Change Document Version November 2011 versus Version November 2014

Change Document Version November 2011 versus Version November 2014 RSPO recently published a revised version of its Supply Chain Certification Standard and Systems document. Both documents are available on the RSPO website: http://www.rspo.org/resources/key-documents/certification/rspo-supply-chain-certification This document shows the most important changes (and additions) in the new Standard and what these changes mean for organisations and their RSPO Certification Systems. The new version became effective from 1 January 2015. Its use will become mandatory from 1 April 2015. Implementation period of the new standard and systems ends April 2015. Noncompliance raised against the new Standard requirements will be considered as minor and have to be closed within one year. 31 March 2016 is the end of transition period. All certificate holders must comply with the 2014 standard. Section Version 2011 Version 2014 5.1: General 5.1.1. The General Chain of Custody System requirements of the RSPO Supply Chain Standard shall apply to any organization throughout the supply chain that take legal ownership and physically handle (including receipt into storage tanks) RSPO Certified Sustainable oil palm products. This requirement applies up to and including the end product manufacturer. General 5.1.1: Organisations which take legal ownership and physically handle RSPO products are required to have RSPO certification. 5.1.2: New clause added to confirm that although traders and distributors do not need RSPO certification, they do need to have RSPO membership and to apply for a licence from RSPO to sell RSPO certified product. When selling RSPO certified product a licensed trader and/or distributor must pass on the certification number of the product manufacturer and the applicable supply chain model. NB: Distributors that remove or change primary packaging are no longer distributors, they are processors and need to have their own supply chain certification. 1

5.3: Documented procedures The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements specified. This shall include at minimum the following: The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. 5.4: Certification check A check of the validity of the Supply Chain Certification of suppliers is required for all facilities that are SCCS certified. This shall be checked via the list of RSPO Supply Chain Certified facilities on the RSPO website www.rspo.org or the RSPO IT System within a reasonable timeframe. 5.5: Outsourcing activities 5.4.1. In cases where an operation seeking or holding certification outsources activities to independent third parties the operation seeking or holding certification shall ensure that the independent third party complies with the intent and requirements of the RSPO Supply Chain Standard. c) The facility has an agreement or contract covering the outsourced process with each contractor through either a signed and enforceable agreement with the subcontractor. The onus is on the facility to ensure that certification bodies have access to the outsourcing contractor or operation if an audit is deemed necessary. 5.1.4: New clause clarifying that processing aids that contain palm oil do not need to be included in the organisation s scope of certification. Documented procedures Change in terminology: facility is now site. (This applies throughout the standard.) 5.3.1: Change in responsibility from name of person with overall responsibility to identification of the role of the person having overall responsibility NB: Requirements to have the name and contact details of the responsible person on the supply chain certificate have now been removed. Certification check 5.4.1: Change in requirement to check validity of suppliers supply chain certification from within a reasonable timeframe to at least annually at www.rspo.org and need to show proof to auditor of this check. Outsourcing activities 5.5.1: Clarification of the criteria that apply to outsourcing. The organisation has a responsibility to ensure that the subcontractors also comply with the requirements of the standard. The certification body must have right of access to audit the subcontractor if this is deemed necessary. NB: The certification body will apply a risk assessment, on a case-by-case basis to determine if the outsourced activity presents a significant level of risk to justify an audit. In cases where the outsourced activity is transport, storage/distribution, or where the outsourced activity is carried out by another RSPO certified organisation, the likelihood of an audit being required will typically be low. 2

5.4.4. The facility shall inform its certification body about the names and contact details of any new contractor used for the processing or production of RSPO certified materials. 5.6: Sales and goods out 5.5.1. The facility shall ensure that all sales invoices or relevant documents, e.g. delivery notes, shipping documents and specification documentation, issued for RSPO certified oil palm products delivered include sufficient information, this may include the following: - The name and address of the buyer; - The name and address of the seller; - The loading or delivery date; - The date on which the documents were issued; - A description of the product, including the applicable supply chain model (Identity Preserved, Segregated or Mass Balance The quantity of the products delivered; Any related transport documentation Supply chain certification reference number 5.5.4: The site shall at its next audit inform its CB of the names and contact details of any new contractor used for the processing or production of RSPO certified materials. Sales and goods out 5.6.1: Clarification as to how output (sales) claims should be presented by the organisation to their customers. The clause lists the minimum information that must be passed on but allows the organisation to present this information across a range of documents. Documents which may carry the minimum information may include a combination of: sales invoice delivery note certificate of conformity/analysis product specification contract documentation (eg bill of lading) product packaging (unique identification/batch number). The minimum information is described as: name and address of the buyer name and address of the seller the loading or delivery date the date on which the documents were issued product description including applicable supply chain model reference (IP, SG or MB) product quantity related transport documentation supply chain certificate number (eg CU-RSPO SCC-123456) unique identification/batch number. NB: The use of the terms IP, SG, MB etc within the product description is not fixed in terms of how the information should be presented. A description of the product, including the applicable supply chain model (Identity Preserved, Segregated or Mass Balance or the approved abbreviations). Approved descriptions: Identity Preserved, Identity preserved, identity preserved, IP, Ip, ip; Segregated, segregated, SG, Sg, sg, SEG, Seg, seg, SEGR, Segr, segr; Mass Balance, Mass balance, mass balance, MB, Mb, mb, MBal, Mbal, mbal; RSPO may be added to these supply chain models and abbreviations to clarify which scheme is 3

5.7: Registration of transactions 5.6.1 Supply chain actors who take legal ownership and physically handle RSPO Certified Sustainable oil palm products and who are part of the supply chain of RSPO Certified Sustainable oil palm products before and up to the (final) refinery need to register their transaction in the RSPO IT System upon the moment of physical shipment. involved (for example to distinguish between UTZ Certified and RSPO certified for chocolate products); Punctuation marks like / \ - _ and space between the letters are all allowed; All other descriptions are not allowed. Registration of transactions 5.7.1: As before, this clause requires that organisations in the supply chain up to and including the final refining of the product must register their RSPO palm oil transactions on the RSPO IT platform (currently called etrace). NB: All organisations must register on the RSPO IT platform prior to certification, regardless of where they are in the supply chain. By registering they will receive a registration number which is used by the certification body to upload their audit reports and certificate to the etrace document portal. 5.8: Training Training No significant changes. The requirements to have a training plan, to deliver the training and to maintain records remain. Clarification added that the training shall be specific and relevant to the task(s) performed. 5.9: Record keeping Record keeping New clause in section 5 (previously in the modular sections covering the different supply chain models). 5.9.1: Requirement for records to be up to date and accessible. 5.9.2: Record retention period reduced from 5 years to a minimum of 2 years. 5.9.3: Requirement for the organisation to keep up-to-date records of RSPO certified palm oil products purchased and claimed over a specified period NB: The specified period, is interpreted as the period between the previous third party audit and the date of the following audit. A reporting sheet for sustainable oil palm products is mandatory for refineries. (see RSPO Supply Chain Certification Systems A1.2) The template (can be provided by the CB prior to the audit) should be filled and handed over in electronic form to the certification body upon the annual surveillance audit. 4

5.10: Conversion factors Conversion factors 5.10.1: New clause, applicable mostly to refineries and the production and processes of derivatives of palm oil and palm kernel oil as applied to the oleochemical and personal care industries. The clause allows organisations to justify and set their own conversion rates, where these differ from the RSPO guidance on conversion rates (as related to industry average). 5.11: Claims 5.8.1. The facility shall only make claims regarding the use of or support of RSPO certified oil palm products that are in compliance with the RSPO Rules for Communications and Claims. Claims 5.11.1: As before, RSPO certification allows the organisation to make RSPO claims onproduct or through corporate communications, provided they follow the RSPO Rules on Communications and Claims document (current version November 2011). 5.12: Complaints Complaints 5.12.1: New clause: organisations must now have a documented complaints procedure covering the collecting and resolving of stakeholder complaints. 5.13: Management review Management review 5.13.1: New clause: the organisation is now required to conduct management reviews of its RSPO certification system at planned intervals. The clause defines the minimum inputs and outputs from the management review process. Inputs: results of external audits, and internal audits if these are conducted (review of) customer feedback process performance and product conformity status of preventative and corrective actions follow-up actions from (previous) management reviews changes that could affect the management system recommendations for improvement. Outputs: improvements of the effectiveness of the management system and its processes resource needs. NB: The organisation will be expected to have conducted at least one management review, covering all of the above requirements in the period between the last surveillance audit and the next audit. 5

Module A: Identity Preserved A.1.3. The objective is for 100 % segregated material to be reached. The systems should guarantee the minimum standard of 95 % segregated physical material; up to 5 % contamination is allowed. Module B: Segregation B.1.2. The objective is for 100 % segregated material to be reached. The systems shall guarantee the minimum standard of 95 % segregated physical material5; up to 5 % contamination is allowed. Module C: Mass Balance C.3 Mass balancing system C.3.1 The facility shall ensure that the quantity of physical RSPO mass balance material inputs and outputs (volume or weight) at the physical site are monitored on a real-time basis. C.3.2 The facility shall ensure that the internal material accounting system complies with the following; a facility can only deliver Mass Balance sales from a positive stock. a facility is allowed to sell short NB: there is no specific requirement for an internal audit to have been conducted as part of the management review. Identity Preserved As before, except that clause A.3.2 now states that, in terms of physical separation procedures, the objective is for 100% identity preserved (IP) material to be reached. The 95% rule that applied to the management of storage tank contamination has been removed. Segregation As before, except that clause B.3.2 now states that, in terms of physical separation procedures, the objective is for 100% segregated (SG) material to be reached. The 95% rule that applied to the management of storage tank contamination has been removed. Mass Balance Introduction of two different methodologies for operating a Mass Balance system: continuous accounting systems and fixed inventory periods. C4: Continuous accounting system: this is based on the previous Mass Balance system. Inputs and outputs are monitored in real time and the MB account can never be overdrawn. This system will typically be used by organisations in continuous production of certified product where continuity of supply of raw materials is reasonably assured. C5: Fixed inventory periods: this new system has been introduced to assist operations who are not in continuous production of certified product or who don t have continuity of supply of certified inputs. This approach will allow an organisation to set up fixed inventory periods of up to a maximum of three months. Within that period they will be able to overdraw their MB account as long as it is reinstated to a positive balance before the end of the inventory period. Additionally if there is any unused credit at the end of the current inventory period, it may be carried over to the next inventory period. 6

Module D and E: CPO Mills: Segregation and Mass Balance D. Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill, the implementation of any processing controls (for example, if segregation is used), and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without segregating the material then only Module E is applicable. C6: Conversion ratios: this clause identifies the various options available to organisations to justify how they reconcile inputs and outputs within whichever MB system they are operating. Refining losses may be neglected but the organisation must choose which option suits it best. Clause C.6.4 is the most straightforward approach in which any volume of SG raw material inputs may be offset against a range of MB oil palm outputs. C7: Yield schemes: this section identifies the alternative approach that can be used in a MB system where a range of certified inputs (IP, SG and MB) are permitted. In this case the actual refining yields must be applied for example, when refined oil is fractionated into oleins and stearins, the typical chemical yield is 80% olein, 20% stearin. This approach limits output claims to the volumes produced during fractionation or blending. The section contains graphics showing typical yield schemes for both palm oil and palm kernel oil. Also, for the first time, the graphics show the presence of Palm Fatty Acid Distillate (PFAD) and Palm Kernel Expeller as by-products in the refining of palm oil and PKO respectively. This will allow these products to be sold with RSPO claims. CPO Mills: Identity Preserved and Mass Balance These sections apply exclusively to the independent oil palm mills which receive fresh fruit bunches (FFBs) of palm oil fruit direct from the plantations. The rules which apply to mill activities are slightly different from the rest of the supply chain in that, at the beginning of every year, mills have to agree a forecasted production volume with their certification body which is then declared on the RSPO IT platform. This information then becomes publicly available. Module D applies to mills which receive FFB exclusively from a known certified supply base or do not mix certified and non-certified FFB inputs. 7

E. Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil palm products produced from processing of the certified FFB as MB. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the certification body in the public summary of the certification report. Module F Multi-site certification The company shall define the geographic area, the number and identity of facilities, the supply chain model and the types of operations covered by the scope of their multi-site chain of custody system. Module G Group certification Supply Chain Group Certification offers an option for RSPO Supply Chain Certification Scheme in a pragmatic way whereby the direct costs of certification are shared between the members of a group. It is also recognised that whilst group membership will be applicable only to small and medium sized companies (not more than 500mt/year), the quantity and value of RSPO certified products that are processed or produced will also be a determining factor between individual RSPO SC Certification and joining a Group Certification Scheme. Module E applies to mills which are supplied from a range of certified and non-certified plantations and do not segregate or separately process the different inputs. They can operate a Mass Balance system but the tonnage of crude oil palm that can be sold with an MB claims is limited to the weight of certified FFB purchased. Multi-site certification As previously, multi-site certification is available to organisations that operate multiple sites across a range of physical locations and countries. The section outlines the key requirements, particularly the role and responsibilities of the Central Office. The 2014 Standard provides more detail as to how the internal audit and management review processes should be managed, otherwise the section is largely the same as the previous version. Group certification This is a new section and allows independent small businesses to come to together in a group under the control of a group manager. The group manager must have a legal or contractual relationship with the group members. Membership of the group is constrained to companies that: use up to 500 MT of oil palm products per year employ a maximum of 100 full-time equivalent employees. Members can be distributed across national boundaries but if any member subsequently exceeds the qualification criteria above, they must leave the group and obtain their own certification. 8

Most important changes (and additions) in the new systems Internal audits 5.3.7. The CB shall review the management documentation of the applicant to ensure that all elements fully meet the requirements of the RSPO Supply Chain Certification Standard. The certification body shall clarify any issues or areas of concern with the operation seeking or holding certification. Internal audits shall be fully planned and underway before certification is awarded. Outsourcing units Outsourcing units will still be part of the audit but will not appear on the certificate Micro users 5.3.32 To minimize costs and complexity for palm oil micro users (organizations which use a very low level of palm oil, ie less than 1000KG of palm oil per annum) and to encourage their use of sustainable palm supply chains, these organizations can apply to the CB if a desk audit by submitting a self-declaration form will do instead of undergoing surveillance audits. Initial certification audits and recertification audits shall take place as normal. It is up to the CB to decide whether it is acceptable Certificate Once a certificate holder has completed the transition to the 2014 Standard they will be issued with a new RSPO supply chain certificate. The new certificate will reference the 2014 Standard but will no longer include a reference to the certificate holder s RSPO representative and contact details. This requirement has been removed. Contact details Contact details will only be mention in the audit report and no longer on the certificate 9