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Multiple Suppliers

SUBJECT

On 23 May 2018, Apical received a draft report from the Eyes on the Forest (EoF) for clarification on the alleged six Apical suppliers that were found receiving FFB from the Tesso Nilo National Park (TNNP), Bukit Batabuh Tiger Corridor (BTTC), or areas that are not permitted for oil palm planting. The six reported suppliers are:

  1. PT Inti Indosawit Subur
  2. PT Gemilang Sawit Lestari
  3. PT Makmur Andalan Sawit
  4. PT Fortius Wajo Perkebunan
  5. PT Sawit Mas Nusantara
  6. PT Persada Alam Jaya

Apical responded to EoF on 27 May 2018 (citing investigations) and EoF published the report “Enough is Enough” on 8 June 2018.

We took the allegations very seriously and immediately engaged with the six suppliers for detail clarifications and field verifications where necessary as part of Apical’s published grievance procedure. Our team also visited PT Gemilang Sawit Lestari and PT Fortius Wajo Perkebunan for grievance verifications.

Overall findings from the field verifications were consistent with the responses gathered from the suppliers. Tesso Nilo was officially announced as a protected area in 2004, leaving no solution or options for local people and farmers who had been living there for generations to find alternative livelihood. Indonesia’s Environment Ministry spokesman Djati Witjaksono Hadi said, “Smallholders, not companies,” owned plantations in national parks (Source: CGTN, 19 July 2018).

Although most of the palm oil mills had proper records of their FFB transporters, they did not have specific visibility on the origin of FFBs through dealers or from agents and farmers. All the six suppliers responded to Apical.

Apical will be working together with civil society group, Setara Jambi and suppliers to strengthen FFB traceability to plantation (TtP) in Tesso Nilo landscape. Apical has secure commitments from suppliers to have traceability to plantation. Two of the supplier has given a commitment to participate in the TtP project together with Apical and Setara Jambi and to remove any unknown/illegal FFBs from supply chain if found, during the project.

With regard to an exclusion list which has been distributed by global brand in November 2018, Apical has responded to the company. The response is available here.

PROGRESS

Below is a summary of the outcome of our desktop investigations and field verifications to the suppliers.

1. PT Inti Indosawit Subur (PT IIS)

PT Inti Indosawit Subur responded to Apical on 25 July 2018. PT IIS had conducted a site visit on 23 May 2018 and confirmed that the recorded coordinate was indeed located in the area of Tesso Nilo National Park. PT IIS then traced the reported supply chain of the FFBs to gather further insight and reviewed the 17 June 2017 FFB supply report to confirm the data.

On 24 May 2018, the management of PT IIS met with the supply agent who was the Delivery Order (DO) holder, to discuss EoF’s findings. The agent claimed that he was not aware of tainted FFBs in his truck. For his negligence, PT IIS suspended the DO of that agent immediately.

PT IIS maintains a Traceability Master Database of its entire third party supply chain which enables them to monitor the source of incoming supply. The farmers sign a statement that binds FFB suppliers to source only from legal areas and to prevent the inclusion of illegal FFBs in their supply to the mills belonging to PT IIS. This supplier also has achieved 100% FFB traceability to plantation since 2017. Both Ukui 1 and Ukui 2 mills mentioned in the report have been ISPO certified since 2013.

Based on the above development, this grievance for PT IIS is considered resolved.

2. PT Gemilang Sawit Lestari (PT GSL)

PT. Gemilang Sawit Lestari responded to Apical on 3 July 2018. This supplier reiterated its commitment on responsible sourcing and compliance with the national laws and regulations. Apical’s grievance verification team found the mill management had general control measures to prevent the inflow of illegal FFB. These included evidence of a company policy on responsible sourcing and records of socialisation to its dealers on the importance of observing land legality and to not source from forest areas had been conducted since December 2016.

A permanent notice board was positioned at mill entrance as a reminder to FFB transporters not to source from illegal or forest areas. The SOP on receiving FFB was already in place, although our team observed that it could have been strengthened to prevent blacklisted transporters from delivering to the mill. We also found evidence of signed agreements with declarations to not source from illegal or protected areas available.

With regards to the transporter (B 9708 NI) who allegedly delivered FFBs to this supplier from PT Runggu Prima Jaya (located within BBTC) on June 2017, PT GSL’s investigations showed that their weighbridge records provided evidence that this transporter did deliver to the mill on the date and time as mentioned in the EoF report – but the source of FFB was not supplied by PT Runggu Prima Jaya. As a precautionary measure, the mill stopped the service of this transporter until further investigations could provide valid evidence.

Moving forward, the mill committed to blacklist all the agents or transporters reported by EoF in relation to illegal FFBs as a precautionary measure. PT GSL planned to gather all their suppliers, dealers and agents to re-socialise their policy requirements; strengthen their agreements with their dealers/agents through revised/additional clauses to prevent illegal sourcing and stop sourcing from any dealers or agents found in violation of their policy.

In meeting Apical commitments on responsible production and sourcing of palm oil, PT GSL is require to provide the traceability data. PT GSL has implemented traceability to plantation on their own accord and has provided data to Apical.

3. PT Makmur Andalan Sawit (PT MAS)

PT Makmur Andalan Sawit responded to Apical on 08 June 2018. PT MAS denied receiving FFBs from the suppliers mentioned in the EoF report. Based on their investigations and findings of their sourcing documents, there was no record of any truck bearing the number plate BM 8442 CI (EoF 2018) delivering FFBs to the mill, which was allegedly supplied by Air Hitam Group and Simpang Silau Group.

PT MAS stated their long-term responsible sourcing measure by conducting supplier surveys and recording the coordinates of their suppliers to map them out and overlay them with the Riau forest areas to prevent illegal FFB sourcing. PT MAS requires dealers to sign letters to commit not to deliver illegal FFBs from forest or protected areas to the mill. PT MAS will terminate and blacklist suppliers if proven involved in illegal sourcing.

In meeting Apical’s commitments on responsible production and sourcing of palm oil, PT GSL is require to provide the traceability data. Apical together with PT MAS and Setara Jambi has completed TTP project and achieved 100% traceability to plantation.

4. PT Fortius Wajo Perkebunan (PT FWP)

PT. Fortius Wajo Perkebunan responded to Apical on 28 June 2018. PT FWP denied the allegation based on their investigations.

With regards to the transporter (BG 8402 LO) who allegedly transported illegal FFB from PT Alkausar VII, and another transporter (BH 1392 LN) who allegedly transported illegal FFB from KPMMB (an area not permitted for oil palm planting since January 2017), PT FWP’s investigation based on weighbridge records showed that, these transporters did deliver to the mill but the date and time differed from that reported in EoF’s report and that the FFBs were supplied by CV Bina Putra Pramata (not PT Alkausar VII or KPMMB as reported).

Apical’s grievance verification team visited PT FWP on 9-11 July 2018, and our verifications found the weighbridge records consistent with PT FWP’s response. As a precautionary measure, PT FWP went ahead and blacklisted the service of the transporters mentioned in the EoF report. PT FWP has SOPs available on due diligence in receiving FFBs, and valid agreements have been signed between the mill and its dealers.

In meeting Apical’s commitments on responsible production and sourcing of palm oil, PT FWP is require to provide the traceability data. Apical together with PT FWP and Setara Jambi has completed TTP project and achieved 100% traceability to plantation.

5. PT Sawit Mas Nusantara (PT SMN)

PT Sawit Mas Nusantara (SMN) responded to Apical on 3 July 2018. PT SMN stated that they never received any FFB sourced from TNNP and that there were no documents available to provide evidence that the alleged transporters sourced their FFB from TNNP and transported it to their mill.

In meeting Apical’s commitments on responsible production and sourcing of palm oil, PT SMN is require to provide the traceability data. PT SMN has implemented traceability to plantation on their own accord and has provided data to Apical.

6. PT Persada Alam Jaya (PT PAJ)

PT Persada Alam Jaya responded to Apical on 23 June 2018. They denied that the truck (BH 8817 EU) mentioned in the report ever sent FFB to their mill. A copy of the transporter’s inbound record was provided as evidence that the alleged truck never entered the mill.

In meeting Apical commitments on responsible production and sourcing of palm oil, PT PAJ is require to provide the traceability data. The traceability to plantation is still on-going.

Di Apical Group, komitmen kami terhadap keberlanjutan didukung penuh dimulai dari jajaran managemen teratas. Presiden Apical didukung oleh Direktur Keberlanjutan bersama seluruh kepala bisnis, memastikan keberlanjutan terintegrasi dalam unit bisnis dan fungsional, dan tertanam dalam nilai dan inisiatif inti perusahaan.

Topik keberlanjutan dibahas pada rapat dewan yang diadakan setiap tiga bulan. Kami juga memiliki tim keberlanjutan yang berdedikasi berbasis di Kuala Lumpur; Malaysia, dan Indonesia; Pekanbaru, Dumai, Medan, Jakarta dan Balikpapan. Tim Keberlanjutan ditugaskan untuk menerapkan dan memantau komitmen kami melalui keterlibatan dan kolaborasi pemangku kepentingan yang konstruktif.

Selain itu, kami didukung penuh oleh departemen Sosial, Keamanan, dan Perizinan (SSL) khusus di setiap unit bisnis yang kami miliki, untuk menangani masalah sosial dan perizinan sesuai dengan peraturan nasional serta kebijakan keberlanjutan Apical. Tim juga mengawasi program Tanggung Jawab Sosial Perusahaan (CSR) untuk mendukung penghidupan yang lebih baik di masyarakat setempat.

Mencapai tujuan keberlanjutan membutuhkan lebih dari sekadar kolaborasi dengan pemangku kepentingan utama kami. Kolaborasi lintas industri dan perusahaan sejenis juga penting dan karenanya, kami terus mencari dan berpartisipasi dalam kemitraan baru, keanggotaan industri yang relevan, dan skema sertifikasi.

Kami berpartisipasi dalam skema keanggotaan dan sertifikasi industri seperti Tropical Forest Alliance 2020, Roundtable on Sustainable Palm Oil (RSPO), termasuk P&C Review Taskforce RSPO dan National Interpretation Working Group RSPO Indonesia, International Sustainability and Carbon Certification (ISCC), dan Indonesian Sustainable Palm Oil (ISPO).

Dato' Yeo How

PRESIDEN APICAL GROUP

At Apical Group, our commitment to sustainability stems right from the top. Apical’s President is supported by the Director of Sustainability and various business heads, to ensure sustainability is integrated within business and functional units, and embedded in the company’s core values and initiatives.

Sustainability topics are discussed at Board meetings held quarterly. We also have dedicated Sustainability teams based in Kuala Lumpur, Malaysia, and Pekanbaru, Dumai, Medan, Jakarta and Balikpapan in Indonesia. The Sustainability teams are tasked with implementing and monitoring our commitments through constructive stakeholder engagement and collaboration.

In addition, there is also a dedicated Social, Security and Licensing (SSL) department in each refinery we own, to handle social and licensing matters in compliance with national regulations as well as Apical Sustainability Policy. The team also oversees Corporate Social Responsibility (CSR) programmes to support better livelihoods in local communities.

Achieving sustainability goals requires more than just collaboration with our key stakeholders. Collaboration across industries and peer companies is also crucial and hence, we constantly look for and participate in new partnerships, relevant industry membership and certification schemes.

We participate in industry membership and certification schemes such as the Tropical Forest Alliance 2020, Roundtable on Sustainable Palm Oil (RSPO), including the RSPO P&C Review Taskforce and the RSPO Indonesia National Interpretation Working Group, the International Sustainability and Carbon Certification (ISCC), and the Indonesian Sustainable Palm Oil (ISPO)

Dato' Yeo How

APICAL GROUP PRESIDENT