REVIEW OF PT. LIMPAH SEJAHTERA (LS) HCV ASSESSMENTS UNDERTAKEN IN 2008 AND 2010 FOR THE FIRST RESOURCES (FR) COMPLAINT AND COMPENSATION CASE

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1 N. 002/Sustainability/FR/III/ March 2017 RSPO Secretariat Sdn Bhd (Attentin: Cmplaints Panel) Unit A-37-1, Level 37 Twer A Menara UOA Bangsar 5 Jalan Bangsar Utama Kuala Lumpur, Malaysia Dear Members f the Cmplaints Panel and the RSPO Secretariat, RE: REVIEW OF PT. LIMPAH SEJAHTERA (LS) HCV ASSESSMENTS UNDERTAKEN IN 2008 AND 2010 FOR THE FIRST RESOURCES (FR) COMPLAINT AND COMPENSATION CASE We refer t the abve-titled reprt prduced by reviewer MEC and we wish t prvide ur cmments. In rder t keep ur cmments cncise, we shall direct ur cmments nly at the final cnclusins 1 made by the reviewer. Hwever, this des nt imply that we cncur with all ther sectins f the reprt. Reviewer s Cnclusin 1 The 2008 HCV reprt is cnsidered unreliable, althugh it was undertaken in a perid where there was mre ptential HCV areas present. The credibility f the internal assessment shuld be questined as there is n evidence that it was undertaken by cmpetent and sufficiently trained persnnel. The 2008 HCV assessment fr PT LS was cmmissined in mid We wish t highlight the backdrp at the time this HCV assessment was carried ut: (i) the cncept f HCV and HCV assessments was still very new t RSPO members and even mre s t PT LS, which at that time was nt yet a subsidiary f First Resurces. This initial unfamiliarity has been acknwledged by the RSPO: - Sme tlerance was initially given fr RSPO prducer members fr plantings dne frm end Nvember 2005 t end Nvember 2007, due t an array f factrs (ntably the initial field trial perid fr the P&C, which lasted until 2007, the requirements t develp natinal Interpretatins f the P&C, the rudimentary nature f HCV assessment guidance at that time, the near-absence f qualified HCV assessrs, purchase f plantatins frm nn-members, and cmmunicatin prblems. (RSPO Remediatin and Cmpensatin Prcedure related t Land Clearance Withut Prir High Cnservatin Value Assessment, versins 9 May 2014 and 12 Nv by the RSPO) 1 Page 37 f the reprt 2 Annex 1 f the Prcedure Page 1 f 6

2 (ii) there was n guidance frm the RSPO n the qualificatins f a HCV assessr. Such guidance was given nly in January 2010 with the intrductin f the New Planting Prcedure. Even then, the first list f RSPO-apprved HCV assessrs was released nly in May Grwers shuld als nte that with the intrductin f the New Planting Prcedure (NPP) frm 1 Jan. 2010, HCV assessments shall be cnducted by HCV assessrs apprved by the RSPO (after 1 Jan 2015 under the HCV Assessr Licensing Scheme (ALS)). New requirements under the criterin 7.3 as stated in the 2013 P&C will nt apply retrspectively n past HCV assessments. (RSPO Remediatin and Cmpensatin Prcedure related t Land Clearance Withut Prir High Cnservatin Value Assessment, versins 9 May 2014 and 12 Nv by the RSPO) (iii) the existing 2003 HCV tlkit 4 guided that cmpanies can cnduct HCV assessments as an internal exercise, withut the need fr externally-surced specialists. The team that cnducted PT LS s 2008 HCV assessment cmprised multi-disciplinary staff frm the estate, GIS, sustainability and scial/cmmunity departments. In the absence f any guidance then, this diverse team was in ur view, the mst apprpriate t carry ut the assessment. - Frest managers can carry ut evaluatins n their frest areas t determine whether any f the defined HCVs are present within their FMU. Frest managers can integrate HCV identificatin and management int their verall frest management planning and activities. The preliminary assessment is a simple methdlgy t see if HCVs are likely t ccur r nt. This acts as a carse filter, t rapidly exclude all thse frests that definitely d nt cntain HCVs, and t identify frests that d ptentially cntain specific HCVs. The preliminary assessment shuld be straightfrward enugh t be undertaken by peple withut specialist knwledge f bilgical r scial sciences (e.g. frest managers and timber purchasers). The preliminary assessment is usually in the frm f a yes r n questin and asks abut the presence f certain values. (Identifying, Managing, and Mnitring High Cnservatin Value Frests in Indnesia: A Tlkit fr Frest Managers and ther Stakehlders, Versin 1, August by the Rainfrest Alliance and PrFrest n behalf f the WWF and IKEA C-peratin n Frest Prjects) 3 Annex 1 f the Prcedure 4 The available HCV tlkit during mid-2008 was the 2003 tlkit. ( The revised and current HCV tlkit was published nly in 2009 ( althugh it was cmpleted and dated Jun Page 2 f 6

3 (iv) the existing 2003 HCV tlkit had its shrtcming, as acknwledged later by industry stakehlders, which was why a revised tlkit had t be issued. By reviewing the 2008 HCV assessment (which was guided by the 2003 HCV tlkit), against revised and imprved HCV standards, the assessment will bviusly nt measure up. - This riginal 2003 versin f the HCVF Tlkit fr Indnesia served a vital purpse, but vertime became increasingly difficult t use fr the fllwing reasns: The Tlkit was riginally designed t supprt assessments in the cntext f FSC certificatin fr respnsible frest management. Hwever, as time passed, the Tlkit became the de fact manual fr HCV assessment in ther sectrs as well, including pulp and il palm plantatins, and fr prvincial- and District-level spatial planning. These applicatins required a different assessment apprach beynd that utlined in the riginal Tlkit. Use f the riginal Tlkit by practitiners f varius backgrunds demnstrated a lack f clarity and cnsistency in key cncepts, definitins, and methds f evaluating HCV due primarily t: an incnsistent and unsystematic scpe and spatial scale fr evaluating varius HCVs adaptatin f certain features f the Glbal HCVF Tlkit prved t be inapprpriate fr the Indnesian cntext2 imperfectins in the translatin frm English (the language used in the Glbal HCVF Tlkit) t Bahasa Indnesia (the language used in the riginal Indnesian HCVF Tlkit). Use f the HCV cncept utside the FSC cntext is viewed by many as high risk, because the HCV prcess as defined in the riginal Tlkit did nt prvide adequate scial safeguards, as required by ther Principles f the FSC system. Brader use f the HCV cncept in Indnesia has been cntrversial at times due t inadequate effrts t raise awareness and understanding abut HCV amng civil sciety. The riginal Tlkit was never apprved by stakehlders invlved in its planning and field testing, and, as such, its credibility in defining the HCV prcess has been questined. (Guidelines fr the Identificatin f High Cnservatin Values in Indnesia (HCV Tlkit-Indnesia) - by Cnsrtium fr Revisin f the HCV Tlkit fr Indnesia, 2009) Under the circumstances highlighted abve, we are f the pinin that PT LS shuld nt be penalised n the basis that the 2008 HCV assessment was cnducted internally by nn-hcv specialists. As the reviewer had pinted ut - the cmpetence f the assessrs (wh did the 2010 HCV assessments) is acceptable as it was undertaken during a perid where HCV assessment was evlving and it is prbably the best that the team culd achieve - we strngly believe the same shuld be said f the 2008 assessment, which was undertaken Page 3 f 6

4 during a perid when the HCV cncept was just emerging. It is nt reasnable t use current expectatins t rate an assessment that was carried ut almst a decade ag, as sustainability standards have evlved s rapidly n all frnts. Reviewer s Cnclusin 2 The 2010 HCV assessment cannt be rejected n a technical basis as it was undertaken by cmpetent persnnel and verall is a dcument graded as fair. The cmpetence f the assessrs is acceptable as it was undertaken during a perid where HCV assessment where evlving and it is prbably the best that the team culd achieve. Saying this hwever, this assessment shuld als be rejected as at the time that the assessment was undertaken the cmpany had cleared 98.1% leaving small remnant areas that were bviusly earmarked as HCV. This HCV has subsequently been disturbed and serves little purpse fr cnservatin. The cmmitment as an RSPO member abiding t the RSPO P&C requirement is nt demnstrated. In 2010, PT LS was already majrity land-cleared fr il palm planting. During this time, the cmplainant raised cncerns ver existence f rangutan habitats in PT LS. In respnse t the cmplainants cncerns and RSPO s request, and especially since RSPO had just released its list f apprved assessr at that time, PT LS cnducted anther HCV assessment fr the then remaining unplanted area in PT LS. The assessr fr this 2010 assessment was frm RSPO s list f apprved assessrs. The reviewer s rejectin f this 2010 HCV assessment because it was undertaken n the remaining unplanted part f the cncessin lacks f any technical justificatin, and unfairly penalises the cmpany fr cperating with the cmplainant/rspo and taking steps t address stakehlders cncerns. Cntrary t the reviewer s cnclusin that the HCV area serves little purpse fr cnservatin (basis f cnclusin unclear), this HCV area still serves as a wildlife habitat tday. As part f its HCV management and mnitring, the cnservatin team at PT LS cnducts daily patrls f the HCV area and sightings/indicatins f rangutans and ther wildlife presence have been dcumented regularly. We currently als share ur mnitring results with the cmplainant n a mnthly basis. There was indeed sme deteriratin t the HCV area as a result f a 2015 fire that ccurred in an adjacent cncessin, as per what we have previusly shared with stakehlders 5. We have begun rehabilitating this part f the HCV area since 2016 and will cntinue t update stakehlders f the rehabilitatin prgramme thugh First Resurces peridic sustainability prgress reprts Page 4 f 6

5 Reviewer s Cnclusin 3 The validity f the HCV assessment is questinable as the summary belw indicates that the area identified in 2008 is larger than the area identified in This des represent the actual HCV lss ver that time frame and prvides the basis fr rejecting bth reprts. The reviewer had interpreted and therefre presented the abve set f data wrngly. The 2008 HCV assessment had an area f interest (AOI) f 20,000 ha, f which 1, ha f HCV was identified. The 2010 HCV assessment had a smaller AOI f 1, ha (remaining unplanted area f the cncessin at that time), f which ha f HCV was identified HCV areas that d nt shw up in the 2010 assessment (ie. the difference) are lcated utside f the 2010 AOI. HCV areas that were identified in either f these 2 assessments and within the bundaries f PT LS s HGU, are being managed and mnitred by the cnservatin team at PT LS. Reviewer s Cnclusin 4 The ptential HCV lss in the cncessin is significant. As we have highlighted abve, we d nt agree with the basis f the reviewers cnclusins 1-3. We therefre d nt agree with his resulting cnclusin 4. Page 5 f 6

6 Reviewer s Recmmendatins PT. Limpah Sejahtera shuld submit a full Land Use Change Analysis (LUCA) based n the satellite images used in this reprt r any ther images they see fit fr the perid PT. Limpah Sejahtera must cmpensate fr the ptential HCV lss based n the 2006 vegetatin classificatin. The RPSO prvided vegetatin cefficients shuld be used t calculate the cmpensatin due. PT. LS has already submitted a full Land Use Change Analysis (LUCA) t RSPO in August 2014 as requested by the Cmplaints Panel. The LUCA was cnducted in accrdance t the RSPO s Remediatin and Cmpensatin Prcedures 7 and the 2008 HCV assessment reprt had als been submitted t the Cmpensatin team. The cmprehensive review f the LUCA, carried ut by WRI n behalf f RSPO, went thrugh several runds f clarificatins and was apprved by the Cmpensatin Task Frce in June Cnstructive Feedback We feel that the reviewer MEC may nt have been sufficiently briefed n the backgrund f the cmplaint case and the tw HCV assessments, which may have led t the cnclusins and recmmendatins in their reprt. Fr example, the reviewer did nt seem t be prvided a cpy f PT LS s HCV Management and Mnitring Plan, an imprtant dcument t review in rder t address the Cmplaint Panel s bjective f imprving PT LS s HCV management and mnitring 9. T pre-empt such risks, we had repeatedly requested t be jintly invlved in a transparent engagement f the reviewer, but was regrettably nt given the pprtunity. As a feedback fr future cmplaint cases, we suggest an pen engagement f bth the cmpany and the cmplainant t help avid miscmmunicatin, wastage f valuable time and ther resurces. Open engagement will als enable stakehlders t exchange viewpints, learn frm ne anther, and mre imprtantly strengthen trust and partnerships. We thank yu fr yur time in reading and cnsidering ur cmments abve. Yurs Sincerely Bambang Dwi Laksn Head Sustainability 7 Dated 9 May PT LS LUC Analysis Verificatin Result Dcument - by Wrld Resurces Institute 9 Objective as stated in Page 2 f the reviewers reprt; RSPO s letter t FR dated 20 Apr 2016 Page 6 f 6