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  1. A letter dated July 26, 2025 from Earthsight (an international environmental organization in London, United Kingdom) and Auriga Nusantara (an environmental organization in Bogor, Indonesia) addressed to PT Korindo Ariabima Sari regarding the use of timber from deforestation and the supply chain to the European Union.
  1. In 2024, PT Korindo Ariabima Sari, as one of the timber exporters to the European Union, was mentioned in the letter as allegedly obtaining part of its timber supply from PT Indosubur Sukses Makmur, which is linked to the conversion of natural forests into industrial plantation forest (HTI) areas.
  1. Korindo Group has terminated all transactions with Sentra Abadi Makmur (a timber trader sourcing from PT Indosubur Sukses Makmur) and PT Indosubur Sukses Makmur, in accordance with Korindo’s sustainability policy.
  2. On August 27, 2025, Korindo Group engaged the Timber Legality Certification Body, PT Mutu Hijau Indonesia, as an independent third party to conduct an independent audit and verification related to the ongoing investigation.
  1. From August 28 to September 26, 2025, PT Mutu Hijau Indonesia conducted an audit and verification using a qualitative approach through document review and gap analysis, with the following results:
    • PT KABS and PT ISM have complied with the requirements of the Legality and Sustainability Verification System standard established by the Ministry of Forestry.
    • The review indicated that part of PT KABS’ raw material sources supplied by PT ISM originated from land clearing (conversion of natural forest land into plantation forest), which was not fully aligned with PT KABS’ commitment.
    • PT KABS has established adequate procedures and forms for raw material acceptance to support its Timber Sourcing Policy. Consistent monitoring of implementation is required to ensure alignment with stated commitments, including for raw materials procured from third parties. To achieve this, immediate actions are recommended in line with the following
  2. Following recommendations were made based on the audit result:
    • Establishment of an Internal Audit Team.
    • Implementation of a strict Due Diligence System across the entire supply chain, through regular technology-based deforestation monitoring.
    • Enhancement of personnel capacity and policy dissemination.
  3. As a follow-up to these recommendations, PT KABS will undertake the following actions:
    • Issue an internal audit report in 2026, prepared jointly by the Korindo’s audit team and ESG team.
    • Conduct regular land monitoring every three months during the timber purchase contract period.
    • Implement capacity building programs for personnel and conduct policy dissemination within this year.
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