and POME. POME management is limited to waste utilization for land application only. The SUCOFINDO INTERNATIONAL CERTIFICATION SERVICES Sucofindo ICS FRM 3.04 Issue 04 Rev. 6 50of 77 volume of waste produced is measured daily and recorded. Monitoring of emission from pollution sources like boiler and genset is carried out every 6 months. Measurement of emission air of boiler and genset shows that the result is below the quality standard of Decree of the Minister of Environment No. KEP-13MENLH32005. Ambient air measurement results comply with Government Regulation No. 411999. The latest emission and ambient air measurement was conducted on 28 June 2013. The records of greenhouse gas emission reduction efforts are in the form of shell and fiber use report and empty fruit bunch use report. In addition to that, Company also implements zero burning and reserve an area of 445.45 Ha within the HGU for conservation. Peat land water reduction by controlling water level through trenching. Routine maintenance of equipment and operational vehicles is one of the pollution reduction programs. Compliance status: Compliance 6. RESPONSIBLE CONSIDERATION OF EMPLOYEES AND OF INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS

6.1 Aspects of estate and mill management that have social impacts are