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1 Type of document: Scope: Status of document: RA Standard Papua New Guinea FINAL Date of this version: October 24, 2013 Title: RA document code: Consultation period: Approval body: Contact person: Contact CLOSED Rainforest Alliance Chisato Tomimura Rainforest Alliance Standard for Verification of Legal Compliance (VLC) for Forest Management Enterprises (FME) in Papua New Guinea VER Published by Rainforest Alliance. No part of this work covered by the publisher s copyright may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, recording taping or information or retrieval systems) without the written permission of the publisher. Introduction This Rainforest Alliance 1 Standard for Verification of Legal Compliance (VLC) for Papua New Guinea was developed based on the RA Generic VLC Standard for FMEs version 12April13 to assess and verify that Forest Management Enterprises (FMEs) in Papua New Guinea conform to the standard requirements related to forest harvesting laws and regulations applicable in Papua New Guinea. The standard also includes requirements for chain of custody (CoC) to ensure that all points along the defined supply chain maintain systems to document and control the flow of verified wood. Public Comment The Rainforest Alliance encourages public comments and inputs to standards and procedures during and outside of the official consultation period. Organizations and individuals are encouraged to submit their concerns and/or comments regarding this standard to Rainforest Alliance, using the address above. Note on the use of this standard All aspects of this standard are considered to be normative, including the scope, standard effective date, references, terms and definitions, tables and annexes, unless otherwise stated. This standard shall be used as basis for adaptation of country or region-specific Verification of Legal Conformance standards and services offered by Rainforest Alliance. Contents A Scope B Standard Effective Date 1 Rainforest Alliance auditing services are managed and implemented within its RA-Cert Division. All related personnel responsible for audit design, evaluation, and verification decisions are under the purview of the RA-Cert Division, hereafter referred to as Rainforest Alliance or RA.

2 C D E A References Terms and Definitions Standards and Requirements Part I: Principles and Criteria for Verification of Legal Compliance Part II: Principles and Criteria for Chain of Custody Part III: Multi Site Management Requirements Scope This standard is applicable to Forest Management Enterprises (FMEs) which shall be evaluated to all principles of the standard. The standard is applied to verify specifically defined forest areas, and does not verify individual batches of material. In order to verify the existence of a credible Chain of Custody (CoC) system within the forest, FMEs shall also be evaluated against the CoC criteria for FMEs included in this standard. Any processing facility shall be evaluated against VER-23: Rainforest Alliance Generic Legality Standard for Processing and Trade. Part III of the standard is only applicable to FMEs that have two or more Forest Management Units (FMUs) included in the scope of verification. B Standard Effective Date This standard shall be effective from the version date of the approved final version. The standard may be updated annually with any newly approved versions replacing previous versions. All verified operations shall comply with the latest standard within twelve (12) months of the version date. C References VER-01VLO/VLC Supplementary Guide for Evaluation VER-04 Rainforest Alliance Generic Standard for Verification of Legal Compliance (VLC) for Forest Management Enterprises (FME) VER-20 Legality Verification Services Policy FSC-STD Controlled Wood Standard for Forest Management Enterprises D Terms and Definitions Chain of Custody (CoC): The path taken by raw materials, processed materials, finished products, and co-products from the forest to the consumer or (in the case of reclaimed/recycled materials or products containing them) from the reclamation site to the consumer, including each stage of processing, transformation, manufacturing, storage and transport where progress to the next stage of the supply chain involves a change of ownership (independent custodianship) of the materials or the products. CITES: The Convention on International Trade in Endangered Species of Wild Fauna and Flora Claim Category: The type of certification or verification scheme that applies to the material/product that is being tracked within the CoC control system.

3 Environmental and Social Impact Assessment: A voluntary assessment conducted to identify, evaluate and develop management measures for environmental and social impacts associated with the construction and operation of a project. Forest Clearance Authority (FCA): A form of license granted to an FIP or FME by the PNG Forest Authority for the purpose of forest clearance along road construction sites and/or for agricultural development. Forest Industry Participant (FIP): An FME that is registered with the PNG Forest Authority and can involve in any forestry related activity in the country. Forest Management Agreement (FMA): An agreement made between the state (PNG Forest Authority), a developer (FIP or FME) and landowners for the development of a forest area exceeding 80,000 ha. A license granted by the PNG Forest Authority under this arrangement is for a period of 10 years or more and the cutting cycle for the FMA is 35 years. Forest Management Enterprise (FME): Company or operation responsible for forest management. Forest Gate: The place, e.g. standing tree, landing, mill site, where the harvested verified wood changes ownership from FME to purchaser. Forest Management Unit (FMU): A clearly defined forest area with mapped boundaries, managed by a single managerial body to a set of explicit objectives which are expressed in a self-contained multi-year management plan. Incorporated Land Group (ILG): Group of landowners formally incorporated under the Land Groups Incorporation Act (1974). Investment Promotion Authority (IPA): A government body responsible for ensuring that all business entities in PNG are registered. Upon registration, IPA issues a business certificate giving approval for the entity to do business in the country. Local Level Government (LLG): In PNG, there are three levels of government: national government, provincial government and local level government. LLGs are community-level governments that are responsible for the governance and development of the jurisdiction. The LLGs are funded by the national government. Planning Monitoring and Control Procedures (PMCP): Legal guideline that sets the detailed timber harvesting prescriptions and gives details of harvestable volumes and inventory requirements. Papua New Guinea Forest Authority (PNGFA): A statutory body of the government responsible for management of the forest resources of the country. RA: Rainforest Alliance RA-Cert: Auditing and certification division of the Rainforest Alliance. Timber Authority (TA): A form of license granted to an FIP or FME by the PNG Forest Authority for the management of a forest area. Volume of timber to be harvested from such areas shall not exceed 5,000 m 3 per year.

4 Timber Rights Purchase (TRP): Purchase of timber rights, but not necessarily the land itself. Verification Agreement is a legal document signed by the verified organization and the Rainforest Alliance after the organization has met all of the requirements of the VLO or VLC as outlined in the standards and policies and before the organization is issued a verification statement. The agreement establishes the provisions, terms, and limitations of the verification statement. Verification Statement: Refers to the document that the Rainforest Alliance issues upon confirming that the candidate operation has met all the requirements for VLO or VLC as outlined in the standards and policies. Verification Statement Holder: Refers to the legal entity that the verification statement is issued to. In relation to multi-site verifications (verification of a whole or part of a supply chain) it is the verification statement holder that is responsible for the maintenance of conformance to the applicable standard. Compliance

5 E Standards and Requirements In this standard each principle and its associated criteria are stated along with generic indicators. All of the criteria and indicators shall be audited in every verification audit, unless certain criteria or indicators are not applicable for the jurisdiction or the operation under evaluation. Part I: Principles and Criteria for Verification of Legal Compliance Principle 1: Legal Right to Harvest The legal status of the FME shall be clearly defined and its boundaries delineated. The FME shall prove that it has validly obtained the legal right to operate and to harvest timber from within the defined FMU. 1.1: Clear and documented legal registration of FME with authorization to carry out forest management activities shall exist : FME shall have valid tax registration number/forms and a business license to operate within the jurisdiction - Forest Industry Participant (FIP) shall hold the following legal document including: Valid permit/license granted by the National Minister for Forest or his nominee. Valid timber permit types include: Timber Authority (TA), Timber Rights Purchase (TRP), Forest Management Agreement (FMA). Certificate of FIP granted by PNGFA Valid tax registration number (Tax file number, Certificate of compliance, VAT, GST) approved by PNG Internal Revenue Commission (PNG IRC) Business or Company Certificate (Business group, Business names, Companies etc.) approved by PNG Investment Promotion Authority (PNG IPA). Landowner Consent from every clans, forest resource owners and Incorporated Land Groups (ILG) with ILG Certificates from Lands Department present within FMU : The registration of FME shall have been granted according to the legally prescribed process. - FIP shall hold the following documents as evidence of following both the legal renewal and new registration process: IPA Certificate FIP Certificate Permit/License 1.1.3: Legal status of the operation or rights for conducting the established activities shall not be subject to a court or other legally established order to cease operations : If the legal status and rights are being challenged, FME shall be engaged in a legal process to resolve the challenges.

6 1.2: FME shall have legal authorization to harvest in FMUs. NOTE: PNGFA has 35 steps as a process of forest resource acquisition from customary land owners. Many of existing or expired timber permit areas have been acquired through improper process. This can be verified with PNGFA and with appropriate documentation of implementing the 35 step process : FME shall have documented permission from the resource owner to harvest, including those with rights held according to customary law, where legally recognized. Note: Provincial, District and Local Level Government (LLG) laws and local conditions should be considered in evaluation of this requirement. Proof of payment of compensation to local communities and proof of compensation paid by FME to local communities according to the local regulation can be accepted as evidence : Where applicable, FME shall hold a valid permit, license or similar legal document governing the harvesting of forest resources issued by the legally designated authority. - FIP shall have a valid permit/license granted to operate in a FMA, TA or FCA area. - Not applicable for small-scale community forestry operations in customary land FME shall possess an up-to-date map of FMUs to which it has legal rights to harvest. 1.3: Evidence shall exist that the forest management area has been legally classified for the type of land-use or commercial activities conducted : The forest harvesting activities shall correspond to the legal land use classification for the FMU. -Timber harvesting operations shall be carried out only in forest areas designated for harvesting and clearly written and shown on maps : If legally required, the forest harvesting area shall be indicated on a map at a scale to permit identification of boundaries. -Areas with harvesting restriction shall be clearly marked on the Annual Harvesting Plan, including high slopes exceeding 30% and riparian buffers appropriate to the stream class : The harvesting areas shall not conflict with land-use classifications for areas where timber harvesting is prohibited : The designation of the FMU for timber harvesting of the type being carried out shall have followed the legally prescribed procedures. Principle 2: Approved Planning Authorizations and Operations The FME shall have received the necessary approval for the basic and fundamental planning requirements legislated as necessary to enable forest management and shall adhere to the planning and operational requirements.

7 2.1: Timber concessionaire shall have a current Forest Management Plan approved by the relevant authorities prior to commencement of corresponding forest management activities. -Not applicable for small-scale community forestry operations on customary land 2.1.1: FMA concessions shall have a Five-year Working Plan, Annual Logging Plan and Operational Set-up Plan (harvesting plan) approved by PNGFA prior to commencement of utilization of the forest : The Forest Management Plan shall have been approved according to the legally prescribed process. - Record of correspondence for the approval process shall be in place : Clear evidence (e.g., maps) shall confirm that the management plan area is located within the licensed FMU. 2.2: If legally required, annual operating or harvesting plans shall be in place and approved by legally qualified authorities. (Required for all concessionaires) 2.2.1: If legally required, a current, approved operating or harvesting plan shall exist. - Required documents for concessionaires include: Five Year Working Plan authorized by PNGFA as per the Forestry Act. Annual Logging Plan authorized by PNGFA as per the Forestry Act Operational Set-up Plan (harvesting plan) authorized by PNGFA as per the Planning Monitoring and Control Procedures (PMCP) : The contents of the operating and harvesting plans shall be consistent with approved forest management plans. 2.3: Legally prescribed diameter restrictions and annual allowable cut or production quotas shall clearly be included in applicable planning and operational documents 2.3.1: The Five Year Working Plan and Annual Logging Plan shall include the details of the annual allowable cut and minimum diameter for felling. 2.4: Harvesting and felling shall be strictly confined to areas and species approved for harvesting by national, regional or local regulations; these shall be adhered to in practice and, if legally required, identified in the operating or harvesting plans : Only species and/or trees allowed for harvest by applicable laws shall be harvested : Prior to harvesting operation, FME shall conduct a forest inventory survey with assistance from locals to identify trees with cultural significance. The list shall be available and such trees and protected tree species shall be listed in operational plans, identified on maps, marked on the ground, and protected from felling. - The protected species found within FMU should be identified with reference to the national regulations for protected sites and species and international requirements such as CITES : Harvesting shall only be conducted within the authorized boundaries of FMU and shall not take place in areas where harvesting is legally prohibited or subject to restrictions.

8 2.4.4: If legally required, areas where harvesting is prohibited or subject to legal restrictions (e.g., riparian buffers, slopes exceeding a set gradient, etc.) shall be identified in the management plans and maps. (Required for all concessionaires). - Riparian buffer zones appropriate to the stream class shall be identified in the plans and maps and shall be established in the field. - All slopes exceeding 30% shall be identified in the plans and maps : Wood confiscated or seized from illegal operations shall not in any case be allowed as legally verified. 2.5: If legally required, approved Environmental and Social Impact Assessments shall be completed and approved by the legally qualified authority. (Required for all concessions) 2.5.1: FME shall have the Environment Plan and Environment Impact Assessments approved by the Department of Environment and Conservation (DEC). 2.6 FME shall keep approvals and related documents for a minimum of five (5) years. Principle 3: Payment of Relevant Fees and Taxes The FME shall fulfill all obligatory taxes, fees and/or royalty payments associated with maintaining the legal right to harvest and permitted harvesting volumes. 3.1: All applicable and legally prescribed fees, royalties, taxes and other charges shall be paid in a timely manner : FME shall be current with required payments of royalties, fees and dues and shall maintain documentation for receipts issued by the beneficiaries. - Natural forest concessionaires shall be up to date with payment of the prescribed royalties, premiums and the required levies including Reforestation Levies as per the Forestry Act Plantation concessionaires shall be up to date with the payment of the prescribed royalties and levies. - Where applicable, compensation for local communities shall be paid. - Where applicable, rental fees for land and building shall be paid annually : Taxes and royalties shall be paid according to the actual harvested volume, species and qualities following legal requirements : Income and profit shall be declared according to the relevant tax legislation and applicable tax shall be paid within required timelines. In case there is outstanding payment due to the company s financial situation, there shall be a plan to pay in instalments. Principle 4: Transport and Trade The FME shall adhere to applicable transport, trade, import or export regulations, procedures and restrictions. 4.1: FME shall adhere to applicable wood and wood product trade and transport regulations and/or restrictions, including regulation of offshore trading and transfer pricing where applicable.

9 - Relevant documents include but not limited to: Business or Company Certificate approved by IPA Certificate of FIP granted by PNGFA Landowner Consent Export license 4.2: Permission to trade CITES-listed species shall be documented, and compliance with the applicable provisions and requirements of CITES shall be demonstrated. 4.3: FME shall document clear evidence of possession of applicable authentic official documents (e.g., customs documents) of wood and wood products for import and export in accordance with relevant laws and regulations. NOTE: All material shall be classified correctly according to species, quality and quantity All logs shipment or export shall be strictly monitored and appropriate records kept by the PNGFA and SGS. - Log Inspection Report issued by SGS shall be kept All logs shipped or exported shall comply with and meet the requirements of the Procedures for Exporting Logs All logs shipped or exported shall comply with national Customs and Quarantine Regulations FME shall maintain all documentation of timber administration located at each node of log transfer. Principle 5: Fulfilment of Harvesting Regulations The FME shall be operating in compliance with legal requirements relating to the harvesting of forest products. Management plans and annual operating plans as required by law shall exist, shall contain accurate information, and be adequately implemented. This principle provides additional requirements in addition to the requirements of Principle : Compliance with relevant local and national laws, and legally binding codes of practice relating to forest management and harvesting operations shall be documented : FME shall adhere to all legally prescribed specifications for harvesting, in addition to those covered in criteria 2.3 and 2.4, covering aspects such as timing, harvesting procedures, equipment, and/or layout of harvest. - FME shall comply with the requirements of Planning Monitoring and Control Procedures (PMCP) and Forestry Act : FME shall register heavy machinery used in forest operation : FME shall comply with requirements of PMCP and Forestry Act 1991 and conduct an inventory at 1% : All trees to be felled shall be mapped and marked on the ground before harvesting.

10 5.1.5: Natural forest logging operation shall comply with Papua New Guinea Logging Code of Practice : FME shall be in compliance with forest management plan requirements : Forest management plans shall contain all legally required information and procedures. - The forest management plan shall be consistent with the 24 key standards as prescribed in the PNG Logging Code of Practice and other related requirements of Natural Forest Logging : FME shall implement the management plan according to all applicable legal requirements. 5.3: FME shall be in compliance with annual operating or harvesting plan requirements : Annual operating or harvesting plans shall contain accurate information and procedures, according to all legal requirements. - The approved annual logging plan shall have maps such as working map, topographic map, and tree marking plans contained in the harvesting plan : FME shall implement the annual operating or harvesting plans according to all legal requirements. - Diameter of trees felled shall not exceed the minimum diameter specified in the harvesting plan. 5.4 Harvesting reports shall be compiled according to legal requirements. - FME shall have reports and records consistent with the operational set-up plan (harvesting plan) and Planning, Monitoring and Control procedures for Natural Forest Logging. 5.5 FME shall document that all contractors comply with legally required registration and with legal requirements to undertake harvesting activities. Principle 6: Fulfilment of Environmental Regulations The FME shall demonstrate compliance with local and national laws relating to the environmental obligations of a forest management operation, including but not limited to conservation of protected areas, wildlife, rare, threatened and endangered species, water and soil. 6.1: FME shall implement legally required environmental precautions and impact mitigation measures required (e.g. those related to soil damage, buffer zones, retention of trees, seasonal restrictions) 6.1.1: 10% of Timber permit areas should be allocated for protection. Such areas shall be clearly identified in the 5 year and annual plans, and marked in the field. 6.2: FME shall implement legally required procedures for protected areas, protected species etc. 6.3: All legally required procedures for surveying, managing and protecting endangered or threatened species within the management unit shall be followed. 6.4: Employees of the FME shall be prohibited from hunting and trade of wildlife, unless it is legally permitted and documented permission from the resource owner exists.

11 6.5. FME shall be in compliance with legal requirements of environmental monitoring : FME shall submit an environmental management plan and approved by the Department of Environment and Conservation (DEC) prior to a forest management operation. Principle 7: Worker s Rights The FME shall demonstrate compliance with local and national laws relating to social issues such as health and safety, labor laws, and third parties use rights. 7.1: FME and contractors shall meet all applicable laws and/or regulations covering health and safety of employees and their families : Proper personal protective equipment (PPE) shall be provided by FME depending on the work type FME shall have Health and Safety Program : National or regional minimum age established for persons involved in hazardous work shall be adhered to. -Minors under 18 years old shall not be employed. 7.2: All employees and contractors of FME shall be employed under formal contract if legally required : All employees shall have formal employment : FME shall have Mutual Work Agreement with employee representatives witnessed by Workers Union or Trade Union Congress. 7.3: All employees shall be covered by applicable legally required insurance : All employees shall be provided insurance (e.g. Kwila Insurance, Workers Mutual Insurance). 7.4: All employees shall hold applicable legally required certificates of competence for the function they carry out : FME shall keep certificate of trained staff. 7.5: All employees of FME shall be paid and treated in compliance with national laws and regulations as well as applicable international conventions : FME shall adhere to the International Labor Organization's Fundamental Principles: Freedom of association and the effective recognition of the right to collective bargaining; Elimination of all forms of forced or compulsory labor; Effective abolition of child labor; Elimination of discrimination in respect of employment and occupation : Minimum wage laws shall be followed if applicable. -FME should have reference of minimum wage law issued by the provincial and/or district government. Principle 8: Third Parties rights

12 8.1: Legally recognized customary rights shall be taken into account in management of forest resources : Documented agreements with those who hold customary user rights shall be in place prior to harvesting. (Note: Applicable in PNG) 8.1.2: Appropriate mechanisms and procedures shall be implemented to mitigate and resolve conflicts and grievances related to land rights and user's rights. 8.2: Record or evidence of agreement from local landowners before harvesting shall be available. Principle 9: Control of Unauthorized Activities The FME shall work to control unauthorized or illegal activities. The FME shall identify, monitor, and implement activities to control illegal or unauthorized activities that may occur within the FMU. 9.1: Illegal or unauthorized activities, e.g., illegal logging, poaching or illegal settlement, that occur within or through the forest shall be identified and documented. 9.2: Illegal or unauthorized activities shall be controlled in collaboration with the resource owner, regulatory agencies, and other relevant parties as appropriate.

13 Part II: Principles and Criteria for Chain of Custody (CoC) Documented control of the Chain of Custody (CoC) of forest products is fundamental to the traceability of verified forest products from the forest source through manufacturing and distribution to ensure the authenticity of a verified product claim. This principle applies from the point of harvest up to the forest gate for FMEs. Note: in the CoC criteria, verified refers to materials qualifying as Rainforest Alliance VLO/VLC or equivalent. 10 Quality System Criteria 10.1 FME shall define CoC system responsibilities and appoint staff positions, including the following: a) One overall responsible person shall be designated for the CoC control system; b) Individual responsible persons shall be designated for each critical control point in the CoC control system FME shall develop and maintain an up-to-date documented control system, procedures and/or work instructions to ensure implementation of all applicable CoC standard requirements FME shall develop and implement procedures for internal auditing of its systems as related to the requirements in this standard FME shall develop and implement procedures for addressing nonconformances (e.g. nonconformity reports, corrective action requests, observations) identified by auditors FME shall develop training requirements and implement training as follows: a) All applicable staff and workers shall be trained on the CoC procedures to a degree relevant to the scale and complexity of the system and responsibility; and, b) Records shall be kept to demonstrate training has taken place FME shall define and document verified product group under applicable Claim Categories FME shall define the sales system(s) or Forest Gate for each verified product covered by the CoC system (e.g., standing stock, sale from log yard in the forest, sale at the buyer s gate, sale from a log concentration yard) FME shall develop and maintain records to document quantities of verified materials for the following: a) Production of materials; b) Outputs sold with and without a claim. c) Log transfer balance report Note: In PNG, Swiss Company SGS has been given contract by the Government/ PNGFA to monitor and keep records of all log shipment/export out of the country since SGS issues a Log Tag on each log shipped. The Log Tag represents the site where the logs have been harvested and a log number. A three letter code for genera and species name for each log exported out of the country are also written on the logs.

14 One important and specific document that SGS issues for the log shipment/export is the Log Inspection Report. This report gives details of which type of timber species and how much volume are being shipped/exported. 11 Material Handling and Segregation 11.1 FME shall develop and implement an effective timber tracking system to demonstrate traceability from standing timber until ownership is transferred at the forest gate FME procedures and practices shall control the risk of mixing verified forest products with non-verified products which originate outside the scope of the verification A system shall exist to identify FME products as verified (e.g., through documentation or marking system) at the forest gate FME shall keep verified material physically separate as secure units at all stages of harvesting, storing, and transporting All material that cannot be identified as verified shall be kept physically separate from verified material. Note: material that is pending evidence of its legal status shall be kept separate until such time that adequate documentation is obtained FME shall use a distinguishing mark (e.g., the verification code) to identify products as verified at all stages of handling FME shall develop and implement procedures to ensure that markings to identify Rainforest Alliance verified materials are distinguishable from other verification/certification markings and claims. 12 Shipping and Sales Criteria 12.1 FME shall include claim information on sales invoices and shipping documents, including the following: a) The quantity/volume and species for each product; b) The Rainforest Alliance verification code RA-VLC-XXXXXX. 13 Claims and Public Information 13.1 FME shall not use the VLC claim until it is in possession of a valid Rainforest Alliance Verification Statement FME shall have procedures to ensure that all VLC verification claims follow the applicable Rainforest Alliance policies: a) On-product labeling shall not be permitted; b) Rainforest Alliance Trademarks for off-product promotion shall not be used; public promotion of the VLC claim shall not be permitted. c) Use of the verification code (RA-VLC-XXXXXX) on products shall only be used for traceability of products; d) Business to business communication and promotion of VLC shall be approved by RA-Cert prior to being released by the organization for use FME shall have procedures in place and demonstrate that all review and approval correspondence with Rainforest Alliance for verification claims is kept on file for a minimum of five (5) years.

15 Part III: Multi-site Management Requirements The multi-site management criteria have been developed to facilitate evaluation of organizations that have two or more sites included in the scope of their supply chain and wish to manage those under one Verification Statement. The multi-site management requirements, plus communication with Rainforest Alliance, are coordinated by the Verification Statement Holder. Multi-site criteria allow Rainforest Alliance to evaluate the participating sites based on audit sampling in recognition of control and reporting systems monitored by the Verification Statement Holder. In addition to these criteria, Rainforest Alliance shall ensure that all sites included in the verification scope of a multi-site supply chain comply with all relevant legality and CoC requirements in the VLO or VLC verification standards as applicable. 14 Documented Procedures and Responsibility 14.1 The Verification Statement Holder shall appoint one person (or position) with overall responsibility for the multi-site management and conformance with Rainforest Alliance s multi-site management requirements The Verification Statement Holder shall have documented procedures in place, covering all multi-site requirements of this standard. 15 Records 15.1 The Verification Statement Holder shall have access to, and collate data from all sites for Rainforest Alliance s annual audits as well as upon request The Verification Statement Holder shall maintain up-to-date, centralized records for all sites for a minimum of five (5) years, including: a) List of sites in the verification scope, including name, address, site manager, date of entry, and date of removal when applicable; b) Records showing the scope of verification for each site; c) Volume summary data for each product group, including purchases, production and conversion, inventory, and sales for each site. 16 Site Management and Auditing 16.1 All sites in the scope of the verification shall have signed a consent form that includes the following: a) Agreement to conform to the obligations and responsibilities of participation in the multi-site verification for the period as described in the Verification Statement Holder procedures and the Rainforest Alliance VLC Verification Agreement; b) Agreement to conform to the relevant Rainforest Alliance Standard(s) and correct any nonconformances identified by Rainforest Alliance and/or the Verification Statement Holder Prior to admitting a new site into the scope of the verification, the Verification Statement Holder designated auditor shall carry out an initial audit of each site to ensure that it complies with all the requirements of the applicable Rainforest Alliance verification standard.

16 16.3 The Verification Statement Holder designated auditor shall carry out an audit of each site at least once a year to confirm continual conformance with all the requirements of the applicable Rainforest Alliance verification standard When nonconformances are found during internal audits, the Verification Statement Holder shall issue corrective actions for the nonconformances to applicable sites and verify implementation The Verification Statement Holder shall provide reports with the results of all internal audits.

17 Annex 1: List of applicable national or local forest laws, administrative requirements and legal documents for PNG Principle Criteria Laws/Regulations/documents Forestry Act 1991 Forestry (Amended) Act 1993 Forestry (Amended) Act 1996 Forestry (Amended) Act 2000 Forestry (Amended) Act 2005 Land Dispute Settlement Act Land Groups Incorporation Act 1.2 Forestry Act 1991 Forestry (Amended) Act 1993 Forestry (Amended) Act 1996 Forestry (Amended) Act 2000 Forestry (Amended) Act 2005 Land Groups Incorporation Act 1.3 Forestry Act 1991 Forestry (Amended) Act 1993 Forestry (Amended) Act 1996 Forestry (Amended) Act 2000 Forestry (Amended) Act 2005 Land Groups Incorporation Act Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit 1995 and any amendment Procedures for the Identification, Scaling and Reporting (including Royalty Self- Assessment) on Logs Harvested from Natural Forest Logging Operations since September 1996 and any amendment 2.2 Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit November 1995 Conservation Areas Act Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit November 1995 Environmental Planning Act Forestry Act 1991 Forestry (Amended) Act 1993 Forestry (Amended) Act 1996 Forestry (Amended) Act 2000 Forestry (Amended) Act 2005 Companies Act Procedures for Exporting Logs April 1996 Industrial Organizations Act and Regulations

18 Industrial Relations Act and Regulations Industrial Organizations Act and Regulations Industrial Relations Act and Regulations Procedures for Exporting Logs April 1996 Companies Act 4.2 CITES Fauna (Protection and Control) Act 1966 International (Fauna and Flora) Trade Act (1978) 4.3 Procedures for Exporting Logs April Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit November Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit Forestry Regulations 1998 PNG Logging Code of Practice 1996 Planning, Monitoring and Control Procedures for Natural Forest Logging Operations under Timber Permit Forestry Act 1991 Forestry (Amended) Act 1993 Forestry (Amended) Act 1996 Forestry (Amended) Act 2000 Forestry (Amended) Act Conservation Areas Act Environmental Contaminants Act Environmental Planning Act Procedures for Assessing Post-Logging Waste Within a Set-up, May 1996 Water Resources Act Fauna (Protection and Control) Act 6.2 Conservation Areas Act 1978 Environmental Planning Act Fauna (Protection and Control) Act 6.3 Conservation Areas Act 1978 Environmental Planning Act 6.4 Fauna (Protection and Control) Act Conservation Areas Act 1978 Environmental Contaminants Act Environmental Planning Act Procedures for Assessing Post-Logging Waste Within a Set-up, May 1996 and any amendment Water Resources Act Public Health Act Worker s Compensation Act and Regulations Industrial Safety, Health and Welfare Act and Regulations 7.2 Companies Act Employment Act and Regulations Industrial Organizations Act and Regulations Industrial Relations Act and Regulations

19 Worker s Compensation Act and Regulations 7.3 Public Health Act Employment Act and Regulations 7.4 Industrial Organizations Act and Regulations Industrial Relations Act and Regulations 7.5 ILO Codes Companies Act Employment Act and Regulations Industrial Organizations Act and Regulations Industrial Relations Act and Regulations Worker s Compensation Act and Regulations Land Dispute Settlement Act Land Groups Incorporation Act 8.2 Land Dispute Settlement Act Land Groups Incorporation Act

20 Annex 1: List of Relevant International Conventions PNG Has Ratified Environmental Conventions Convention on Biological Diversity (CBD, 1993) Convention to Combat Desertification (CCD, 2000) Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES, 1973) Convention on Wetlands of International Importance, especially as Waterfowl Habitats (RAMSAR, 1971) Convention for the Protection of the World Cultural and Natural Heritage (1972) Basel Convention on the Trans-boundary Movement of Hazardous Wastes and their Disposal (1989) Protocol on Biosafety (Cartagena Protocol) Stockholm Convention on Persistent Organic Pollutants (POPs Convention) Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade (Rotterdam Convention) Vienna Convention for the Protection of the Ozone Layer (1995) Montreal Protocol on Substances that deplete the Ozone Layer Convention to Ban the Importation in Forum Islands Countries of Hazardous Wastes and Radioactive Wastes and to Control the Transboundary Movement and Management of Hazardous Wastes within the South Pacific Region. (Waigani Convention) Convention on Conservation of Nature in the South Pacific Region (Apia, 1996) Convention for the Protection of the Natural Resources and Environment of the South Pacific Region and related Protocols (SPREP, 1986) ILO Conventions Fundamental Convention Date Status C029 - Forced Labour Convention, 1930 (No. 29) 01 May In Force C087 - Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) 02 Jun 2000 In Force C098 - Right to Organise and Collective Bargaining Convention, 1949 (No. 98) 01 May In Force C100 - Equal Remuneration Convention, 1951 (No. 100) 02 Jun 2000 In Force C105 - Abolition of Forced Labour Convention, 1957 (No. 105) 01 May In Force C111 - Discrimination (Employment and Occupation) Convention, 1958 (No. 111) 02 Jun 2000 In Force C138 - Minimum Age Convention, 1973 (No. 138)Minimum age specified: 16 years 02 Jun 2000 In Force C182 - Worst Forms of Child Labour Convention, 1999 (No. 182) 02 Jun 2000 In Force

21 Governance (Priority) Convention Date Status C122 - Employment Policy Convention, 1964 (No. 122) 01 May In Force Technical Convention Date Status C002 - Unemployment Convention, 1919 (No. 2) 01 May In Force C007 - Minimum Age (Sea) Convention, 1920 (No. 7) 01 May Not in force C008 - Unemployment Indemnity (Shipwreck) Convention, May In Force (No. 8) C010 - Minimum Age (Agriculture) Convention, 1921 (No. 10) 01 May Not in force C011 - Right of Association (Agriculture) Convention, 1921 (No. 11) 01 May In Force C012 - Workmen's Compensation (Agriculture) Convention, May In Force (No. 12) C018 - Workmen's Compensation (Occupational Diseases) 01 May In Force Convention, 1925 (No. 18) C019 - Equality of Treatment (Accident Compensation) Convention, 01 May In Force 1925 (No. 19) C022 - Seamen's Articles of Agreement Convention, 1926 (No. 22) 01 May In Force C026 - Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) 01 May In Force C027 - Marking of Weight (Packages Transported by Vessels) 01 May In Force Convention, 1929 (No. 27) C042 - Workmen's Compensation (Occupational Diseases) 01 May In Force Convention (Revised), 1934 (No. 42) C045 - Underground Work (Women) Convention, 1935 (No. 45) 01 May In Force C085 - Labour Inspectorates (Non-Metropolitan Territories) 01 May In Force Convention, 1947 (No. 85) C099 - Minimum Wage Fixing Machinery (Agriculture) Convention, 01 May In Force 1951 (No. 99) C103 - Maternity Protection Convention (Revised), 1952 (No. 103) 02 Jun In Force 2000 C158 - Termination of Employment Convention, 1982 (No. 158) 02 Jun 2000 In Force