Golden Agri-Resources Social and Environment Policy Evaluation Report ...

Golden Agri-Resources Social and Environment Policy Evaluation Report Executive Summary

December 22, 2017

Golden Agri-Resources (GAR) is one of the largest palm oil plantation companies in the world. GAR manages more than 480,000 hectares of palm oil plantations (including smallholder farmers) in Indonesia.

GAR is committed to being a leader in sustainable palm oil production by adopting the best industry practices and standards, managing the environment responsibly, creating employment and empowering the communities where they operate. To this end, GAR is committed to engage with government, civil society, indigenous groups, local communities, growers and industry stakeholders, and technical experts to find solutions to existing challenges.

In February 2011, GAR launched its Forest Conservation Policy (FCP) as its commitment to delinking palm oil production from deforestation. Subsequently GAR created two additional policies: Social and Community Engagement Policy that addresses Free Prior Informed Consent (FPIC), grievances, conflict resolution, and respecting human rights; and a Yield Improvement Policy that aims to increase tree growth and fiber yield. In 2015, GAR established the Social and Environment Policy (GSEP). The GSEP is an updated and enhanced sustainability policy that combines and builds on the Forest Conservation, Social and Community Engagement and Yield Improvement Policies.

The GSEP comprises four principles: Environmental Management, Social and Community Engagement, Work Environment and Industrial Relations, and Market Place and Supply Chains. This policy is applicable to all upstream and downstream palm oil operations that GAR owns, manages, purchases supply from, or invests in.

GAR asked the Rainforest Alliance to provide an objective verification of GAR's performance in implementing the GSEP. Starting in March and ending in May 2017, the Rainforest Alliance carried out an initial verification of three GAR companies in West Kalimantan, Indonesia: PT. Kartika Prima Cipta (KPC), PT. Paramitra Internusa Pratama (PIP), PT. Persada Graha Mandiri (PGM). The scope of the verification included palm oil plantations, mill facilities and infrastructure, conservation areas, surrounding indigenous peoples and communities, and workers' rights. The objective is to provide a performance-based verification of progress towards meeting the GSEP goals that will lead to on-the-ground improvements. The verification will highlight performance requiring further investment and/or alternative strategies. Rainforest Alliance believes that a philosophy of constructive engagement with companies, communities and governments is the most practical and effective approach to achieving conservation and sustainable livelihoods.

Verification Process

Prior to the verification, the Rainforest Alliance in cooperation with GAR developed a verification checklist (indicators) based on GSEP principles. The timeframe for verifying the companies' progress in meeting the GSEP was between 8 September 2015, the start date for the implementation of the GSEP, and 2 May 2017, the end of field verification work.

The verification has been conducted by a team of five professionals with auditing and verification experience in social, environmental and best practice aspects of sustainable resource management. The verification team used established auditing procedures, including evidence submissions by GAR and other observers, and stakeholder consultation with affected communities, individuals and organizations. A stratified random sampling method was used for selecting sites, workers, smallholders, communities, and other stakeholders to visit and interview. Sample selection of stakeholders and field visits was specifically focused where the risk of noncompliance with the GSEP policy was considered high.

Two public stakeholders meeting were conducted during the verification. Letters of invitation were sent to stakeholders a week prior to the meeting. Stakeholders that were consulted during the field visit were also informed verbally about the meetings. The stakeholders invited were based on stakeholders identified in the Social Impact Assessment of the companies and key persons that were identified by the verification team during the field visit. Stakeholders also included local individual community members, workers and government representatives.

Verification Findings

While GAR's progress in implementing the GSEP is positive, there are areas that need improvement. The three companies engaged during the verification process are fully committed to the implementation of the GSEP in their operations. All parts of the policy are being addressed. Standard Operating Procedures for all activities are in line with the policy.

All three companies have adopted internationally recognized approaches to social and environmental sustainability such as FPIC, High Conservation Values and High Carbon Stock Forest methodologies. Half of one company's plantation area is now classified as conserved and excluded from palm oil development using the existing HCS methodology. There has been no clearance of HCS or HCV forest for new plantings in any of the three companies' plantations. FPIC consultation has been consistently conducted to remedy land acquisition issues since 2015. A participatory approach has been adopted as the basis for conservation and community development programs. The companies are trying to remedy the lack of FPIC implementation prior to the 8 September 2015 GSEP launch date. The remediation process was still ongoing during this verification. However, GAR has a dispute resolution process that is accessible by the affected parties.

There are no non-compliances observed related to peatland management and conservation, zero burning policies, and GHG emission monitoring and reduction. Interviews with relevant stakeholders and workers confirmed that there is no issue related to the violation of human rights,

including forced or child labor, harassment and discrimination. Prices paid for palm fruit is transparent and a full accounting is provided to the sellers.

The companies have a traceability system for all Fresh Fruit Bunch inputs. All supply bases are included in the scope of this verification and we have confirmed that the land used by the supply bases are not illegally occupied land or from protected areas.

Key Opportunities for Improvement

The companies still need to complete their progress in managing HCS and HCV beyond the areas under their operational rights through the Participatory Conservation Plan, especially those areas that are overlapping with community ownership where slash and burn farming is still being practiced. Less than full compliance was observed in the management of agrochemicals, including evidence that would confirm the companies' effort to reduce and rotate agrochemical usage. Solid waste management needs to improve in terms of complete collection and recycling, although chemical wastes are being disposed of properly.

Based on interviews with both GAR and key stakeholders, the consultation process within the community development program needs further improvement. Some local community members and government representatives interviewed said that they were not notified or consulted with on some projects or activities and no reason for this lack of communication was provided.

Improvement is needed in health and safety procedures by ensuring that personal protective equipment (PPE) is provided to workers as described in their SOP and consistently enforcing the SOP so that workers use the PPE. The companies also need to provide washing and sanitary facilities to ensure the health and safety of workers who handle chemicals.

The companies need to meet their commitment for being fully compliant with international certification requirements. The primary certification scheme is Roundtable on Sustainable Palm Oil (RSPO). None of the companies verified are RSPO certified but they have a time bound plan to complete RSPO certification.

Summary

In summary, GAR's journey to implement its GSEP sustainability commitments will continue to require a tremendous amount of work. Implementing the commitments throughout its supply chain is a substantial challenge. GAR has accepted the results and observations contained in this verification report and are committed to making the needed improvements identified by the Rainforest Alliance team.

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