Apical-SR2016 FA 131017 Standard

APICAL GROUP
www.apicalgroup.com
IMPROVING
APICAL GROUP
Level 6, Tower 2
LIVES
SUSTAINABILITY REPORT 2016

Avenue 5, Bangsar South City
No. 8 Jalan Kerinchi
59200 Kuala Lumpur, Malaysia
T +603 2785 8888
F +603 2785 8999
SUSTAINABILITY
REPORT
2016
INSIDE
THIS REPORT
I am proud that Apical’s
IMPROVING LIVES determined effort in
engaging suppliers to bring
Sustainability, transparency about positive changes,
and care is at the heart of it all. is gaining traction.
Through the creation of responsible
DATO’ YEO HOW
marketplaces, healthy environment President
and communities, Apical will continue Apical Group
to integrate sustainability into our
business right across our value chain,
from cultivation to production to
consumption.
CHAPTER 04 07 10
pg10 pg31 pg58
01 About
Apical Group
Working
with Suppliers
Community
Livelihood
and Smallholders
pg2
About
this Report 05 08 11
pg18 pg66
02 Our Approach
to Sustainability
pg41
Environmental
Customers
and Consumers
Management
pg4
President’s
Statement 06 09 Glossary of Terms
pg26
03 Our
Sustainability
pg50
Labour Relations
Milestones
pg8
& Commitment
You can find this report and additional Report Review: to Future Targets
information about Apical Group Proforest
on our corporate website.
2 APICAL GROUP I SUSTAINABILITY REPORT 2016 APICAL GROUP I SUSTAINABILITY REPORT 2016 3
01 ABOUT
THIS REPORT
Complimentary to this report is the
Sustainability Progress Dashboard on our
website, which is available at all times to
users who wish to be regularly updated
on our goals, roadmap, activities,
progress and more. Please visit
www.sustainability.apicalgroup.com to
view the information.
REPORTING STANDARDS
In an effort to align with international

best practice, and recognising where we
are on our journey, Apical has chosen to
We have not sought independent external
produce a GRI-referenced report. For a
assurance of the information contained
full list of disclosures referenced in this
in this report but will consider doing so in
report, please visit our website. We hope
the next report.
to continue using the GRI Standards and
APICAL’S COMMITMENT BOUNDARIES AND FEEDBACK AND
we are currently working toward setting
TO DISCLOSURE SCOPE POINT OF CONTACT
strategic goals that are aligned to the UN
Sustainable Development Goals (SDG)
Apical Group (Apical) has been This report contains information Feedback from our stakeholders is a
while evolving our approach to reporting
communicating the progress of policy pertaining to FY2016. It describes Apical’s vital part of our continued growth and
in future years.
implementation including the social and environmental, social and economic improvement. We welcome your views,
environmental developments as well performance covering our business comments and feedback, which may be
In this report, we have applied the GRI
as initiatives since the launch of our operations and production facilities in directed to:
reporting principles for defining report
Sustainability Policy in 2014 through a Indonesia, which consist of the following: content.
Bremen Yong,
yearly Sustainability Progress Report.
Head of Sustainability for Apical Group
In our first Sustainability Report, we • Stakeholder Inclusiveness:
Bremen_yong@apicalgroup.com
decided to take on a more comprehensive responding to stakeholders’ reasonable
stance by aligning the content against
the Global Reporting Initiative (GRI)
Standards.
By producing a GRI-referenced report,

3
REFINERIES
1KERNEL
CRUSHING
expectations and interests;
• Sustainability Context:
presenting the company’s performance
in the wider context of sustainability;
Apical has stepped up our commitment • Materiality:
PLANT
to disclosure and accountability when it focusing on aspects that reflect the
comes to sustainability. This report seeks greatest impacts, and those that are
to demonstrate the company’s progress most important to our business and
1 1
and performance of our sustainability stakeholders; and
journey against our commitments in an • Completeness:
open, transparent and timely manner. including information of material
BIODIESEL OLEOCHEMICAL aspects and their boundaries for the
We continue to drive positive social and reflection of significant environmental,
economic impact for all our stakeholders,
PLANT PLANT
social and governance factors so as
especially smallholders and communities, to enable stakeholders to assess the
by sourcing responsibly, partnering Unless otherwise stated, this report excludes company’s performance.
equitably and creating shared value for all. the company’s activities outside of Indonesia.
02 PRESIDENT’S
In 2015, the United Nations launched
the Sustainable Development Goals
(UN SDGs), a sustainable development
STATEMENT roadmap that invites both the public and

private sectors to achieve 17 Global Goals
by 2030. Apical Group is fully committed
to supporting the efforts to achieve the
Global Goals. We are currently working
towards setting strategic objectives in
relation to these goals.
INDUSTRY TRENDS AND OUTLOOK

Dear
Stakeholders, Despite oil palm’s overwhelming yield
advantage over other oilseed crops
and its pivotal role in socio-economic
I am pleased to present our development and poverty eradication,
the sector continues to be embroiled in
FIRST SUSTAINABILITY REPORT debates over deforestation, biodiversity TRACEABILITY AND
written with reference to GRI Standards. loss, greenhouse gas (GHG) emissions
and social conflicts. It is essential that SUPPLIER ENGAGEMENT
At Apical Group, we are committed to
leading industry players take leadership in
putting sustainability at the heart of our addressing these issues. Apical actively engages our upstream
business. Our vision is to be a leading, suppliers to help transform them to
We recognise that we cannot achieve our become more sustainable. Since 2016,
sustainable and integrated edible oils our key focus has been the traceability
sustainability ambitions on our own. To
player globally. this end, we seek active engagement and and sustainability of our supply chains.
sustained collaboration with our business I am proud that through determination
partners such as our suppliers. Together, and hard work, Apical has achieved 100
we can enable economic growth and percent traceability to mills in 2015 and
improve the quality of lives, especially for has maintained this achievement in 2016.
local communities and smallholders, while Our next step is to seek traceability to
protecting the environment. the plantation level. This is an ongoing
process as some of the commercial mills
The mid-term outlook for palm oil we source from buy from aggregators,
DATO’ YEO HOW adding complexity to the upstream supply
President continues to be positive. Global
consumption of palm oil has accelerated chain that we alone cannot resolve.
Apical Group
given its natural advantage, versatility of
use and long shelf life. As global demand In 2016, we intensified our campaign for
continues to grow, it is the responsibility greater transparency and sustainability
of all stakeholders to collectively work in our supply chain. Through our Shared
towards addressing the challenges and to Value Programme (SVP), we equipped
ensure that transparency, accountability our suppliers with the knowledge of
In 2014, we launched our sustainability Founded in 2006, Apical is guided by and fairness govern the entire supply our policy, good practices and tools (for
policy. The following year, we published the 5Cs that our founder Mr Sukanto chain. implementation and monitoring), helping
our first progress report to provide an Tanoto embedded within his businesses them gain a competitive edge in meeting
update on the implementation of the philosophy: operating in a manner that This commitment to sustainability is global requirements in sustainable
policy. This year’s report presents our is good for the Community, good for the a critical component of our decision palm oil. We are now strengthening our
continued commitment and seeks to Country, good for the Climate, good for matrix. When we invested in a bio-diesel approach to engage our suppliers towards
transparently disclose our sustainability the Customer, then only will it be good production plant in Spain, we ensured that conserving high carbon stock (HCS) and
performance and achievements, the for the Company. For us, sustainability is it had a robust environmentally-friendly high conservation value (HCV) forests,
challenges we still face and our ongoing not a buzzword but about investing in the regime in place. Whether they are our key as well as preventing new planting on
efforts to address them. long term success of our business and markets in Europe or in Asia, our business peat areas regardless of depth. Through
the palm oil sector as a whole. We seek growth model is built upon responsibly- Shared Value Program and Priority
to create healthy marketplaces, healthy sourced certified oil. Suppliers Engagement Program visits,
environments and healthy communities. we have communicated the importance
of protecting HCV and HCS areas and
provided training for selected suppliers.
PRESIDENT’S
02 STATEMENT
LOOKING AHEAD
Sustainability is a long-term commitment

for Apical. With new issues constantly
emerging, we cannot be complacent. We
look forward to the near future where
Apical is able to produce fully traceable
and sustainable palm oil for the global
market with the support of our business
partners.
As we continue to track and review

the progress and effectiveness of our
efforts in implementing our Sustainability
Policy, this report and the future ones
will be vital tools to communicate our
performance and provide a starting point
for our engagement with you, our valued
Fire monitoring tower at Buatan Estate, Asian Agri stakeholders. It is my sincere hope that as
CARE FOR EMPLOYEES AND you read through this report, you will not
We have formed strategic partnerships We also wish to be a driver of positive ENVIRONMENT only gain a better understanding of our
with organisations such as The Forest socio-economic change to local and business but also share our commitment
Trust (TFT), to help drive supply chain indigenous communities. We are Apical believes that our greatest assets and conviction towards building a strong
transformation for sustainability committed to including more independent are our people. We actively contribute and sustainable business.
policy compliance. TFT and other non- farmers and smallholders into our supply to the socio-economic development of
governmental organisations such as IDH, chain by helping them meet global local communities in Indonesia by hiring
Yayasan SETARA Jambi and Serikat Petani sustainability standards. We are also locally and through various community
development programmes discussed in Yours sincerely,
Kelapa Sawit (SPKS) have also been taking additional measures to respect
this report.
invited as speakers in various workshops and recognise the rights of indigenous
organised for our sustainability team and and local communities to give or withhold We also believe in taking care of our
supply partners. their Free, Prior and Informed Consent own staff and constantly look after their
(FPIC) to the utilisation of lands to which health, safety and well-being. We provide
Apical has in place a fully dedicated they have legal, communal or customary numerous training and development
team focused on supplier engagement rights. We are pleased to report that in opportunities to enhance our workers’
through day-to-day interaction, training, 2016, there were no incidents involving skills and enable them to perform DATO’ YEO HOW
monitoring activities and providing the rights of the local people and their various tasks better and safer. President
various support services. This approach indigenous peoples. We will continue to To uphold fundamental human rights, Apical Group
has not only resulted in enhanced yield minimise the likelihood of conflicts taking we comply with all the laws that apply
for our suppliers but has also reduced place and monitor any publicly reported to the locations in which we operate,
the pressure to clear more land through grievances against our suppliers through respecting freedom of association, fair
burning. our internal Grievance Alerts System. wages, just working hours, enforcing non-
discrimination and a zero tolerance for
child or forced labour.
We are also committed to make our

operations more efficient and more
environmentally friendly by reducing our
GHG emissions and water consumption,
as well as responsibly managing our
refinery waste.
03 REPORT REVIEW:
PROFOREST
Apical is in an important position to resource-intensive, mechanism through operations are, through the employment
influence change in the wider industry which Apical is able to identify possible of local villagers and the provision of
landscape for palm oil, as it operates as policy violations by its suppliers on a wages exceeding the minimum legislated.
a refining business and does not own group level. It is recommended that case There are clear safeguards against the use
mills and plantations. Apical sources from studies of grievance management are of child labour and respect for freedom of
numerous mills throughout Indonesia, included in future reporting. association is upheld.
where each mill has a different set of
challenges in terms of scale, structure, In implementing its policy commitments Apical has highlighted work with
and sourcing. Asian Agri as one of Apical’s related to environmental and social smallholders through capacity-building for
major suppliers has its own sustainability compliance, Apical has reported widely suppliers and pilot projects on a single
policy that is implemented in its mills and on its own refining operations. In its mill thus far on strategies to improve
plantations. Apical is taking on a degree own operations, it is clear that Apical has production methods, living standards, and
of accountability for the actions of its implemented concrete actions on labour access to education and health for small
upstream suppliers over which they have and human rights, but has yet to fully farmers. Additional disclosure on these
varying levels of leverage and can more roll-out improvements on environmental smallholder programmes and data on
actively influence these suppliers towards indicators. As there is already reporting outcomes in future reports is welcome.
complying with their sustainability on greenhouse gas emissions, waste
commitments. management, and water consumption, a As a partner to Apical in implementing
more detailed plan to manage emissions their sustainability policy, it is clear
Apical has reported full traceability to mills and effluents may need to be drawn up. that Apical is on track with its mission
and is embarking on an ambitious plan to improve and elevate sustainable
to implement traceability to plantation As Apical continues to work with its practices within its supply chain. A
with assistance from CORE (Consortium suppliers on improving practices, more positive way forward is to develop a
of Resource Experts)1 starting in 2017. information on suppliers’ practices relating reporting mechanism on Apical’s material
An essential part of maintaining full mill to labour, community, smallholders, issues to include third-party suppliers
Apical’s 2016 Sustainability Report traceability is the implementation of a and social grievances will need to be with key performance indicators (KPIs)
communicates its progress in robust supplier due diligence process collected. It is heartening that case to enable monitoring of deliverables,
implementing policy commitments that that collates information on a supplier’s studies of community empowerment beyond traceability. Developing this
it set out in 2014, through the launch of existing practices and determines and raising of living standards have been tracking mechanism would also enable
its Sustainability Policy. The 2016 report avenues for improvement through included in this year’s report. It would be prioritisation of focus, and enable Apical
focuses on Apical’s progress in key engagement and collaboration. Apical good to see more examples from third- to leverage its resources to greater effect.
areas including traceability, grievance has conducted engagement visits to 21 party suppliers in future reporting. In view of the complexity of conditions
management, compliance to standards, of their major palm oil suppliers in 2016 – in its supply base, it is commendable
environmental protection, labour and we look forward to details on how these Subsequent reports should include that Apical has arrived at this level of
human rights, and customer-centric focus. visits have transformed or improved the objective tracking of labour indicators disclosure on the material issues in line
suppliers’ sustainability compliance in within the operations of third-party with its policy commitments.
As the report is Apical’s first attempt at future. suppliers and greater oversight of
a GRI-referenced report, it is noted that suppliers’ labour practices. As the use
there is no overarching theme focusing on Recognising that traceability is a key step of contract labour is under increased
a particular area of concern, but in general towards enabling positive change, the scrutiny, additional information on
its disclosures aim to provide the reader implementation of policy commitments safeguards against the exploitation
of an understanding of Apical’s set of should also include effectively resolving of labour and guidelines on ensuring
challenges in implementing its policy. The any grievances or issues that may occur in contractors are fully compliant with MR SURIN SUKSUWAN
materiality matrix referred to in this report the supply chain. Apical has implemented Apical’s labour policies are areas on Proforest Southeast Asia Regional Director
lists 9 out of 17 indicators as material in a grievance management system which greater disclosure is needed.
nature – providing detailed information on including a whistle-blowing channel and
these indicators is a challenge, especially an alerts system that covers all potential Apical has clearly sought to increase
considering that all of Apical’s suppliers suppliers, whether currently in Apical’s its positive contribution to the local
are third parties. supply chain or not. This is a good, albeit communities in areas where its refining
1
Proforest and Daemeter Consulting
04 ABOUT
APICAL GROUP
VISION and
COMPANY’S OVERVIEW AND HISTORY increasing demand for palm oil in biofuel
VALUES
Apical’s vision is to be a leading, sustainable and global integrated edible oils player.
production in Southern Europe, Apical To fulfil this vision, we are guided by the following set of core values:
Apical Group is one of the largest expects to be a key participant in the
exporters of refined palm oil in Indonesia. growing market.
The company owns and controls an
extensive spectrum of the palm oil Our business model is built on four core
business value chain from sourcing to strengths:
distribution and is engaged in the refining,
processing and trading of palm oil for both 1. Having a reliable, traceable, and broad
domestic use and international export. Crude Palm Oil (CPO) sourcing network
in Indonesia;
Headquartered in Singapore, Apical 2. Integrating primary and secondary
Group manages a group of companies refinery assets that are efficient and
with palm oil operations spreading from strategically located in Indonesia and COMPLEMENTARY TEAM OWNERSHIP PEOPLE
sourcing to distribution and is engaged China; We are aligned by our common We take ownership to achieve We develop our people to
in the refining, processing and trading purpose and work together as a outstanding results and seek grow with us
of palm oil for both domestic use and 3. Managing efficient logistics channels
to deliver quality products to a well- complementary team value at all times
international export. It consists of three
refineries and processing operations in diversified clientele; and
Indonesia; Asianagro Agungjaya Marunda, 4. Driving sustainability throughout
Jakarta; Sari Dumai Sejati, and Asianagro business operations; including risk-
Agungjaya Tanjung Balai in Sumatra. based assessment for supply bases,
While Apical was established in 2006, mapping and a prioritisation approach
our beginnings can be traced back to to sieve out any illegal sources, and
our business consolidation exercise in engaging suppliers proactively for
1989 when Asian Agri acquired a palm oil capacity building and progressive
refinery in Tanjung Balai, Sumatra. transformation in our supply chain.
Today, Apical operates independently and Apical has invested in its own logistical
manages all these refineries, while Asian infrastructure to deliver CPO and INTEGRITY CUSTOMER CONTINUOUS IMPROVEMENT
Agri remains a reliable and long-term processed palm oil (PPO) to a range of We act with integrity at all times We understand our customers We act with zero complacency
supplier of crude palm oil, palm kernel, buyers comprising international trading
and crude palm kernel oil to our refineries. and deliver best value to them and always strive for continuous
houses and local industries. The business
improvement
model gives the Group the advantages
On 5 July 2016, Apical successfully of quality control, the inculcation of
acquired Bio-Oils, a leading Spanish sustainability, thus driving efficiency and
biodiesel company. The acquisition synergy at every step of the supply chain
strengthens Apical’s foothold in the to create value to stakeholders.
growing EU biodiesel market. With
ABOUT
04 APICAL GROUP
SCALE OF
THE ORGANIZATION
MALAYSIA
3
2
KALIMANTAN
SUMATRA
APICAL
Bird’s-eye view of Asianagro Agungjaya Marunda REFINERIES: 1 INDONESIA
CORPORATE GOVERNANCE AND 1 Asianagro Agungjaya Marunda

2 Sari Dumai Sejati JAKARTA
BOARD OF DIRECTORS 3 Asianagro Agungjaya Tanjung Balai
The Apical’s Board of Directors (BoD)

is the highest governing body in driving
the group’s long-term business direction
towards sustainable growth, as guided Apical handles the downstream business Apical employs a total of 1,416 employees
by the founder’s 5Cs philosophy. The BoD that includes raw material sourcing; across its operations. Total facilities
and President, supported by a senior distribution of CPO and PPO; fractionation owned are four refineries (three in
management team are tasked with and refining of CPO, Crude Palm Kernel Indonesia, one in China) with a total
strategic and operational implementation; Oil (CPKO); processing (palm kernel capacity of 3.70 million metric tonnes, a
embedding the company’s core values, crushing, production of shortening, biodiesel plant, a fat splitting plant and a
driving key initiatives, making investment margarine, biodiesel etc.); merchandising crushing plant in Indonesia.
and divestment decisions, and risk and trading of palm oil and its products.
Management team and employees at AAJ Marunda
management. The President, supported
CORPORATE PHILOSOPHY by the Head of Sustainability and various
business heads, ensures sustainability INDONESIA SINGAPORE
Apical adopts the same approach as our
founder’s 5Cs philosophy: operating in a
manner that is good for the Country, good
is integrated into the various roles within
business and functional units. The Board
of Directors and President are members
1258 34
for the Community, good for the Climate, of the Apical’s Grievance Committee, NO. OF EMPLOYEES
good for the Customer and good for the and are supported by Grievance MALAYSIA CHINA
Company. We believe that a company can
only be successful if it is a responsible
corporate citizen.
Secretariat consisting of members from
cross-functional units including Trading,
Sustainability, and Sourcing divisions.
1416 37 87
ABOUT
04 APICAL GROUP
OUR PRIMARY BRANDS AND PRODUCTS
CRUDE
CRU
CRRU
UD
UDE
DE
E OI
OILS
OIL
LS
L SA
AND
N FINISHED
PROCESSED
P OCESS
SSED OOILS PRODUCTS
CPO (Crude Palm Oil) VITAS MEDALIA
CPKO (Crude Palm Kernel Oil) • Margarine • Margarine

- Gold Margarine • Table Margarine
HPS (Hydro Palm Stearine) - Supreme Margarine • Shortening
Night view at the Sari Dumai Sejati Refinery, Lubuk Gaung, Dumai
RBDCNO (Refined Bleached - Cake Margarine • Baker’s Fat
• RBD Coconut Oil
Deodorized Coconut Oil) • Shortening
The primary processing plants and
storage tanks are located near raw RBDPKO (Refined Bleached - Gold Whipping Fat
THE - Supreme Shortening
material sources in Indonesia. The Deodorized Hydro Kernel Oil)
secondary manufacturing facilities are
TOTAL - Gold Cream Shortening OTHER BRANDS AND
situated close to the industrial zones of VOLUME PKFAD (Kernel Fatty Acid)
• Apikote
PRODUCTS
cities for quick access to large customer OF ALL PALM OIL AND CFAD (Coconut Fatty Acid) FRYBEST Frying Fat
base. Sari Dumai Sejati (SDS) is Apical’s OIL PALM PRODUCTS HANDLED/ • Butter Oil Substitute
CBS (Cocoa Butter Substitute)
main refinery at Lubuk Gaung, Dumai and TRADED/PROCESSED IN • Gold Confectionary Fat SUPERFRY Frying Fat
it operates in a bonded zone. This offers RBDHCNO (Refined Bleached
the benefits of quick documentation 2016 WAS Deodorized Hydro Coconut Oil) • Gold Coating Fat CAMAR Cooking Oil, Frying Oil
HARUMAS Cooking Oil, Frying Oil
processing, efficient berthing and timely
vessel delivery from a one kilometre long
private jetty. The AAJ Marunda processing
4,988,144 MT RBDHPO (Refined Bleached
Deodorized Hydro Palm Oil)
• Apichoc Cocoa Butter
Substitute MARIGOLD Butter Oil Substitute
plant near Tanjung Priok container terminal RBDHPKO (Refined Bleached OPTIMA 100 Rumen Protected
BAKERIA Feed Fat
facilitates on-time delivery and shipment Deodorized Hydro Kernel Oil)
Aside from the domestic market in
exports resulting in logistical efficiencies. Indonesia, sales destinations of Apical RBDHPKL (Refined Bleached • Cream Margarine OPTIMA 200 Rumen Protected
• Pan Release Agent Feed Fat (Flavour Enriched)
products include Europe, Asia, America, Deodorized Hydro Kernel Olein)
Apical supplies quality edible oils to Australia, New Zealand and Africa. The
leading companies worldwide that use RBDHPKS (Refined Bleached OPTIMA 300 Feed Fat for Mono-
types of customers we serve include Gastrics (Lecithinized)
them in the production of consumer Deodorized Hydro Kernel
palm oil traders, biofuel manufacturers,
brands. The use of CPO, apart from food manufacturers and consumer goods Stearine)
industrial applications such as lubricants manufacturers. CPL (Crude Palm Olein)
and biodiesel, can be processed for
edible matters such as cooking oil, CPS (Crude Palm Stearin)
Our constant engagement with global
margarine, shortening, ice-cream and brands and leading trading houses RBDPL (Refined Bleached
instant noodles. CPO is also used in the helps us ensure that our policies and Deodorized Refined Palm Olein)
manufacture of household products such practices—including meeting their
as soaps and detergents, shampoo and RBDPS (Refined Bleached
sustainability requirements—continue to
fabric softeners. Deodorized Refined Palm
be relevant and effective.
Stearin)
Our major products are the following: PFAD (Palm Fatty Acid Distillate)
CPO, various forms of PPO and PKO, as
well as refined coconut oil (RBDCNO), all PME (Palm Methyl Ester) Consumer products by AAJ Marunda Refinery
of which can be processed into value-
added products.
ABOUT
04 APICAL GROUP
VALUE CHAIN Going downstream in our value chain,

we partner with local, international
Apical operates an extensive logistics and multinational brand owners and
network and provides customers with an retailers to help them optimise the flow
end-to-end solution, covering the time the of inventory and information to reduce
raw materials are sourced and processed cost and improve service level. Our
in our refineries to the time it reaches the ability to sense and respond successfully
final consumer. A reliable and extensive to changes enables a sustainable and
sourcing network at the upstream profitable operation. Our people work
enables us to better control our quality closely with both internal and external
and enhances our ability and commitment stakeholders to anticipate their needs,
to traceable and sustainable crude oil and develop solutions to meet their
supplied to our refineries. expectations.
RAW PROCESSED
PROCESSING We have come to realise through many
MATERIAL PRODUCT
levels of support and engagement
with our network of suppliers that the
journey to improve our supply chain
RESEARCH PLANTATION AND CRUDE PALM OIL REFINING BRANDED AND
with greater sustainability standards
AND DEVELOPMENT HARVESTING UNBRANDED COOKING OIL is indeed a long one. With senior
management commitment and guided
by a comprehensive sustainability
framework, we have found an effective
MARGERINE AND way forward is to involve and engage with
SPECIALTY FATS
SEEDLING key decision makers from diverse groups
of stakeholders: plantation owners and
smallholders, government authorities,
non-governmental organisations (NGOs),
BIODIESEL civic groups and activists.
We are developing a method for

traceability to our FFB suppliers with
our partner The Forest Trust (TFT). We
PALM KERNEL KERNEL CRUSHING PALM KERNEL MEAL
have achieved full traceability to all our
tier one suppliers, palm oil mills, who
supply us with CPO and PK. More than
250 independent mills in Sumatra and
Kalimantan are contracted as suppliers.
PALM KERNEL OIL
Our target is to achieve full traceability to
FFB suppliers by 2020. This is covered in
more detail in subsequent chapters.
OLEOCHEMICAL FATTY ACIDS
GLYCERINE
05 OUR
APPROACH
TO OUR SUSTAINABILITY
SUSTAINABILITY POLICY
Apical released its Sustainability Policy in

September 2014. The policy serves the
emerging needs and future requirements
of the Group in its pursuit of becoming
a global and sustainable processor and
trader of palm oil. We saw the importance
of aligning the Group with leading
practices and therefore engaged with The
Forest Trust (TFT) to help us deploy and
THE IMPORTANCE implement the policy in the field.
OF PALM OIL:
Palm oil is a highly versatile
vegetable oil with numerous
and varied uses. Oil palm is
grown mainly in the equatorial
belt where abundant sunshine
and regular rainfall contribute
to oil palm having, by far, the
highest oil yield per hectare of
cultivated land compared to APICAL SUSTAINABILITY POLICY
other agro-based oil feedstock.
Therefore, oil palm cultivation Apical will build a traceable and transparent palm oil supply chain that is committed to:
plays an important role in 1. The protection of high conservation value (HCV) areas and high carbon stock
ensuring that the growing (HCS) areas
demand for edible oil can be 2. The protection of peat regardless of depth
met through more efficient 3. Driving positive socio-economy impact for people and communities
Being a market leader in agricultural palm
oil trade, we shoulder the responsibility use of land. Due to its natural
advantage, oil palm cultivation This commitment extends to all of Apical’s subsidiaries and to the refineries that we
of conducting business in an ethical and
is an attractive investment for own and manage. We will work to ensure that our employees and business partners
transparent manner. We have placed comply with the above commitments, local laws and regulations. We will source our
sustainability at the core of our business large corporations and also plays
a significant role in the social supplies only through networks that are transparent and traceable, ensuring that the
strategy, impacting the extensive palm oil we purchase, process and sell, are in-line with the policy. We will use our
and economic development
spectrum of our value chain -- from best endeavours, including our resources, to assist smallholders adopt sustainable
of the countries in which it
cultivation to consumption. practices and to facilitate their inclusion in the supply chain.
is cultivated. It also presents
opportunities for improving the
As millions of people worldwide consume livelihoods of smallholders in If suppliers are found in breach of this policy, Apical will work with them on a
palm oil in one way or another, it only local communities. corrective action plan containing detailed measures and timelines to ensure that
makes good business sense to utilise practices are improved. If suppliers refuse to comply or do not demonstrate efforts
the oil’s natural advantage to advance to implement corrective action, we will take additional measures and in some cases,
responsible and positive development for temporarily suspend our business relationship with them until we can see significant
all stakeholders. positive improvements.
Details of our policy commitments can be found on Apical’s website:

http://www.sustainability.apicalgroup.com/wp-content/uploads/2016/09/apical-sustainability-policy.pdf
OUR
05 APPROACH
TO SUSTAINABILITY
MANAGING SUSTAINABILITY Material Issue Description Priority

IN OUR BUSINESS
Fire prevention and Work with farmers and communities to Material
Our commitment to upholding our management prevent and supress forest fires, especially in
policy and principles stems right from carbon-rich peat lands.
the top with senior management’s full
endorsement and support of Apical’s Free Prior Informed Respect community rights by freely informing Material
environmental and social initiatives. We Consent (FPIC) for communities of licences, government
have a Sustainability Department with indigenous and local and company policies regarding land
dedicated personnel based in our key communities development, as well as ensuring FPIC and
offices in Kuala Lumpur, Medan and compliance with local and national laws on
Pekanbaru. The sustainability team is land offers.
tasked with implementing and monitoring
the commitments and their corresponding Human rights, Prevent the risk of forced, bonded or child Material
activities. including child labour labour occurring in the supply chain or
workforce.
In addition to this team, there is a
dedicated Social, Security and Licensing Livelihood & Contribute to local communities in terms Material
(SSL) department in each of Apical- empowerment of jobs, income opportunities, education
owned refineries to handle social matters and skills, and the development of shared
in accordance to our corporate social infrastructure.
responsibility (CSR) programs. Identification of material aspects and
topic boundaries of reporting Protection of Work to protect ecologically sensitive Material
DEFINING OUR environment and habitats, reduce habitat loss and maintain
MATERIAL SUSTAINABILITY ISSUES Apical identified a long list of potential biodiversity areas plant and animal regional species diversity.
sustainability issues based on industry
To better understand the sustainability trends and stakeholder feedback. With Smallholder Support the socio-economic development and Material
issues that affect our business and where this list, we designed and distributed a development welfare of smallholders that form part of our
we have a significant impact on society materiality survey to internal and external supply chain.
and the environment, Apical has applied stakeholders. Participants were asked to
the four GRI principles in defining our rank each issue using a Likert Scale (rating Stakeholder Have constructive engagement with suppliers Material
report content. Following a systematic from 1 to 5) in order to prioritise social, engagement, including for policy compliance and traceability to
approach and cross-functional team effort, environmental, governance and economic grievance handling ensure that raw materials are sourced and
we were able to assess our material factors that are most important to our managed responsibly.
issues. stakeholders and business.
Ensure relevant stakeholders are aware of the
Out of 34 stakeholders approached, grievance mechanisms to register complaints
we received 18 completed surveys and supply chain issues.
that served as relatively balanced
representation of the defined group of Sustainability standards Ensure that the environmental impacts of our Material
external stakeholders. The survey findings and policy compliance business operations are upheld by externally-
were analysed, validated and classified recognised standards (such as RSPO).
into material, moderate and low priority
topics to produce a materiality matrix. Traceability Work with suppliers and industry partners to Material
ensure the traceability of raw materials.
OUR
05 APPROACH
TO SUSTAINABILITY
Material Issue Description Priority STAKEHOLDER ENGAGEMENT
Governance, ethics and Have in place governance structures, Moderate Apical is committed to maintaining Identifying our key stakeholder groups
integrity management practices and risk management active and open communication with
systems that uphold the successful running of its network of stakeholders. We aim to Our stakeholder network ranges from
Apical. The alignment of the business strategy build long-term relationships to help us people we engage regularly through
with our approach to managing sustainability manage emerging issues and identify our operations to those who influence
can help govern the elements that are subject opportunities for collaboration and our activities externally. Based on their
to significant stakeholder scrutiny. innovation in the industry. We proactively knowledge, relevance, and impacts
encourage dialogue to listen to what our (social and environmental) to Apical,
Product quality & safety Ensure goods brought to market do not cause Moderate stakeholders have to say and respond to we identified the groups below as
harm to the user and that they comply with their concerns appropriately. fundamental to our continuing business
laws and regulations. success.
Wages and benefits Observe fair wages in accordance to national Moderate

laws.
Waste management Ensure the safe and sustainable disposal of Moderate

waste.
Worker health, safety Ensure that the company’s workers and Moderate
and well-being contractors are afforded safe, suitable and Em
Empl
Emplo
mployees
mp oyyee
o
oyeeess
e
Employees
sanitary work facilities and are provided
with the protective equipment and training
necessary to perform their tasks safely. Industry groups, Local
trade associations Communities
and certification
Emission reductions Management and reduction of GHG Emerging bodies
emissions and maximisation of energy issue
efficiency.
Innovation Continuous innovation is key to meeting Emerging KEY

customers’ stringent quality requirements issue
for oils and fats. Proximity to end-users also
STAKEHOLDER Palm oil
Pa
Palm oil su
uppliers
p ie
suppliers,
Government
Go
Govern
ov
ve
ernm
e rrnm
ment
men
ent iin
n
nclud
l dding
including g
enables us to react to market changes in the GROUPS sm ers
smallholders
shortest time possible.
Water management The use of best practice management Emerging

systems to minimise water pollution and issue
maximise water efficiency in our operations.
Banks Customers
KEY
Material : These are issues with high impact on society and the environment, and of high concern to
NGOs
stakeholders. They form the focus of our sustainability efforts and communication.
Moderate : These are issues of ongoing importance to Apical and of medium concern to stakeholders.
We actively manage and report on these issues as appropriate.
Emerging Issues : These are issues that are of relatively lesser importance, but still relevant to both Apical and
its stakeholders.
OUR
05 APPROACH
TO SUSTAINABILITY
Mr. Syafrianto Silalahi, Head of Administration

from Buatan Estate, Asian Agri
A KE
KEY
EYY FOC
FOCUS
OCC
CU IN The engagement process also
involves a visit to the mills and
OUR
U E
UR EN
ENGAGEMENT:
NGA
GA estates to identify improvements
SUPPLIERS
UPPL
UPP LIER
IE
IER needed according to market
standards or our specific
Apical recognises the importance requirements. We note changes
of establishing a tailored in practices and further actions
approach to communicating with for improvement in individual
our broad range of stakeholders. supplier reports. We also prepare
Thus far, we have prioritised an overall report that outlines
suppliers to get them on general findings from all supplier
board with our sustainability visits. This aims to depict the
commitments. For our suppliers, actual supply chain scenario
we conduct regional workshops and to determine the strategies
that spur discussions on that are needed to address the
incorporating sustainability remaining issues that appear to
and traceability as part of their be beyond suppliers’ abilities.
quality management system.
Visiting suppliers directly gives As of 2016, we engaged with 21
us further opportunities to of our major palm oil suppliers
encourage and support them in through assessment visits to Products loading points at AAJ Marunda refinery
embracing best practices to meet their mills and plantations. The
our sustainability commitments findings and recommendations CERTIFICATION AND MEMBERSHIP the Indonesian Sustainable Palm Oil
and requirements. Priority in for improvement from these (ISPO). We leverage on membership
engagement is given to long- visits have been communicated We recognise that many of the of these organisations to strengthen
term suppliers or those who to Apical’s senior management. sustainability challenges facing our our management systems and ensure
sell us large quantities of raw More information on our industry are too complex for any one we procure our raw materials from
materials. However, smaller engagement activities with company to tackle alone. We continue sources that operate in accordance with
suppliers who are willing to suppliers can be found in to play an active role in certification and global standards. Certification is further
adopt more responsible practices the section of Working with
membership organisations, such as the discussed in the Customers section of
will be given equal priority in Suppliers and Smallholders.
Roundtable on Sustainable Palm Oil this report.
joining our sustainable supply
(RSPO), the International Sustainability
chain as well.
and Carbon Certification (ISCC) and
06 OUR
SUSTAINABILITY
MILESTONES Our Commitments and Progress at a glance
& COMMITMENT Sustainability

Issue Goals
Progress/
Achievements In 2016
Future
Commitments
TO FUTURE Sustainability
standards
and policy
Implement
our policy
within our own
Strengthened the collaborative partnership
with The Forest Trust (TFT) to fast
track our journey towards fulfilling our
Achieve internal
capacity building
through training by our
TARGETS compliance operations and

communicate
it effectively to
commitments. consultant and other
recognised external
Developed a new set of standard operating expert practitioners
procedures (SOP) that embed our policy
our suppliers on HCS, HCV, FPIC,
commitments into our operations. participatory mapping,
Conducted Priority Supplier Engagement social conflict
• Apical Group’s subsidiary, AAAOF Pte Ltd
became member of ISCC
20 Program (PSEP) visits and Shared Value
Workshop to actively cascade the Apical
management and
other related topics.
Sustainability Policy to our suppliers based Extend PSEP visits and
10 20 • AAAOF Pte Ltd became member of RSPO
• SDS CET Storage Dumai certified to ISCC
in Sumatra.
Conducted pre-screening and desktop
conduct Workshop for
AAJ Marunda’s supply
11 analysis before commencing trading

activities with new suppliers in order to
chain in Kalimantan
in order socialise the
Apical Sustainability
• SDS Refinery Dumai and CEP Biodiesel
Plant Dumai certified to ISCC and RSPO
• AAJ Marunda certified to RSPO
20 minimise potential risks of violating the
Apical Sustainability Policy. Policy and encourage/
support suppliers to be
12 20 • Apical Group became signatory to

Sustainable Palm Oil Manifesto (SPOM)
operating in-line with
our Policy.
14
• Apical established Sustainable Palm Oil
Fire Enforce our Developed a practical guide on Continue to engage
Policy Statement and implementation
• Commenced joint project with TFT prevention “zero-burn” “Prevention, early detection and control of with our suppliers
• Selection of priority mills for field visits
through Mill Prioritization Process (MPP)
20 timeline
• AAAOF Pte Ltd obtained RSPO eTrace/
UTZ for the RSPO Trader (no physical
and
management
policy in all
operations and
open-burning in oil palm plantations” which
was published on the Apical Sustainability
on fire prevention
efforts, collaborating
by TFT and first visit at priority supplying
mill located in Riau
• Achieved full traceability to the palm oil
15 handling) license
• AAAOF Pte Ltd became founding
actively engage
in initiatives of
fire and haze
Dashboard.
Pre-screened potential new suppliers
to ensure there was no history of open
with neighbouring
companies, relevant
governmental bodies
member of Business Council for mitigation and local communities
supplying mills of all refineries under burning and the availability of effective for the purpose of fire
Sustainable Development (BCSD)
Apical Group in Indonesia system and procedure to prevent the prevention training.
possibility of accidental fire.
• Conducted the first Apical Sustainability
• Published our first Sustainability
Policy Socialization Workshop for Medan-
based suppliers 20 Progress Report (2015).
• Conducted a Sustainability Policy
16
• Conducted six Priority Supplier
Engagement Program (PSEP) visits at our Socialisation Workshop for Jambi-based
selected SDS’s suppliers in Sumatra. suppliers
• Launched the Apical Sustainability • Conducted an elevated inaugural Apical

Progress Dashboard as a main Shared Value Program Workshop for our
communication channel with our Indonesian suppliers in Pekanbaru
stakeholders • Conducted 21 PSEP visits at SDS’s
• Published our Grievance Procedure as suppliers in Sumatra
a channel for our stakeholders’ to voice • Maintained full traceability to the
their concerns supplying mills
• Launched Sourcing Policy • Achieved 27% traceability to plantation
OUR SUSTAINABILITY
06 MILESTONES & COMMITMENT
TO FUTURE TARGETS
Sustainability Progress/ Future Sustainability Progress/ Future

Issue Goals Achievements In 2016 Commitments Issue Goals Achievements In 2016 Commitments
Free, Prior Work closely No incidents involving the rights of the Work with suppliers Transformation Engage Developed relevant SVP sessions to equip Continue to identify
and Informed with local local people and indigenous peoples took to continue practicing of supply chain suppliers and our suppliers with the knowledge to help high priority
Consent (FPIC) communities to place in 2016. FPIC before developing bring about them gain a competitive edge in meeting suppliers through Mill
for indigenous create mutually into new areas that transformation the global requirements of sustainable Prioritization Process
and local beneficial A guideline on FPIC has been developed are considered through the palm oil. (MPP) and gradually
communities relationships and publicly published on the Apical communities’ legal Aggregator transform the visited
and to bring Sustainability Dashboard. and customary rights. Refinery Conducted two SVP Workshops for our suppliers through the
about positive Transformation Indonesian suppliers located in Jambi and ART approach.
Continue to train Pekanbaru.
socio-economic (ART) plans
our suppliers on Provide reports
development Conducted 21 PSEP visits at our priority
the importance on findings with
of engaging with SDS’s suppliers in Riau, Jambi and North recommendations
accredited consultants Sumatra with each entity visited
and government and encourage them
departments to to develop corrective
carry out Social and action plans and take
Environment Impact a positive approach
Assessments (SEIA) towards continuous
prior to any new improvement with our
development and support.
expansion that may
affect surrounding Continue to directly
local communities and engage with suppliers
the environment. through site visits to
understand the issues
faced by suppliers and
Protection of No new Communicated the importance of Continue to provide
communities so that
environment development on protecting HCV and HCS areas to our training to suppliers on
practical solutions can
and biodiversity peat and adopt stakeholders and provided training for practical methods to
be found.
areas protection selected suppliers through our Shared reduce GHG emissions
measures on Value Program (SVP) and PSEP visits. in their operations.
Stakeholder Robust and Apical developed the Apical Grievance Continue to minimise
developed peat
Continue practising engagement, responsive Procedure to provide guidelines for the the likelihood of
areas
our zero-tolerance on including system transparent and accountable handling of conflicts taking place
No suppliers resorting to grievance to handle grievances related to the sustainability through prompt,
deforestation the practice of open handling grievances and practices within our supply chain. proactive and direct
throughout our burning, especially in conflicts engagement with
supply chain estates planted on peat Developed our internal Grievance Alerts relevant stakeholders.
area. System to monitor any publicly reported
grievance against our suppliers and provide Work in a fair and
prompt support to resolve the issue. transparent manner to
resolve any verifiable
complaint and conflict
with all parties
involved through
the Apical Grievance
Procedure.
OUR SUSTAINABILITY
06 MILESTONES & COMMITMENT WORKING WITH 07
TO FUTURE TARGETS SUPPLIERS AND
Sustainability Progress/ Future
SMALLHOLDERS
Issue Goals Achievements In 2016 Commitments
Traceability Achieve full Continued to realise 100% traceability to Achieve 100% Our commitment to sustainability extends Apical subscribes to Traceability Working
traceability to supplying mills. traceability to throughout our supply chain. We believe Group’s (TWG) definition of traceability,
palm oil mills. plantation by 2020. our sustainability goals must not be and the following data as part of our
Reported Traceability Declaration
Achieve Documents (TDD) of supplying mills to the achieved in isolation. All stakeholders, requirements to establish FFB traceability
traceability to Apical Sustainability Dashboard at quarterly particularly our suppliers who are closest by 2020:
plantations. basis. to many of the material social and
environmental issues in our value chain, Category of Data Required for
Developed the Action Plan to Build Full must be involved in order for collective
Fresh Fruit Bunch (FFB) Traceability. FFB Supplier FFB Traceability
efforts to be effective and meaningful.
Achieved 27% traceability to plantations. • Estate name
In 2016, our sustainability efforts were • Parent company name
Developed Traceability Outreach Program
focused on pro-active engagement with • Certification status
(TOP) to intensify our effort in achieving
our target of full traceability to plantation our suppliers through field visits and Estate
Estta
ttat
atte
a
ate
te • % of overall FFB tonnage
through engagement with suppliers. face-to-face meetings, support and the (>
> 25
25h
25ha)
ha) to mill
necessary guidance for corrective actions, • A GPS coordinates as a
Smallholder Initiated the Initiated the Rurality Project, with TFT, at Develop possible and making progress towards a fully representative source
development Rurality Project one of our supplying mills in Riau. improvements that traceable supply chain. We also continued location
to improve can be done to our work on the development of • Planted hectarage
livelihoods and The project is currently under diagnosis improve the socio- smallholders, ensuring we have adequate • Total concession area
agricultural stage, where the project team is economic conditions
identifying problems affecting the grievance mechanisms in place and due • FFB volume
practices and livelihoods of
livelihood of the smallholders. diligence in the selection of suppliers.
of local smallholders as part of • Number of smallholders
communities the Rurality Project. • % of overall FFB tonnage
and ENSURING TRACEABILITY OF
to mill
smallholders. OUR PALM OIL Koperasi/
opera
pe
e • Overall FFB volume
Associated/
As
A ss cia
cii • A GPS coordinates as a
Supply chain traceability is an important Scheme/
he representative source
issue for our customers and the Group location
consumers of palm oil products. It • Planted hectarage
“ RSPO was established as a multi stakeholder is fundamental to the confidence of
initiative to give players within the palm oil supply our stakeholders in responsible and • Dealer names (and/or
chain a way to play an active role in transforming sustainable sourcing for the products we dealer unique ID)
markets to make sustainable palm oil the norm. produce. It is also crucial to the reliability Dealer
De
ea
ealer
a ler • % of overall FFB tonnage
Together with other RSPO processors and/or and quality of our supply. However, the to mill
palm oil industry in Indonesia is complex, • Overall FFB volume
traders members, Apical plays a strategic role in with many stakeholders involved. The • GPS coordinates of
ensuring that the sourcing of sustainable palm oil effort it takes to map our supply chain first-tier dealers
products from plantation to customer is increased. down to the individual farmer producing (office/ramp)
RSPO appreciates the overall sustainability progress FFB is enormous. • Number of smallholders
of Apical where we trust this will result in a greater • Village/ sub-district of
smallholders
uptake of RSPO Certified Sustainable Palm Oil.”
MS. TIUR RUMONDANG
RSPO Country Director, Indonesia Operations
WORKING WITH
07 SUPPLIERS AND Aceh
SMALLHOLDERS North
Sumatra
East
Kalimantan
Riau
West
Kalimantan
West
Sumatra Central
Jambi Sulawesi
Central
Kalimantan West
Bangka-Belitung Sulawesi
South South
Sumatra Kalimantan
Bengkulu
Lampung
INDONESIA
PROVINCE % VOLUME SOURCED
Aceh 0.20%
2.10%
Bangka Belitung 1.51%
2.35%
Bengkulu 3.53%
9.24%
Central Kalimantan 3.14%
Palm oil dispatching point at PT. Mitrasari Prima palm oil mill
Central Sulawesi 0.07%
Apical does not own any upstream assets East Kalimantan 3.67%
or facilities such as plantations and mills. 18.96%

ACHIEVED Jambi 13.20% Distribution of supply chain in Indonesia
Instead, we rely on third party supplying
FULL mills in Indonesia including those owned
Lampung 1.02%
8.75%
TRACEABILITY by our major long-term supplier Asian
North Sumatra
Riau
18.20%
43.29%
TO THE Agri, to provide us with raw materials
South Kalimantan 0.40%
41.52%
SUPPLYING such as CPO, CPKO and PK.

South Sumatra
0.16%
4.14%
2.85%
MILL More than 250 independent mills in West Kalimantan 4.13%
10.48% = CPO
IN 2015
.
REMAINED THE CASE IN 2016.
THIS REMA
Sumatra and Kalimantan have been
contracted as suppliers. Our supply chain
map, available on our website, can be
West Sulawesi
West Sumatra
0.37%
0.22%
6.50%
= PK
used to access supply chain information

about all of our facilities.
and smallholders, making Asian Agri one certified CPO a year, plasma smallholders
Our traceability efforts are categorised of the largest certified manufacturers supplying to Asian Agri are one of the
into two levels, namely traceability to mill ABOUT ASIAN AGRI in Indonesia. In addition to certification, largest certified plasma producers in
and FFB suppliers (e.g. plantations). Asian Agri is aiming to achieve 100% FFB Indonesia.
Asian Agri is one of the largest Crude traceability by 2017.
Our first step towards attaining traceability Palm Oil suppliers to our refineries, Independent smallholders are also
has been to achieve full traceability to the contributing towards more than 20% of Asian Agri also plays a vital role in the important partners for Asian Agri
mill in 2015. This remained the case in the annual crude palm oil that we process. socio-economic development of local to implement its sustainability
2016. Our mapping is based on gathering communities by partnering with more commitments. They are contributing about
and verifying information about mills Asian Agri-owned mills have been fully than 30,000 plasma smallholders, 25% of the total production, involving
supplying to our refineries. In order to be ISCC certified since 2015 and they are
covering a total of 60,000 hectares of land approximately 30,000 independent
traceable, the suppliers need to provide committed to a certifying all of their mills
- one of the largest in Indonesia. Asian smallholders. The Amanah Association,
and plantations based on the Principles
correct information of GPS coordinates Agri works with plasma smallholders to Asian Agri’s independent smallholder
and Criteria of RSPO and ISPO. So far,
that show where the mills are located, ensure that high sustainability standards association in Riau, has received RSPO
approximately 635,000 MT of CPO have
name of company and mill and specific are applied. Today, plasma smallholders certification in 2013, it was also the first
been certified, including mills, plantations
address. This information is then further play a significant role by contributing up independent smallholders group to be
verified by The Forest Trust (TFT). to 25% of Asian Agri’s total output. By RSPO certified in Indonesia.
producing 184,000 MT of RSPO and ISCC
WORKING WITH
07 SUPPLIERS AND
SMALLHOLDERS
MILL ENGAGEMENT THROUGH FIELD VISITS

TRACEABILITY APICAL HAS
Apical has established a Priority Supplier
A TARGET Engagement Program (PSEP) to engage
TO BUILD and support suppliers based on long-
FULL FFB term business relations, and a risk-based
approach using the TFT’s Mill Prioritization
100% 100% 100%
TRACEABILITY Process (MPP). Conducting field visits
Sari AAJ AAJ
Dumai
Sejati
Refinery
Marunda
Refinery
Tanjung
Balai
Refinery BY
Y 2020 INVOLVING
THE PROGRESSIVE STAGES OF
to prioritised suppliers allows us to
have personal interaction and effective
communication. The deeper engagement
BUILDING CAPACITY THROUGH OUR through these visits facilitates a better
IMPLEMENTATION AND MONITORING SHARED VALUE PROGRAM (SVP): understanding of our suppliers, provides
Focusing on the mill as an initial step
has provided a good indicator of the THE BUSINESS CASE FOR new insights into the limitations of
approximate location of its suppliers. traceability, and helps to identify hidden
In our next level of traceability to FFB SUSTAINABLE PALM OIL
Still, traceability to FFB suppliers is far gaps for improvement.
supply sources, we have developed
more complex—there are thousands of Traceability is only a starting point
a method with TFT and initiated our in ensuring our supply chain is more Areas that we focus during the
dealers and independent smallholders
Traceability Outreach Program (TOP), sustainable. Once we have identified and engagement visits include but are not
in Indonesia, which means more
targeting all suppliers, especially in Riau, mapped our suppliers, engagement and limited to the following:
stakeholders are involved in supplying
Jambi, North Sumatra and Kalimantan. capacity building is crucial to ensure that • Legal Compliance
to us the necessary data. Our network • Environmental Impact Management
In order to achieve our 2020 target, they are meeting the commitments and
of FFB suppliers come from three main • Respect for Human Rights,
we are following a stepwise approach standards for responsible and sustainable
sources: sourcing that we have set. No Exploitation of People and
to progressively build traceability to
FFB sources. Concurrently, issues Local Communities
• Estate One of our flagship initiatives for engaging • Creation of Shared Values
associated with the FFB suppliers will
>25 Ha suppliers and driving sustainable • Traceability
be identified and engagement through
change is our Shared Value Program
• Smallholders field assessment will be carried out when (SVP). Delivered in partnership with our In 2016, with the help of our consulting
(Koperasi/Schemed/Group SH) necessary. consultants – TFT, Proforest and Daemeter partners, Apical conducted 21 PSEP visits
• Dealers – we run workshops for suppliers focused at mills, plantations and their main FFB
In 2017, Apical plans to extend our on building their capacity to adopt more suppliers that include plasma farmers,
collaboration with suppliers to put in place sustainable practices. The workshops independent smallholders and dealers/
Another challenge to overcome
traceable supply sheds for full disclosure includes topics such as market trends agents. Having found such personal visits
is suppliers’ concern about data in sustainability and traceability and the
and greater transparency. More details to be highly effective, we will continue
confidentiality so as to protect their implications to the palm oil industry. They
on our approach can be found on Apical’s to engage with our suppliers in a similar
commercial interests. Addressing their also include case studies in traceability
Sustainability Progress Dashboard. capacity and closely monitor their
needs for confidentiality and profitability, and engagement with smallholders
we have taken proactive steps in building as well as practical knowledge on implementation of best practices.
close and healthy relationships with sustainability and good practices to aid
suppliers. We strive to instil a positive implementation and monitoring.
and cooperative spirit within our priority APICAL CONDUCTED
suppliers during contact points such as Since the commencement of the project
workshops, meetings and field visits.
We are prepared to sign a non-disclosure
with TFT in 2015, we conducted four SVP
workshops for our Indonesian suppliers.
In 2016, conducted another two SVP
21 MILLS
agreement in certain cases. workshops for our suppliers based
VISITED
in Jambi and Pekanbaru. Participants PRIORITY SUPPLIER MILL
comprised business owners, commercial VISITED UP TO 2016
heads, and officers in the sustainability
fraternity.
WORKING WITH
07 SUPPLIERS AND
SMALLHOLDERS
COMMITMENT TO ZERO BURNING A major mill in Riau Province, Sumatra

AND SMALLHOLDER DEVELOPMENT was selected for the pilot project. The
Rurality Project will be implemented in
Countries in Southeast Asia particularly three phases:
Indonesia, Malaysia and Singapore are
typically affected by the transboundary 1 Scoping Visit
air pollution (commonly referred to as the This field assessment aims to gather
haze) that is associated with the burning information on smallholders who
of forests to clear land for agriculture. The are interested in the project and
regional haze that occurred during the takes note of their concerns and
period of August to November in 2015 expectations. This activity is useful
Management personnel of PT. Mitrasari Prima for the documentation and analysis
was the worst in history, exacerbated by
the El Niño climate cycle. of challenges in running the project.
SUPPLIER
The primary cause of the fire and haze 2 Rurality Dynamics Diagnosis
ENGAGEMENT FOR was attributed to the illegal slash-and- The main objective is to address the
burn method used by some independent key challenges and key performance
TRACEABILITY smallholders for land clearing, particularly indicators or KPIs to measure the
on peat areas in the Riau province and project’s transformational impact. A
The sourcing of FFB has to be in Kalimantan. These fires had spread team, typically an agronomist and
line with local and international uncontrollably to neighbouring plantations a social specialist, go to the field to
standards and as such, engagement with negative impacts on natural habitats meet with smallholders and to build
visits to PT. Mitrasari Prima (PT. MSP) as well as the health and safety of wildlife trust. They gather information on the
mill and its FFB suppliers were carried and people. stakeholder mapping, community
out in 2016. The management of PT. dynamics, cultivation practices, living
MSP and the Head of Administration conditions, infrastructure, and access
The palm oil industry as a whole typically
benefited from these informative to education and health services.
faces similar challenges in getting
sessions, learning about the concept
of sustainability and the importance of smallholders to adopt more progressive
and sustainable cultivation methods 3 Transformation & Monitoring
traceability, beyond profitability. This phase is carried out through the
of FFB. As a vital part of managing our
“ This has not only supply chain, Apical is committed to implementation of a participatory
action plan that focuses on strategies
benefited our business, ensuring that our network of smallholders
receives guidance to get on the right to improve resilience. These include
but also improved our Harvesting activity at PT. Mitrasari Prima areas such as profitability and
track.
company’s image and production, enhancing environmental
In 2016, planning began for the Rurality and social stewardship, and fostering
acceptance by the Project. The project aims to improve the developmental needs of farmers.
surrounding community suppliers’ livelihoods and agricultural
practices through training and access to We plan to report on the progress of our
as a sustainable and
better facilities. Supported by funding pilot project in Sumatra in the coming
responsible company. from other TFT members, this initiative year. We will explore opportunities to
The company is also able aims to create small-scale but compelling upscale smallholder programs and share
examples of change, which could act as a learning with mills and smallholder
to minimise the risk of catalyst for bigger transformations to take suppliers.
violating the government place and be adopted across a larger scale
regulations,” they commented. supply chain network.
WORKING WITH
07 SUPPLIERS AND
SMALLHOLDERS
The diagram below illustrates the process involved in whistle blowing and grievance management.
Illustration of
Apical’s Grievance Process Flow
GSR2 identifies potential Allegations raised by
grievance cases via the Apical Whistle Blower against
Grievance Alerts System our “Suppliers”
GSC clarifies with whistle NO Are we sourcing from

blower | Case closed GSR acknowledges receipt,
this Company? GSC responds and makes
positioning statement
YES (within 5 working days)
NO
Is it a Grievance case?
Socialization of Apical Sustainability Policy to suppliers through regional Apical Shared Value Program
YES
GRIEVANCE We have strengthened our grievance
SET3 approaches supplier for
MANAGEMENT process to include a whistleblowing clarification/statement
channel and a Grievance Alert System
Where there are concerns, complaints that delivers prompt notifications on
or instances of grievance against any matters of concern raised against our YES
Satisfactorily addressed?
of our third party suppliers, Apical suppliers. Simultaneously we use the TFT
takes all of these seriously. We adopt a Grievance Tracking mechanism for supplier NO
proactive stance in grievance handling monitoring and policy compliance. This
with open and transparent mechanisms integrated approach is not just transparent Investigation through desktop
Clarification report
but also aimed at achieving due diligence, review and/or grievance field
through direct stakeholder engagement verification by VT4 (if necessary)
with findings or evidence
and regular monitoring of our supplier and prompt action.
dealings. We have constructive dialogues
with grievance raisers and relevant The process of dealing with an issue
NO Evidence of
stakeholders for dispute resolutions. raised against a supplier is to clarify the Non-conformance?
Such issue settlement is conducted in an alleged violations within a stipulated
period of time. For proven violations, YES
open and transparent manner with direct
stakeholder engagement for progressive suppliers are required to provide concrete
Supplier commits to
improvement that is, where possible, tied and corrective action plan with clear remedial action with
to a time-bound action plan. timelines. Failure to respond and commit time-bound action plan
towards remedial action would trigger Note:
suspension of contracts until progress
1
GSC – Grievance Steering Committee
has been made or the issue has been Publish grievance case on 2
GSR – Grievance Secretariat
Supplier provides progress
resolved. Apical will cease transactions Apical Sustainability Progress 3
SET – Stakeholder Engagement Team
update of implementation
Dashboard 4
VT – Verification Team
with suppliers who have repeatedly
violated our commitments.
Allegations addressed NO
and issues resolved?
YES Case closed
A full list of our grievances and their status is published on our website.
Meeting with a supplier during an engagement visit http://www.sustainability.apicalgroup.com/grievances/
WORKING WITH
07 SUPPLIERS AND ENVIRONMENTAL 08
SMALLHOLDERS MANAGEMENT
Apical seeks to build engagement and SUSTAINABILITY STANDARDS AND
influence positive change towards POLICY COMPLIANCE
sustainable practices for all its suppliers.
Having knowledge on geospatial risks and We believe that palm oil production and
non-spatial risks on a supplier enables us environmental conservation can go hand
to chart an effective engagement strategy in hand. Although Apical only handles
to implement our policy commitments the downstream aspects of the palm oil
with collaboration from suppliers. value chain, we work with our upstream
Prior to entering the supply chain, Apical suppliers to ensure that our raw materials
will require the potential supplier to are from legal and responsible sources.
provide basic information of its supply
base and acknowledge the Apical We are highly committed to getting our
Sustainability Policy. On top of that, the suppliers of raw materials to become
potential supplier will be going through responsible themselves. In particular,
internal risk analysis where the supplier we focus on our suppliers of FFB, which
will be screened for its potential risks are either large plantation owners or
based on spatial and non-spatial analysis. independent smallholders, and are located
Mulching by using empty fruit bunches at Muara Bulian Estate, Asian Agri Spatial analysis involves a series of in many areas within the Riau, Jambi
critical environmental parameters while and North Sumatra and some of other
non-spatial analysis consists of publicly provinces in Indonesia.
SUPPLIER SELECTION AND available information related to the
SCREENING supplier. By launching Apical’s Sustainability Integrated pest management by rearing barn owls at
Policy in September 2014, we signalled Muara Bulian Estate, Asian Agri
Apical has developed a process for With this information, we are able to our intention of being a responsible
selecting and screening suppliers prior chart an effective engagement strategy player in the palm oil marketplace. This PROTECTION OF ENVIRONMENT AND
to commencing any sourcing from a mill. for policy compliance in our supply chain. document states our commitments to BIODIVERSITY AREAS
This approach begins with requiring the Further down the road, we also assess ensure sustainability in the entire value
supplier to acknowledge and sign on to suppliers’ performance throughout their chain, from cultivation to consumption. Apical is aware that our business is reliant
Apical’s Sustainability Policy and provide contract with Apical. Through our supplier Our policy extends to all our subsidiaries on land availability for oil palm plantations
information on its operations and FFB engagement program, we develop and refineries that we own and manage, and that there are risks of deforestation
supply base to Apical. remedial action plans for any areas or regardless of what is at stake. We and biodiversity loss if proper monitoring
improvement identified. also work with relevant stakeholders and control mechanisms are not in
The information on a mill’s supply base to encourage the adoption of these place. As such we are working with our
will be used to conduct risk analysis commitments by our direct suppliers to suppliers to meet local and international
based on geospatial indicators and non- ensure that the palm oil we purchase, sustainability standards to protect the
spatial indicators. Geospatial analysis process and sell, are in line with the environment.
refers to indicators including fire hotspots, policy.
forested areas, reserve areas, peatlands, We developed the Apical Sustainability
and other environmental risks within a Policy with the central aim of building
50km radius of a supplying mill. Non- a traceable and transparent palm oil
spatial analysis focuses on indicators supply chain founded on the principle
related to communities, smallholders, and of no deforestation of HCV and HCS
ongoing grievances that may occur in a areas. Apical will continue to engage
mill’s supply base. our suppliers proactively to ensure that
they adopt the same standards in their
businesses.
ENVIRONMENTAL
08 MANAGEMENT
We have also deployed the policy to palm oil to Apical and/or are adjacent to
suppliers for their adherence. The section any protected areas and peatland. Our The HCS We will work to ensure our suppliers adopt a credible HCS
“Working with Supplier and Smallholders” aim is to eventually engage the rest of our Approach identification procedure (HCS Approach) based on field trials and
gives details on our supplier selection and suppliers as well. During our field visits, scientific recommendations. The HCS Approach is a scientific
screening processes. we make inquiries into our suppliers’ process to identify forests that hold or have the potential to hold a
future plans for new developments high amount of carbon and should thus be protected or restored,
Apical has assessed our entire network of and advise them to conduct relevant and distinguished from areas of degraded forests with lower
supplying mills for environmental-related assessments before proceeding with any carbon stocks. The HCS Approach is also designed to ensure
risks. Where gaps are identified, these are new plantations. that land use rights and the livelihoods of local communities are
addressed by direct engagement with our respected and secured.
suppliers to influence positive mindsets
on the sustainable cultivation of FFB.
Currently, priority for supplier engagement
visits is given to long-term business
partners that contribute high volumes of
Peatland Oil palm planting on peatland has significant adverse

protection environmental impacts, mainly resulting in excessive carbon
emissions due to oxidation caused by the drainage of peat. Apical
is working with our suppliers and conducting regional socialisation
Macaque in the HCV area of
workshops to prevent further new development on peatland
Muara Bulian Estate, Asian Agri
and adopt best management practices, especially on water
management in the existing peat estates.
In terms of new plantations, we strictly enforce a commitment to

Protecting Apical has communicated the importance of HCV areas to our no development on areas of peatland that is defined as organic
stakeholders and will continue to do so. Where necessary, we
HCV areas will provide training for selected suppliers to prevent any land
soils with 65% or more organic matters, regardless of the depth
of peat.
clearance of HCV areas.
For existing plantations that were developed on peatland prior to
We do not intentionally source from deforested areas and seek to
our policy, we are working with our suppliers to share knowledge
prevent any FFB harvested from deforested lands from entering
and provide guidance on best management practices. This is
our supply chain. Through the geospatial risk analysis carried out
to prevent the release of high levels of carbon emissions by
on our supplying mills, we have found that about 10% of these
mills are located adjacent to HCV and/or forested areas. We have ensuring that the land is kept wet and that the water table depth
engaged these mills through site visits and technical workshops is maintained at appropriate levels. For example, the use of
where we sought to inform the mills of risks associated with their subsidence poles at about one per 500 ha is considered good
supply chains and help implement control measures to prevent practice to monitor peat subsidence. A peat plantation with
sourcing of FFB from areas with high biodiversity and HCV. optimal water level (50-70 cm from peat surface) should have a
subsidence of less than 3cm per annum.
Apical will work with suppliers found in breach of our policy
through a corrective action plan. If suppliers refuse to comply For a peat block that has become undrainable due to excessive
or fail to implement corrective action plans, we will take subsidence, we recommend it to be converted to a conservation
additional measure and if deem necessary, review our business area. A guideline on “Drainability Study Prior to Replanting on
relationship. Peat” has also been uploaded onto our online Sustainability
Dashboard for sharing with our suppliers.
ENVIRONMENTAL
08 MANAGEMENT
RIAU APPROACHES
A practical solution was introduced

in May 2016 by Asian Agri through
the Fire Free Village Program (FFVP),
in collaboration with the mentioned
departments. With the backing of the
Governor of Riau, the FFVP aimed to
educate members of selected villages
and independent smallholders on fire
prevention, guided by the vision of
CASE STUDY: achieving zero fire-related incidences in
2016. Training was provided along with
TOWARDS FIRE-FREE the supply of necessary firefighting
equipment.
VILLAGES THROUGH
Prevention is better than cure – this
Emergency Response Team at the fire monitoring tower at Buatan Estate, Asian Agri PREVENTION adage was well appreciated by
members of the FFVP. “Prevention of
FIRE PREVENTION AND initial fire is very important, because
we must take initial preventive action,
MANAGEMENT BACKGROUND instead of putting out fires once it
happens,” Rahman Pasaribu said, a
The regional haze that occurred during the The Riau provincial government has team leader of Lubuk Ogong Village.
El Niño period from August to November deep concerns about the social and
2015 was the worst in history and had environmental damage related to Another team leader, Abu Kasim from
affected large parts of Indonesia, Malaysia illegal open burning and is firmly Lalang Kabung Village, believes in
and Singapore. committed to eradicating this practice encouraging his farming community
with the help of agency forces such not to burn for land clearing. “For
The primary root cause of the haze was Zero burning method in replanting of oil palm at
as the Department of Food Crops, me, the fire is very dangerous for
identified as independent smallholders Buatan Estate, Asian Agri Horticulture and Plantation of Riau the village as it may burn the local
practicing the illegal slash-and-burn Province, forestry department, disaster community crops and land,” he said.
method for land clearing. These Our key supplier Asian Agri initiated a Fire management body and other technical
occurred particularly in Riau province Free Village Program (FFVP) in May 2016 units, and with the coordination of the The Riau authorities put in place
to build awareness and educate selected police and the armed forces. several measures to tackle illegal open
and Kalimantan, which then spread to
villages and groups of independent burning. Targeted villages that were
neighbouring areas.
smallholders. They had been equipped A multi-stakeholder partnership was problematic with land and forest fires
with the necessary firefighting equipment believed to be the best way in helping over the years came under the FFVP
Apical took the initiative to upload communities to take matters into their to become such agents of change.
a practical guideline onto our online and training. In recognition of their efforts
own hands even though this approach The villages involved in the FFVP are
Sustainability Dashboard on “Prevention, and to serve as positive behavioural
would take much time and effort. now well equipped to deal with fire
early detection and control of open- reinforcement, villages achieving the
An important aspect of triggering prevention. “Currently the village
fire free target were awarded with
burning in oil palm plantations” to guide the behavioural shift required was has fire engines, hoes, fire-fighting
community infrastructure.
our suppliers in taking precautionary to include businesses as part of the equipment, machetes, buckets and
actions and preventive steps against solution. Farmers and planters became transportation,” Rahman Pasaribu said.
In the long term, Apical will continue
future accidental burning. the main business actors for change as
to engage with our suppliers on fire they themselves have become victims New mechanisms were introduced
prevention efforts, collaborating with of large fires, experiencing setbacks in such as surveys and on-ground
neighbouring companies and relevant community well-being, decreases or surveillance by the department
governmental bodies for the purposes of losses in crop productivity, and land officials, who also instituted social
training in fire prevention. degradation. activities to foster a caring community.
ENVIRONMENTAL
08 MANAGEMENT
OUTCOMES Villagers were also shown appreciation MANAGING OUR OPERATIONAL FOOTPRINT
for their cooperation. Business partners
The combined efforts of stakeholders in the FFVP provided funds that could We are committed to minimising the negative impact of our operations on the
resulted in significant positive be used for investing in infrastructure environment. We have established control systems and a regular monitoring regime in
impacts – in the selected villages, not projects. In 2016, Asian Agri awarded place, allowing us to comply with the benchmarks set by local regulation.
a single land or forest fire incidence Lubuk Ogong Village IDR100 million
was reported in 2016. This is a (about USD 7,500) for this purpose.
precursor to better land management
in the surrounding plantations with Although the villages stand to receive
close cooperation among palm oil some financial benefits by adopting
stakeholders. environmentally-friendly land
cultivation practices, they realise that
“We hope that all the companies the highest advantage gained were
located in the area around the Fire Free safety, security, and land and nature
Village will do the same thing as Asian protection. “We hope that this program
Agri did, and if necessary, they need to can run long term, and not only for
collaborate and work together,” said Ir. short term,” Mr. Rahman Pasaribu
H. Ferry HC. Ernaputra, M.Si, division concluded. Water Waste
head with the Department of Food management management
Crops, Horticulture and Plantation of The FFVP has been effective in
Riau Province. influencing other villages prone to We are committed to the efficient use Our refineries have procedures to manage
fires as well to also take preventive of water in our refineries. At our Sari hazardous wastes such as fly ash (a light
With a sharp reduction in land and and security measures, for example, Dumai Sejati (SDS) Refinery, water is form of coal ash), bottom ash (the heavier
forest fires around the villages of the allowing road access for the transport obtained from the sea water treated by portion of coal ash) as well as spent earth
Riau province, people saw remarkable of fire extinguishers. Subsequently, the refinery’s desalination plant to service (solid waste material generated as part
improvements to their safety and they too experienced fewer fires in
factory operations. At our Asianagro of the bleaching aspect of the oil refining
health. Moreover, they were reassured 2016.
Agungjaya Marunda Refinery (AAJ process). A trained person in-charge is
seeing that their crops were being
protected, which meant livelihoods Apical intends to continue to lend Marunda), water is supplied by the local responsible for handling waste disposal in
could be sustained. support to farmers and smallholders utility company. Water usage takes place the refineries according to our Standard
to ensure that forests and wildlife are as and when it is required so that water Operating Procedures. Key responsibilities
protected in the preservation of HCV wastage at both facilities is minimal. include monitoring, keeping an inventory,
and HCS areas, and peat land. Water consumption is also metered. and ensuring waste is disposed on
The average sea water withdrawn is time. Waste is collected by a licensed
300 m3/ day for processing 2000 Mt of contractor who has the appropriate
CPO (2014-2016), which eventually goes transport and disposal permit.
to a wastewater treatment plant set up in
refinery.
The treated wastewater from the refining

process will be fully utilised by recycling it
for cooling tower, fire hydrant, or domestic
purposes such as cleaning. The refineries
utilise micro bacterial and Activated
Sludge Process in the treatment of
effluent water and use chemicals such as
coagulant, flocculant, caustic soda, bioxide
and nutrients to ensure that the effluent
water is within the permissible quality.
Fire Prevention Team at Buatan Estate, Asian Agri
ENVIRONMENTAL
08 MANAGEMENT
Wastes generated from Apical refineries in 2016 GHG emissions More than 90% of the GHG emissions from our
refinery and biofuel production plant are from
GHG emissions in 2016 electricity generation through power plant and
usage of fossil fuel for starting up the boiler. GHG
emissions from other sources such as chemical
Sari Dumai Sejati % usage and effluent treatment contributed only
Quantity Electricity generated from power plant 71.47 about 5 to 7% of the total GHG emissions.
Generated 21.13
Fossil fuel usage for boiler
(MT) Apical has participated in the Programme for
Type of Hazardous Wastes 2016 % Chemical usage * 5.23 Pollution Control, Evaluation and Rating (PROPER),
Spent bleaching earth 21,708.92 57.85 Electricity generated from diesel 1.29 the Indonesian Ministry of Environment’s national
public environmental disclosure initiative at annual
Fly & bottom ash 15,407.54 41.06 Effluent treatment 0.87 basis. The programme assesses the following
Sludge 335.52 0.89 100.00 aspects of environmental performance:
Used lubricant oil 48.31 0.13 * Chemical usage consists of bleaching earth
1) Environmental Management System
and phosphoric acid.
Contaminated packaging 6.56 0.02 2) Resources Conservation and Reuse, Recycle,
container and Recovery of Wastes (3R)
Cemerlang Energi Perkasa 3) CSR: Community Development
Others * 18.12 0.05 (Biofuel production plant) % 4) Water and Sea Water Pollution
GRAND TOTAL 37,524.97 100.00 Electricity generated from power plant 95.19 5) Air Pollution
6) Hazardous Waste Management
* Others consist of Rags, battery, oil filter and office wastes. Effluent treatment 4.01
7) Implementation of EIA
Chemical usage * 0.79
Electricity generated from diesel 0.01 PROPER publicly discloses results
of the assessment using a
100.00 five-colour grading scale. In 2015
* Chemical usage consists of methanol, and 2016, our Sari Dumai Sejati and
sodium methyl, caustic soda, hydrochloric acid AAJ Marunda refineries received a
and citric acid. Blue Rating in the PROPER
assessment.
More than 98% of the waste generated In addition, SDS has an ongoing Kaizen
from palm oil refining process consist of project for improved productivity and
spent bleaching earth and fly & bottom efficiency that is targeted at zero oil REQUIREMENT
ash. Spent bleaching earth generated spillage. They also have a dedicated
from the degumming and bleaching emergency response team and regular
processes of crude palm oil while fly & training to prevent and deal with
bottom ash are wastes produced from accidental oil spillage.
The facility has made The facility has The facility has met The facility’s The facility has
coal combustion process that are driven
virtually no pollution made some pollution legal standards and pollution is met international
out of the boiler. All the wastes generated
control effort control effort, but has demonstrated significantly below standards of
from palm oil refining process are handled failed to meet legal frequent reporting legally required environmental
according to our standard operating standards and had standards and it excellence
procedure which including storing in insufficient reporting has conducted
secured area and disposal by licensed food equipment
waste management company at specific Rating: maintenance,
interval. reporting, and
environmental work
09 LABOUR
RELATIONS
The palm oil industry provides vast employment opportunities for people in Indonesia, HUMAN RIGHTS
particularly within rural communities. To ensure that the impact of employment in
the sector is positive, Apical is committed to maintaining a productive and engaged As stated in the Apical Sustainability
workforce through fair, ethical, and favourable relations with our workers. These include Policy, we are guided by the principles
employees, suppliers and smallholder farmers who are independent or part of the of the Universal Declaration of Human Child labour
Indonesian plasma scheme. Rights and as such, we strive to uphold
and respect fundamental human rights. With regard to the recruitment of
We comply with all the laws that apply workers, Apical complies with the
to the locations in which we operate minimum age employment standard
and cover issues such as freedom of in the country. In Indonesia, one of
association, fair wages, working hours, the recruitment criteria specifies that
non-discrimination, child and forced, applicants must not be under 18 years
bonded or illegal labour. of age. Child labour is not permitted
and Apical is not tolerant towards any
occurrence in our operations. As standard
procedure, all job applicants must produce
identity cards as proof of their age.
Freedom of association and At Apical refineries Sari Dumai Sejati

trade union membership (SDS) and Asianagro Agungjaya Marunda
(AAJ Marunda), there exists a policy
Freedom of association includes the to ensure that the plant is child-free.
right of all workers to form or become No children are allowed to enter those
members of labour union on their free premises.
will, and the right for collective bargaining.
In Indonesia, this is mandated by Law and Apart from our own operational units, we
Regulation No. 21/ 200 on Trade/Labour engage our direct suppliers by informing
Unions and is in line with the International them of Apical’s policy against child labour
Labour Organization Convention No. 98 on and ensuring this commitment is upheld.
Employees of Sari Dumai Sejati refinery
the freedom of organisation and collective
Apical takes the initiative to assess,
The community of Karya Mukti Village in bargaining. As such, all employees are
identify and analyse potential risks of
Riau found their socio-economic conditions entitled to practise freedom of association
child labour occurring in our operations
improving with the presence of Asian Agri and to be covered by collective bargaining
or at any of our suppliers by conducting
group of businesses. Fifteen percent of mill agreements in the workplace. As of 2016,
field visits, Shared Valued Workshops to
employees come from the village, a figure that 56% of our workers have joined trade
socialise Apical Sustainability Policy, and
is likely to increase over time. The people have unions.
through engagement meetings.
also benefited from the mill’s CSR activities
DRIVING POSITIVE that include providing clean water sources and
road maintenance. “We would like to thank
IMPACT TO Asian Agri for giving all their assistance and
cooperation to Koperasi Unit Desa. We hope the
LOCAL COMMUNITIES company can offer more CSR to this village and
provide educational assistance to the villagers
THROUGH EMPLOYMENT where the education level is quite low,” said
Dasmin, the village head.
OPPORTUNITIES
LABOUR
09 RELATIONS
Employee Breakdown as of FY2016
62
27 25
13
7
24
Empowering women and 1087 171
local communities
Economic avenues are present through PROVIDING

the industry. Where appropriate to
the needs of our work, priority for China
OPPORTUNITIES TO
employment opportunities is given to Singapore
the surrounding community. In general, Malaysia INDONESIAN FARMERS
Indonesia
such opportunities exist depending on
the competence of ready labour in the IN ADJACENT VILLAGES Local villager working at the oil palm nursery
immediate area.
Total Employees by Employee Category BACKGROUND Any grief over the mills operations is
According to the latest data, 70% of our
No. of Employees Male Female also quickly addressed due to the close
workforce consists of local people. The
In Indonesia, certain traditional relationship between the management
gap between the skills available from the Worker (Non-Staff) 858 112 agricultural crops have been replaced of the mills and the village committee.
local community and the needs of the with oil palm. The community of Segati “As of now, social turmoil does not
company, however, is quite large because Non-Executive 223 87 Village faced low income and hardship exist in our village. There was one
the factory is highly driven by technology. with the sourcing and trade of rubber, incident where the villagers alerted the
This results in a demand for workers Junior Management 37 12 rattan and forest produce. Believing mill management on effluent leakage
who have certain basic understanding of that their prospects would improve and the management responded
the technology deployed. Where there Middle Management 52 15 with palm oil plantation, the people quickly to this,” said Sofyan. the Segati
are skills gaps, we provide continuous embraced change but not without Village chief. The rights and entitlement
training programs such as the Driving Senior Management 19 1 some initial resistance. of employees are also fulfilled,
License Program (DLP) for workers. We according to employee Syaiful, who
also frequently bring in external trainers to SOLUTIONS noted that no one under the age of 18
expose our workers to related industries worked in the mills.
so that they can be even better embrace The village committee of Segati Village
to new skills. saw the potential of trading FFB with OUTCOMES
oil palm cultivation and directed their
Apical believes in hiring with no residents to make the switch. This The mill management rolled out
discrimination, including gender, and meant change, which was new and various benefit schemes. Housing,
therefore provides equal opportunities thus difficult for some to adjust to. water, electricity and other facilities
With the set up of palm oil milling in addition to wages provided for the
for men and women. The hiring decision
companies PT. Mitrasari Prima, Apical social welfare needs of employees
is based primarily on the job nature and
third party supplier in supply chain and families. “Our hope is to have
requirement, the role that needs to be
within the village area, FFB could be better quality housing, and I'm sure
fulfilled, and the right competency level processed quicker instead of days of the company will respond to this.
for a particular position. waiting for transportation. Another is to increase the number
of housing,” said Darman, a security
officer with PT Mitrasari Prima for two
years. Segati Village has also been the
recipient of the mills’ corporate social
responsibility programs. The local
mosque received a new fence, thanks
to the support of the mills.
LABOUR
09 RELATIONS
FAIR WAGES AND

EMPLOYEE BENEFITS CASE STUDY: CASE STUDY:
It is important for employees to FAMILY ROOF ABOVE

be rewarded for their service and
contribution to the company in the form SPIRIT THE HEAD
of fair wages and benefits. All employees
of Apical receive wages that are above the Mr.r. Sy
Syaiful
Syaaiful had
aifu h been working as an Mr. Darman has been employed to
minimum requirements set by the local FFB fa m in his parent’s Segati
farmer
rmer
me look after the security needs of PT.
and provincial authorities in Indonesia. Village estate before joining PT.
lage estat MSP. He and his family have benefited Safety & health training at Sari Dumai Sejati refinery
Minimum wages are set according to Mitrasariari Prima (MSP), Apical’s third
asari from the residential and environmental
the cost of living, factoring in the prices party supplier. Having worked at the facilities provided by the company TRAINING AND DEVELOPMENT
of local goods and services, as well as plant for two years as an FFB sorting such as free housing, electricity and
general living expenses. From Riau to employee, he has witnessed how potable water on tap. Having worked Apical provides employees with
Jakarta and North Sumatra where Apical the company’s management takes for the company for two years, Mr. numerous training and development
operates, employee wages are typically care of employee welfare by providing Darman is satisfied with the way opportunities. These enhance their
higher than the minimum wage set by the for the family’s economic needs. communication between staff and knowledge and skills, which then enable
provincial government. management is handled: comments them to perform better at their various
North
“ The management here is or grievances on employee needs in
terms of housing facilities or building
tasks. The channels to do this are through
formal and informal training, either on the
Sumatra very concerned with the maintenance are expressed either job or at Apical’s partner premises.
Jakarta (AAJ
Riau (AAJ Tanjung interests of employees. through direct conversation with the
division leader or by letter submissions One of the main centre of learning at
(SDS) Marunda) Balai) The rights and entitlement through the suggestion box. our upstream supply chain (suppliers) is
Provincial 2.095.000 3.100.000 1.811.875 to the employees are the APRIL Asian Agri Learning Institute
government
minimum
always fulfilled,” “ The problem solving (AAALI), formerly known as the Buatan
Training Centre which was founded in
wages Mr. Syaiful Said. period is two days 2002. This centre provides the foundation
Apical 2.453.000 3.255.000 2.047.000 maximum. If the issue is for the strengthening of human
He vouches that there are no resources through regular and custom
minimum underage workers in the company not too complicated, it programs. These aim to educate and train
wages
as the management has set the can be done on the same agricultural-based workers such as oil
minimum age of employment at palm planters and foresters.
% above 17.9% 5% 12.98%
18 years.
day itself. In general, the
minimum
wages
company responds well to There are four regular educational
“ Here we work as a the complaints,” he said. programs at Asian Agri as follows:
Moreover, employees receive a range of family, and have the same - Estate Assistant Training (EAT),
additional benefits that include private on estate management;
medical insurance for inpatient treatment purpose,” he said, thanking Does he have further expectations?
- Mill Assistant Training (MAT),
“Our hope is to have better quality
and reimbursement for outpatient health Mr. Putra, Mr. Melki and Mr. Mex from on managing palm oil mill such as
housing, and I’m sure the company
consultation. To motivate employee the PT. Mitrasari Prima management processing and workshop;
will respond to this. Another request
in keeping healthy and fit, Apical for their support. - Traction Assistant Training (TAT),
is to increase the number of housing,”
gives monthly rewards in the form of on how to manage FFB transportation
Mr. Darman said.
daily groceries such as cooking oil to equipment, fertiliser and heavy
employees who achieve good attendance equipment in the plantation; and
record. - Administration Assistant Training (AAT),
on administration and management.
LABOUR
09 RELATIONS
The Risk Management function reports

to the board of Risk Management THE
Committee three times a year during
which the major risks affecting the
TOTAL TIME
businesses are presented and the SPENT ON
mitigation measures are reviewed. TRAINING
The examples of risks covered concern
the operational, financial and trading OF APICAL
aspects of the company. At the business EMPLOYEES
unit level, the individual Risk Registers IN 2016 WAS
are monitored by the management to
ensure that all corrective actions are
implemented on a timely basis. 2,501 hours .
Crisis risks are monitored by executing

various disaster scenarios via desktop Floor supervisors ensure that employees
simulations or drills at the respective wear suitable personal protective
business units. Some examples of equipment (PPE) and that they follow
scenarios include fire, accident at the established procedures and work
Training on emergency response at Sari Dumai Sejati refinery instructions during the work hours
jetty, oil spill and civil unrest.
accordingly. We strictly prohibit unfit
AAALI provides participants with function. Workforce clinics are also held We provide training regularly to raise and unauthorised personnel to operate
business, technical and managerial to conduct evaluation on high performers employee awareness of health and safety. machinery and harmful chemicals within
information to help them achieve key along with coaching, which can be a our operating units.
performance indicator (KPI) targets set rewarding experience at the personal and In 2016, 26 percent of management level
by the company. Training on operations professional level. (managers and above), 62 percent of In the last two years, there were a total of
aims to increase participants’ knowledge employees and 37 percent of workers seven Lost Time Injury (LTIs) throughout
about the entire transportation process of AAALI has become an integral part attended human rights related training Apical’s plants. We also regret that there
FFB, manpower resources management, of human resource development, sessions. were three fatalities in 2015 at the SDS
road and bridge maintenance, and more. instilling within staff the traits of self- facility. Following reviews investigations
Such training has effectively reduced discipline, effective communications with of each case, Apical has put in place
breakdown time and allowed for smooth management and co-workers, and good extra precautionary measures to prevent
processes in the factory by ensuring that time management. re-occurrence of such incidences. There
transportation and heavy equipment are HEALTH, SAFETY AND were no fatalities in 2016.
available and operated without glitches. HEALTH, SAFETY AND
Trained employees contribute towards In addition, to promote the wellbeing
WELLBEING
better operations and proper budget of our employees, we facilitate medical
monitoring, enabling business units to check-ups and provide clinical facilities
Apical takes the health and safety of
manage funds optimally for the benefit of and services along with the Badan
our employees seriously. As such, both
the company. Penyelenggara Jaminan Sosial (BPJS)
our Health, Safety and Environment
insurance scheme for peace of mind due
(HSE) team and Risk Management
Custom programs provide yearly skills to the comprehensive health and medical
team proactively assess and work out
upgrade to boost employees’ technical coverage offered. We also encourage our
procedures, policies and mitigation
knowledge and soft skills according to employees to practise healthy lifestyles
measures so as to minimise the risk of
current needs. At the foreman level, they for general well-being.
incidences at the workplace.
are coached on self-development for
better behavioural qualities and leadership
Cadet training at APRIL Asian Agri Learning Institute
10 COMMUNITY
LIVELIHOOD
COMMUNITY ENGAGEMENT RESPECTING THE RIGHT TO FREE,
PRIOR AND INFORMED CONSENT
The palm oil industry brings about (FPIC) FOR INDIGENOUS PEOPLES
significant socio-economic benefits to
AND LOCAL COMMUNITIES
the communities in Indonesia. Primarily it
presents new sources of income through
Based on our sustainability commitments,
job and trading opportunities, thus helping
Apical fully recognises and respects
to create employment, alleviate poverty
the rights of indigenous and local
and empower people to secure better
communities to give or withhold their
livelihoods for themselves. At the same
Free, Prior and Informed Consent (FPIC)
time, we recognise that the development
to the utilisation of lands to which they
of our industry may adversely impact local
hold legal, communal or customary rights.
communities, in particular indigenous
We also ensure that a transparent and
people, giving rise to conflicts. As such,
legal land allocation process is in place
we are committed to respecting the rights
to prevent any land-related grievances or Community in PT. Mitrasari Prima
of local and indigenous communities as
conflicts.
well as promoting better livelihoods.
CONFLICT RESOLUTION EMPOWERING COMMUNITIES
We strictly follow national laws and
regulations where we operate. As such, At the forefront of our approach to Apical prioritises the recruitment of
prior to any new development and handling community conflicts, we first local residents for employment as it
expansion that may affect surrounding aim to minimise the likelihood of cases is our primary focus to empower the
local communities and the environment, arising through proactive and direct communities in which we operate
Apical will engage with accredited engagement with relevant stakeholders. and improve their living standards. In
consultants and government departments Still, should a conflict arise, we strive to addition, as a responsible company,
to carry out Social and Environment work in a fair and transparent manner Apical has broad engagement with
Impact Assessments (SEIA) or AMDAL to resolve any verifiable complaint and adjacent villages to fulfil its role in the
(Analisis Mengenai Dampak conflict with all parties involved. Apical’s development of local communities.
Lingkungan). This is applicable in grievance mechanism has been in place For example, our SDS Refinery at
Indonesia and aims to evaluate potential through the establishment of a Grievance Lubuk Gaung, Dumai has several CSR
Unloading FFB at PT. Mitrasari Prima Palm Oil Mill impacts from land-based development. Procedure and the formation of a programs for the local communities
During this stage, any adverse feedback grievance verification team. These ensure such as road and bridge construction,
from communities and negative impact that all grievances and conflicts are dealt refurbishment of the mosque, repair
to the environment are taken on board for with and handled in a transparent and of burnt primary school facilities, and
further assessment. accountable manner. This team gathers scholarship for outstanding students.
the necessary information from all Other programs seek to boost alternative
In 2016, there were no incidents involving relevant parties before conducting field livelihoods such as the establishment
the rights of the indigenous peoples investigation with the aim of seeking of catfish farms. These CSR programs
at our refineries, which operate on resolution and compliance with our arose out of communication between
designated industrial zones authorised sustainability policy. The description of the management of SDS and the local
by the local government. Apical’s policy grievance related cases and the follow up communities, and are customised
is to discontinue sourcing palm oil from actions taken are logged and published according to people’s expectations and
supplying companies that have been on Apical’s Sustainability Progress needs. Through these programs, Apical
reported to be errant repeatedly and Dashboard. and our key supplier Asian Agri seek to
refused to take remedial actions. remain relevant as socially responsible
corporate organisations.
Employees housing complex at PT. Mitrasari Prima

COMMUNITY
10 LIVELIHOOD
Techniques that were taught on fish Despite this promising venture, a few
farming were aimed at maintaining areas needed attention. “Currently
environmental, health and safety the question is how to improve the
standards according to local marketing position and how to increase
regulations. This was important for the selling volume of these fish,” Bpk
the fish farmers to minimise negative Eko said, a plasma farmer who joined
PROVIDING impacts to the environment while the Jabang Tutuka fish farm.
maximising profits.
ADDITIONAL SOURCES The farming of fish presents an
OUTCOMES additional income avenue for
OF INCOME DURING plasma farmers especially during the
With financial support, training and replanting season of oil palms. This
THE REPLANTING the provision of supplies, farmers alternative way of farming helps feed
found that fish farming was a lucrative themselves and their families while
OF OIL PALMS business. The local people liked eating providing the village with added food
fish, which then resulted in a high source.
THROUGH FISH FARMING demand at wet markets. Partnering
companies even helped with the fish Apical supports such socio-economic
distribution to local markets situated development projects led by Asian
further away. Agri, its major partner in the supply
Alternate source of income for smallholder at chain.
Buatan Estate, Asian Agri
BACKGROUND SOLUTIONS
Oil palm farmers are dependent on In 2015, Asian Agri introduced fish
the income from their crops to sustain farming to its network of oil palm
their livelihoods. However, when the plasma growers in Jabang Tutuka.
oil palms have reached economic life-
span at around 25-30 years, farmers The local governing body played
typically face decreasing yield of FFB. an active role in developing such
Replanting is then needed to restore opportunities for its people and they
crop yields again. Farmers could collaborated with businesses as well.
expect peak yield anytime between Partnering companies, including Asian
six to twelve years from the time of Agri, financed training and equipment
replanting. In the meantime, the first such as tarp-lined pools and ponds,
few years from replanting is considered pellet machinery and more. Farmers
a less or non-productive phase, could also turn to such supporting
which presents a loss of income. companies for easier access to
This holds farmers back from business loans compared to banks
replanting, which in the long run and financial institutions. Should
reduces yield. To encourage farmers difficulties arise, these were brought
to proceed with replanting oil palms, to the attention of these companies,
a solution for an alternative income which then gave further technical or
during this transition period was marketing input.
proposed – fish farming.
Livelihood improvement program initiated by Sari Dumai Sejati for the villagers
COMMUNITY
10 LIVELIHOOD
Apart from training and skills upskilling,

farmers are given funding to help with
the replanting program. Getting high yield
oil palm seeds from the partnership with
corporations also meant getting FFB much
sooner, “after approximately 2.5 years”
PLASMA SCHEME according to Jamaluddin.
PARTNERSHIPS Another farmer, Nasrun from Kerinci
Kanan Village, shared that his family
IMPROVE FARMERS’ had moved from basic to higher living
standards, and he could now afford
LIVING STANDARDS his children’s college education. “In
the plasma operational activities, the
company helped us a lot during replanting
period, such as construction of terraces,
crop fertilisation, and socialisation of the
good land clearing exercise by using the
excavator to avoid land burning.” The
lots of Nasrun and many other members
have received ISPO, RSPO and ISCC
Employee housing complex at PT. Mitrasari Prima certification, increasing the value of their
products.
SOLUTIONS OUTCOMES
“The FFB production yield is much higher
The Indonesian government initiated Families of plasma communities have at plasma plots under the guidance of
the Plasma Program to ensure that reported that such partnerships have Asian Agri compared to our own managed
smallholders could manage their improved their lives in a number of ways. oil palm cultivation plots,” he added.
plantations well by leveraging on Many of them have since been able to
relationships with palm oil corporations. afford better housing and attain higher Agreeing, Haji Armedi from Kerinci
The program is mutually beneficial to education for their children. Kanan Village said, “The advantage
BACKGROUND both farmers and palm oil corporations. of certification is clear as farmers are
Plasma farmers benefit from training and With the intervention of such corporate continuously being trained about the
Agriculture in Indonesia provides education in oil palm cultivation which partners, a new world has opened up for upkeep of palm oil plantation, fertilisers
many economic benefits, particularly increases their yield and therefore income local agricultural farmers. “I was a rice and any other matters about palm oil, plus
employment. In the palm oil sector, and welfare. Plantation companies are paddy farmer but the harvested crops get external training,”
however, a large part of plantations are able to enjoy a stable supply of fresh fruit could only sustain us for eight months.
owned by small or independent land bunches FFB. I had to resort to getting an extra job as Seeing that the plasma scheme has
owners with poor access to infrastructure, village secretary. But after joining the benefited local communities in more
training and capital finance. Palm oil Apical’s major supplier Asian Agri plasma program with Asian Agri in 1992, ways than one, Asian Agri has a target of
farmers in this category have reported maintains partnerships via a plasma we planted oil palms, which now provides building mutually beneficial relationships
low and inconsistent income. scheme model with about 30,000 for us very well economically,” said with 60,000 independent smallholders by
smallholders that have approximately Muhammad Jamaluddin, a plasma farmer the year 2020.
60,000 hectares of palm oil plantations in who migrated from Cianjur Regency, West
Sumatra’s Jambi and Riau Provinces. Java Province.
COMMUNITY
10 LIVELIHOOD
SOLUTIONS Over at Sungai Sembilan, Dumai in

the early 2000s, the MTs Nurul Islam
Employers and partnering corporations Lubuk Gaung,was falling into disrepair
such as Asian Agri saw the potential to with leaky roofs and broken ceilings.
enhance learning opportunities. As part As it was a private school with limited
of its corporate social responsibility budget, it could only embark on
FOSTERING (CSR) program, Asian Agri typically renovations with external funding.
supports education and therefore PT Sari Dumai Sejati (SDS) stepped
THE SPIRIT OF established a new elementary school in to assist with funding from Tanoto
– the Sekolah Dasar Permata Agri in Foundation. Renovations finally began
LEARNING IN Muara Bulian Estate in Riau province. in December 2015.
With funding from Asian Agri, Childcare center at Muara Bulian Estate, Asian Agri
LOCAL COMMUNITIES education is delivered free by local With Tanoto Foundation’s help,
teachers who are paid honorarium. renovation of MTs school and OUTCOMES
construction of its dormitory at RT07
Headmaster Natalie Sembiring of was completed with a total cost of With both local schools looking
Permata Agri elementary school IDR 800 million. In addition to this good and equipped with educational
acknowledged the CSR contribution ‘hardware’ improvement, ‘software’ facilities, the number of students
BACKGROUND in improving access to education. needs were met by improving teachers’ attending increased. “Up to now,
“Asian Agri, helped quite a lot. Initially skills in six schools. there are 173 children studying in this
Villagers in distant places often the library was empty and we got elementary school, from Grade I to
encounter difficulties in accessing help in the form of bookshelves. The Grade VI, and they are the combination
learning centres, especially children. company also provided health and of children from Asian Agri employees
They tend to be disadvantaged if their sports facilities as well as a science and local villages,” said Sembiring.
families lack transport to send them to laboratory.”
established schools in the district. A similar response took place at MTS
Nurul Islam. After getting financial
Palm oil communities in a certain assistance from Tanoto Foundation via
Indonesian district found it challenging PT. SDS, the school saw a 50 percent
to send their children to the elementary increase in admission rate from the
school situated just two kilometres previous year. The school has since
away. The school bus often broke down, won several awards.
leaving students stranded and missing
classes for up to a week while repairs Although there are more areas
were being done. in schooling that need attention,
headmaster M. Fathan is most
In another district, a rundown school appreciative of the support received,
saw declining number of students. which has motivated teachers and
In these two instances, children were students to excel further. “Our hope is
not able to get proper elementary to receive continuous assistance for
education. teacher training – this is very useful for
reviving – the teacher’s passion and
motivation for teaching, and the spirit
of learning in the child,” M. Fathan
smiled.
Oil palm training program by Asian Agri for
students at SMA Negeri 11 Batanghari school
11 CUSTOMERS AND
CONSUMERS
We recognise customers as our key SUSTAINABLE PALM OIL We also engage with our global
partners to business growth. It is THROUGH CERTIFICATION customers such as Unilever, Neste,
therefore important for Apical to work Bunge, Cargill and Kao Corporation for
closely with them to jointly meet their As part of our commitment to promote beneficial collaborations and shared
market needs and global requirements traceable and sustainable palm oil knowledge on the latest development
in supplying sustainable palm oil and production, and in our efforts to meet the in the sustainability requirements of
products. growing demand from our customers for the market. This leads to continuous
certification, we continue to participate in improvements and innovations in our
Apical believes in ethical business various industry schemes, including the sustainability journey.
practices, sustainable and quality RSPO and ISCC certification schemes in
products as the key to long-term Quality control laboratory at AAJ Marunda refinery our operations (refineries, kernel crushing
customers relations. Most of our globally- plant, biodiesel plant and oleochemical
recognised customers have adopted ENSURING PRODUCT plant). We have gone beyond that by
stringent standards in sustainability, QUALITY AND SAFETY engaging our suppliers vigorously through
which are also met through the Apical the Shared Value Program and Priority
Sustainability Policy and sourcing Our customers rely on Apical to supply Supplier Engagement Program (PSEP).
processes. These provide us with a high quality and safe palm oil products. Moreover, we have formed a dedicated
solid ground to deliver traceability and Through continuous innovation and Supplier Engagement team to forge
sustainability requirements in social, legal improvements, Apical is able to meet greater FFB traceability and production
and environment contexts, going beyond the food manufacturer’s stringent quality of sustainable palm oil through globally-
the fundamental needs of product safety requirements for oils and fats. recognised certification schemes.
and highest quality requirements.
We appoint independent third party
Apical supplies customers with a range accredited certification bodies to validate
of products, from Crude Palm Oil (CPO), and verify the standard of our products
Crude Palm Kernel Oil (CPKO) to various regularly. Our palm oil products are
forms of Processed Palm Oil (PPO), HACCP certified for food safety, and Halal
Processed Palm Kernel Oil (PPKO) and and KOSHER certified. We also adhere to
Refined Soy Bean Oil (RBDSBO), all of PORAM or Palm Oil Refiners Association
which can be further processed into value of Malaysia standards for PPO and can
added products. tailor our product specifications to suit
customer requirements.
For example, CPO is a versatile vegetable
oil with a variety of edible and industrial The proximity to end-users also enables
applications such as cooking oil, Apical to react to market changes in the
margarine, shortening, ice-cream, bakery shortest time possible. For example, our
fats, instant noodles, chocolate and Sari Dumai Sejati Refinery sources its raw
coatings, sugar confectionary, soaps and materials from within Sumatra, processed
detergents, shampoo, fabric softeners, through state-of-the-art facilities to ensure
emulsifiers, fatty alcohols, plasticisers, optimised resources and GHG emission
resin, surface-active agents, lubricants reduction throughout its processes. Its
and biodiesel. As such, our customers integrated operations allow for greater
incorporate our materials into their Product quality testing lab at AAJ Marunda refinery
efficiency in response to changes in
products, many of which are globally- market requirements. Our AAJ Marunda
recognised consumer brands. processing plant is located near Tanjung
Priok container terminal, which facilitates
on-time delivery and export of our
shipments. The efficient logistics result in
cost savings for Apical and its customers.
CUSTOMERS AND
11 CONSUMERS
KAO
ROUNDTABLE ON INDONESIAN INTERNATIONAL
SUSTAINABLE SUSTAINABLE SUSTAINABILITY TESTIMONIAL
PALM OIL (RSPO) PALM OIL (ISPO) AND CARBON
CERTIFICATION (ISCC) KAO has also started to actively explore
with Apical to ensure palm oil traceability
Apical became an RSPO We support the ISPO ISCC has been by planning to conduct site visits to
member under the launched by the established as the first Apical’s refinery and its supply chain as
category of palm oil Indonesian Ministry Certification System for part of the quality assurance practice.
processor and trader of Agriculture in 2011 sustainable Biomass This exercise will also serve as a platform
As a member of the Roundtable on
on 11 August 2011. Our to create a single and Biofuels. Apical to learn and advance together towards
Sustainable Palm Oil (RSPO), KAO is
refineries have obtained national standard for Group has been adhering sustainable and responsible palm oil
committed to ensuring our operations
RSPO Supply Chain sustainable practices in to its principles since adhere to the RSPO Standards and in sourcing.
Certification since 2012. the palm oil sector. The 2010 and continuously line with industry best practice. The
scheme aims to drive to meet customers Kao Sustainability Statement guides We respect Apical’s contributions
As an RSPO certified the competitiveness of demand in supplying low our business towards responsible and in continuing exploring practical
company and one Indonesian palm oil in GHG materials for their sustainable practices by focusing on methodology for traceability to FFB
committed to the international market productions. the three key areas of Conservation, sources and concurrently expect them to
transparency in its and helps Indonesia Community and Culture. strive further in palm oil traceability up to
business operations, meet its commitment to their FFB suppliers.
we have been reporting ensure legal compliance With the firm belief that quality products
can only be produced using the best We hope that Apical will continue to
our sustainability efforts in its palm oil produce
raw materials sourced from responsible invest in the long term sustainability of
through RSPO Annual as well as address other
and sustainable sources, we continue the industry and we look forward to future
Communications of social and environmental
to encourage and support our major collaborations.
Progress (ACOP) since issues.
2014. suppliers in their sustainability journey
through our Guidelines for Sustainable
Procurement of Raw Materials and
Guidelines for Suppliers Assessment.
As of December 2016, 26.5% of our raw
materials come from RSPO certified
We work closely with responsible
source, 19.3% come from ISPO certified producers, such as Apical who share
source, and 27.8% come from ISCC similar values and commitments, to
certified source. We are determined to enable us to produce the best products
improve these figures in the years ahead and services for our valued customers.
based on our commitment to be a leading
responsible palm oil supplier. As a reliable supplier of raw materials, we
reached another milestone in 2016 with
business partner Apical, by establishing
PT Apical Kao Chemicals, a joint venture
company for manufacturing fatty acids.
MR HIDEKI TANAKA
Executive Officer/ Senior Vice President,
Global Procurement, Kao Corporation
70 APICAL GROUP I SUSTAINABILITY REPORT 2016
CUSTOMERS AND
11 CONSUMERS GLOSSARY OF
TERMS
AAALI – APRIL-Asian Agri Learning Institute PME – Palm Methyl Ester
NESTE
AAT – Administration Assistant Training PPE – Personal Protective Equipment
TESTIMONIAL AAJ – Asianagro Agungjaya PPO – Processed Palm Oil
AMDAL – Analisis Mengenai Dampak PSEP – Priority Supplier Engagement
Lingkungan Program
ART – Aggregator Refinery Transformation RBDCNO – Refined Bleached Deodorized
BCSD – Business Council for Coconut Oil
Sustainable Development RBDHCNO – Refined Bleached Deodorized
BoD – Apical’s Board of Directors Hydro Coconut Oil
BPJS – Badan Penyelenggara Jaminan RBDHPKL – Refined Bleached Deodorized

The palm oil industry certainly looks Sosial Hydro Kernel Olein
different today from what it was 10 RBDHPKO – Refined Bleached Deodorized
CBS – Cocoa Butter Substitute
years ago. Ten years ago, the discussion Hydro Kernel Oil
on certification and sustainability was CFAD – Coconut Fatty Acid
RBDHPKS – Refined Bleached Deodorized
relatively new and unknown; this was a CPKO – Crude Palm Kernel Oil Hydro Kernel Stearine
challenge which also Neste was facing CPL – Crude Palm Olein RBDHPO – Refined Bleached Deodorized
at the time. We are glad we approached
CPO – Crude Palm Oil Hydro Palm Oil
leading suppliers such as Apical, who
were willing to join us in the journey. CPS – Crude Palm Stearin RBDPKO – Refined Bleached Deodorized
Kernel Oil
MR ADRIAN SUHARTO DLP – Driving License Program
Today, Neste would like to congratulate Head of Stakeholder Engagement, RBDPL – Refined Bleached Deodorized
Neste EAT – Estate Assistant Training Refined Palm Olein
Apical for their first ever GRI-based
Sustainability Report. This is a significant FFB – Fresh Fruit Bunch RBDPS – Refined Bleached Deodorized
achievement! However, the sustainability journey does FFVP – Fire Free Village Program Refined Palm Stearin
not end with certification and reporting.
FPIC – Free, Prior, and Informed Consent RSPO – Roundtable on
The Apical team has continuously There are challenges that remaining, such Sustainable Palm Oil
demonstrated that they can adapt as the need to further reduce greenhouse GHG – Greenhouse Gas
gas emissions throughout the supply SDS – PT Sari Dumai Sejati
to changing regulatory and market GRI – Global Reporting Initiative
requirements. They have always been chain, to gain even stronger respect for SEIA – Social and Environment Impact
HCS – High Carbon Stock Assessments
open for new ideas and joint efforts in human and labour rights, and to develop
continuous improvements. traceability of palm oil derivatives to the HCV – High Conservation Value SOP – Standard Operating Procedures
point of origin, to name a few. HPS – Hydro Palm Stearine SPOM – Sustainable Palm Oil Manifesto
ISCC – International Sustainability and SVP – Shared Value Program
These challenges cannot be solved by Carbon Certification
Apical or Neste alone. Solving these TAT – Traction Assistant Training
ISPO – Indonesian Sustainable Palm Oil
challenges requires a shared goal and TDD – Traceability Declaration Documents
System
collaboration from every player connected
to the palm oil industry. We at Neste LTI – Lost Time Injury TFT – The Forest Trust
are committed to such transformative MAT – Mill Assistant Training TOP – Traceability Outreach Program
collaborative efforts with Apical and MPP – Mill Prioritization Process TWG – Traceability Working Group
other players aiming at moving the whole
MSP – PT Mitrasari Prima UN SDGs – United Nations Sustainable
industry forward.
Development Goals
PFAD – Palm Fatty Acid Distillate
PKFAD – Kernel Fatty Acid
PKO – Palm Kernel Oil

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APICAL GROUP

SUSTAINABILITY REPORT 2016

In an effort to align with international

By producing a GRI-referenced report,

STATEMENT roadmap that invites both the public and

INDUSTRY TRENDS AND OUTLOOK

Sustainability is a long-term commitment

As we continue to track and review

We are also committed to make our

CORPORATE GOVERNANCE AND 1 Asianagro Agungjaya Marunda

The Apical’s Board of Directors (BoD)

OUR PRIMARY BRANDS AND PRODUCTS

CPO (Crude Palm Oil) VITAS MEDALIA

CPKO (Crude Palm Kernel Oil) • Margarine • Margarine

VALUE CHAIN Going downstream in our value chain,

We are developing a method for

OLEOCHEMICAL FATTY ACIDS

Apical released its Sustainability Policy in

Details of our policy commitments can be found on Apical’s website:

MANAGING SUSTAINABILITY Material Issue Description Priority

Material Issue Description Priority STAKEHOLDER ENGAGEMENT

Wages and benefits Observe fair wages in accordance to national Moderate

Waste management Ensure the safe and sustainable disposal of Moderate

Innovation Continuous innovation is key to meeting Emerging KEY

Water management The use of best practice management Emerging

Mr. Syafrianto Silalahi, Head of Administration

& COMMITMENT Sustainability

TARGETS compliance operations and

11 analysis before commencing trading

12 20 • Apical Group became signatory to

• Launched the Apical Sustainability • Conducted an elevated inaugural Apical

Sustainability Progress/ Future Sustainability Progress/ Future

or facilities such as plantations and mills. 18.96%

SUPPLYING such as CPO, CPKO and PK.

used to access supply chain information

MILL ENGAGEMENT THROUGH FIELD VISITS

COMMITMENT TO ZERO BURNING A major mill in Riau Province, Sumatra

GSC clarifies with whistle NO Are we sourcing from

YES Case closed

Peatland Oil palm planting on peatland has significant adverse

In terms of new plantations, we strictly enforce a commitment to

A practical solution was introduced

The treated wastewater from the refining

Freedom of association and At Apical refineries Sari Dumai Sejati

Employee Breakdown as of FY2016

Economic avenues are present through PROVIDING

FAIR WAGES AND

It is important for employees to FAMILY ROOF ABOVE

The Risk Management function reports

Crisis risks are monitored by executing

Employees housing complex at PT. Mitrasari Prima

Apart from training and skills upskilling,

SOLUTIONS Over at Sungai Sembilan, Dumai in

BPJS – Badan Penyelenggara Jaminan RBDHPKL – Refined Bleached Deodorized

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