TRANSFORMATION FOR EXCELLENCE SUSTAINABILITY
PT PUPUK INDONESIA (PERSERO) Head Office Jalan Taman Anggrek, Kemanggisan Jaya Jakarta 11480, Indonesia Phone : +62 21 536 54900 Fax : +62 21 80647955 E-mail : [email protected] Website : http://www.pupuk-indonesia.com Call Centre : 0800-1-008001 (Toll Free) Sustainability TRANSFORMATION FOR EXCELLENCE & SUSTAINABILITY Report TRANSFORMATION FOR EXCELLENCE SUSTAINABILITY &
Sustainability PT Pupuk Indonesia (Persero) Report 2018 www.pupuk-indonesia.com
Sustainability 1 Report
TRANSFORMATION FOR EXCELLENCE SUSTAINABILITY
Through integrating business with its 10 (ten) Under this light, Pupuk Indonesia is committed Subsidiaries, Pupuk Indonesia has always towards transformation to continuously improve emphasized the importance of doing business its profitability, preserve the environment, and in an environmentally-friendly way and strived positively affect the general public. We view to add value to our Stakeholders. Nonetheless, people, planet, and profit not only as our triple rapid changes brought by globalization, digital bottom line, but also as essential parts of our revolution, advancements in biotechnology, and planning, processes, and goals towards excellence. global climate change can only be responded to Through consistent development and innovation, by transforming ourselves into a leading company Pupuk Indonesia is ready to serve as the nation’s that focuses on the principles of sustainability. backbone to achieve food security by improving Excellence and commitment to sustainability are Indonesia’s agricultural production output. necessary if we wish to remain competitive in the global market.
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TABLE OF CONTENTS
4 Performance Highlights 6 Events Highlight 12 Awards 39 Developing a Culture of 57 Developing Community 14 Certification Occupational Health and Welfare and Well-being Safety 58 Corporate Social 41 OHS Policy and Target Responsibilites Programs
41 OHS Performance 59 Partnership Programs
44 Employee Representation in 61 Community Development OHS Issues Program
44 Contractors and Working 61 Corporate Social Responsibility Security Program Implementation
17 Management Report 45 OHS Training 70 Testimonies from Beneficiaries
18 Report of the Board of 45 Health Service for Employees of PKBL Pupuk Indonesia Commissioners 70 Awards 20 Report of the Board of Directors
25 Developing Work Attitudes 47 Developing Excellent 73 Developing and Environmentally Friendly Products Stakeholders’ Economy Operations 48 Prioritizing Health and Safety 75 Revenues 26 Resource Optimization of Customers 75 Profitability 26 Raw Materials 50 Product Information 75 Contributions to the 27 Plant Revitalization Programs and Communication Government Responsibilities 28 Energy Consumption 76 Contributions to the Public 52 Customer Distribution and 29 Reducing Energy 76 Investments in Infrastructure Services Consumption and Services 55 Commitment to Obligation 30 Energy Intensity 77 Contributions to Local 30 Water Management and Suppliers Usage 77 Financial Assistance
31 Biodiversity Conservation 79 Implications of Climate 33 Emissions Control Change
35 Waste Management
37 Supervision Over Policy
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81 Developing Resilient and 115 About PT Pupuk 138 Assurance Statement Competent Character Indonesia (Persero) 140 Statement GRI Standards 82 Employee Composition 116 Corporate Identity in Accordance Check
83 Recruitment of Workers 118 Milestones 141 GRI Standards Index Comprehensive Options 86 Equality, Diversity and 120 Market Share Opportunities 149 Linking the SDGs and GRI 120 Scale of Organization 88 Composition of Governance Standards 120 Subsidiaries and Operating Bodies Areas 89 Alliance Freedom 122 Supply Chain 89 Education and Training 122 Business Chain 90 Employee Assessment 123 Distribution Mechanisms 91 Employee Welfare Program 124 Vision, Mission, and Corporate 92 Preparation for Retirement Values
126 External Initiatives
126 Organizational Memberships
95 Governance of 129 About Sustainability Sustainability Report 96 Governance Structure 130 Reporting Period, Scope, and
109 Anti-corruption Standards
111 Political Contribution 130 GRI Standards and Assurance
112 Engagement with 131 Process to Determine the Stakeholders Contents of Report and Material Aspects 112 Application of Sustainability Concept to Suppliers 134 List of Material Topics
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PERFORMANCE HIGHLIGHTS
FINANCIAL
2018 2017 2016
Operating Revenue Rp69.45 trillion Rp58.94 trillion Rp64.16 trillion
Operating Profit Rp4.21 trillion Rp3.08 trillion Rp3.53 trillion
Contribution to the State (Tax) Rp6.25 trillion Rp4.94 trillion Rp5.50 trillion
PSO Fertilizer Sales 9.34 million tons 9.30 million tons 9.18 million tons
Non-PSO Fertilizer Sales 3.46 million tons 3.03 million tons 2.91 million tons
ENVIRONMENTAL
NATURAL GAS CONSUMPTION NATURAL GAS CONSUMPTION PER TONNE PER TON OF UREA OF AMMONIA
28.41 28.67 29.88 36.38 36.15 36.22
2018 2017 2016 2018 2017 2016
NATURAL GAS CONSUMPTION AS RAW MATERIAL ELECTRICITY CONSUMPTION (MMBTU) (GIGA JOULE)
157,711,044 143,279,544 142,398,679 15,433,931 6,463,018 6,441,546
2018 2017 2016 2018 2017 2016
PROPER AWARDS PT Pupuk Kalimantan Timur, one of the Company’s subsidiaries, won the PROPER Gold for its achievements in environmental management that exceeded the Government’s standards and for its efforts in sustainable PROPER Green community development. The Company’s Pupuk Kujang, other subsidiaries won the PROPER Green and Pupuk Sriwijaya PROPER Gold PROPER Blue. Palembang Pupuk Kaltim
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SOCIAL
2018 2017 2016
Partnership Program Rp129.042 billion Rp128.568 billion Rp133.274 billion
Community Development Rp30.989 billion Rp54.293 billion Rp34.700 billion
CSR Rp96.431 billion Rp66.575 billion Rp96.304 billion
Customer Satisfaction Score 88.33 (Excellent) 88.22 (Excellent) 87.98 (Excellent)
OCCUPATIONAL SAFETY
TOTAL SAFE WORKING HOURS
24,868,182 4,404,482 6,774,477 3,220,582 7,446,784 working hours working hours working hours working hours working hours
PT Petrokimia PT Pupuk PT Pupuk PT Pupuk PT Pupuk Gresik Kujang Kalimantan Iskandar Muda Sriwijaya Timur Palembang
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EVENTS HIGHLIGHT
16 JANUARI 2018 The Company held a General Meeting of Shareholders to approve the Company’s Business Plan and Budget for Fiscal Year 2018. The Meeting was held on January 16, 2018 in Jakarta.
15 MARCH 2018 PT Pupuk Indonesia (Persero) and PT Semen Baturaja (Persero) signed a Memorandum of Understanding on using fertilizer byproducts as raw material in cement production.
19 APRIL 2018 Communal Harvest with the Minister of State- owned Enterprises to Commemorate the Agricultural Entrepreneurship Program in Karawang.
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26 APRIL 2018 A memorandum of understanding for a planned cooperation between PT Pupuk Indonesia with PT Perkebunan Nusantara III and its subsidiaries was signed where the former will procure fertilizer for the latter, with banking and financing facilities for both to be given by PT Bank BNI.
8 MAY 2018 An Annual Meeting of Shareholders (AGM) was convened on May 8, 2018 in Jakarta to approval the Company’s Annual Report for fiscal 2017.
11 MAY 2018 The initiation of 2.4 Million Tons of NPK Project and the Inauguration of Pusri 2B in Palembang, South Sumatra, attended by SOE Minister Rini Soemarno and Minister of Industrial affairs Airlangga Hartanto.
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20 MAY 2018 First Urea Production by Amurea II project of Petrokimia Gresik Project, a Subsidiary PT Pupuk Indonesia (Persero) in Gresik, East Java.
8 JUNE 2018 An Extraordinary General Meeting of Shareholders (RUPS-LB) was convened on June 8, 2018 in Jakarta to appoint Anwar Sanusi as Commissioner of PT Pupuk Indonesia (Persero) Widharma Raya Dipodiputro as Independent Commissioner.
17 AUGUST 2018 To commemorate the 73rd Anniversary of the Republic of Indonesia, PT Pupuk Indonesia (Persero) gave community support to residents of Sebatik Island- by holding a ceremony, fun walk, SMME exhibitions, CSR assistance and Siswa Mengenal Nusantara (SMN) program, in Sebatik Island, North Kalimantan.
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To give proper appreciation for the dedication 17 SEPTEMBER 2018 and work of its employees in developing various product innovations and work processes, Pupuk Indonesia held the 2018 Pupuk Indonesia Innovation Day Award event, in Jakarta.
18 SEPTEMBER 2018 The symbolic send-over ceremony for export of 20,000 ton of urea from the PT Pupuk Kaltim Port in Bontang, East Kalimantan, witnessed by Rini Soemarno, Minister of SOE.
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26 OCTOBER 2018 - An Extraordinary General Meeting of Shareholders (EGMS) was held on October 26, 2018 in Jakarta to appoint Nugroho Christijanto, then President Director of PT Petrokimia Gresik, as Director of Business Transformation of PT Pupuk Indonesia (Persero) - An Extraordinary General Meeting of Shareholders (GMS) was held on December 21, 2018 in Jakarta, to approve the Company’s Work Plan and Budget (RKAP) for 2019.
22 NOVEMBER 2018 A collaboration between PT Pupuk Indonesia (Persero) and PT Pelindo IV was signed to optimize and utilize business capacity of land use at the Makassar container terminal by re-functioning it as a dry bulk terminal and a connecting port.
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22 NOVEMBER 2018 An agreement between PT Pupuk Indonesia (Persero) and PT Bank Rakyat Indonesia, Tbk (BRI) was signed for a working capital of Rp11 trillion that the former and its 10 subsidiaries will collectively use for business expansion.
28 NOVEMBER 2018 An agreement for a working capital loan of IDR7.1 trillion between PT Pupuk Indonesia (Persero) and PT Bank Central Asia Tbk (BCA) was signed as part of continued collaboration between the two parties and to follow up the need for loan facilities due to the addition of subsidiaries under Pupuk Indonesia Group.
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AWARDS
No. Awards Events Organizer Date 1 Trusted Company based on Indonesia The Most The Indonesian Institute December 19th, 2018 the Corporate Governance Trusted Companies for Corporate Governance Perception Index (CGPI) Award 2018 (IICG) in collaboration with SWA Magazine 2 Taxpayers for their Taxpayer Appreciation & Directorate General of March 13th, 2018 contribution as one of Awards Tax, Ministry of Finance the 31 largest taxpayers in RI Indonesia 3 Runner-Up in Public Risk ASEAN Risk Awards 2018 Enterprise Risk December 06th, 2018 Category Management Academy (ERMA) 4 Platinum Rank Asia Sustainability National Center for December 08th, 2018 Reporting (ASR) Sustainability Reporting (NCSR) 5 Basic Industry Category Economic Challenges Metro TV November 30th, 2018 Award 2018
6. Best Achievement 7th Anugerah BUMN BUMN Track Magazine August 09th, 2018 in Corporate Social 2018 Responsibility (PKBL)
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No. Awards Events Organizer Date 7 Best Achievement 7th Anugerah BUMN BUMN Track Magazine August 09th, 2018 in Corporate Social 2018 Responsibility (PKBL) 8 Top Leader on CSR TOP CSR Award 2018 Top Business Magazine October 04th, 2018 Commitment 2018 9 Best Partnership TOP CSR Award 2018 Top Business Magazine October 04th, 2018 Program and Community Development in Processing Indonesian Community Warta Ekonomi May 02nd, 2018 Industry Category Partnership and Magazine Development Program Appreciation 2018 10 Silver in PR 2018 Staff Jambore PR INDONESIA PR Indonesia Magazine November 09th, 2018 Category VP PR
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CERTIFICATION
Company Name of Certificate Validity issuer
Pupuk Iskandar ISO 9001 – 2008 Quality Management System 17 September 2021 Sucofindo ICS Muda ISO 14001- 2015 Environment Management System 17 September 2021 Sucofindo ICS
Occupational Safety and Health Management System 16 May 2019 Minister of Manpower of the Republic of Indonesia
Pupuk Sriwidjaja ISO 9001 – 2015 Quality Management System 28 April 2021 SGS
ISO 14001- 2015 Environment Management System 28 April 2021 SGS
ISO 17025 Testing Laboratory and Calibration Laboratory 28 July 2019 National Accreditation Committee
Occupational Health and Safety Management System 16 May 2019 Ministry of Manpower, Republic of Indonesia
IFA Protect & Sustain Product Stewardship Program 3 May 2021 SGS
Pupuk Kujang ISO 9001 – 2015 Quality Management System 23 December 2020 Sucofindo ICS
ISO 14001- 2015 Environment Management System 23 December 2020 Sucofindo ICS
ISO 17025 Testing Laboratory and Calibration Laboratory 28 August 2022 National Accreditation Committee
Green Industry Certification 3 December 2022 Green Industry Certification Institute, General Center for Technologies in Industrial Pollution Prevention
Occupational Health and Safety Management System 30 July 2021 Ministry of Manpower, Republic of Indonesia
Petrokimia Gresik ISO 9001 – 2015 Quality Management System 7 March 2021 Sucofindo ICS
ISO 14001- 2015 Environment Management System 7 March 2021 Sucofindo ICS
ISO 17025 Testing Laboratory and Calibration Laboratory 17 November 2019 National Accreditation Committee
IFA Protect & Sustain Product Stewardship Program 18 February 2021 SGS
Green Industry Certification 26 September 2022 Green Industry Certification Institute, General Center for Technologies in Industrial Pollution Prevention
ISO 50001: 2011. Manufacture of Ammonia Product for Plant 1 11 December 2021 Lloyd’s Register
Occupational Health and Safety Management System 3 February 2022 Ministry of Manpower, Republic of Indonesia
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Company Name of Certificate Validity issuer
Pupuk Kaltim ISO 9001 – 2015 Quality Management System 25 May 2019 TUV Rheinland
ISO 14001- 2004 Environment Management System 25 May 2019 TUV Rheinland
ISO 17025 Testing Laboratory and Calibration Laboratory 19 September 2021 National Accreditation Committee
Green Industry Certification Green Industry Certification Institute, General Center for Technologies in Industrial Pollution Prevention
Certificate of Registration for Environmental Laboratory 19 September 2024 Ministry of Environment and Competence Forestry
IFA Protect & Sustain Product Stewardship Program 26 July 2020 SGS
ISO 50001: 2011 PKT-3 Production of Ammonia, Urea and 16 November 2020 TUV NORD Utility.
Occupational Health and Safety Management System 16 May 2019 Ministry of Manpower, Republic of Indonesia
ISO 50001: 2011 PKT 1A Production of Ammonia, Urea and 31 October 2021 TUV NORD Utility
Rekind OHSAS 18001:2007 29 November 2019 DNV
ISO 9001:2015 20 December 2019 DNV
ISO 14001: 2015 Environmental Management System 31 July 2019 DNV
Occupational Health and Safety Management System 14 July 2020 Ministry of Manpower, Republic of Indonesia
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PT Pupuk Indonesia (Persero) Sustainability 17 Report
MANAGEMENT REPORT
Transformation is the on-going journey to become a leading company. This report illustrates our transformation momentum in sustainability matters for the advancement of the Company and welfare of the nation.
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REPORT OF THE BOARD OF COMMISSIONERS [GRI 102-14]
“To become a highly competitive, sustainable, world- class agrochemicals and petrochemicals company that contributes to national food security and world food demand.”
Bungaran Saragih President Commissioner
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Dear Esteemed Stakeholders, The Board also appreciates Board of Directors efforts It is our privilege to present to you this Sustainability to improve productivity. Their achievements were Report 2018 containing Pupuk Indonesia’s recognized by 44 awards in the National Quality achievements in economic, environmental, and social & Productivity Convention (Temu Karya Mutu & affairs. This Sustainability Report is the statement of Produktivitas Nasional, TKMPN) as well as the our commitment and accountability to stakeholders in International Quality and Productivity Convention (IQPC) matters concerning sustainability. 2018. The Board wishes Pupuk Indonesia to further strengthen its quality and competitive culture through The Board believes that our vision “To become a highly further innovative developments and productivity. competitive, sustainable, world-class agrochemicals and petrochemicals company that contributes to Pupuk Indonesia’s achievements in social affairs were national food security and world food demand” is no recognized by winning six awards in the 7th SOE Awards longer a slogan; it is now practiced in all aspects of 2018 as among the State-owned Enterprises with the Pupuk Indonesia’s operations. We truly appreciate best Community Development and Partnership (PKBL) the economic improvements achieved in 2018 and programs. We believe this achievement was contributed witnessed the efforts made to transform and advance by Pupuk Indonesia’s quality and caring individuals. In environmental and social matters. We value the Board view of that, the Board remains steadfast to promote of Directors leadership and dedication of all Pupuk corporate performance and growth by observing good Indonesia employees, allowing the Company to put corporate governance and managing competitive sustainability principles front and center. people.
Year 2018 was a motivating year for us. Pupuk Indonesia The Board expresses its utmost appreciation to the received numerous awards for its commitment Board of Directors and management for their hard to conservation, efficient resource utilization, and work and dedication to improve Pupuk Indonesia’s community development. The Proper Gold received sustainability performance. We trust that we will not rest by Pupuk Kalimantan Timur marked our commitment on our laurels and that we will create new innovations to environmental issues. Pupuk Indonesia Group to achieve our targets going forward. We also extend also received the PROPER Green through PT Pupuk our gratitude to our stakeholders for their support Sriwidjaja Palembang and PT Pupuk Kujang as well and contribution to Pupuk Indonesia. In particular, we as the PROPER Blue through PT Petrokimia Gresik wish to thank the Government for its full support that and PT Pupuk Iskandar Muda. The Board urges Pupuk enabled Pupuk Indonesia to serve the nation. We will Indonesia Group to maintain this type of performance continue our hard work and advance the nation towards using sound strategic policies and environmentally food self-sovereignty. friendly operations.
Jakarta, April 2019
PRESIDENT COMMISSIONER Bungaran Saragih
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REPORT OF THE BOARD OF
DIRECTORS [GRI 102-14]
“Our strategies to improve sales have worked well. Pupuk Indonesia is pleased to book a net profit of Rp4.21 trillion.”
AAS ASIKIN IDAT President Director
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Dear Esteemed Stakeholders, one of our subsidiaries, won the best Organizational First and foremost, we wish to express our gratitude for Transformation in the SOE Awards. every support that allowed Pupuk Indonesia (Persero) to achieve good results amid challenges in 2018. For all such extraordinary accomplishments, I wish to thank and extend my highest appreciation to every This Report contains Pupuk Indonesia’s sustainability director, management, and employee in the Pupuk performance in 2018. As time passes, we understand Indonesia Group. The accomplishments must motivate that sustainability goals and principles are a necessity every Pupuk Indonesia individual to contribute and for every company. Indeed, it is not a choice since public innovate for the advancement of the company and trust hinges upon this fact. In other words, we believe welfare of the nation. that sustainability goals are highly relevant for Pupuk Indonesia’s growth and operations. To that end, we have made investments in people, planet, and profit for the ECONOMIC PERFORMANCE sake of future generations and for our own business Our strategies to improve sales have worked well. sustainability. Pupuk Indonesia is pleased to book a net profit of Rp4.21 trillion. The figure was obtained by fertilizer sales The global economy in 2018 was marked by fluctuations of Rp69.44 trillion from a production volume of 11.66 in the US Dollar exchange rate. The instability affected million tons. The increase in net profit has resulted in our business operations, particularly the fertilizer and greater contribution to the state through taxes. In 2018, ammonia segments since they both use natural gas as we booked a net profit of Rp5.22 trillion, up by 24% from a raw material and that our natural gas procurement Rp4.21 trillion booked in the previous year. contracts were denominated in US Dollars. In response to such challenges, we have adopted various strategic policies while delivering on assignments set by the ENVIRONMENTAL PERFORMANCE Government. Among our assignments were to ensure We recognize the fact that chemical processes in our effective and efficient distribution of subsidized fertilizer operations will affect the environment. Accordingly, to support the Government’s food self-sufficiency we give greater emphasis on sustainable policies and objective; revitalize plants to improve fuel efficiency; strategies by controlling emissions, reducing energy manage financing portfolios to minimize exchange consumption, protecting biodiversity, and efficient rate pressures; raise prices of urea and ammonia in line resource management. In our operations, we ensure with price increases of both commodities in the global that we have performed the Environmental Impact market; and using coal as raw materials in place of Analysis (AMDAL) or the Environmental Management natural gas. Through these strategic policies, we have and Monitoring Plan (UKL-UPL). These measures are successfully exceeded our initial targets. In 2018, we taken to calculate a given project’s environmental have booked 12.8 million tons in sales of fertilizer and 923 impact thus, all decisions are taken with consideration thousand tons in sales of ammonia. to the environment. We believe that being committed to sustainability is key to build a solid company. Corporate In addition to good operating performance in 2018, social responsibility and conservation are key issues we have also improved energy efficiency by modifying for Pupuk Indonesia since the issues have direct and equipment, adopting environmentally friendly indirect effects on our business sustainability. equipment, and reusing raw materials. Pupuk Indonesia Group has achieved 12,276,161 GJ of energy efficiency, In terms of environmental performance, we have up by 6.5% from the previous year. In addition, we have successfully reduced our emissions by 4% to 9,475,894 received 44 awards in recognition of our improvements tons from 9,835,977 tons. As we are well aware, in productivity and quality from domestic and greenhouse gases have the potential to exacerbate international bodies. Winning the awards was not easy global warming and cause climate change. We have since we were competing with some 2,050 national taken measures to reduce our energy consumption in and multinational companies in Southeast Asia. We order to limit greenhouse gas emissions. Furthermore, are happy to inform you that PT Rekayasa Industri,
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we have planted mangrove trees in Gresik and Bontang standard of living, through which we assisted 1,303 to minimize the greenhouse effect. Since the start of the partners by providing business loans, assistance, program, we have planted 325,167 trees. In addition, we and training. In 2018, we spent Rp160,032 billion in have started the grouper and lobster farming projects community development and partnership and for CSR for fishermen in Bontang with the goal of discouraging programs. fishermen from fishing using explosives, poisons, or other environmentally unsafe methods. KEY IMPACTS, RISKS, AND OPPORTUNITIES Our commitment to the environment is also [GRI 102-15] demonstrated by our compliance with environmental For 2019, experts estimate that Indonesia’s economic laws. PT Pupuk Kalimantan Timur, one of our growth will be 5.2% with inflation hovering at 3.5%. The subsidiaries, won the PROPER Gold for its achievements estimates make us optimistic for prospects in 2019. The in conservation that exceeded the Government’s Government’s impetus to increase rice production to standards and for its efforts in sustainable community meet domestic demand will result in greater market development. The Pupuk Indonesia Group also received opportunities for us. Demand for urea and NPK fertilizers the PROPER Green through PT Pupuk Sriwidjaja will remain strong in 2019, for which we have adopted Palembang and PT Pupuk Kujang as well as the strategies to maximize every opportunity. PROPER Blue through PT Petrokimia Gresik and PT Pupuk Iskandar Muda. The recognitions motivate us to With more than 50 years’ of experience in the maintain our performance in the years to come. agrochemicals industry, we are confident to consider ourselves as a world-class agrochemicals manufacturer and petrochemical company. In 2019, we will prioritize SOCIAL PERFORMANCE construction of the NPK plant until 2025 in anticipation We strongly believe in making social investments for of the urea fertilizer market saturation. One of the communities living near to our operating areas, given strategies for the NPK plant is by applying better that we both grow and develop together. Several of technologies than those currently deployed to create our community programs have successfully raised the globally competitive products. We began construction community’s income, and in turn their standard of living. of the NPK Fusion II PSP plant with a capacity of These programs are, among others, business loans and 2x100,000 in 2018 with PT Wijaya Karya as the project’s training in horticulture, food and beverage, and textiles contractor. We have synergized and benchmarked for small business owners. the technologies between subsidiaries that currently operate NPK plants and those that are planning to build Our attention to future generations is shown through such plants. “BUMN Hadir Untuk Negeri” (SOE for the Nation) that consists of student and program development. Started We believe that the fertilizer and ammonia business in 2015, Pupuk Indonesia’s Siswa Mengenal Nusantara segments will yield positive returns since they support (SMN) program aims to instill a spirit of nationhood the national food security objective and offer farmers in a nation rich in diversity and natural potential. Our with access to affordable fertilizers. In addition, we program seeks to achieve the goal by inviting students believe that commodity prices in 2019 will remain stable. to participate in hands-on interaction with the Overall, the projections can have a positive impact on Government and local communities. We also educate our stakeholders. stakeholders on the role of the Ministry of State-owned Enterprises and its companies in National Capacity Developing through youths. Our other partnership program has a direct impact on the communities’
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In the domestic market, it is predicted that the average gas price in Indonesia is US$6 per MMBTU while agricultural, forestry, and fisheries sectors will improve, the average price in other countries is between US$1 albeit moderately. The State Budget 2019 assumed and US$2 per MMBTU. We appreciate the issuance of these segments to grow at about 3.8%. The assumption the Regulation of the Minister of Energy and Mineral is supported by special measures to stimulate Resources No. 14 Year 2016, which in essence is a policy to productivity amid challenges to production, such as lower gas prices for the fertilizer industry. Nonetheless, weather, conversion of land use from agriculture to we are optimistic to face the international market and industrial, and possibility of outsourcing. we have set an export target of 1.9 million tons in 2019.
In the construction service segment, our goal in 2019 Another challenge for us is that our plants are relatively is to further develop this market by securing new older and not fuel efficient. In response, we have contracts worth Rp9.48 trillion and services worth Rp6.81 revitalized these older plants to improve production trillion. We are optimistic that we can secure the Senoro efficiency. We have also decided to suspend plants that Ammonia Urea petrochemicals project in the next year. are no longer efficient. In addition, we expect projects started in the previous year, such as the Tiung Biru, PLTU Lombok, and PLTP Despite these challenges, we are optimistic to face Rantau Dedap, to continue achieving their progress challenges in 2019 with help from Pupuk Indonesia’s milestones. solid and highly dedicated individuals and support from the Board of Commissioners. We believe that Another risk in this business that may need attention we can improve on the achievements in 2018. Last is maintaining competitiveness with fertilizer but not least, we wish to extend our sincere gratitude manufacturers from other countries. Although we are to every Pupuk Indonesia individual. Your hard work the largest manufacturer of urea fertilizer in Southeast have resulted in extraordinary achievements. Together, Asia and among the 10 largest in the world, our products we will move forward and continue our trend of are not that competitive in the international market. innovations. I would also like to express my gratitude Natural gas, a raw material in the production of urea to our stakeholders, whose trust enabled us to build fertilizer, is expensive in Indonesia, resulting in higher Pupuk Indonesia as a world-class fertilizer company. production costs relative to that in other countries. The Together, we build the Nation.
Jakarta, April 2019
PRESIDENT DIRECTOR Aan Asikin Idat
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DEVELOPING WORK ATTITUDES AND ENVIRONMENTALLY FRIENDLY OPERATIONS
Economic growth and conservation should be hand-in-hand as humans will be unable to create and develop their economic life in an unhealthy environment. To protect our lives means to protect the environment.
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We take active and proactive measures in RESOURCE OPTIMIZATION environmental conservation through compliance with We are revitalizing our plants to optimize our material and prevailing legislation. Our observance is not just at energy consumption. For existing plants, our goal is to compliance, but also beyond compliance. We prioritize improve their efficiency and raw material consumption sustainability-enabling policies and strategies, such as rather than an outright increase in production output. controlling emissions, reducing energy consumption, The measure stands to reason since these plants environmental conservation, and efficient resource tend to be older and consume significant amounts of utilization. We also organize training and communicate energy, thus raising product prices. Given the above, conservation practices to our employees as mandated we are currently running an eco-efficiency program to by prevailing legislation. revitalize our plants. The eco-efficiency programs are to ensure that plants receive regular maintenance and In our operations, we ensure that we have performed thus can operate efficiently. We expect that regular the Environmental Impact Analysis (AMDAL) or the maintenance can prevent energy wasting unscheduled Environmental Management and Monitoring Plan (UKL- shutdowns. As for business development, our goal is UPL). These measures are taken to calculate a given to manufacture non-urea fertilizers, such as NPK and project’s environmental impact such that decisions are other petrochemical products. This measure is taken taken with consideration to the environment. since there is a shortfall of 3.9 million tons in domestic [GRI 102-11] NPK supply from a national demand of 11.1 tons.
Our conservation activities include: 1. Adopting the ISO 14001 Environment Management RAW MATERIALS System; The primary raw materials in fertilizer manufacturing 2. Adopting the principle of reuse, reduce, recycle (3R) are natural gas (a non-renewable resource) and water in our operations; (renewable resource). 3. Preference on environmentally-friendly and energy efficient technologies. We also ensure that we have Renewable resource usage, i.e. water will be described all the necessary waste management equipment in the chapter on water consumption. and have upgraded our waste treatment installations; MATERIALS USED BY ENERGY UNIT [GRI 301-1] 4. Protecting biodiversity; Gas Consumption(MMBTU) 5. Participation in the PROPER Program organized by the Ministry of Environment and Forestry to evaluate our environmental performance. 157,711,044
In the reporting year, PT Pupuk Kalimantan Timur, one 143,279,544 142,398,680 of our subsidiaries, won the PROPER Gold while PT Pupuk Sriwidjaja Palembang and PT Pupuk Kujang won 2018 2017 2016 the PROPER Green.
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NPK PRODUCTS Urea Production process does not allow raw materials to be recycled since the primary raw material, natural NPK is a synthetic fertilizer that is composed of nitrogen, gas, is a consumable. [GRI 301-2] phosphorous, and potassium. Nitrogen promotes with leaf growth; phosphorous promotes root and shoot However, the production process of NPK fertilizers allows growth; and potassium promotes flower and fruit some 48,132 tons of materials to be recycled. There is no development. We operate two types of NPK Plants: significant amount of packaging material that can be re- steam granulation and chemical granulation processes. used in the production process. [GRI 301-3] Steam granulation NPK plants are operated by PT Pupuk Sriwidjaja, PT Pupuk Kujang, PT Petrokimia Gresik, and PT Pupuk Kalimantan Timur. Chemical granulation PLANT REVITALIZATION PROGRAMS NPK plants are operated by PT Petrokimia Gresik. We Facing stronger competition, we have taken measures manufacture our own nitrogen-based raw materials, i.e. to improve our competitiveness. One of these measures urea and ZA. However, we still have to import phosphorus is the plant revitalization program – refurbishing older (P) and potassium (K) products, such as DAP, as well as plants into cost-effective and fuel-efficient plants. We phosphate rocks and potassium chloride (KCL). have revitalized two plants: the Pusri 2B in Palembang and Amurea 2 in Gresik. The following table shows our consumption of NPK raw materials. [GRI 301-1] In addition, we are planning to increase the production capacity of the NPK plant in Aceh and perform an STEAM GRANULATION NPK exploratory study into a petrochemical project. Total Consumption for NPK (tons) Raw Materials 2018 2017 2016 To maintain plant performance, we have deployed Urea 165,719 144,943 126,008 the Plant Integrity Management System (PIMS) and ZA 117,849 170,395 98,725 Production Management System (Sistem Manajemen DAP 277,242 318,275 226,040 Produksi, SIMPRO). Both PIMS and SIMPRO are used to Phosphate 26,660 6,181 14,489 monitor the overall effectiveness of our business process, rocks (steam granulation) systems, equipment, and resources. We have also taken Potassium 263,181 261,696 212,731 preventive, predictive, and corrective maintenance Chloride (KCL) measures to maintain plant reliability and efficiency. Clay 129,520 133,222 109,559
In addition to natural gas, we also use coal and fuel for CHEMICAL GRANULATION transportation. This Report calculates the volume of NPK In addition to steam granulation, Petrokimia Gresik natural gas used as raw material and as fuel separately. produces NPK using the chemical granulation process. The calculation of natural gas consumption includes subsidiaries that produce fertilizers.
Total Consumption for NPK (tons) Raw Materials 2018 2017 2016
Phosphoric 613,017 643,521 564,844 Acid Ammonia 286,294 301,087 263,591 (NH3) Sulfuric Acid 449,350 478,632 420,450 ZA 345,850 364,360 293,247 Urea 31,275 33,400 37,650 Potassium 483,627 482,504 477,064 Chloride (KCL)
PT Pupuk Indonesia (Persero) 28 Sustainability DEVELOPING WORK ATTITUDES AND Report ENVIRONMENTALLY FRIENDLY OPERATIONS
ENERGY CONSUMPTION COAL CONSUMPTION [GRI 302-1] We use a number of non-renewable (gas, coal, electricity, petroleum) sources of energy. In addition to being a raw 23,012,887
material, we use natural gas in the production process 14,769,624 17,742,445
to generate energy to power heaters and boilers. In 1,096,961 661,193 781,922 Ton the reporting period, our natural gas consumption for 2018 2017 2016 GJ energy increased by 2% to 84,826,815 MMBTU from 84,660,491 MMBTU in the previous year.
NATURAL GAS CONSUMPTION FOR HEATERS AND Electricity consumption includes consumption at our BOILERS (RENEWABLE ENERGY Head Office in Jakarta and at our subsidiaries’ offices. (MMBTU) [GRI 302-1] Consumption is calculated according to meter readings 89,744,121 that are then converted into gigajoules (GJ). Electric power is supplied by PT PLN (Persero) and our own 84,660,491 84,826,815 power stations.
2018 2017 2016 ELECTRICITY CONSUMPTION [GRI 302-1]
1,739,432,246.3 1,795,264,344 1,789,302,649
15,433,930,8 6,463,018 6,441,546
Coal is being gradually phased-in to power heaters kWh 2018 2017 2016 and boilers since it is more economical than natural GJ gas. We expect that the cheaper raw fuel source will help to improve our products’ competitiveness. Coal
consumption is converted into an energy unit, i.e. GJ. In We use fuel-powered company vehicles to support our the reporting period, our coal consumption jumped by business operations. Fuel consumption is calculated 55% to 23,012,887 GJ from 14,769,624 GJ in the previous according purchase receipts that are then converted into year. A large part of the increased consumption was gigajoules (GJ). We are employing ways to reduce fuel due to the recently operating Coal-fired Boiler at consumption, such as a fuel quota system for company Pupuk Sriwidjaja. The boiler’s steam production is 1,920 vehicles, replacing older vehicles with newer, fuel efficient tons/day. vehicles, and using bicycles at several locations.
PT Pupuk Indonesia (Persero) Sustainability 29 Report
FUEL CONSUMPTION [GRI 302-1] ABSOLUTE ENERGY CONSUMPTION (GJ) [GRI 302-4]
14,111,447 2,050,790 1,981,352 2,014,709 13,320,288 12,175,572 149,690 76,924 78,146
Liters 2018 2017 2016 GJ 2018 2017 2016
At the moment, we did not calculate off-premise energy Energy sources included the reduction program are consumption. We plan to report such figures in the next coal, electricity, and fuel. The standard of calculation is report. [GRI 302-2] done by comparing energy consumption before and after a modification completed or by comparing with business-as-usual conditions. The base year used is the REDUCING ENERGY CONSUMPTION year when a modification was completed. We have taken measures to reduce energy consumption On top of reducing our overall energy consumption, we at our head office and subsidiaries’ offices. The also reduced energy demand for the following products: comprehensive energy saving program is aimed to reduce consumption of coal, electricity, and fuel by: 1. Modifying and interconnecting plants; REDUCTION IN ENERGY DEMAND IN 2. Using LED bulbs for road illumination; MANUFACTURING UREA PRODUCTS (MMBTU/Ton Urea) [GRI 302-5] 3. Modifying/replacing air conditioners; 4. Turning off electrical appliances when not in use; 2018 2017 2016 5. Improving natural gas consumption efficiency.
-0.26 -0.31 To further improve natural gas consumption efficiency, we have improved plant reliability, suspended older and -1.22 inefficient plants, and revitalized fertilizer plants. Another Note: numbers with the (-) sign denote energy reduction; efficiency program that has produced significant impacts the (+) sign denote energy increase. was the Cost Reduction Program for non-gas costs.
The calculation uses energy consumption data and calculates the difference between gas consumption intensity from the previous year. The energy balance method was used.
PT Pupuk Indonesia (Persero) 30 Sustainability DEVELOPING WORK ATTITUDES AND Report ENVIRONMENTALLY FRIENDLY OPERATIONS
ENERGY INTENSITY [GRI 302-3] WATER MANAGEMENT AND USAGE Energy intensity is used to calculate energy In fertilizer manufacturing, significant amounts of consumption per product unit. Lower energy intensity water are used during production and for cooling. We means that less energy is needed to manufacture a are committed to use water as efficiently as possible product. The average energy intensity to manufacture by evaluating every process that requires water in a ton of ammonia in 2018 was 36.38, up by 1% from significant volumes. We set the water parameter and 36.15 achieved in the previous year. The average energy consumption targets. If there were irregularities, we intensity to manufacture a ton of ammonia in 2018 was will perform further evaluations. Water consumption 28.41, up by 1% from 28.67 achieved in the previous year. for offices, plants, and production is measured using flow meters. In addition, we use desalinated seawater, groundwater, rainwater, and recycled wastewater. GAS CONSUMPTION INTENSITY (AMMONIA & UREA) Seawater and freshwater consumptions are calculated (MMBTU/TON NH3) using flow meters.
36.38 36.15 36.22 28.41 28.67 29.88 WATER CONSUMPTION BY SOURCE (m3) [GRI 303-1]
Ammonia 2018 2017 2016 Urea 72,848,171 72,848,171 57,814,780 57,814,780
51,223,955 24,185,467 24,185,467 22,960,380 22,696,733 7,365,145 7,365,145 The energy intensity ratio calculation shown includes 6,629,279 6,428,784 3,874,737 3,874,737 3,890,652 3,890,652 3,741,504 1,054,819 1,915,627 569,840 569,840 consumption of coal, electricity, and natural gas used Groundwater Surface Rainwater Recycled Desalinated as an energy source. The calculation accounted for all water (rivers) wastewater seawater
energy consumption used as feedstock and used to 2018 2017 2016 produce stream and generate electricity for production. All data included in this Report is the intensity ratio In 2018, total measured water consumption increased within our premises and does not account for off- by 19.1% to 83,922,027 m3 from 70,125,396 m3 in the premise energy intensity. previous year. Our surface water consumption increased because the Pusri 2B and Plant 1A operated by Petrokimia Gresik have begun operations. We are also improving our efforts in natural resource management by recycling wastewater.
PT Pupuk Indonesia (Persero) Sustainability 31 Report
Seawater is sourced from the Makassar Strait for our sites RECYCLED WATER CONSUMPTION (m3) in Kalimantan Timur; freshwater from rivers in Aceh,
Palembang, Cikampek, and Gresik are not protected 22,960,380 22,957,357 by national and international laws. For individual water 21,284,294 sources, e.g. rivers, sea, groundwater, we did not take volume measurements since it is difficult to measure the volume of water bodies, e.g. seas and rivers. 2018 2017 2016
For local communities, the Sungai Musi is an important route to transport goods and people. Seas are used for fish farming. Nonetheless, our usage of river and seawater does not disrupt their access to local communities. It BIODIVERSITY CONSERVATION must be noted that the volume of accessible water We recognize the urgency to conserve and protect the far exceeds our reasonable usage. In addition, water environment. Conservation is not the sole duty of the is neither tapped at special environmental protection Government, but also the public and industry players. areas nor is it tapped at protected habitats. [GRI 303-2] To that end, we are identifying potential environment locations before preparing a conservation program. We We also use recycled wastewater for our operations. routinely monitor the biodiversity’s status and evaluate Wastewater is treated at the Wastewater Treatment conservation programs organized by our subsidiaries. Plant to be reused in production and discharged as effluent. We ensure that discharged effluents have fulfilled the standards set by the competent authority to MANGROVE AND CORAL PLANTING prevent pollution and not disturb the environmental. In Mangrove offers protection against coastal erosion particular, we have adopted a Water Conservation Policy and abrasion, plus it offers shelter for various land and and Pollution Reduction from Wastewater to preserve marine animals. Its roots are eaten and provide shelter our water supply. for marine animals, such as fish, shrimps, and crabs. More importantly, mangrove forests are able to mitigate In 2018, our recycled wastewater usage was 22,960,380 carbon emissions that cause global warming and m3, obtained from flow meter readings. The volume was climate change. 27.3% of our overall water consumption from surface water, groundwater, and rainwater. [GRI 303-3]
PT Pupuk Indonesia (Persero) 32 Sustainability DEVELOPING WORK ATTITUDES AND Report ENVIRONMENTALLY FRIENDLY OPERATIONS
For that reason, PT Pupuk Kalimantan Timur has planted PT Pupuk Kujang established the Pupuk Kujang mangrove seedlings at Kedindingan Island, Bontang Biodiversity Park (TKHPK) in 2013 that covers 47.7 ha since 2010. In collaboration with the Bontang Regional or 39.75% of the company’s 120 ha land. Pupuk Kujang Government, we are committed to rehabilitate the and the West Java Environmental Office (Pengelolaan marine ecosystem surrounding the island. As at the end Lingkungan Hidup Daerah, BPLHD) established the of 2018, PT Pupuk Kalimantan Timur has planted 45,100 TKHPK as a sanctuary to protect the natural environment mangrove trees at Kedindingan Island. It is now rich in that meets prevailing standards and regulations. The marine life such as starfish, hermit crabs, and clams. We TKHPK was inducted into the West Java Biodiversity have also replaced dead trees to preserve the forest. Parks by the West Java Environmental Office. According to a survey by the BPLHD Jawa Barat, the park is home Other conservation efforts include transplanting coral to 20 of the 89 rare tree species in Jawa Barat. In other in the waters around Tobok Batang, Bontang. As at 2018, words, 22.5% of the province’s rarest trees can be found we have transplanted 4,733 m2 of coral to the area. In here. a marine ecosystem, coral serves as habitat and food source for various sea creatures. Coral and zooxanthellae The TKHPK has several springs and ponds. These water can also mitigate the effects of global warming through sources demonstrate that the area continues to perform
chemical processes, i.e. converting CO2 into calcium as a model of good water management. Communities carbonate, the developing blocks of coral reefs. In living around the TKHPK use these water sources addition, recreational divers can enjoy the underwater for domestic consumption. It follows that PT Pupuk beauty offered by Tobok Batang with its soft and hard Kujang plays an indirect role to supply water to local corals as well as other marine life. communities.
PT PUPUK KUJANG BIODIVERSITY PARK EMISSIONS CONTROL PT Pupuk Kujang is partly responsible in the conservation We realize that as a participant in the industry of fertilizer of the spotted deer (Axis axis). The deer, previously and petrochemicals, Pupuk Indonesia also produces residents of the Bogor Palace, were gifted by then emissions either directly or indirectly. These emissions President Soeharto during his visit to PT Pupuk Kujang are the result of the activities of the production of fertilizer back in 1982. The three deer have multiplied into dozens. and energy usage. To respond to this, we continue to strive to control the emissions produced from the operational activities of the company. As regards record keeping system approach, every subsidiary measures its own emissions, as opposed to using an overall equity, financial or operational control approach.
PT Pupuk Indonesia (Persero) Sustainability 33 Report
GHG DIRECT EMISSIONS (SCOPE 1)
OF PUPUK INDONESIA GROUP (TON CO2 EQ) [GRI 305-1]
6,690,928.21 6,520,083.87 5,373,439.13
4,102,355.20 3.509.722,43 3,333,892.79
IPPU 2018 2017 2016 Energy
The emissions control program in Pupuk Indonesia is the fertilizer manufacturing subsidiary. The calculation supported with more accurate computerization and results show that there is a decline of 4% from 9,853,977 standardization using Tier 1 emission method, i.e. based in 2017 to 9,475,794. The decline was caused by the on the IPCC method of calculation of the emissions efficiency in the production process such as revamping produced from production activities. The company ammonia converter, redesigning catalyst heating up, conducts the calculation by itself. The GHG emission improving interconnection of utilities and product calculation includes direct emissions of GHG (Scope 1), between plants, etc. which is derived from the production activities within
GHG INDIRECT EMISSIONS (SCOPE 2) OF PUPUK GHG INDIRECT EMISSIONS (SCOPE 2) OF PUPUK
INDONESIA GRUP (kWh) [GRI 305-2] INDONESIA GRUP (TON CO2 EQ) [GRI 305-2] 106,784,235 106,784,235 79,127 95,762,921 97,768,000 70,960 72,446 63,829,782 63,829,782 46,277 48,550,380 35,199 35,199 29,607,533 29,607,533 21,465 21,465 3,435,690 3,168.000 2,356 2,619 472,055 472,055 323.88
2018 2018 Petrokimia Pupuk Pupuk 2017 Petrokimia Pupuk Pupuk 2017 Gresik Kujang Iskandar Muda Gresik Kujang Iskandar Muda 2016 2016
PT Pupuk Indonesia (Persero) 34 Sustainability DEVELOPING WORK ATTITUDES AND Report ENVIRONMENTALLY FRIENDLY OPERATIONS
Of all the subsidiaries of the Company, only three GHG EMISSION REDUCTION (TON CO2 EQ) [GRI 305-5] use electricity from PLN as reported above. While the others, namely PT Pupuk Kaltim and PT Pupuk Program 2018 2017 2016
Sriwidjaja Palembang, consume electricity produced Use of Urea raw 250,494 331,939 309,879 by their own power plants. The scope 2 emission is materials
measured based on the grid at each location; and the Reduction of ZAII raw 41,713 67,989 57,619 source of the emission factors that GHG used are IPCC, material
and BAPPENAS (National Development Planning Production of CO2 liquid 13,022 5,092 23,588 Board) instructions and monitoring, evaluation and Total 305,229 405,020 391,086
reporting with GWP mitigation CO2=1, CH4=21, and N2O= 310. We take the year 2010 as the base year, in We continue to strive to reduce GCG emissions through accordance with the agreement with the Ministry of various programs including performing energy Industry as a directive for emissions. conservation and using the CO2 as a product. In the reporting year, the calculation shows a decline at 4% from 9,853,977 in 2017 to 9,475,794. This calculation OTHER INDIRECT GHG EMISSIONS (SCOPE 3) includes direct emissions (Scope 1) as well as CO2, CH4 IN THE CO2 (KG) and N2O gases. The calculation performed with direct 91,031.73 81,075.97 measurements of raw materials with measuring tools 51,327.77 applying the method in the technical guidance on the calculation of fertilizer industry’s greenhouse gas emissions issued by the Ministry of Industry. 2018 2017 2016
EMISSIONS OF OZONE-DEPLETING SUBSTANCE (ODS [GRI 305-6] The indirect emission scope 3 consists of emissions from business travel using aircraft. This is calculated using The ODS (Ozone Depleting Subtances) is a variety of gases that damage the ozone layer – the layer that the CO2 calculator that calculates the amount of fuel per resists the excessive ultraviolet radiation from the sun. distance per passengers and then converted into CO2. In 2018, we have successfully reduced emissions GRK In its operations Pupuk Indonesia we use ODS only by 11%, by taking advantage of video conference facility for air conditioners (AC), of which the amount is not for meetings, reducing direct meeting involving the significant. Therefore, it is not relevant to be reported. subsidiaries of the company. [GRI 305-3] OTHER EMISSIONS CONTROL [GRI 305-7]
GHG EMISSION INTENSITY[GRI 305-4] Pupuk Indonesia also observes, manages and controls other emissions, in accordance with the Decree of the The intensity of GHG emissions represents GRK Minister of the Environment No. 133 of 2004 on Emission emissions produced for every ton of the production Quality Standard for the Fertilizer Industry Activities. The of Urea fertilizer. The intensity of emissions GRK in calculation takes in the concentration of the compound reporting is 1.27 tons CO2eq/ton Urea fertilizer comes at the debit and the operating time, using mass balance from the production process and the use of energy. method. In this calculation we use metric “ton”, which is our production unit. The calculation of GHG emission intensity includes direct emissions (Scope 1) and indirect emissions (Scope 2). Regarding the gases included in
the calculation, these are the CO2, CH4, and N2O.
PT Pupuk Indonesia (Persero) Sustainability 35 Report
Effluent is monitored every month. The measurement OTHER AIR EMISSIONS is carried out by accredited laboratory KAN that uses Parameters Unit 2018 2017 2016 the method in line with SNI about sampling effluent
NOx Ton 4,067.19 2,535.42 4,236.42 and effluent analysis test methods or other equivalent test standards. Once the quality standard has been SO2 Ton 2,042.60 1,482.01 6,894.79 met, or even at lower rate, effluent is channeled to Total Particulate Ton 2,060.71 2,817.16 5,572.18 the bodies of water as illustrated in the tables below.
NH3 Ton 2,165.94 2,730.56 4,236.42 Effluent is channeled into bodies of water that no other
Fluor Ton 19.44 48.31 208.75 organizations use. The volume of effluent is measured regularly with debit measuring tool. [GRI 306-1]
WASTE MANAGEMENT POLLUTION DATA (IN KG) RELEASED PER TON UREA PRODUCED Industrial Waste management is not only important Parameter Denomination 2018 2017 2016 for the environment and the community surrounding our operational areas, but it is also important for us, COD kg/ton urea 0.14 0.15 0.12 TSS kg/ton urea 0.05 0.04 0.02 because a good waste management supports the Oil & kg/ton urea 0.00 0.01 0.00 sustainability of the Company and employee health. grease Our commitment to the environment and waste Total kg/ton urea 0.17 0.22 0.30 Ammonia management is evidenced by the PROPER Gold and TKN kg/ton urea 0.30 0.37 0.47 two PROPER Green awards from the Ministry for the Fluor kg/ton urea 0.00 0.00 0.04 Environment won by our subsidiaries. Debit m3/ton urea 1.02 1.08 0.74
Waste, both solid and liquid, is an inevitable part of the VOLUME OF THE EFFLUENT process of the production of fertilizer. However, we TO BODIES OF WATER [GRI 306-1] ensure that the management of the remaining waste Business Unit “Waste Effluent Status Volume Disposal to production is processed in accordance with the quality (m3/year)” Bodies of standard and regulation stipulated by the Government. Water
Petrokimia 1,133,184 Java Sea Not Gresik protected THE RELEASE OF EFFLUENT BASED ON Pupuk Iskandar 317,147 Malacca Strait Not QUALITY AND PURPOSE Muda protected Pupuk 2,966,625 Musi River Not Waste water from the production process by Pupuk Sriwidjaja protected Indonesia is returned to the bodies of water after being Palembang refined and processed according to the applicable Pupuk Kaltim 3,380,856 Makassar Strait Not protected regulations, so that it would not damage the environment and endanger the living beings, both of humans and Pupuk Kujang 1,024,769 Cikaranggelam Not River protected water animals. Effluent of Pupuk Indonesia is managed Total 8,822,581 through in-plant treatment taking advantage of NH3 in the effluent with hydrolysis process and NH3 stripping. Every company subsidiary has been equipped with the Size of the bodies of water where the effluent disposal installation of effluent management. [GRI 306-1] (could not specified)[GRI 306-5] The bodies of water are not specified as national conservation areas [GRI 306-5] There are no protected species in the areas [GRI 306-5]
PT Pupuk Indonesia (Persero) 36 Sustainability DEVELOPING WORK ATTITUDES AND Report ENVIRONMENTALLY FRIENDLY OPERATIONS
HAZARDOUS WASTE [GRI 306-2] HAZARDOUS WASTE TRANSPORTATION To reduce the hazardous and toxic substance hazardous [GRI 306-4] waste generated in the production process, we reuse We apply the waste management system in accordance the hazardous waste that still has economic value in with the type and character of the waste to be processed. various ways, including: The following is the data about the treatment of 1. Decoking or primary catalyst reformers, hazardous waste which is calculated based on the 2. Replacing the hazardous substances with non- weight of waste times the volume of hazardous waste hazardous substances, packaging. 3. Utilizing gypsum and coal ash, 4. Working together with hazardous waste utilizers which hold permits from the Ministry of HAZARDOUS WASTE MANAGEMENT (TONS) Environment and Forestry. 2,232,158.81
1,873,546.44 Waste management is performed according to the 1,389,458.49 Volume of standard of the scientific treatment of the Ministry of transported hazardous 52,318.25 Environment and Forestry, namely meeting the quality 49,184.57 40,501.69 waste standards of air emissions and combustion efficiency of Volume of 2018 2017 2016 99.99% at the minimum. Hazardous waste produced by processed hazardous the Company is managed in the following processes: waste 1. Be transported by land and the sea, by third parties who hold transportation permit from the Ministry of Environment and Forestry, and recommended SIGNIFICANT SPILL [GRI 306-3] by the Ministry of Transportation. In the reporting year there were no significant spills. 2. Hazardous waste is processed by authorized hazardous management companies.
NON-HAZARDOUS WASTE [GRI 306-2] In the environment of Pupuk Indonesia, only Pupuk Kalimantan Timur has permit of hazardous waste The implementation of the 3R system (reuse, processing by thermal (incineration) for certain reduce, recycle) is a solution to non hazardous waste hazardous substances, including used majun, laboratory management in the Company environment. Waste in effluent and packaging of chemicals. In 2018, we are able the form of organic waste is transformed into compost, to significantly reduce the hazardous waste volume by while papers and some other non-organic waste are lowering phospogypsum produced by the phosporic recycled and sent to landfill. The organization standards acid plant. regarding Non-hazardous waste management are ISO 14001:2015. The method specified in the waste disposal is adjusted to the type and characteristic of waste; and HAZARDOUS WASTE (TON) the Company has appointed that contractors that have
2,272,713.76 been certified and meet the regulation concerning 1,922,731.01 waste management. 1,441,776.74
2018 2017 2016
PT Pupuk Indonesia (Persero) Sustainability 37 Report
NON-HAZARDOUS WASTE GENERATED NUMBER OF COMPLAINTS AND FOLLOW UPS
Year Number of Number of Type of waste Number of Unit Complaint Complaints Complaints generated Complaints 2017 2016 Followed Up Resolved
Organic waste Tons 5,790.38 5,989.83 6,697.55 Odor of 26 26 26 Ammonia Non-organic Tons 5,359.16 9,340.29 12,604.82 waste Water 1 1 1 Paper waste Tons 116.61 377.21 185.86 pollution
Other 5 5 5 Complaints
NON-HAZARDOUS WASTE PROCESSED Most of the complaints that we received from the Year Type of waste Unit communities around the factory is complaints generated 2018 2017 2016 regarding odor of ammonia. Responding to the Organic waste Tons 3,689.29 4,624.08 5,174.66 complaints, we immediately take operational control Non-organic Tons 1,976.01 5,679 3,996.75 measures. As with complaints regarding the pollution waste of waste to the bodies of water and other grievances, Paper waste Tons 53.04 69.02 80.86 we take note of and resolve these to reach a win- win solution for both sides and we overcome waste pollution by making improvements because we SUPERVISION OVER POLICY [GRI 306-2] prioritize compliance with environmental regulations. SUPERVISION OVER POLICY In order to build a harmonious relationship with the During the reporting period, we have well resolved every communities surrounding the Company and to provide issue, considering the sense of justice for all the relevant the best benefits for stakeholders, Pupuk Indonesia parties. Therefore, there are no significant fines or non- periodically runs a survey of environment satisfaction. monetary penalty because of disobedience against the The results of the survey serve as inputs for the planning laws or regulations of the environment. In the year of community development programs to suit the needs reporting, no subsidiary received any sanctions. of the community. From the survey conducted in [GRI 307-1] the reporting year, the value of Key Performance Indicators (KPI) about environmental satisfaction of Pupuk Indonesia Group in 2018 is 88.33 or an increase ENVIRONMENTAL INVESTMENT compared to the one in 2017, which is 88.22. Description Value in Rupiah (Thousand)
Preservation of the environment 4,137,263,383 COMPLAINTS RELATED TO THE Consulting services and 2,793,567,980 ENVIRONMENT licensing
Our commitment to the standards and compliance Hazardous Waste Management 49,264,524,024 with the legislation in terms of the environment is also Awareness 1,050,000,000 demonstrated by opening the means of complaints from the public regarding environmental disturbances Total 57,245,355,387 that might arise. We respond to every complaint under the procedures involving three departments within Total investment environment in the reporting year Pupuk Indonesia Group, namely the Department of is Rp57.24 billion, a decrease from the previous year K3LH, Production Department and the Department of investment of Rp59.78 billion. Public Relations. The following are complaints filed at Pupuk Indonesia throughout 2018.
PT Pupuk Indonesia (Persero) 38 Sustainability DEVELOPING A CULTURE OF Report OCCUPATIONAL HEALTH AND SAFETY
PT Pupuk Indonesia (Persero) Sustainability 39 Report
DEVELOPING A CULTURE ON OCCUPATIONAL HEALTH AND SAFETY
A healthy and safe working environment will improve employee productivity. Pupuk Indonesia prioritizes the efforts to employ the highest standards in occupational health and safety.
PT Pupuk Indonesia (Persero) 40 Sustainability DEVELOPING A CULTURE OF Report OCCUPATIONAL HEALTH AND SAFETY
Occupational health and safety (OHS) cannot be providing the safety equipment needed at work. Not separated from the operational processes and least of all is developing a culture of OHS awareness in productivity of a company. Every worker is entitled to every employee, because the human factor is one of the protection in occupational health and safety in every most important factors in maintaining OHS. aspect of his work. We are committed to maintaining a healthy and safe working environment for every worker, In 2018 Pupuk Indonesia made a joint work safety so they can be safely home to meet their families at the commitment to ensure that all activities within Pupuk end of the day. This commitment has been accomplished Indonesia Group are secured and safe. by designing OHS policies and systems, in addition to
PT Pupuk Indonesia (Persero) Sustainability 41 Report
OHS POLICY AND TARGET performance has been conducted. The measurements have focused on the leading indicator and the lagging Pupuk Indonesia and all levels of its subsidiaries indicator. These evaluations and measurements are has implemented strict OHS management in each useful to provide input on efforts of improving and operational activity, in accordance with regulatory developing the OHS system and management. standards set by the government, besides referring to international standards on OHS ISO 45001. Clear OHS targets have provided direction for the formulation of appropriate policies and strategies. In In order to optimize OHS performance, “Behavior Based 2017, our OHS target was to reach zero accident hours. Safety” and “Process Safety Management” have been implemented. Behavior Based Safety (BBS), efforts focusing on preventing work accidents by emphasizing [GRI 403-2] the aspects of human behavior; therefore, BBS OHS PERFORMANCE identifies behavior related to OHS, and provides Various standard procedures according to prevailing feedback that will later be analyzed and realized in standards have been applied in order to improve OHS the action plan. Hopefully this process can improve performance, such as the implementation of HAZOP occupational health and safety towards zero accidents. (Hazard Operability Study) to map potential hazards, and JSA (Job Safety Analysis) including the list of works, Safety Management Process (PSM) – a management their hazards and safety procedures. Not only are these system with a proactive approach to identify and procedures useful for controlling the risk of work injury, control hazards from production process activities as a but also for protecting work equipment and increasing precautionary measure at work – focuses on prevention, productivity. preparation, mitigation and response to workplace accidents. It contains various guidelines for working We also ensure that each employee works with work processes, such as the handling of hazardous materials, permit and wears the required PPE (Personal Protective maintenance of working equipment and its proper Equipment). PI also periodically conducts training and operation, management of working procedures and so disseminates communication concerning workplace forth. hazards. These are aimed to increase employee awareness and accuracy to reduce the risk of workplace To ensure the effectiveness of OHS, regular hazards. Information regarding OHS performance in the measurements, evaluations and reporting on OHS reporting year is reported in the following table.
SAFE WORKING HOURS
46,714,507 37,763,704 27,047,684
2018 2017 2016
PT Pupuk Indonesia (Persero) 42 Sustainability DEVELOPING A CULTURE OF Report OCCUPATIONAL HEALTH AND SAFETY
WORK ACCIDENT RATE, BUSINESS UNIT-WISE
BUSINESS UNIT LTI LTIFR MTC RWDC TRIR
PT Petrokimia Gresik 0 0 0 0 0
PT Pupuk Kujang 0 0 5 0 1.14
PT Pupuk Kalimantan 0 0 2 0 0.30
PT Pupuk Iskandar Muda 0 0 0 0 0
PT Pupuk Sriwidjaja Palembang 0 0 0 0 0
* Classified according to business units, since each unit is located in a different region (West Java, East Java, East Kalimantan, Aceh, Palembang).
BUSINESS UNIT-WISE WORK ACCIDENT RATE
GENDER LTI LTIFR MTC RWDC TRIR
Male 0 0 7 0 0.135
Female 0 0 0 0 0
The recording is based on data from Human Resources Division, referring to the regulation of the MINISTER OF MANPOWER NO. 3 OF 1998:
1. LTI (Lost Time Injury), numbers of working hours lost due to an occupational accident, which results in more than 24 hours of lost hours. 2. LTIFR (Lost Time Injury Frequency Rate), numbers of hours lost due to work accidents per 1 million working hours 3. MTC (Medical Treatment Case), cases of work accident requiring professional treatment, but does not results in lost hours. 4. RWDC (Restricted Work Day Case), accidents resulting in the inability to work normally, requiring the employees to be temporarily moved for other projects. 5. TRIR (Total Recordable Incident Rate), recorded accidents caused by an incident at work and requires some types of medical action.
NUMBER OF ACCIDENT, LOCATION-WISE
5
2018
Minor
Moderate
2 Severe
Fatal
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Head Office PT Petrokimia Gresik PT Pupuk Kujang PT Pupuk Kalimantan PT Pupuk Iskandar PT Pupuk Sriwidjaja Timur Muda Palembang
PT Pupuk Indonesia (Persero) Sustainability 43 Report
6
2017 4
Minor 3 3 Moderate
Severe 2 2 Fatal
1 1
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Head Office PT Petrokimia Gresik PT Pupuk Kujang PT Pupuk Kalimantan PT Pupuk Iskandar PT Pupuk Sriwidjaja Timur Muda Palembang
12
2016 9 8 8
Minor
Moderate
Severe
Fatal 3 2 2 2 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Head Office PT Petrokimia PT Pupuk Kujang PT Pupuk PT Pupuk Iskandar PT Pupuk Sriwidjaja PT Rekayasa Gresik Kalimantan Timur Muda Palembang Industri
NUMBER OF ACCIDENT, GENDER-WISE
Business Unit Minor Moderate Severe Fatal Total
2018 Male 7 0 1 0 8 Female 0 0 0 0 0 2017 Male 8 11 2 1 23 Female 0 0 0 0 0 2016 Male 19 28 1 2 50 Female 0 0 0 0 0
1. Minor, accidents which do not result in loss of 3. Severe, accidents that result in lost hours and are working days (first aid). expected to cause physical or mental disability 2. Moderate, accidents result in lost hours (inability to interfering with their duties and work. work temporarily) and will presumably not lead to 4. Death/fatal, accidents causing immediate or within physical and/or mental disabilities that will interfere 24 hours death after the accident. with their duties.
PT Pupuk Indonesia (Persero) 44 Sustainability DEVELOPING A CULTURE OF Report OCCUPATIONAL HEALTH AND SAFETY
In 2018, no fatal accidents took place in the Fertilizer We realize that OHS is a joint obligation and Manufacturing subsidiary. Generally speaking, responsibility, therefore, along with employee compared to the previous year, the level of mild, representatives, PI agreed on Collective Labor moderate, severe injuries in Pupuk Indonesia subsidiary Agreement (CLA) containing articles related to OHS. experienced a decline of 100%. From all 72 articles in CLA, 6 articles, or about 8% of the agreements, focus on OHS. The topics covered are core EMPLOYEE REPRESENTATION IN OHS ISSUES topics regarding employees work safety, such as: Our commitment to realize effective OHS with [GRI 102-41, GRI 403-4] employees is manifested in a joint agreement in forming Occupational Health & Safety Advisory Team OHS ASPECTS IN CLA (P2K3), a forum for cooperation between the company Article in CLA Focus on OHS Aspect and workers to develop good cooperation, mutual Chapter XII Article 52 General OHS Aspects understanding and encourage effective participation in the application of OHS. The team has been providing Chapter XII Article 53 Work Uniform
advice and consideration for the Company regarding Chapter XII Article 54 Work Equipment OHS issues, in addition to helping communicate OHS Chapter XII Article 55 Occupational Safety and awareness to every employee. Hopefully, the hazard Health Protective Equipment control system can be developed, and the Company along Chapter XII Article 56 Occupational Safety Protective with all employees can determine the best alternatives Equipment Inspection for corrective actions. In the corporate structure, this Chapter XII Article 57 Occupational Health committee has operated at the compartment level in each subsidiary and is comprehensively coordinated at the head office. [GRI 403-1] CONTRACTORS AND WORKING SECURITY
Pupuk Indonesia also signed a Collective Labor During business processes, contractors work with PI Agreement (PKB) with employees to guarantee as labor providers. However, we make sure that each representation and protection for all company contractor has fulfilled all OHS requirements according employees. The number of employee representatives to laws and regulations and meet Pupuk Indonesia’s in PKB varies from subsidiary to company, but PKB standards. PI has implemented the Contractor Safety protects all of the Company’s employees. [GRI 403-1] Management System (CSMS) to make sure that contractors are committed to meeting all requirements regarding health, occupational safety and environment. EMPLOYEE REPRESENTATION IN P2K3 IN 2018 Important requirements for contractors: Company Representation 1. Contractors hold official license as a legal company PT Pupuk Iskandar Muda 12% 12% and expertise in the related field.
PT Pupuk Kujang 12% 12% 2. Contractors have fulfilled the occupational health and safety requirements and comply with PT Pupuk Kalimantan Timur 12% 12% prevailing OHS rules and regulations. PT Pupuk Iskandar Muda 12% 12% 3. Contractors have met the technical requirements,
PT Pupuk Kujang 12% 12% and have certified workers.
PT Pupuk Kalimantan Timur 12% 12%
PT Pupuk Indonesia (Persero) Sustainability 45 Report
OHS TRAINING up held annually for all employees / employees prone to occupational diseases. Periodic audiometry checks To ensure that every employee and contractor have also been also provided for workers exposed to understands and prioritizes work safety, OHS noise. For employees exposed to pollution, spirometry campaigns and various, training and meetings related checks have been provided to find problems in their to OHS implementation and evaluation have been respiratory function. conducted. This training is held in every Pupuk Indonesia subsidiary involving every level of workers, At each subsidiary, we provide standard clinic facilities from employees to managers. In addition, subsidiary equipped with examination table, first aid kits (first meetings have been held monthly to discuss OHS aid for accidents), ambulances and other medical issues by P2K3. The following is the frequency of P2K3 equipment. Medical personnel have been certified meetings conducted at the Pupuk Indonesia subsidiary. to handle a variety of minor injuries in the event of an accident. For further treatment, our clinic has FREQUENCY OF P2K3 MEETINGS IN 2016-2018 established cooperation with the nearest hospital. BUSINESS UNIT 2018 2017 2016
PT Petrokimia Gresik 12 12 12
PT Pupuk Kujang 9 9 9 Types of High Risk Frequency Coverage Works of Health of Health PT Pupuk Kalimantan 12 12 12 Examination Examinations
PT Pupuk Iskandar Muda 12 12 12 Employee health 1 time a year Medical check up check PT Pupuk Sriwidjaja 12 12 12 Palembang Workers exposed to 1 time a year Audiometry high noise PT Rekayasa Industri 6 6 6 Workers exposed to 1 time a year Spirometry Notes: The P2K3 meetings discuss K3LH attended by workers and management representatives chaired by the Chair of P2K3. P2K3 meetings air pollution are held at least once every 3 months.
For employees and their families, health insurance has In addition to meetings at each subsidiary, a joint been provided in accordance with prevailing regulations, coordination meeting at the head office of Pupuk including: Indonesia in Jakarta, has annually been held and 1. Health insurance for emergencies, hospitalizations attended by representatives of each subsidiary. The and outpatients. topics are issues of OHS; the level of work accidents, 2. Vaccination and Immunization. OHS programs and precautions. 3. BPJS Kesehatan according to Government Regulations.
HEALTH SERVICE FOR EMPLOYEES [GRI 403-3] Pupuk Indonesia considers the health of employees The fertilizer industry is one of the most important and their families important, since preventing is industries in promoting food self-sufficiency in better than curing. Moreover, in a safer-working Indonesia, yet it also leads to high level of hazard environment, maximum contribution can be expected due to chemicals and special equipment use. For this from healthy employees. reason, special attention are given to medical check-
PT Pupuk Indonesia (Persero) 46 Sustainability DEVELOPING EXCELLENT PRODUCTS Report
PT Pupuk Indonesia (Persero) Sustainability 47 Report
DEVELOPING EXCELLENT PRODUCTS Pupuk Indonesia provides the Indonesian best quality fertilizer to develop food sustainability in Indonesia to meet the consumers’ needs and demands.
PT Pupuk Indonesia (Persero) 48 Sustainability DEVELOPING EXCELLENT PRODUCTS Report
PRIORITIZING HEALTH AND SAFETY OF In order to provide the best products and services, we CUSTOMERS [GRI 416-2] receive input and feedback from customers to improve our products and services quality. To that end, Pupuk With a production capacity of 13.75 million tons per Indonesia conducted a survey to determine customer year, Pupuk Indonesia is expected to be able to meet satisfaction. This survey, conducted by fertlizer producer national fertilizer needs by providing various types of subsidiaries, is a useful input for decision making based fertilizers. We are aware that our customers are assets, on information from the field and the results are listed and their loyalty matters for our business. For that as below. reason, we strive to provide the best for our customers.
Our goal to efficiently produce and market fertilizers and CUSTOMER SURVEY RESPONDENTS GROUP
other agribusiness products and to satisfy customers is Subsidized Non Subsidized Non Fertilizer realized through: Fertilizer Fertilizer Customers 1. Producing high quality fertilizers by improving Customers quality and promoting innovation. Distributor Distributor Distributor
2. Paying attention to customer responses and Kiosk Exporter/trader Exporter/trader complaints. Farmer Plantation Industry 3. Being responsive in providing solutions and company anticipating problems that might occur. Industry 4. Maintaining good relations with customers and other stakeholders. 5. Ensuring that the distribution of fertilizers is on CUSTOMER SATISFACTION INDEX SURVEY RESULTS time, in the right amount and cost efficient. 2018 2017 2016
To ensure that the product is safe for consumer Customer Loyalty 4.31 4.23 4.38 Index use, the Company has met the standards of various standardization institutions, including: Customer Satisfaction 4.31 4.26 4.19 Index 1. ISO 9001: 2015 Quality Management System. Customer 1.36 1.51 1.70 2. ISO 14001: 2015 for both urea and ammonia factory Dissatisfaction Index facilities. 3. Halal Certificate for Chemicals issued by the Indonesian Ulema Council (MUI) (Gresik CUSTOMER SATISFACTION INDEX Petrochemical Products). NON SUBSIDIZED
4. Halal Certificate for Rice issued by the Indonesian Urea NPK Ammonia Ulema Council (MUI) (Gresik Petrochemical Customer Satisfaction Index Products) Very Satisfied Very Satisfied Very Satisfied 5. Halal Certificate for Ammonia and Urea (Kujang Fertilizer Product) [GRI 416-1] Customer Loyalty Index
Very Satisfied Very Satisfied Very Satisfied Quality checks on all products have been conducted to Customer Dissatisfaction Index ensure our customers’ safety. [GRI 416-1] Very Satisfied Very Satisfied Very Satisfied
PT Pupuk Indonesia (Persero) Sustainability 49 Report
The results of customer loyalty and customer satisfaction 6. Document and evaluate all received complaints to surveys indicate that customers are very satisfied with be followed up, including making the necessary the quality and service and shows good loyalty to Pupuk improvements, to ensure that the same complaint Indonesia products. During the reporting period, no will never occur and increase customer satisfaction. incidents of violations related to the health and safety of products and services in the Pupuk Indonesia Group To reach these valuable inputs, various means of took place. [GRI 416-2] communication and interaction such as websites, e-mails, call centers, and social media such as Twitter However, we remain open to input, questions, and and Instagram are available. complaints from customers. From these inputs, we obtain the opportunity to identify matters that need RECAPITULATION OF CUSTOMER COMPLAINTS to be improved for the business progress of Pupuk Type of Complaint Number of Total of Percent Indonesia. Every complaint has been managed through Complaints Responded Resolved Complaints a comprehensive process involving each of the related functions: Fertilizer Scarcity 12 12 100%
1. Conduct an analysis of the problem complained for Subsidized Fertilizer 0 0 - a follow up by related Department. Deviation
2. Identify various possible solutions. Product Complaints 20 20 100% 3. Determine the solution to the problem. Distribution Barriers 0 0 - 4. Implement solutions. 5. Deliver a settlement to the customer. Total 32 32 100%
PT Pupuk Indonesia (Persero) 50 Sustainability DEVELOPING EXCELLENT PRODUCTS Report
PRODUCT INFORMATION AND use them so that it is safe for customers and for the COMMUNICATION RESPONSIBILITIES environment. In addition, this information also supports the marketing activities of our products, to deliver fertilizer to the right market segment. For this reason, PRODUCT PACKAGING INFORMATION clear information on all the packaging of our products, [GRI 417-1] including content, circulation period, instructions for Appropriate and complete information about the use, net weight, and others as below has been included. products will help the public to safely and appropriately
Compliance Number
Content Type of Fertilizer
Producer SNI Logo & SNI Number
Weight
Manufacturer Address Circular Period Registration Number
PT Pupuk Indonesia (Persero) Sustainability 51 Report
Indonesian fertilizers use special packaging that does products. Sometimes farmers lean their preferences not break easily, which prevents the fertilizer from towards a particular brand because they are familiar. If being spilled and consumers will be protected from there is a surge in demand for fertilizer in an area which the danger of being exposed to toxic chemicals when leads to a sellout of a certain brand, farmers can be consumed by humans. flexible in choosing other Pupuk Indonesia’s fertilizer products that are similar/same as those commonly During the reporting year, there were no incidents used. Thus the supply of high quality fertilizer remains related to product information and labeling due to available and farmers get the best service. The bag non-compliance with prevailing regulations, and no uniformity of one brand is carried out on subsidized incidents of non-compliance related to marketing urea fertilizer products and organic fertilizers. communications. [GRI 417-2, GRI 417-3] The uniformity of one brand bags also makes it easier UNIFORMITY OF ONE BRAND BAGS to monitor. Each bag contains a bag code so that the distributed products can be easily traced when In order to maximize services to farmers and ensure deviations occur. This effort is also a part of our good quality, eliminate fanaticism towards certain commitment to provide the highest quality fertilizer for factory products in an area, Pupuk Indonesia applies a every customer. policy of using shared bags for subsidized urea fertilizer
1 Subsidized Urea fertilizer 2 Subsidized NPK Phonska Fertilizer
3 Subsidized SP-36 Fertilizer 4 Subsidized ZA Fertilizer 5 Subsidized Organic Fertilizer
PT Pupuk Indonesia (Persero) 52 Sustainability DEVELOPING EXCELLENT PRODUCTS Report
COLORING OF SUBSIDIZED FERTILIZERS CUSTOMER DISTRIBUTION AND SERVICES Special coloring is applied to avoid misuse in the The importance of punctuality on fertilizer supply distribution of subsidized fertilizers. Subsidized urea is our concern, because of farmers’ dependence on is now pink, while non-subsidized urea, produced fertilizer in the growing seasons. For this reason, we for commercial purpose is white, and ZA is orange. designed an effective fertilizer distribution system by However, this coloring does not affect the composition making the following efforts. and content of fertilizer, and it is still safe for farmers and the environment, because the dyes used are organic; RAYONIZATION OF SUBSIDIZED FERTILIZERS water-soluble and non-poisonous. The process of rayonizing subsidized fertilizer has helped to distribute fertilizer to farmers. With this rayonization, JOINT PROMOTION/SPONSORSHIP AND farmers will hopefully be able to obtain fertilizer on time, COUNSELING in a short time and at an affordable price after a short In order to share information to improve farmers’ and inexpensive distribution channel. To determine businesses, Pupuk Indonesia conducted promotional the most efficient path, the area has been mapped. activities / sponsorship and national-scale counseling. The types of fertilizers distributed are urea fertilizer, Some of the topics outlined in this activity are NPK and subsidized organic fertilizer. The distribution technological escort, product excellence and balanced of subsidized fertilizer refers to Minister of Trade fertilization for farmers. On several occasions, we have Regulation No. 15 / M-DAG / PER / 4/2013 concerning collaborated with relevant agencies in the field of Procurement and Distribution of Subsidized Fertilizers agriculture to hold promotions and counseling. for the Agriculture Sector.
Gambar : Rayonization of Subsidized Urea Fertilizer
PT Pupuk Indonesia (Persero) Sustainability 53 Report
Image: Rayonization of Subsidized Organic Fertilizer
Image: Rayonization of Subsidized NPK Fertilizer
Image: Rayonization of Subsidized ZA and SP 36 Fertilizers
Pupuk Iskandar Muda Petrokimia Gresik
Pupuk Sriwijaya Palembang Pupuk Kalimantan Timur
Pupuk Kujang
PT Pupuk Indonesia (Persero) 54 Sustainability DEVELOPING EXCELLENT PRODUCTS Report
DISTRIBUTION MECHANISM DIRECT SALES FOR END USERS FOR THE The fertilizer distribution mechanism is designed so COMMERCIAL SECTOR that it is efficient and effective. From the factory, the Direct sales to end users gives buyers the opportunity to fertilizer is brought to Line II packing place (bagging get the best price, from which their product loyalty can unit), to then be stored in Line III which functions as be formed. a warehouse. From Line III, fertilizer was distributed to distributors’ warehouses in various regions, which DISTRIBUTION IMPROVEMENT eventually distribute fertilizer to retailer where farmers Accelerated and quick distribution flow plays an or farmer groups eventually buy fertilizer. important role in marketing that benefits both parties, leading to both the best service for customers and DISTRIBUTION FACILITIES company efficiency. For this reason, we undertake Complete distribution facilities are an important factor strategies including: in supporting efficient and effective distribution. Our 1. Applying 3-year subsidiary distribution service distribution facilities are spread all over Indonesia as contracts to guarantee fertilizer availability, as an attached map, with various facilities as follows: implementation of Cost Reduction Program (CRP) • Owned Fleet: 9 Units 2. Synergizing distribution services with PT Pupuk Ship Fleet Rental: 6 Units Indonesia Logistik through fertilizer producer Voyage Charter: ± 168 Trip subsidiary. Carrying Unit: 4 Units Fleet of Trucks: ± 6,151 units OPTIMAL STOCK MANAGEMENT • Distributors: 1,542 One of the most important means in business is stock Stands: 45,005 management since precise stock management leads to Warehouse Line I: 567,400 ton capacity maximum benefit and good customer service. Various Warehouse Line II: 970,249 ton capacity strategies have been implemented including: Warehouse Line III: 1,886,781 ton capacity 1. Application of Subsidized Fertilizer Stock Control • Total Warehouse Capacity: 3,424,430 tons. Guidelines. 2. Application of Optimal Fertilizer Stock Management Guidelines. COMPLETE FERTILIZER STALLS To improve services for farmers, Pupuk Indonesia Group has signed a fertilizer purchase agreement (SPJB) contract with 1,247 distributors and 34,452 subsidized fertilizer retailers, consisting of state-owned or region- owned enterprise units and cooperative units, as well as private units. With this sales system, distribution of subsidized fertilizer for farmers is expedited.
PT Pupuk Indonesia (Persero) Sustainability 55 Report
CUSTOMER SERVICES To help customers and other stakeholders to access information or provide input, we open various means of communication as below.
Information Support Requirements Effectiveness Measures
Company Profile, Product Info, Website: www.pupuk-indonesia.com Easy access Number of visits Distributor
Products and complaints Telephone: 0800-100-800-1 Toll free Response time
Product and Activity Info Advertisement: Informative Brochure, Print Information Quality of information Media, Electronic Media Fax: 021-80647955 Email: [email protected] Instagram: pt.pupukindonesia Twitter: @pupuk_indonesia
COMMITMENT TO OBLIGATION Pupuk Indonesia has been appointed as one of the GP3K operators with the following assignment areas: We are committed to comply with laws and regulation 1. Year 2011 - 100,000 hectares since the progress and health of the company hinges 2. Year 2013 - 1,000,000 hectares on such compliance. During the 2018 reporting year, no 3. Year 2014 - 1,200,000 hectares cases of violations of the law related to anti-competition, antitrust, and monopolistic practices that could harm Starting in 2015 PT Pupuk Indonesia Group has not the business industry in general, or laws and regulations been assigned as an operator of the GP3K Program, in the social and economic fields occurred. [GRI 419-1] but we continue to transfer technology to customers. We are committed to continuing the program through Our commitment to compliance also translated the Food Production Improvement Program (P4) and to implementation of the Corporation-based Food Demonstration Plots (DEMPLOT). Production Increase Movement (GP3K), an elaboration of Presidential Instruction No. 5 of 2011 concerning Safeguarding National Rice Production in Facing Extreme Climate. The Presidential Instruction explained that the duties of the Ministry of SOEs were as follows: 1. Providers of land in forest areas with a production pattern of intercropping for rice plants. 2. Provision and distribution of grain and rice production and distribution facilities, and 3. Procurement and management of government grain / rice reserves.
PT Pupuk Indonesia (Persero) 56 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
PT Pupuk Indonesia (Persero) Sustainability 57 Report
DEVELOPING COMMUNITY WELFARE AND WELL-BEING
Community welfare is our main concern, since we grow and evolve together with community. In addition to the economic priority, it is our commitment to be sustainable through our policies, strategies and programs which prioritize social and environmental aspects.
PT Pupuk Indonesia (Persero) 58 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
Our measures to improve community welfare are attention to their welfare through our CSR programs. The manifested through our policies and programs on purpose of the program is to improve community welfare corporate social responsibilities (CSR). “People, planet, through local economic development, employment profit” are three primary components which guide us in opportunity, education and training, and various other determining our long-term outcomes. It is our purpose programs. It is expected that the communities residing that our CSR programs will not only benefit communities, around Pupuk Indonesia operational areas can benefit but also increase the pride for our employees and to from our business activities. strengthen our relationships with stakeholders. To initiate each program, we conduct an assessment to The policies and programs regrading corporate social identify the needs of the respective communities and responsibility (CRS) refer to and are regulated in: encourage them to actively participate In the programs 1. Code of Conduct about Community and Environment we will implement. Their active participation is inevitable 2. Regulation of the Minister of State-owned to ensure the smooth implementation and to achieve Enterprises (SOEs), No. PER-09/MBU/07/2015 dated ultimate benefit of the programs towards the life of the 3 July 2015 concerning the Partnership Program communities. All our CSR programs have gone through and Community Development Program of State- assessment process, evaluation and engagement with owned Enterprises and its amendments Nos. PER- local communities as well as other relevant stakeholders. 03/MBU/12/2016 dated 16 December 2016 and PER- [GRI 413-1] 02/MBU/7/2017 dated 5 July 2017. We also ensure that these operations will not cause any Given that local communities have their varied needs, the harm in compliance with the international initiatives implementation of CSR programs is managed by each (ISO) as well as the prevailing regulations and subsidiary. However, these programs should follow the laws. As a result, no program actually or potentially primary strategic objectives as follows: effectuate significant negative impacts towards local 1. In relation to nature. Pupuk Indonesia is communities. {GRI 413-2] committed to preserve environment through planting measures. We manage the programs seriously as manifested 2. In relation to welfare. Pupuk Indonesia strives for by establishing a specific division to deal with these improving the welfare of both internal and external issues, namely the Division of Partnership and stakeholders. Environmental Development, who is responsible 3. In relation to communities. Pupuk Indonesia to implement, oversee and evaluate the programs endeavors to contribute in developing the welfare of PKBL and CSR. This division has several specific of the communities where the subsidiaries of units to ensure that the PKBL and CSR programs are Pupuk Indonesia operate implemented properly and effectively, which include: 4. In relation to economy period. Pupuk Indonesia 1. Unit CSR PT Petrokimia Gresik (Gresik, East Java) attempts continuously to increase profits in order 2. Unit PKBL PT Pupuk Sriwidjaja Palembang to support the state’s economy as well as to sustain (Palembang, South Sumatra) the national food security programs. 3. Unit PKBL PT Pupuk Kujang (Kujang Cikampek, West Java) 4. Unit PKBL PT Pupuk Iskandar Muda (Lhokseumawe, CORPORATE SOCIAL RESPONSIBILITES North Aceh, Aceh) PROGRAMS 5. Unit CSR PT Pupuk East Kalimantan (Bontang, East Communities around our operational areas who Kalimantan) contribute in determining the success and operational 6. Unit PKBL & Comdev PT Rekayasa Industri (Kalibata continuity of Pupuk Indonesia. Therefore, we pay special Timur, South Jakarta)
PT Pupuk Indonesia (Persero) Sustainability 59 Report
AMOUNT OF PKBL FINANCING PROGRAMS BY PUPUK INDONESIA SUBSIDIARIES (IN MILLION RUPIAH)
Company 2018 2017 2016
Pupuk Sriwijaya Palembang 39,645 38,542 44,307
Petrokimia Gresik 58,375 74,635 64,206
Pupuk Kujang 37,352 29,698 31,645
Pupuk Kalimantan Timur 17,225 32,826 21,873
Pupuk Iskandar Muda 1,530 1,569 925
Rekayasa Industri 5,905 5,590 5,319
The funds of PKBL Pupuk Indonesia, that is the Partnership Program and Community Development, disbursed in 2018 totaled Rp160,032 billion, decreasing at about 12% compared to the amount disbursed in 2016, which was Rp182,861 billion. The major amount of the funds is directed to partnership programs, which is Rp129,042 billion, which aim primarily to improve community welfare through employment opportunities and income generation. The remaining funds, Rp30.989 billion were disbursed to finance community development programs.
AMOUNT OF FINANCING FOR PKBL PROGRAM IN SUBSIDIARIES PER UNIT (IN MILLION RUPIAH)
Program 2018 2017 2016
Partnership Program 129,042 128,568 133,274
Community Development 30,989 54,293 34,700
CSR Program 96,431 66,575 96,304
Total 256,463 249,436 264,278
ENVIRONMENTAL SATISFACTION SCORE
Description 2018 2017 2016
Environmental Satisfaction Score 88,33 88,22 87,98
PARTNERSHIP PROGRAMS 2. Providing soft loans to encourage employment PKBL is a form of SOE’s responsibility to communities, opportunities and promote self-reliant communities since the main goal of the SOE operation should not 3. Providing communities with relevant training only be to gain profit, but also to actively coach and on skills to generate income and improve their assist low-income groups and other social groups. wellbeing. Pupuk Indonesia contributes to strengthen the capacity of small entrepreneurs and expand employment Pupuk Indonesia provides loans for their non-bankable opportunities through PKBL programs by: partners or those who are not eligible to apply for loans to 1. Increasing the competence of micro, small, and banks. The loans provided for the partners only require medium scale enterprises to be a self-reliant and very small interest, which is 6% flat annually. However, solid business since the enactment of PER-02/MBU/7/2017 dated 5 July 2017 the amount of the interest for a new loan is
PT Pupuk Indonesia (Persero) 60 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
3% of the balance of the loans in the initial year. Besides over. In the reporting year, the realization of the loan providing loans, we also strengthen the capacity of our disbursement in the partnership programs is Rp129,042 partners in the forms of training, promotion for their billion, consisting of micro-loans Rp123,674 billion and products and providing tools/technology for businesses. coaching for partnership that costs Rp5,368 billion.
Loans provided in the partnership program are obtained from the repayment of loans which are being rolled
EXPENSES OF PARTNERSHIP PROGRAM FUNDS (IN BILLION RUPIAH)
Expended Funds 2018 2017 2016
Micro-loans for small business 123,674 122.00 127.28
Cost for partnership coaching 5,368 6.56 7.33
Total 129,024 128.56 133.27
Pupuk Indonesia has strengthened the capacity of around 1,303 partners across the operational areas of the subsidiaries, with the agricultural sector receiving the most support.
DISTRIBUTION OF PARTNERSHIP FUNDS OF PUPUK INDONESIA PER SECTOR (IN BILLION RUPIAH)
Distributed Funds 2018 Loan Value
Industry 85 5,202
Trade 358 25,604
Agriculture 309 46,528
Plantation 84 3,480
Fishery 54 4,076
Animal husbandry 182 25,939
Service 231 12,846
Total 1,303 123,674
NUMBER OF PARTNERS OF PUPUK INDONESIA PER SECTOR
Sector 2018 2017 2016
Industry 85 63 109
Trade 358 442 395
Agriculture 309 447 594
Plantation 84 75 42
Fishery 54 29 56
Animal husbandry 182 134 268
Service 231 202 248
Total 1,303 1,422 1,712
PT Pupuk Indonesia (Persero) Sustainability 61 Report
As of 2018 there are a total of 59,500 partners of 3. Assistance to improve health; partnership program across the operational areas of the 4. Assistance to develop infrastructure and/or public subsidiaries. facilities; 5. Assistance for place worship infrastructure; 6. Assistance for nature conservation; COMMUNITY DEVELOPMENT PROGRAM 7. Assistance for communities for poverty alleviation; The environmental programs we implemented is by 8. Partnership Development. providing grants to communities, to improve their wellbeing through eight main sectors as follows: In this reporting period, the funds realization for 1. Natural Disaster Relief; environmental development is Rp30,989 billion, where 2. Assistance for education and/or training; education and training as well as poverty alleviation assistance account for the largest portion of the funds.
DISTRIBUTION OF ENVIRONMENTAL DEVELOPMENT FUNDS (IN BILLION RUPIAH)
Use of funds 2018 2017 2016
Natural disaster relief 2,258 0,533 2,329
Education/Trainings 8,069 11,210 9,611
Health Improvement 1,589 3,773 2,678
Public Facilities/Infrastructure 3,307 9,994 5,122
Place of worship 4,755 7,789 5,810
Nature conservation 1,885 0,925 1,220
Poverty alleviation 9,126 20,069 4,106
Partnership development - - 3,823
Total 30,989 54,293 34,700
CORPORATE SOCIAL RESPONSIBILITY PROGRAM IMPLEMENTATION Pupuk Indonesia Group also implements a number of activities for economic empowerment and provides social support in accordance with the main pillars of our CSR programs. The support from Pupuk Indonesia for small and medium enterprises (SMEs) is in accordance with the government policies which encourage the revitalization of small and medium enterprises to play strategic roles in strengthening national economy. As a state-owned enterprise, Pupuk Indonesia sets aside a portion of profits to support SMEs, in accordance with Minister of SOE Regulation No. PER-09/MBU/07/2015 dated 3 July 2015 about Partnership Program and Community Development including its amendments Nos. PER-03/MBU/12/2016 dated 16 December 2016 and PER-02/MBU/7/2017 dated 5 July 2017. [GRI 203-2}
Our CSR programs are prepared and implemented properly, by conducting assessments to identify opportunities and potential, also positive and negative impacts. We conduct evaluation regularly on each program to ensure effectiveness. Up to now, no negative impacts are identified due to the CSR programs. On the contrary, communities show their appreciation to the assistance provided by Pupuk Indonesia. [GRI 203-2]
PT Pupuk Indonesia (Persero) 62 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
PARTNERSHIP PROGRAM
BATIK BERAS BASAH, BONTANG The support from PI in the form of capital worth Rp40 million, loans Rp80 million, and coaching accompaniment, the business develops its sales turnover up to Rp750 million per year. [GRI 203-2]
BATIK KENONGO SARI, GRESIK With our support in the form of the capital of Rp50 million, and training on production, finance, intellectual property rights (IPR)and e-commerce, the business currently grows with 300 employees, producing 200 pieces per day. [GRI 203-2]
JERUK NIPIS PERAS (PRESSED LIME PRODUCTS), KUNINGAN With the loans amounting to Rp60 million, the sales have increased from 300 dozen per month to be 1,000 dozen per month, with its extensive market in the areas of Bandung, Karawang, Jakarta. [GRI 203-2]
PT Pupuk Indonesia (Persero) Sustainability 63 Report
KOPI BIJI PALEMBANG (PALEMBANG COFFEE BEANS) Superior type of coffee beans from Ulu Muara Enim have been processed using better methods, including the selection of coffee beans types, the quality, production process, packaging process and marketing strategies.. [GRI 203-2]
NYAK CUT SOUVENIR The business of embroidery bags with typical Acehnese motifs received capital loans with the amount Rp30 million so It grows fast, empowering 132 female workers, producing 5000 units per year with a turnover reaching Rp225 million per year. [GRI 203-2]
PT Pupuk Indonesia (Persero) 64 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
COMMUNITY DEVELOPMENT
WEST NUSA TENGGARA EARTHQUAKE PT Petrokimia Gresik donated funds with the total amount of Rp400 million for the people affected by Lombok earthquake.
SUNDA STRAIT TSUNAMI Emergency response assistance to tsunami affected people with the total amount of Rp200 million, in the areas of Lampung and Banten.
EDUCATION
PETRO SCHOLARSHIPS (BEASISWA PETRO - BESTRO) Petrokimia Gresik provides disadvantaged communities with scholarships covering registration fees, stipend, tuition fees, accommodation cost, operational costs and transport cost for homecoming. In 2018, the recipients of the scholarships are 25 high school students and six university students, with total amount of fund realization Rp1.68 billion.
PT Pupuk Indonesia (Persero) Sustainability 65 Report
TRAININGS AND WORKSHOPS (LOKA LATIHAN KETERAMPILAN - LOLAPIL) Lolapil is a vocational training program which aims to strengthen the skills for high school/vocational school graduates majoring in industrial operators. 99 students participated In the 10th scheme period of Lolapil, with the funds realization Rp762 million. Meanwhile, 16 students participated in Lolapil Pupuk Sriwidjaja program, with funds realization of Rp355 million.
Pupuk Kalimantan Timur Peduli Pendidikan (PKTPP) Program PKTPP scholarships were granted to talented students to continue their study in universities. The total number of beneficiaries for this scholarship was 41 people. Up to the first quarter in 2018, 92 students were graduated, and some of them have been employed, so that 42 students still become the active recipients. Funds realization of the PKTPP scholarship in 2018 amounts to Rp642 million.
PIMCAREducation PIMCAREducation provides assistance to support the education for students in all levels including elementary schools, junior high schools, senior high schools and universities. The total amount provided is Rp44 billion.
PT Pupuk Indonesia (Persero) 66 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
HEALTH
KAMPUNG SEHAT PETROKIMIA GRESIK In cooperation with Petro Graha Medika Hospital, the Kampung Sehat program has been operational since 2014 to provide free health services to communities who are directly affected by the company’s operations, with the total amount of funds realization of Rp364.7 million.
BUDIMAN OKE (BUDAYA TANAMAN OBAT KELUARGA) BONTANG This activity is implemented by PKK women’s groups, Dasawisma groups, accompanied by local NGOs. PI provides training on cultivating methods for medicine plants, bookkeeping, packaging and online marketing. In 2018 fund realization for this activity was Rp100,5 million to construct a production house and plant nursery space. The business turnover reached Rp44 million per group.
PT Pupuk Indonesia (Persero) Sustainability 67 Report
PUBLIC FACILITIES & POVERTY ALLEVIATION
KAMPUNG MALAHING PUPUK KALTIM The village over the sea located in Bontang is a home to 52 households. Pupuk Kaltim implemented a number of projects of infrastructure development and community empowerment, as well as training for accessing jobs, so that the village becomes a comfortable space to live in, and the residents of the area obtain skills to generate income (processing seaweed, sewing, etc.). In this current period of reporting, Pupuk Kaltim has carried out house renovations, electricity network distribution, painting etc. The amount of funds rolled over were Rp228.9 million.
BUSINESS INCUBATOR PERMATA BUNDA (INBIS) Children with special needs are those who experience obstacles due to their physical conditions or intelligence, so they need special assistance and attention, particularly to prepare a self-reliant life in the future. Pupuk Kaltim provided and facilitated training on entrepreneurship and business development, so that the business started up In 2017 now have grown having 6 active business lines. The other activity is reshaping the disability friendly areas, sign language classes, etc. The total funds realization is Rp280.6 million.
HORTICULTURAL VILLAGE OF PUSRI PALEMBANG [GRI 203-2] Horticultural village is an urban farming program with an integrated concept engaging 3E pillars: ecology, education and economy. This activity is implemented in 2 subdistricts, 6 urban villages, 26 neighborhoods, involving 5 farmer groups and 208 members. This activity is a continuation of the activity in the previous year.
PT Pupuk Indonesia (Persero) 68 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
OFFSHORE SUBMERSIBLE CAGE IN BONTANG The program began in 2016 initially involving 29 fishermen and later growing involving 70 fishermen. Pupuk Kaltim has implemented a program of cultivation of lobster and grouper fish, so that fishermen will no longer catch fish using explosives, toxic substances, and other methods harmful to the environment. The fish sales turnover is around Rp670 million annually and the income from culinary tourism was Rp25 million per month. [GRI 203-2]
MANGROVE FOREST IN BONTANG From 2009 to 2018, Pupuk Kaltim had planted 225,167 mangrove seedlings in an area of 22.5 hectares. The mangrove forest also provides additional income for farmer groups, so that each of its members earned Rp500,000 up to Rp1,000,000 per month. The funds rolled over during this reporting period is Rp405.8 million.
MANGROVE FOREST IN GRESIK Pupuk Indonesia restored and developd ecotourism along Kali Lamong, which costed Rp293 million for mangrove rehabilitation for 3.5 kilometers long, built docks and other ecotourism facilities in Gresik District.
PT Pupuk Indonesia (Persero) Sustainability 69 Report
“BUMN HADIR UNTUK NEGERI” PROGRAM
SISWA MENGENAL NUSANTARA PROGRAM Through this program, Pupuk Indonesia provides an opportunity for 23 high school students, vocational school students and disabled students (SLB) who recorded outstanding achievements from various areas across Indonesia to come and obtain more knowledge, in Jakarta on 11 – 18 August 2018. The purpose of this activity is to instill a sense of pride and love to motherland from early age.
SAFARI RAMADHAN To celebrate the holy month of Ramadhan, PI distributed aid and foods to underprivileged people in Tasikmalaya District, with the total amount is Rp150 million.
PT Pupuk Indonesia (Persero) 70 Sustainability DEVELOPING COMMUNITY Report WELFARE AND WELL-BEING
TESTIMONIES FROM BENEFICIARIES OF PKBL PUPUK INDONESIA Partnership Program
WIJI RAHAYU/EWID, BATIK “BERAS BASAH” hope more friends, particularly in Kalimantan, can have SUPPORTED BY PUPUK KALTIM opportunities like I had. This scholarship program has The coaching assistance from Pupuk Kaltim enabled improved the quality of education and contribute to me to develop a business from previously simply to be a community welfare. Thank you, Pupuk Kalitim. Wish shoe tailor to now become a batik entrepreneur. I hope you success, keep striving for good achievements and Batik Beras Basah can develop a broader marketing stay prosperous, and all its employees as well. network and attract more people. (A HIGH SCHOOL STUDENT, A RECIPIENT OF (WINDA, CV COFFEE BIJI SUPPORTED BY PT PUSRI SCHOLARSHIP FROM PETROKIMIA GRESIK) PALEMBANG) Petro scholarships help Gresik students to achieve their It is truly memorable to be a partner of PT. Pusri. PT dreams. By granting the scholarships, Gresik community Pusri assisted me with loans for business, support me receive assistance to maintain their education in all level, in promoting our products in exhibitions. PT Pusri also both in high schools and bachelor degrees, and they no provides me with training relevant to the products, to longer face difficulties due to economic problems. be a mediator between the micro entrepreneurs with buyers. In terms of human resources, the PKBL Team of (IBU RADA, SECRETARY OF A FEMALE FOREST Pusri Palembang has been very cooperative in providing FARMER GROUP “SUMBER CAHAYA”) services, coaching and information sharing to partners. Alhamdulillah, since the mangrove program from Pupuk Kaltim was implemented, I can purchase (CV BANGSAWAN INDONESIA TEXTILE DAN UD refrigerator, a washing machine, a gold bracelet for my AROFAH SUPPORTED BY PT PETROKIMIA GRESIK) children and fulfill my other needs at home. I am truly In addition to participating in exhibitions, partners also grateful for this program. have opportunities to access knowledge on customs and customs-related facilities provided for SMEs. (SITI MUZAYAH, HEAD OF HORTICULTURAL VILLAGE GROUP “KEBUMEN GEMILANG SEJAHTERA”) (A STUDENT OF UNIVERSITAS AIRLANGGA, PUPUK The assistance program from PT Pupuk Sriwidjaja KALTIM PEDULI PENDIDIKAN) Palembang for the community in Kelurahan 2 Ilir Greetings from Borneo, East Kalimantan. I am Dwi Palembang to develop a horticultural village is part Winarsih, majoring in Aquatic Sciences, Universitas of the company’s responsibilities to address social, Airlangga. Alhamdulillah, I was graduated on 3 March economic and environmental problems. This initiative 2018 awarded with “cum laude” with GPA 3.84 I am has increased and provided an alternative income one of the scholarships from Pupuk Kaltim Peduli source for households as a form of community Pendidikan, a program of CSR Pupuk Kaltim in 2014. I empowerment program.
AWARDS We received various awards from the government, media and communities for the community welfare initiatives and our achievements. These achievements are the results of the collaborative works between Pupuk Indonesia and all the components in communities as well as the government with whom we continue to cooperate to achieve our great purpose.
PT Pupuk Indonesia (Persero) Sustainability 71 Report
INSTITUTION LOCATIONS REMARKS
Warta Ekonomi Sari Pan Pacific Hotel, Jakarta Best Partnership Program and Community Development in Processing Industry Category
BUMN Track JW Marriot, Jakarta The Best PKBL Program
Majalah Top Business Hotel Sultan, Jakarta TOP Leader CSR Commitment 2018, TOP CSR 2018 Sektor Industri Pupuk (TOP CSR in fertilizer industry), TOP CSR 2018 for integrated support area program (Program Pengembangan Kawasan Binaan Terintegrasi (Kampung Malahing))
The National Center for Sustainability Reporting Lor In Hotel, Solo Commendation for Best Disclosure on (NCSR) Environment Responsibility
PR Indonesia Surabaya “Kampung Sehat” CSR Program and “Loka Latihan Keterampilan (LOLAPIL)” whichh received silver award under the category of Community Based Development with sub- category SOE subsidiary
The La Tofi School of CSR Hotel Indonesia Kempinski Award received: “Mempelopori Pencegahan Polusi”. (A pioneer in pollution prevention); and Rekayasa Teknologi dan Menghemat Energi” (Engineering Technology and energy saving”; development of biodiversity (Mengembangkan Keanekaragaman Hayati; Saving water resource. (Penyelamatan Sumber Daya Air) and developing water supply system in Muara Telang.
Provincial Government. South Sumatra Hotel The Zuri, Palembang Best CSR Governance
The National Center for Sustainability Reporting Lor In Hotel, Solo Pupuk Kaltim was awarded with Sustainability (NCSR) Report Award (SRA) with the category of Best Disclosure on Waste Management in The 13th Sustainability Reporting Award (SRA) 2017
The La Tofi School of CSR Hotel Indonesia Kempinski Pupuk Kaltim won seven categories, which are Eksekutif Millenium for the Managing Director of Pupuk Kaltim, for saving water resources, technology engineering in energy saving, pollution prevention, biodiversity conservation, managing integrated waste management as well as technology engineering for new energy
Provincial Government of East Kalimantan Governor Office of East Kalimantan Gold Level Province
Corporate Forum for Community Development Hotel JS Luwansa, Jakarta Gold Grand Program, Predikat Platinum (CFCD) (1), Predikat Gold (1), Predikat Silver (3), Best Predicate for Partnership (2)
PT Pupuk Indonesia (Persero) 72 Sustainability DEVELOPING STAKEHOLDERS’ ECONOMY Report
PT Pupuk Indonesia (Persero) Sustainability 73 Report
DEVELOPING STAKEHOLDERS’ ECONOMY
As a fertilizer manufacturer, Pupuk Indonesia helps national economic growth through supporting the National Food Security program. In addition, the economic value we generate is paid directly to the state and to our stakeholders.
PT Pupuk Indonesia (Persero) 74 Sustainability DEVELOPING STAKEHOLDERS’ ECONOMY Report
Pupuk Indonesia is a State-owned Enterprise (SOE) and self-sufficiency. These policies include fertilizer subsidies one of the largest manufacturers of urea fertilizer in for farmers to increase food crop production. Asia. As at 2018, our total assets were valued at Rp138.90 trillion and our annual production capacity was 13.76 As a corporate entity, we also pay close attention to million tons. We and our 10 (ten) subsidiaries are among our financials to provide the greatest return for our the largest fertilizer manufacturers in Asia and among stakeholders. These returns include dividends and the world’s ten largest. tax payments to the Government, remuneration for employees, and social investments through community As a State-owned Enterprise, we support and development and partnership programs. implement the Government’s policies to achieve food
ECONOMIC VALUE GENERATED AND DISTRIBUTED (RP MILLIONS) [GRI 201-1]
Description 2018 2017 2016
Economic Value Generated
a. Sales 69,448,132 58,942,682 64,164,003 b. Interest Receivables 83,304 204,313 169,092 c. Dividends 9,988 4,585 6,034 d. Royalties - - - e. Property Leases - - - f. Asset Sales 8,502 3,168 29,253
Economic Value Generated (1) 69,549,927 59,154,748 64,368,382
Economic Value Distributed
a. Operating Costs Revenue Costs 51,111,002 43,696,679 49,929,129 Sales Costs 791,933 737,489 849,666 Administrative and Sales Costs 1,816,897 1,813,664 1,828,578
Subtotal Operating Costs 53,719,832 46,247,832 52,607,373
b. Employee Salaries and Allowances Revenue Costs 3,366,206 2,754,582 2,043,078 Sales Costs 613,412 598,480 491,431 Administrative and Sales Costs 2,302,617 1,556,946 1,501,557
Subtotal Employee Salaries and Allowances 6,282,235 4,910,008 4,036,066
c. Payment to Lenders Interests 3,804,681 3,784,879 2,186,846 Dividends 768,850 1,070,874 1,527,550
Subtotal Payment to Lenders 4,573,531 4,855,753 3,714,396
d. Subtotal Payment to Lenders 1,710,438 1,483,483 1,318,703
e. Investments in the Community Partnership Programs 129,539 128,968 133,570 Community Development Programs 34,074 55,148 41,751 CSR Programs 96,259 67,883 97,868
Subtotal Investments in the Community 259,873 251,999 273,189
Economic Value Distributed (2) 66,545,909 57,749,075 61,949,727
Economic Value Retained (1-2) 3,004,018 1,405,673 2,418,655
PT Pupuk Indonesia (Persero) Sustainability 75 Report
REVENUES sales of non-PSO fertilizers and ammonia; increase in subsidy receipts due to an increase in prices of raw In 2018, the Company recorded a revenue of Rp69.45 materials for the NPK fertilizer, which in turn was caused trillion or 112.43% of our initial target. The figure was up by depreciation of the Rupiah against the US Dollar; by 17.82% from Rp58.94 trillion recorded in the previous efficiency measures to reduce financial costs. year. The increase was due to the following: 1. Strong sales of non-PSO fertilizers and ammonia. Profitability in the reporting year was also reflected in an 2. Increase in subsidy receipts due to an increase in increase in the Company’s assets by 9.29% to Rp139.90 prices of raw materials for the NPK fertilizer. The trillion from Rp128.49 trillion in the previous year. latter increase was caused by depreciation of the Rupiah against the US Dollar. 3. Efficiencies in financial costs. CONTRIBUTIONS TO THE GOVERNMENT Contribution to the state is realized through payment of PROFITABILITY income tax, value-added tax, and other taxes. We have contributed to both Regional Governments and the In the reporting period, we have successfully recorded Central Government by paying their respective taxes. a net profit of Rp4.21 trillion or 182.76% higher than the Our tax payment in 2018 was Rp5.48 trillion, up by 11% target set by the Shareholder. The figure was up by from Rp4.94 trillion paid in the previous year. 37% from Rp3.08 trillion recorded in 2017. Factors that contributed to the increase in net profit was strong
TAX PAYMENTS BY PUPUK INDONESIA GROUP TO THE STATE (RP MILLIONS) 2018 2017 2016 2015
5,479,326 4,943,766 5,504,135 4,613,924
REGIONAL TAX AND CENTRAL TAX PAYMENTS BY PUPUK INDONESIA GROUP (RP MILLIONS) Regional Tax National Tax Total Tax Paid
99,764 5,379,562 5,479,326
PT Pupuk Indonesia (Persero) 76 Sustainability DEVELOPING STAKEHOLDERS’ ECONOMY Report
In addition to taxes, our contribution to the state is in the form of dividend payments. In 2018, our dividend distribution for fiscal year 2017 was Rp768.85 billion, paid to our sole shareholder, i.e. the Indonesian Government. Under the letter from the Directorate General of Budgets of the Ministry of Finance No. S-95/MK.2/2018 dated May 30, 2018, distributions were made in three tranches: the 1st tranche was Rp192.1 billion; the 2nd tranche was Rp288.32 billion; and, the 3rd tranche was Rp288.32 billion. The dividend distribution amount was determined in the General Meeting of Shareholders (RUPS) by the Ministry of State-owned Enterprises as proxy of the Indonesian Government, the sole shareholder.
CONTRIBUTIONS TO THE PUBLIC Contributions to the public are means to bridge relationships and build a sustainable Pupuk Indonesia Group. Our goal is to improve the wellbeing of the communities living in our operating areas. The economic value we invested in the community was Rp256.253 billion. These social investments consisted of Partnership Programs, Community Development Programs, and CSR. Our programs were aimed at assisting small businesses, develop coastal communities, and assisting youths by financing their education and awarding scholarships.
Types of Investment (in Billion Rupiah) 2018 2017 2016
Partnership Programs (PK) 129,411 128,568 133,274
Community Development Programs (BL) 30,582 54,293 34,700
CSR Programs 96,259 66,575 96,304
Total 256,253 249,436 264,278
INVESTMENTS IN INFRASTRUCTURE AND • Accessibility to clean water. SERVICES [GRI 203-1] • Access to toilets in tourist attractions. • Access to ambulances for the underprivileged Good infrastructure is an enabling factor to improve during hardships, e.g. death, illness, as well as for social welfare. To that end, we have made investments childbirth. to construct the necessary infrastructure. In the • The Fishermen Shelter can be used as a reporting period, we spent Rp3,267 billion to construct communication and interaction hub for fishermen. the following: • Accessibility to education facilities. • Water wells • Early-childhood education institutions Facilities are only constructed after studying its • Public toilets impacts, both positive and negative. We have taken • Ambulances reasonable steps to ensure that such infrastructure • Fishermen shelters neither violated a community’s human rights nor • Clean water infrastructure. negatively affect the community. As a result, there were zero complaints and legal claims from the The facilities we constructed are donated to the communities. community. We expect that the communities can enjoy positive effects from such projects, such as:
PT Pupuk Indonesia (Persero) Sustainability 77 Report
CONTRIBUTIONS TO LOCAL SUPPLIERS from July to September 2018, produced 3 (three) [GRI 204-1] results: supplier satisfaction index of 4.31 (“Very Satisfied”); supplier dissatisfaction index of 1.36 In 2018, local suppliers fulfilled 68.46% of our (“Very Satisfied”); and supplier loyalty of 4.26 procurement requests for a total value of Rp7.6 trillion. (“Very Loyal”). Wider local supplier engagement is proof of our efforts to stimulate local economic growth for mutual At the end of 2018, we have partnerships with wellbeing. 1,241 distributors and 35,452 retailers. The DISTRIBUTION CHAIN partnerships also created new job opportunities and improved local economies. Accordingly, we The fertilizer distribution chain is important to ensure have an indirect impact on the community’s that consumers have access to fertilizers at the right economy. [GRI 203-2] price and at the right time. Our distribution chain consists of:
FINANCIAL ASSISTANCE [GRI 201-4] • Non-subsidized Fertilizers The Government of the Republic of Indonesia is the The distribution of non-subsidized fertilizers is sole shareholder of PT Pupuk Indonesia (Persero). Our stipulated in the Sale and Purchase Agreement paid-in capital is Rp25 trillion from an authorized capital between purchasers and sellers. The contract of Rp100 trillion. We pay dividends annually to the stipulates, among others, sales volume, price, Ministry of State-owned Enterprises, as representative mutual covenants, contract term of contract, of the Government of Indonesia. Except for capital, payment mechanisms, and product delivery/ the Government does not provide any other financial collection. assistance.
• Subsidized Fertilizers The Government’s financial assistance programs are Subsidized Fertilizers are provided to farmers aimed at farmers in the form of subsidized fertilizers, or farming groups engaged in the food crops, thus making it affordable. We are assigned a Public plantations, and horticulture sub-sectors. It Service Obligation (PSO), i.e. a cost reimbursed by is also provided to fish farmers. Subsidized the state for differences in selling prices set by State- fertilizers include urea and non-urea fertilizer owned Enterprises and private companies on certain (NPK, ZA, SP-36, and organic). Distributors who goods/services that the Government wishes to remain are appointed and bound by the SPJB with affordable to the better part of the public. Pupuk Indonesia are responsible for purchasing,
storing, selling, and marketing the subsidized The legal basis of the PSO is Article 66 paragraph 1 of fertilizers. the Law No. 19 Year 2003 on State-owned Enterprises, in which the Government may assign state-owned We have conducted a supplier satisfaction enterprises to perform public service duties that align survey to improve their service quality and, at the with their purposes and objectives. If such assignments same time, enhance sustainable development are deemed to be financially infeasible, the Government processes in our internal and external supply must compensate the cost incurred by the state-owned chains. The satisfaction survey, conducted in enterprise plus a reasonable margin on that cost.
PT Pupuk Indonesia (Persero) 78 Sustainability DEVELOPING STAKEHOLDERS’ ECONOMY Report
Subsidies enable farmers to purchase fertilizers for less GOVERNMENT SUBSIDIES, 2014-2018 (RP MILLIONS) than commercial market prices. Subsidized fertilizers for farmers must meet the 6 (six) principles of fitness: fitness by type, by quantity, by price, by location, by time, 25,662,262 26,840,701 26,853,260 20,406,765 and by quality. 17,926,780
Legislation concerning subsidized fertilizer in 2017 were as follows: 1. Law Number 8 Year 2017 on the Amendment to Law 2018 2017 2016 2015 2014 Number 18 Year 2016 on the National Budget for Note: Payments inclusive of value-added tax (PPN) the 2017 Fiscal Year (State Gazette of the Republic of Indonesia Year 2017 No. 186, Supplement to the State Gazette of the Republic of Indonesia Number 6111); In 2018, subsidy receipts from the Government (including 2. Regulation of the Minister of Agriculture No. 69/ value-added tax) was Rp25.66 trillion. About 73% of Permentan/SR.310/12/2016 on the Allocation the total fertilizer sales volume was allocated to meet and Ceiling Price of Subsidized Fertilizers for the PSO sector demand while the remaining 27% was the Agriculture Sector for Fiscal Year 2017 in allocated to meet demand from the commercial sector conjunction with the Regulation of the Minister (non-PSO). Our profit margin in the latter was 5.81%. of Agriculture No. 04/Permentan/SR.310/3/2017 on Indeed, the Government’s reimbursement guarantees the Amendment of the Regulation of the Minister of that it will buy 80% of our production volume. Agriculture No. 69/Permentan/SR.310/12/2016 on the Allocation and Ceiling Price of Subsidized Fertilizer We employ a closed-loop system to distribute subsidized fertilizers in order to prevent irregularities for the Agriculture Sector for Fiscal Year 2017; and, and ensuring fertilizer availability. To obtain subsidized 3. Decree of the Minister of Agriculture No. 17/KPTS/ fertilizers from authorized channels, farmers or farming SR.310/B/11/2017 on Amendment to the Allocation groups must submit a Definitive Plan for Group Needs, of Subsidized Fertilizer for the Agriculture Sector for prepared with assistance from field outreach agents. Fiscal Year 2017; This system is deployed pursuant to the Decree 4. Supply Agreement between the Ministry of of the Minister of Agriculture No. 69/Permentan/ Agriculture casu quo Directorate General of SR.310/12/2016 on Amendment to the Allocation of Agricultural Infrastructure and Facilities and PT Subsidized Fertilizer for the Agriculture Sector for Pupuk Indonesia (Persero) No. 001/SR.320/B.5/01 Fiscal Year 2017. 2017 and 001/SP/DIR-C10/2017 with the First Addendum of the Supply Agreement No. 03/MoU/ SR.320/B/05/2017 and 051/SP/DIR-C10/2017 with further provisions in the Second Addendum of the Supply Agreement No. 604/MoU/SR.320/B/12/2017 and 123/SP/DIR-C10/2017.
PT Pupuk Indonesia (Persero) Sustainability 79 Report
In addition to the regulations above, distribution of Untimely seasonal change and a shift in growing subsidized fertilizer is also governed by: season have caused swings in fertilizer demand and 1. Regulation of the Ministry of Trade No. 15/M-DAG/ consumption patterns. These swings caused glutting PER/4/2013. in warehouses since fertilizers were not distributed 2. Circular Letter of the President Director of PT Pupuk on schedule. In response, we have rerouted some Indonesia (Persero) No. SE-07/IV/2013. products to the next nearest warehouse to ensure space 3. Supply Agreement between PT Pupuk Indonesia availability. We have also considered open storage (Persero) and its subsidiaries. solutions.
These pieces of legislation serve as the basis of subsidized fertilizer management as a Government- About 100,000 hectares of agricultural land shrunk controlled goods whose procurement and distribution and converted every year. The reduction are not are monitored in order to meet demands from farmers counterbalanced by the opening of new land and and farmer groups. resulted in weaker demand for fertilizer during growing season. In recent times, the Government was only able to IMPLICATIONS OF CLIMATE CHANGE create 40,000 hectares of new farmland every year. Java, [GRI 201-2] the nation’s food basket, saw the largest conversion of
Climate change may imply global warming which can land use at 80%. In response, we will raise our targets for affect national and international food security, causing non-food crops, i.e. plantation and horticulture sectors. temperatures and sea levels to rise, in addition to more We will also improve export sales. frequent natural disasters. Another effect of climate change is flooding, which can
Its effects caused widespread crop diseases and disrupt fertilizer distribution. As for this risk, we have changed growing seasons and patterns. Climate change taken measures to ensure fertilizer availability, such as is responsible for delayed wet season and early dry bringing buffer stock to flood-prone areas from other season in 50% of agricultural land. As a result, growing locations as well as using other modes of transport to season becomes shorter. Furthermore, a temperature ship fertilizer. increase of 1°C increases rainfall by 2 to 3% per year. Data from the Ministry of Agriculture’s Strategic Plan The financial implications of this risk are not calculated (Rencana Strategis, RENSTRA) 2015-2019 showed that as it involves external parties. The cost to manage this in the past 5 years, an average of 29,743 hectares of risk is recognized as part of our operating costs. farmland suffered from flooding while 82,472 hectares suffered from draught.
PT Pupuk Indonesia (Persero) 80 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
PT Pupuk Indonesia (Persero) Sustainability 81 Report
DEVELOPING RESILIENT AND COMPETENT CHARACTER
PT Pupuk Indonesia Group won 44 awards, both national and international, for the ability to improve productivity and quality. Without employee efforts at innovation, hard work and dedication, it would be impossible to achieve such accomplishments. Valuing every individual in Pupuk Indonesia with a competitive remuneration has been our commitment to provide a conducive workplace and to develop everyone’s potentials.
PT Pupuk Indonesia (Persero) 82 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
Human Resources of Pupuk Indonesia is the main Various efforts to meet the expectations of our pillar as well as the wheel driving the Company in employees have been made. For this reason, we the effort to realize its vision and mission. With good specifically measure employee satisfaction through quality of human resources and supported by work surveys to find out the level of service we have provided professionalism, HR has become an important asset to employees, while simultaneously get good feedback for the progress of the Company in the increasingly for the development of the HR system. Various aspects fierce business competition era. Pupuk Indonesia, were measured in this survey, including HR policies, therefore, is committed to giving full attention to the career advancement, work facilities, welfare, health human resources development, especially through the insurance, and other topics. The survey results suggest provision of competitive remuneration, a supportive that the Pupuk Indonesia Group employee satisfaction work atmosphere and quality training, so that Pupuk index is 75.78% or included in the Satisfactory category. Indonesia can be a place for the best talents to devote In addition to the employee satisfaction survey, we also their creativity. conducted the safety culture survey to evaluate the implementation of OHS in the company.
COMPETENCY BASED HUMAN RESOURCE MANAGEMENT (CBHRM) EMPLOYEE COMPOSITION [GRI 102-8] In line with the company’s development, Pupuk In 2018, the total number of Pupuk Indonesia employees Indonesia is committed to developing every employee was 15,265 people, consisting of permanent employees by applying Competency based Human Resource and contract employees. Compared to the previous year, Management in all subsidiaries. CBHRM is the focus this number reduced to 13,286 people. and ongoing stages in achieving good HR which meets company’s business needs to provide the management Most of our employees are full time permanent employees. of Pupuk Indonesia with the best leaders and employees. We strive to optimize employee utilization without The CBHRM system includes: compromising their welfare. Each employee has been 1. Organization Development placed according to their interests and talents where they 2. HR Planning can give maximum contribution to the company, while 3. Recruitment enjoying their working time. The following data is about 4. Performance Management Pupuk Indonesia Group employees collected based on 5. Career & Talent Management data from HRD. 6. Competency Management 7. Compensation & Benefit 8. Termination Management.
In addition, PT Pupuk Indonesia (Persero) has focused on developing the company’s best talents to prepare future company leaders by using technology that helps in the management of employee information data to be more organized and easily accessed through the Capital Management System (HCMS) integrated throughout Pupuk Indonesia Group. Thus, better conduct of remuneration and employee placement is possible.
PT Pupuk Indonesia (Persero) Sustainability 83 Report
EMPLOYEES BASED ON EMPLOYMENT CONTRACTS
Permanent Employees Contract Total
2018 2017 2018 2017 2018 2017
9,661 10,179 5,604 3,107 15,265 13,286
*Because our operations are based on subsidiaries in various regions, the total number of employees based on employment contracts based on regions has been represented by the data above.
EMPLOYEES BASED ON EMPLOYMENT CONTRACTS
10,179 9,661 3,107 5,604
Permanent Employees Contract
2017 2018
EMPLOYEES BASED ON THE TYPE OF EMPLOYMENT CONTRACT (PERMANENT AND CONTRACT), BY GENDER
Permanent Contract Total 2018 2017 2018 2017
Male Female Male Female Male Female Male Female 2018 2017
8,840 821 9,321 858 5,097 507 2,835 272 15,265 13,286
EMPLOYEES BASED ON THE TYPE OF EMPLOYMENT CONTRACT (PERMANENT AND CONTRACT), BY GENDER 9,321
8,840
5,097 2,835 858 821 272 507
Male Female Male Female
Permanent 2017 2018 Contract
RECRUITMENT OF WORKERS [GRI 401-1]
One important function carried out by HRD is the and openly been carried out with the principle of selection and recruitment of workers, as part of HR non-discrimination, to get the best talents for vacant management planning that contributes to the success positions. In addition, we designed and established the of the organization. In 2018, a series of HR recruitment Standard Passing Grade policy for recruiting employees processes was conducted by Pupuk Indonesia to help throughout the group, so employees with sufficient Pupuk Indonesia in producing high performance and competence can support the performance of Pupuk productivity. The recruitment process has broadly Indonesia. There were 98 new employees in 2018.
PT Pupuk Indonesia (Persero) 84 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
RECRUITMENT RATE EMPLOYEE HIRING, BASED ON REGION 14% Placement Location Total %
Headquarters 230 33 (PT PI / Holding)
Subsidiary 9,431 67 51%
Total 9,661 100 35%
Below 30 30-50 years Above 50 EMPLOYEE HIRING, BASED ON REGION years old old years old
9,431 EMPLOYEE HIRING, BASED ON GENDER
230 Category Total %
Headquarters Subsidiary Male 84 86 (PT PI / Holding) Female 14 14
RECRUITMENT RATE Total 98 100
EMPLOYEE HIRING, BASED ON GENDER
33% 84
67% 14
Male Female Headquarters Subsidiary (PT PI / Holding)
RECRUITMENT RATE
EMPLOYEE HIRING, BASED ON AGE 14%
Category Total %
Below 30 years old 50 51
30-50 years old 34 35
Above 50 years old 14 14 86%
Total 98 100 Male Female
EMPLOYEE HIRING, BASED ON AGE EMPLOYEE TURNOVER, BASED ON REGION
50 34 Category Total %
14 Headquarters 5 15 Subsidiary 29 85
Below 30-50 years Above Total 34 100 30 years old old 50 years old
PT Pupuk Indonesia (Persero) Sustainability 85 Report
EMPLOYEE TURNOVER, BASED ON REGION EMPLOYEE TURNOVER, BASED ON GENDER Category Total % 29 Male 29 85 5 Female 5 15 Total 34 100 Headquarters Subsidiary
EMPLOYEE TURNOVER, BASED ON GENDER
29 RECRUITMENT RATE
15% 5
Male Female
85% RECRUITMENT RATE
Headquarters Subsidiary 15%
EMPLOYEE TURNOVER, BASED ON AGE GROUP Category Total % Below 30 years old 17 50 30-50 years old 11 32 85%
Above 50 years old 6 18 Male Female Total 34 100
According to the employee satisfaction survey, the EMPLOYEE TURNOVER BASED ON AGE GROUP employees were satisfied to work at Pupuk Indonesia. 17 Thus, we managed to reduce the number of employee 11 6 turnover to around 7.58%. Reaching retirement age, 56 years old, is the main reason for employee turnover.
Below 30 years 30-50 years Above 50 old old years old Causes 2018 2017
Retirement 714 626 RECRUITMENT RATE Death 11 21 18% Violation - -
Resignation 31 31
50% Total 756 678
32% Turnover Rate 7.58% 6.66%
Below 30 30-50 years Above 50 years old old years old
PT Pupuk Indonesia (Persero) 86 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
EQUALITY, DIVERSITY AND OPPORTUNITIES [GRI 405-1] Employee diversity is an important component of a company’s success on a global platform. As age differences contribute to different mindsets and experiences, cultural, racial and background differences bring about various ideas which encourage innovation and creativity.
Most of our employees, 7,161 people or 74.12% of the total employees are in the productive age range below 50 years. However, we do not limit those who are more senior to keep working because benefit will come from their abundance experience.
COMPOSITION OF PERMANENT EMPLOYEES BASED ON AGE
<25 25-30 30-35 35-40 40-45 45-50 >50 Jumlah Female 20 256 205 95 38 34 140 2018 9,533 Male 816 1,939 1,748 947 461 360 2,474 Female 20 249 208 100 42 38 184 2017 10,483 Male 865 1,916 1,742 945 470 373 3,331
PT Pupuk Indonesia (Persero) Sustainability 87 Report
COMPOSITION OF PERMANENT EMPLOYEES BASED ON AGE 3,331
2,474
1,939 1,916 1,748 1,742
947 945 816 865
416 470 360 373 256 205 249 208 140 184 95 100 38 34 20 20 42 38 <25 25-30 30-35 35-40 40-45 45-50 <50
2018 Female 2018 Male 2017 Female 2017 Male
COMPOSITION OF PERMANENT EMPLOYEES BASED ON DEGREE OF EDUCATION Master/Doctoral Bachelor Non Degree Undergraduate Total 2018 494 2,799 939 5,432 9,661 2017 434 2,837 1,009 5,899 10,179
COMPOSITION OF PERMANENT EMPLOYEES BASED ON DEGREE OF EDUCATION
5,432 5,899
2,799 2,837
939 1,009 494 434
S2/S3 S2/S3 S2/S3 S2/S3
2018 2017
PERMANENT EMPLOYEES BASED ON GRADE Grade I Grade II Grade III Grade IV Grade V-VII Total 2018 171 475 929 2,668 5,419 9,661 2017 174 485 986 2,785 5,765 10,179
PERMANENT EMPLOYEES BASED ON GRADE
5,765 5,419
2,668 2,785
475 485 929 986 171 174
Grade I Grade II Grade III Grade IV Grade V-VII
2018 2017
PT Pupuk Indonesia (Persero) 88 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
COMPOSITION OF GOVERNANCE BODIES Pupuk Indonesia applies the equality and non- [GRI 405-1] discrimination principle in the workplace to realize employee welfare where every worker gets the same Opportunities are open for every person who has the treatment at work without any discrimination. Job ability to be involved in corporate governance bodies. opportunities have been available for anyone with Included in the category of corporate governance required competencies, regardless of gender, ethnicity, bodies are Grade 1 to Grade 7, or those occupying the religion and race. This non-discrimination practice is position of Senior Vice President/General Manager applied at every level of the company, and one of them to Implementing Officer. The diversity in corporate is applied in the provision of wages and remuneration. governance bodies, as well as employees throughout Pupuk Indonesia does not distinguish the provision of the Pupuk Indonesia Group is described below: basic salaries and facilities between male and female employees since salary and remuneration determination is based on performance and position levels. The ratio of PERCENTAGE OF EMPLOYEE GROUP GRADE basic salary and remuneration between male and female PER GENDER employees is 1: 1 at each significant operating location, i.e. Pria Wanita within the scope of the province or municipality where Grade I 189 2.14% 12 2.14% the company operates.. [GRI 405-2]
Grade II 492 5.57% 75 5.57% The implementation of the non-discrimination Grade III 1,135 12.84% 138 12.84% policy has also been applied from initial recruitment
Grade IV 2,386 26.99% 275 26.99% to the training and promotion of positions. Equal opportunities are given to every employee from various Grade V 2,523 28.54% 280 28.54% backgrounds, genders, religions and ethnicities to Grade VI 1,573 17.79% 41 17.79% develop according to their abilities. We also provide
Grade VII 542 6.13% - 6.13% the widest possible employment opportunities for communities in the regions where Pupuk Indonesia Total 8,840 100% 821 100% subsidiary operates and above average minimum wage in the municipality or district has been offered with ratio PERCENTAGE OF EMPLOYEE BASED ON AGE GROUP of basic salary provided by Pupuk Indonesia compared
<30 30-50 >50 to the minimum wage set by the local government is 1.39: 1, as our appreciation for local workers. [GRI 202-1] Grade I - 0.00% 51 1.36% 150 5.69%
Grade II 1 0.03% 280 7.46% 286 10.85% To support diversity and non-discrimination, PI provides
Grade III 7 0.21% 743 19.79% 523 19.83% an opportunity for competent local people to contribute through their involvement in the ranks of senior Grade IV 324 9.91% 1,198 31.91% 1139 43.19% managers in PI. Included in the category of senior Grade V 912 27.89% 1,355 36.09% 536 20.33% managers is Grade 1A to 2A or SVP / GM to VP / Manager
Grade VI 1,488 45.50% 123 3.28% 3 0.11% positions and about 86% of PI’s senior managers originate from the provinces where PI companies Grade VII 538 16.45% 4 0.11% - 0.00% operate. [GRI 202-2] Total 3,270 100% 3,754 100% 2,637 100%
PT Pupuk Indonesia (Persero) Sustainability 89 Report
Within the company, diversity is also maintained by The improvement in skills and competencies is also providing opportunities for every worker to worship expected to provide refreshment and enthusiasm for according to their respective religions and beliefs, each employee. The total achievement of training providing worship facilities, and commemorating man days until the end of 2018 was 125,414 man days. religious holidays together. During the reporting year, there were no incidents or reports of discrimination Realization 2018 to Percentage Company aimed at Pupuk Indonesia. [GRI 406-1] Target December of Target 2018
PT Pupuk Indonesia 3,700 3,908 106% (Persero) ALLIANCE FREEDOM Subsidiaries 102,300 121,506 118% Pupuk Indonesia guarantees freedom of alliance and protection of the right to join a union in accordance with TRAINING MANDAYS (IN DAYS) prevailing laws and regulations. This freedom of alliance Realization is implemented through the existence of the Federation 2018 to Percentage Target December of Target of Pupuk Indonesia Trade Unions where employees 2018 can voice their aspirations. Freedom of alliance helps Pupuk Indonesia 106,000 125,414 118% increasing employee job satisfaction, and is beneficial in Group establishing good communication between employees and management. We carry out various competency and work skills
Across PI’s business there are no operations and improvement programs, including certifications suppliers where workers’ rights to exercise freedom of needed for employees. association or collective bargaining may be violated or run into significant risk. We operate in an area where IN HOUSE TRAINING. With the aim of improving the freedom of association is guaranteed, and as a Company quality of human resources, in-house training has been we support every employee and supplier to fulfill their made to meet the specific needs of each company. rights to associate and conduct collective bargaining. Training is carried out within the company, and is very [GRI 407-1] useful for interacting with each other discussing issues encountered in daily work. Various training topics for 2018 included: EDUCATION AND TRAINING • Energy Planning Training [GRI 404-1, GRI 404-2] • Training of KPKU Assessors • SNI ISO31000: 2011 Training and Certification As an effort to increase the potential and skills • Safety Management Process Training of human resources, Pupuk Indonesia provides • Anti Fraud Workshop education and training. Education and Training for • Leadership Development Program Employees is carried out on a competency basis, so • Training Of Trainer employees having high competence are hopefully able • Turnaround Master Class Workshop to contribute to Pupuk Indonesia through productive • Problem Solving performance. Competency improvement is carried out • Decision Making through learning methods which include On The Job • Training PKBL Accounting Guidelines. Trainee, Coaching and Counseling, seminars, training, workshops, certification programs and education/ learning tasks.
PT Pupuk Indonesia (Persero) 90 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
CERTIFICATION PROGRAM. This training is to ensure NUMBER OF STUDY ASSIGNMENTS RECIPIENT the competence of employees, that they have the WORKERS 2018
skills to perform certain tasks, in accordance with Paid Study applicable professional standards. Certification Total Domestic Overseas training is carried out to ensure health and safety in the work environment. In the Indonesian Pupuk 31 8 39 environment, this training was provided especially for employees who operate work processes related to urea, NUMBER OF STUDY ASSIGNMENTS RECIPIENT WORKERS 2018 ammonia, utility and maintenance. Pupuk Indonesia is committed to maintaining professionalism by 31 developing a Professional Certification Institute (LSP) within the Indonesian Pupuk company environment. 8
Domestic Overseas OUTPLANT TRAINING. For some specific topics such as fertilizer, research, ISO 31000: 2011 Certification, law, SAP and HR, we send employees to get special training The total investment for training and education of outside the company. This training is also useful for employees is Rp103,119,658,850 or an increase of 1.86% opening up insights, seeing the latest trends, and compared to the previous year at Rp101,226,899,126. developing networks.
COACHING AND COUNSELING is a means by which EMPLOYEE ASSESMENT [GRI 404-3] superiors contribute to the success of their employees by providing the advice and support needed, both Pupuk Indonesia regularly evaluates performance on professional and personal issues, that affect their for each employee (100%) using the Performance performance. This process is useful for analyzing the Management System (SMK), a process of creating challenges faced by each employee and providing a shared understanding between employees and solutions that are right for them. management in monitoring and assessing the achievement of employee work goals in relation to
TRAINING. Social skills, communication skills, and the overall company goals. More than just an annual character of a person will determine their success at performance appraisal, Pupuk Indonesia applies SMKs work. Realizing this, Pupuk Indonesia provided special for all processes related to employee performance; training such as the Leadership Development Program, setting goals, evaluating performance, conducting Leader As Coach, Problem Solving, Communication coaching, and getting feedback. Significant impact Skill, and others. has not only been found on the company but also on employees, because it motivates and provides the
STUDY ASSIGNMENTS. Pupuk Indonesia builds guidance needed to achieve their highest potential. the company’s future by developing its people. We This performance appraisal is also used as a basis for send qualified employees for study assignments improving employee careers, determining rotation, both at home and abroad, in the fields of oil and gas, transfer and promotion. The aspects assessed are: management, marketing, soil science and chemical 1. Soft Competency 360 degrees; assesses employee engineering, business administration, instrument behavior from various points of view, namely by the physics, and agriculture. supervisor and / or subordinate, two colleagues and
PT Pupuk Indonesia (Persero) Sustainability 91 Report
self-assessment. The assessment results provide We provide complete compensation (fringe benefits) useful feedback for employee career movements and competitive welfare packages. The welfare package and employee development programs for employee is not only intended for employees when they work at development. Pupuk Indonesia, but also when they enter retirement. 2. Employee Key Performance Indicator (KPI), a measurement based on mutually agreed targets. Pupuk Indonesia also pays attention to the rights of This evaluation is quantitative with obvious results in employees, for example the fulfillment of maternity, and objective numbers. Conducted annually and within maternity leave rights, in accordance with the prevailing a period of three years, KPI is a follow-up evaluation laws and regulations. Employees giving birth get forming the basis for employee career movements three-month- time off, and employees who experience and employee development programs. miscarriage get a 45-working-day-paid leave.
Pupuk Indonesia prepares comprehensive and EMPLOYEE WELFARE PROGRAM competitive employee welfare programs, which are Pupuk Indonesia applies a fair remuneration system, given in various forms: with the principle of eligibility in accordance with • Basic Salary that we offer is quite competitive, prevailing laws and regulations, Law No. 13 of 2013 not only above the minimum wage standard in concerning Manpower. Aside from being an expression our operational areas, but also above the average of appreciation for employees, this welfare package also industry standard. acts as a trigger to motivate Pupuk Indonesia employees. • Functional Allowance is given to employees who Moreover, a competitive remuneration system has also have certain positions, according to their functional proven capable of attracting potential talents. or structural positions. In addition, job allowances are given in the context of carrying out certain tasks.
Pupuk Indonesia employee welfare improvement • Work Facility Allowances is provided in the form of program is carried out by paying attention to material facilities to support the work of employees, such as and non-material aspects. computers, shoes, and others. • Material, in the form of work, housing rental • Holiday Allowances are distributed during religious assistance, pension funds and old-age health holidays. programs, health insurance through BPJS Health, • Leave allowance is given to employees who have Day Allowance (THR) to help employees’ welfare worked for at least one year in the company. during religious holidays, BPJS Employment, leave • Large leave allowance is given to employees assistance, assistance with bereavement assistance who have worked for a certain period of time when employees and their families experience continuously at the company. disasters and others. • BPJS Employment is given to every employee. • Non Material, including training education, study BPJS provides protection for each employee in assignments at home and abroad, open house the form of Work Accident Insurance (JKK), Old events, spiritual services, joint recreation for Age Insurance (JHT), Death Insurance (JKM), and employees and families, and other hospitality Pension Insurance (JP). events. • Bereavement Payment was given as a sign of condolence of the Company for employees and their families when they experience a disaster.
PT Pupuk Indonesia (Persero) 92 Sustainability DEVELOPING RESILIENT AND Report COMPETENT CHARACTER
• Pension Fund Program is prepared as an award for PREPARATION FOR RETIREMENT [GRI 201-3] employees entering retirement. We appreciate every employee who has dedicated himself to working for Pupuk Indonesia, therefore, special welfare packages for retired employees have FORMS OF BENEFITS BASED ON EMPLOYEE STATUS been prepared, so that they can enjoy their retirement [GRI 401-2] comfortably: Form of Benefits Permanent Contract Worker 1. Defined Contribution Pension Plan (PPIP), which Workers is a pension fund savings consisting of employee Basic salary √ √ contributions and Company contributions with a total contribution of 20% of basic salary, as much Functional allowance √ - as 4% of employee contributions and the rest of the Work Facility Allowances √ √ Company.
Holiday allowance √ √ 2. The BPJS Employment Program, which consists of old age savings and pension benefits that are Health program √ √ mandatory. Leave Allowance √ √
Large Leave Allowance √ - In addition to the financial package, we also provide special training before retirement to prepare employees and their partners. Various topics and changes that will be faced by retirees are discussed in this training, CHILDBIRTH LEAVE [GRI 401-3] such as: The Company also provides opportunities for workers 1. Mental preparation for facing retirement. who need to rest during pregnancy and childbirth. The 2. Financial management in retirement. total number of employees entitled to maternity leave in 3. Entrepreneurship training. 2018 is 312 women. Of these, 312 people returned to work 4. Life vision and challenges faced in retirement. after the maternity and maternity leave period ended.
This training is intended to provide retired employees In the previous year, there were 221 people out of a with useful skills to continue their lives productively in total of 221 women who had taken maternity leave to their old age. continue working with PI after 12 months of their leave ended. Thus, the level of employees who are taking maternity leave back to work is 100%.
PT Pupuk Indonesia (Persero) Sustainability 93 Report
PT Pupuk Indonesia (Persero) 94 Sustainability GOVERNANCE OF SUSTAINABILITY Report
PT Pupuk Indonesia (Persero) Sustainability 95 Report
GOVERNANCE OF SUSTAINABILITY
Good governance provides a strong basis to maintain the continuity of business and build a competitive company, to gain trust from all stakeholders. Pupuk Indonesia is committed to applying sustainable Good Corporate Governance (GCG).
PT Pupuk Indonesia (Persero) 96 Sustainability GOVERNANCE OF SUSTAINABILITY Report
Pupuk Indonesia realizes that the application of GCG OBJECTIVES OF GCG APPLICATION is not simply a way to fulfill the requirements of the Pupuk Indonesia is committed to applying the principles existing regulating laws, but also to develop a strong of Good Corporate Governance (GCG) in each business fundamental as the basis for each business activity of activity. Pupuk Indonesia believes that applying GCG Is the Company. Our commitment in applying GCG is a key in achieving corporate performance sustainably. proven by stipulation a number of policies, including: The following are the objectives of the GCG application 1. Establish Corporate Governance Department as the in Pupuk Indonesia: responsible unit for GCG 1. Encourage the application of a proper and prudent 2. Apply a GCG Primary Guidelines, which include Code managerial decision-making mechanism through of Corporate Governance, Code of Conduct, Board a checks and balances mechanism in accordance Manual, and Code of Business Group Governance. with the functions of each company organs; 3. Raise the awareness of everyone within Pupuk 2. Maximize the company value in the form of high Indonesia on the application of GCG through performance and good corporate image; dissemination and internalization of GCG principles. 3. Encourage professional, transparent and efficient 4. Conduct assessment and evaluation for the corporate management and strengthen the application of GCG periodically functions and independence of corporate organs; 5. Follow up every recommendation for areas of 4. Encourage corporate organs in making decisions improvement (AoI) for the GCG assessment results and taking actions based on ethics/morals of social as the improvement steps in applying GCG in Pupuk responsibilities of the company to all stakeholders; Indonesia 5. Encourage efficient and effective risk and resource management; 6. Reduce the potential conflicts of interest between GOVERNANCE STRUCTURE corporate organs and employees in running the BASIC REFERENCE FOR GCG APPLICATION company’s business; Since 5 November 2012, Pupuk Indonesia has applied 7. Create conducive business environment to achieve a Code of Corporate Governance enacted by the corporate goals. President Commissioner and President Director, and the policy had been updated and stipulated by the PRINCIPLES OF CGC APPLICATION issuance of The Joint Decree of Board of Commissioners Pupuk Indonesia ensures that GCG principles are and Directors No. 09/KEP.KOM/XII/2017 and No. SK/ applied in all business aspects and by all positions DIR/066/2017 dated 22 December 2017. The guidelines within the Company. The principles are transparency, refer to the GCG Guidelines of Indonesia issued in 2006 accountability, responsibility, independency and by National Committee for Governance Policies (KNKG) fairness and equality. The application of these GCG and Regulation of Minister of SOE No. PER-01/MBU/2011 principles is beneficial in the process of making right concerning GCG Application in SOEs. As a SOE, decisions and gaining trust of all stakeholders. complying with the existing regulation is mandatory for Pupuk Indonesia.
PT Pupuk Indonesia (Persero) Sustainability 97 Report
CHART OF GOVERNANCE STRUCTURE [GRI 102-18]
In line with the Law of Republic of Indonesia No. 40 of include the CGC Committee and Risk Management 2007 concerning Limited Liability Companies, Pupuk Monitoring Committee, Audit Committee, Secretary Indonesia established a Governance Structure consisting of Board of Commissioners, Corporate Governance of The Primary and Supporting Organs of Company. Compartment, Internal Audit Unit, and the Corporate The primary organs include the General Meeting of Secretary. The Governance Structure of Pupuk Indonesia Shareholders (GMS) and Board of Commissioners and 2018 is as follows: Directors. The Supporting Organs of the company
General meeting Shareholders (GMS)
Board of Board of Directors Commissioners
Corporate Governance GCG & PMR Committee Compartment
Audit Committee Internal Control Unit
Secretary of the Board of Company Secretary Commissioners
Command Line Coordination Line
GENERAL MEETING OF SHAREHOLDERS The GMS is a corporate organ who holds the authority (GMS) which is not given to the Boards of Commissioners and Directors in the limitations as stipulated in Law No. 40/ GMS is the highest corporate organ that serves as the 2007 and/or the Articles of Association of the Company. official forum for the shareholder to make strategic The roles under the authority of GMS include: decisions. The GMS consists of Annual GMS and 1. To stipulate the company’s long term plan and the Extraordinary GMS which are carried out based on the company’s action plan and budget plan Company’s Articles of Association and the existing legal 2. To stipulate the calculation of profit allocation of the frameworks. The shareholder can give its opinions and company suggestions through GMS, to make strategic decisions. 3. To appoint and dismiss the Directors and The decisions are made by considering the interests Commissioners of both parties, which are the shareholder and the 4. To set performance target for each Director and company. Suggestions, opinions and recommendations Commissioner shared by the shareholder through GMS is binding and 5. To set the remuneration for Directors and must be implemented by the Boards of Commissioners Commissioners. and Directors.
PT Pupuk Indonesia (Persero) 98 Sustainability GOVERNANCE OF SUSTAINABILITY Report
BOARD OF COMMISSIONERS 8. Establish other committees, beside the Audit Committee, if necessary, by considering the The Board of Commissioners is a corporate organ that company’s capacity; is in charge of monitoring the company management 9. Employ an expert for specific issues with a certain policies, general management of the company, both period in the expense of the Company, if necessary; regarding the company and the company business and 10. Conduct a company management under certain gives suggestions to the Board of Directors in the interest condition for certain period in accordance with the of the company, in accordance with the objectives and Articles of Association; purposes of the company. The reference of Board of 11. Attend the meetings of the Board of Directors and Commissioners is Law No. 40 of 2007 about Limited share their opinions on the topics discussed; Liability Companies, and Law No. 19 of 2003 concerning 12. Perform the other monitoring roles, in accordance State Owned Enterprises. In performing their roles, the with the existing legal frameworks, Articles of Board of Commissioners is assisted by the Supporting Association, and/or the decisions of the GMS. Organ of Board of Commissioners, namely GCG and Risk Management Monitoring Committee, Audit Committee, the Secretary of Board of Commissioners. COMMITTEES OF BOARD OF COMMISSIONERS
In carrying out its duties, the Board of Commissioners In performing their supervisory duties and responsibility, has the authority to: providing advice and recommendation, the Board of 1. Examine books, letters, and other documents Commissioners is assisted by two committees: GCG and as well as the cash flow for verification purposes Risk Management Monitoring Committee and Audit including the other securities and check the asset Committee. of the company 2. Enter the grounds, developings and offices GCG and Risk Management Monitoring Committee managed by the company; is the organ/instrument appointed by the Board of 3. Request for explanation from the Board of Directors Commissioners to assist the Board of Commissioners and/or the other officials regarding the issues on in performing their duties, in accordance with the the company management; Regulation of Ministry of State-owned Enterprises 4. Access the information on the policies and actions No. PER-12/MBU/2012 concerning the Supporting which have been and will be taken by Board of Organs for the Board of Commissioners/the SOEs Directors; Monitoring Board. Based on the Decree of the Board 5. Request the Board of Directors and/or the other of Commissioners No. 01/KEP.KOM/IV/2015 dated 23 officials under the Board of Directors, acknowledged February 2015 about the Charter of GCG Committee and by the Board of Directors, to attend the meetings of PMR Committee of Pupuk Indonesia, GCG Committee the Board of Commissioners; and Risk Management Monitoring Committee are 6. Appoint and dismiss the Secretary of Board of assigned to assist the Board of Commissioners in Commissioners, if necessary; performing their functions and general supervisory 7. Dismiss temporarily the members of the Board of duties on the company, providing advice in the Directors, if necessary; application GCG and Risk Management to the Board of Directors and the Management team under their supervision, as well as performing the other duties as the Board of Commissioners.
PT Pupuk Indonesia (Persero) Sustainability 99 Report
The Audit Committee is formed in order to assist the 3. Regulate the authority transfer from the Board of duties of the Board of Commissioners to encourage Directors to someone or a number of employees the application of good company governance, to assist both individually or collectively or to some other the establishment of a sufficient internal controlling people, on behalf of the company inside and structure, increase the quality of financial transparency outside the court; and reporting, as well as review the scope, accuracy 4. Regulate the human resource management of the of the independence and objectivity of the public company including to determine salaries, pension accountant. and old-age benefits and other income components for employees in accordance with the existing laws. The duties, obligations and authority of the Audit The salaries, pension and old age benefits and other Committee are further detailed in the Audit Committee income components determined for employees Charter issued in accordance to the Decree of the beyond what have been regulated by the laws need Board of Commissioners Number 08/KEP. KOM/X/2014 to be approved by GMS decision. concerning the Charter of the Audit Committee of 5. Appoint and dismiss employees of the company Pupuk Indonesia dated 23 October 2014. based on the human resource policies of the company and the existing labor laws; 6. Appoint and dismiss the Corporate Secretary; BOARD OF DIRECTORS 7. Perform any actions to deal with the management The Board of Directors perform their duties to of the properties of the company, including to set manage the company in accordance with the interest, the company’s agreement with other parties, to objectives and goal of the company as well as represent represent the company in or outside of court in the company both inside and outside the court in relation to any incidents, to the extent limited by accordance with the existing regulations and laws, the the existing regulations and laws, the Articles of Articles of Association and GMS decision. Association and/or the decisions resulted from GMS decision.
The Board of Directors report their performance 8. Appoint and dismiss the members of the Board to the shareholder through GMS. This reflects the of Directors and Board of Commissioners of the accountability of the company management in subsidiaries and/or a joint venture; accordance with the GCG principles. The performance 9. Develop the policies for the subsidiaries in the areas of the Board of Directors is evaluated by the Board determined by the Articles of Association. of Commissioners and reported to the GMS. The Board of Directors will follow up the findings and recommendation from the internal audit, external auditor and/or the other monitoring bodies.
In performing their duties, the Board of Directors has the authority to: 1. Set up the policies on the company management 2. Regulate the authority delegation from the Board of Directors to someone or several members of the Board of Directors to make decisions on behalf of the Board of Directors inside and outside the court;
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DELEGATING AUTHORITY OF BOARD OF COMPOSITION OF THE BOARD OF DIRECTORS COMMISSIONERS, BOARD OF DIRECTORS In relation to the policies and strategies on sustainability, AND COMMITTEES OF BOARD OF the Board of Directors delegates their authority to COMMISSIONERS [GRI 102-22] design policies and strategies in each division related to COMPOSITION OF THE BOARD OF COMMISSIONERS, economic, environmental and social aspects. [GRI 102-19] BOARD OF DIRECTORS AND COMMITTEES OF BOARD OF COMMISSIONERS At present no executive position is appointed to be The membership characteristics of the Board of responsible for those topics. [GRI 102-20] Commissioners and Board of Directors have been designed so that both organs of the company can The consultation process regarding the economic, work effectively and efficiently, and the company can environmental and social topics is delivered through achieve the targets of their performance. In 2018, the the relevant divisions, subsequently forwarded to the composition of the Board of Commissioners and Board Board of Commissioners through various reports. of Directors of the company is as follows: [GRI 102-21]
COMPOSITION OF BOARD OF COMMISSIONERS
Name Gender Position Tenure Competencies
Bungaran Male President Commissioner 2015 - now Agriculture expert, served as Saragih the Minister of Agriculture Basis of appointment: Decree of of the period 2000-2001. the Minister of SOE Economic expert with as GMS No. PER-83/MBU/2015 education background in the dated June 4, 2015. field of the economy level S1 (undergraduate) to S3 (doctoral).
Sukriansyah S. Male Commissioner 2015 - now Economic expert with education Latief background in laws level S1 Basis of appointment: Decree of (undergraduate) to S3 (doctoral). the Minister of SOE as GMS No. PER-83/MBU/2015 dated June 4, 2015.
Ony Male Commissioner 2015 - 2018 Economic expert with Suprihartono accounting education Basis of appointment: Decree of background and served as the Minister of SOE the Finance Director of PT as GMS No. PER-70/MBU/2016 Pengusahaan Daerah Industri dated March 29, 2016. Pulau Batam for two years.
Anwar Sanusi Male Commissioner 2018 - now Government policy expert, serves as the Secretary General Decree of the Minister of SOE of the Ministry of the Village, as GMS No. PER-193/MBU/2018 Underdeveloped Regions and dated June 8, 2018. Transmigration until today.
Widharma Male Independent Commissioner 2016 - now Economic and management Raya expert, with education Dipodiputro Basis of appointment: Decree of background in economics and the Minister of SOE public administration. as GMS No. PER-160/MBU/2016 dated July 26, 2016.
PT Pupuk Indonesia (Persero) Sustainability 101 Report
COMPOSITION OF BOARD OF COMMISSIONERS
Name Gender Position Tenure Competencies
Yanuar Rizky Male Independent Commissioner 2015 - now Economic and management expert, served as Unit Head Basis of appointment: Decree of of the Evaluation and Capital the Minister of SOE Market Supervision System in the as GMS No. PER-193/MBU/2018 Jakarta Stock Exchange for eight dated June 8, 2018. years.
COMPOSITION OF THE BOARD OF DIRECTORS
Name Gender Position Tenure Competencies
Aas Asikin Idat Male President Director 2015 - now Economic expert, four years serving as Director of Finance & Basis of appointment: Decree of Commercial at PT Pupuk Kujang. the Minister of SOE as GMS No. PER-243/MBU/2015 dated December 4, 2015
M. Djohan Safri Male President Director 2016 - now Shipping and distribution expert, eight years serving as GM of Basis of appointment: Decree of Shipping at PT Pupuk Sriwidjaja the Minister of SOE Palembang as GMS No. PER-243/MBU/2015 dated December 4, 2015
Gusrizal Male Investment Director 2017 - now Expert in distribution, logistic and shipbuilders, with degree Basis of appointment: Decree of from World Maritime University, the Minister of SOE Sweden. as GMS No. PER-243/MBU/2015 dated December 4, 2015.
Indarto Male Finance Director 2015 - now Economic expert, having Pamoengkas banking experience of 21 years. Basis of appointment: Decree of the Minister of SOE as GMS No. PER-243/MBU/2015 dated
Winardi Male Director of Human Resources and 2017 - now Mining Engineering expert, Governance having education background in Mining Engineering and served Basis of appointment: Decree of as Operations Director of PT Minister of State Owned Antam Tbk for five years. Enterprises as GMS No. SK-196/ MBU/09/2017 dated September 13, 2017
Achmad Tossin Male Director of Marketing 2017 - now Economic expert, four years Sutawikara serving as Director of Finance & Basis of appointment: Decree of Commercial at PT Pupuk Kujang. the Minister of SOE as GMS No. PER-07/MBU/2016 dated January 15, 2016.
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COMPOSITION OF THE BOARD OF DIRECTORS
Name Gender Position Tenure Competencies
Nugroho Male Director of Business 2018 - now Chemical engineering expert, Christijanto Transformation served as Production Director at PT Petrokimia Gresik for four Basis of appointment: Decree of years. Minister of SOE as GMS No. SK- 281/MBU/10/2018 dated October 26, 2018 First appointed as Director
COMPOSITION OF THE COMMITTEES OF BOARD OF COMMISSIONERS In performing their duties, the Board of Commissioners is assisted by the GCG and PMR Committee and Audit Committee. The composition of both committees is as follows:
COMPOSITION OF THE COMMITTEE OF GCG AND PMR
Name & Position Position in the Basis of Effective Tenure in the Committee Company Appointment Date
Widharma Raya D/ Chaiman Independent 04/KEP.KOM/VII/2018 July 4th, 2018 serving Commissioner
Sukriansyah S. Latief/ Vice Commissioner 04/KEP.KOM/VII/2018 July 4th, 2018 serving Chairman 1
Anwar Sanusi/ Vice Chairman 2 Commissioner 04/KEP.KOM/VII/2018 July 4th, 2018 serving
Handono Ishardyatmo/ Member Committee 04/KEP.KOM/VII/2018 July 4th, 2018 serving
Tungkot Sipayung/ Member Committee 04/KEP.KOM/VII/2018 July 4th, 2018 serving
COMPOSITION OF AUDIT COMMITTEE
Name & Position Position in the Effective Basis of Appointment Tenure in the Committee Company Date
Yanuar Rizky/Chairman Independent 03/KEP.KOM/VII/2018 July 4th, 2018 serving Commissioner
Ony Suprihartono/Vice Commissioner 03/KEP.KOM/VII/2018 July 4th, 2018 serving Chairman
M. Sapto Setiawan/ Committee 03/KEP.KOM/VII/2018 July 4th, 2018 serving Member
Vera Diyanty/Member Committee 03/KEP.KOM/VII/2018 July 4th, 2018 serving
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PRESIDENT COMMISSIONER [GRI 102-23] the ability to understand managerial issues related to the functions of a management, to have enough The head of the highest governance body in Pupuk understanding on the area of corporate business as well Indonesia Group is the President Commissioner, who as to have adequate time in performing their duties. is not allowed to hold double positions in the executive structure in the organization. Any other position held The appointment of the Board of Commissioners shall by the President Commissioner does not conflict with be effective as of the date of inauguration or the date of the Regulation of Minister of SOE Number PER-02/ official appointment as decided by GMS. The candidates MBU/02/2015. This regulation is to avoid the potential of the Board of Commissioners are selected to sign conflict of interest with multiple positions. a statement/integrity pact stating their willingness to perform their duties properly and be ready to be APPOINTMENT OF THE BOARD OF dismissed any time based on any reason considered COMMISSIONERS AND BOARD OF to be appropriate by GMS and will not sue or propose a legal proceeding related to such a dismissal. DIRECTORS [GRI 102-24] APPOINTMENT OF BOARD OF COMMISSIONERS Several steps to select the candidates for the members The members of Board of Commissioners are appointed of the Board of Commissioners before they are proposed and dismissed by the GMS through a transparent process. to the shareholders who hold the authority to propose The appointment of the Board of Commissioners is the name of candidates for the Board of Commissioners stipulated in the Articles of Associations, Law No. 40 of in GMS are described as follows: 2007 about Limited Liability Companies, Law No. 19 of 1. Screening for the prospective persons to be the 2003 about State-owned Enterprises (SOEs) No. 19 of candidates that is carried out by the Ministry of 2003 and the Regulation of Minister of SOE No. PER- 02/ SOEs (Minister, Secretary, Technical Deputies, and/ MBU/02/2015 about the requirements and procedures or the Deputies to identify the prospective persons to appoint and dismiss the Board of Commissioners to be the candidates from various sources) and the Monitoring Board for SOEs and based on 2. Evaluating the formal requirements and other the professionalism principles and Good Corporate requirements, conducted by the Technical Deputies Governance. 3. Assessing the required materials submitted by the selection team formed by the Ministry of SOEs The members of the Board of Commissioners of Pupuk 4. Conduct a fit and proper test by a professional Indonesia are required to observe the requirements, institution appointed by the shareholder capabilities and propriety as stipulated in the Articles 5. Appoint the Board of Commissioners based on the of Association. The capability requirements include Decree of Minister of SOE/Decision of GMS.
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Prior to the appointment to be commissioners, the 1. Formal requirements candidates must pass the fit and proper test. Therefore, The members of the Board of Directors is an all the commissioners of Pupuk Indonesia can be individual who has competence in legal actions, ensured to have integrity, competence, reputation and unless within 5 (five) years prior to the appointment experience as well as necessary skills to perform their the candidate: duties and functions. a. Been declared to be bankrupt; b. Been a member of Board of Directors or Board The formal requirements for the members of the Board of Commissioners/ Monitoring Board found of Commissioners of Pupuk Indonesia are as follows: guilty causing bankruptcy of a SOE and/or a 1. An individual person company; 2. Competent to conduct legal actions c. Been convicted for a criminal offense 3. Not been declared to be bankrupt within 5 (five) detrimental to the state finances, SOE, a years prior to nomination company, and/or related to other financial 4. Not become a member of the Board of Directors or sectors the Board of Commissioners who was found guilty 2. Material requirements for the member of Board of causing a company to be declared bankrupt within Directors, which include the following: 5 (five) years prior to the nomination; and a. skills 5. Not been convicted of a criminal offense detrimental b. integrity to the state finances and/or related to financial c. leadership; sector within 5 (five) years prior to nomination d. experiences e. honesty APPOINTMENT OF BOARD OF DIRECTORS f. good conduct/behavior The appointment of the members of the Board of g. high dedication to advance and develop the Directors through GMS is in accordance with the existing company legal frameworks as well as the Articles of Association 3. Other requirements for the members of Board of and the Regulation of Minister of SOE No. PER- 03/ Directors of SOE are as follows: MBU/02/2015 concerning the requirements, procedures a. Not a political party administrator and/or of appointment and dismissal of the members of Board a candidate for a legislative member. The of Directors in SOEs. The appointment of the Board of legislative members include the candidates Directors needs to fulfill the other formal requirements for Parliament (DPR), DPD, DPRD - 1 (provincial and the material in line with the prevailing regulations. level) and DPRD - 2 (district/municipal level); b. Not a candidate for a head/vice of district/ The position as the members of Board of Directors is a province and/or in the position as a head/vice of strategic position to achieve the excellence in company district/province management and competitiveness so that to be in c. Not in the position as a member in Board the position someone is required to fulfill specific of Directors in the respective SOE for two requirement and competences. Three requirements consecutive periods; need to be fulfilled by a candidate of the Board of d. Have dedication and willing to allocate time Directors, which include: fully to perform their duties; and e. Be healthy physically and mentally (not suffering from any illness that can hamper the implementation of their duties, as evidenced by a health certificate issued by a doctor)
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CONFLICT OF INTEREST [GRI 102-25] ROLES OF BOARD OF DIRECTORS IN Pupuk Indonesia defines a conflict of interest as a DETERMINING OBJECTIVES, VALUES AND situation or condition faced by any organizational STRATEGIES OF THE COMPANY [GRI 102-26] personnel due their positions, having authorities Setting the objectives, values and strategies in a potentially misused, intentionally or unintentionally, company is an important issue as the objectives give for the interest other than the company’s so that it can the picture of the company in the future, basic values affect the quality of decisions made, as well as the quality expected from all the personnel in the company, and of decisions which can be detrimental to the company. strategies which give the steps how the objectives will The company personnel must comply with the existing be achieved. Therefore, the Board of Commissioners and regulation regarding conflict of interest developed by Board of Directors formulate those three components, the company. related to economic, environmental and social topics.
The Board of Commissioners, Board of Directors and The commitment of Pupuk Indonesia to become employees are allowed to carry out other activities a company that prioritizes sustainability issues has outside the working hours as stipulated, under the been clearly stated in the company’s vision, that is “To condition that the activities do not have conflict of become a world-class agrochemical and petrochemical interests with the interests of PT Pupuk Indonesia company that is highly competitive and sustainable and (Persero), and/or activities assigned to the personnel. contributes to national food security and world needs.” The involvement in other activities should not affect Besides, in the governance of Pupuk Indonesia, we also the independence and the objectivity in making emphasize the sustainability issues, such as the 5th core decisions or the effectiveness and timeliness in values about being environmentally friendly. completing their works. The mission and core values are stipulated in the All employees have to uphold the work standards company’s blueprint 2011-2030 which has been without exception and act as objectively and approved by Minister of SOE. The vision, mission and independently as they can in daily activities. In the cases core values of the company are designed and reviewed when the Board of Directors and/or employees of PT together by the Board of Commissioners in accordance Pupuk Indonesia (Persero) find that there is a conflict with the recommendations for the Company Long Term of interest in the implemented activities, the respective Plan of 2018-2022 through Letter No. 46/KOM-VII/2018, person concerned must report using the form to apply dated 4 July and approved by Minister of SOE through for permission to receive approval from the President the ratification of the Company Long Term Plan 2018 Director. The approval is needed when one or more of through Letter No. S-710/MBU/10/2018 dated 24 the following issues coming up: October 2018. 1. the activity conducted outside the company is using knowledge obtained from the company TRAINING AND DEVELOPMENT OF BOARD 2. the activity lasts exceeding 6 (six) working hours OF DIRECTORS [GRI 102-27] on a working day or more that 20 (twenty) working The Board of Commissioners and Board of Directors hours in a working week. pay special attention to the company development and 3. the activity outside the company that overlaps with sustainability issues by participating in various seminars the working day and hour of PT Pupuk Indonesia regarding the economic, environmental and social (Persero), including sports activities such as tennis, issues as follows: golf and other activities, which are carried out not for business purposes and in working hours.
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PROGRAMS TO DEVELOP KEY MANAGEMENT COMPETENCES OF THE COMPANY
BOARD OF COMMISSIONERS
Name Training/Workshop Organizer Date/ Year
Bungaran Saragih IFA Cross Roads Asia IFA October 23rd, 2018 Pacific
IFA 86th Annual FA June 17th, 2018 Conference Program
Yanuar Rizky IFA Production and IFA March 6th, 2018 International Trade
Digital Farming Pupuk Indonesia October 4th, 2018
Sukriansyah S. Latief IFA Production and IFA March 6th, 2018 International Trade
Ony Suprihartono IFA 86th Annual IFA June 17th, 2018 Conference Program
Widharma Raya Dipodiputro ECIIA Madrid European PAII September 27th, 2018 Conference
EVALUATING THE PERFORMANCE OF the compensation and incentive scheme for all the BOARD OF COMMISSIONERS AND BOARD members of Board of Commissioners. OF DIRECTORS [GRI 102-28] 4. The result of performance evaluation to the members of Board of Commissioners individually The evaluation to the performance of Board of serves as a consideration for the shareholder to Commissioners and Board of Directors are stipulated in dismiss and/or re-appoint the respective members the Board Manual. which elaborates the key performance of Board of Commissioners. The result of the indicators as the specific targeted measurement to performance evaluation is an evaluation Instrument be achieved by Board Commissioners and Board of as well as a tool to increase the effectivity of Board of Directors in overseeing and managing the company. Commissioners.
CRITERIA OF EVALUATION OF BOARD OF CRITERIA OF PERFORMANCE EVALUATION OF BOARD COMMISSIONERS OF COMMISSIONERS General Policies The criteria of performance evaluation of Board of 1. Board of Commissioners should submit a Commissioners and the individual members of the performance report of Board of Commissioners Board of Commissioners are submitted by the Board and the members of Board of Commissioners to of Commissioners, which will be approved during the be evaluated by the shareholder in the GMS. The GMS, which at least include: performance of Board of Commissioners is stipulated 1. The preparation of KPI at the beginning of the year based on the duties as stated in the prevailing laws and evaluation towards the achievements and the Articles of Association and the mandate 2. Attendance frequency in the meetings of the Board from the shareholder. of Commissioners, coordination meetings, as well as 2. Formal evaluation criteria are communicated openly in the meetings with the other existing committees. to the members of Board of Commissioners since 3. Contribution in the monitoring process towards the they are appointed. company and participation in specific assignments 3. The results of the evaluation to the overall 4. Commitment in advancing the company performance of the Board of Commissioners and 5. Compliance to the existing regulations and laws as the performance of the members of the Board of well as to the company policies Commissioners individually are inseparable from
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IDENTIFYING AND MANAGING ECONOMIC, implementation is submitted to the President Director ENVIRONMENTAL AND SOCIAL IMPACTS and the Audit Committee for further follow-ups. [GRI 102-29] In addition, the company had prepared a Guideline for The Board of Commissioners is responsible to oversee Integrated Risk Management as a tool to manage the and provide advice to the Board of Directors periodically existing risks. This application based on information concerning the effectivity of the application of risk technology supports the enhancement of the integrated management. To obtain an accurate picture regarding company governance, in all levels of management the economic, environmental and social issues, the and operation in a company, including the aspects Board of Commissioners and Board of Directors receive of sustainability, such as social, environmental and inputs and suggestions from all stakeholders in the economic aspects. form of periodic reports.
EFFECTIVENESS OF RISK MANAGEMENT ANALYSIS OF ECONOMIC, ENVIRONMENTAL PROCESS [GRI 102-30] AND SOCIAL IMPACTS In every business, some risks can be predicted in advance The evaluation on the sustainability performance of and some are unknown. Therefore, a company sets up a Pupuk Indonesia is reported by each division to the risk management to conduct a process of identification, Board of Commissioners and Board of Directors in analysis, assessment, controlling, and measures to the form of annual reports related to the company avoid, minimize, or even to eliminate unacceptable development. [GRI 102-31] risks. In the institutional structure of Pupuk Indonesia, risk management is carried out at the highest level of In preparing this sustainability report, the Board of the company governance, which is the GCG and risk Directors delegates their responsibilities to prepare management monitoring committee, which serves as the report to the Corporate Secretary to ensure that all the supporting organs for the Board of Commissioners. the material topics have been covered in the report. In turn, the Board of Directors conduct report examination The roles and GCG committee and risk management thoroughly and give approval before the report is monitoring committee are to oversee, provide inputs published. [GRI 102-32] and recommendations on the application of the corporate governance, and identify issues which need to COMMUNICATING CRITICAL ISSUES be attended by the Board of Commissioners, especially [GRI 102-33] in general monitoring and compliance to regulation The discussions concerning strategic and critical issues and the existing laws. In the environmental and social related to the development on the company’s business aspects, the GCG and Risk Management Monitoring process is carried out through the mechanism of joint Committee provides inputs in the form of analysis meetings between the Board of Commissioners and reports to the Board of Commissioners. These inputs are Board of Directors on a monthly basis. In the condition useful to set up strategies of the company, particularly when new issues need to be followed up, the process in the area of sustainability. can be undertaken through the mechanism of response letters, suggestions, and advice from the Board of The other inputs are obtained from the internal Commissioners to the Board of Directors, which later will supervisory unit whose position is under the President be responded to by the Board of Directors through the Director. This unit is responsible to provide improvement response letter to the Board of Commissioners. In this suggestions and objective information concerning reporting period, no critical issues were reported, but the activities under examination in all management the Board of Commissioners and the Board of Directors levels, regarding the conditions, causes and impacts continued to meet periodically to discuss about the due to the weakness in the internal controlling as well development of the company. [GRI 102-33, GRI 102-34] as risk management. The report on the supervision
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CRITICAL PROBLEMS [GRI 102-34]
Number of Date of Month Subject Follow Up Letter Letter March 19/Kom-III/2018 March 22, The response and suggestions of Board President Director's letter to the Board of 2018 of Commissioners on the concept of 2017 Commissioners No. U-0681/A00.UM/2018 dated Audited Financial Report of PT Pupuk April 13, 2018 regarding response and suggestions Indonesia (Persero) of Board of Commissioners on the concept of 2017 Audited Financial Report of PT Pupuk Indonesia (Persero) May 38/Kom-V/2018 May 30, 2018 Follow up on the direction of the Shareholder President Director's letter to the Board of in the implementation of the GMS for Commissioners No. U-1230/A00.UM/2018 Approval of 2017 Audited Financial Report of dated June 29, 2018 regarding Follow up PT Pupuk Indonesia (Persero) on the direction of the Shareholder in the implementation of the GMS for Approval of 2017 Audited Financial Report of PT Pupuk Indonesia (Persero) May 40/Kom-V/2018 May 30, 2018 Review into the performance of PT Pupuk President Director's letter to the Board of Indonesia (Persero) year 2015-2017 Commissioners No. U-1334/A00.UM/2018 dated July 11, 2018 regarding Review into the performance of PT Pupuk Indonesia (Persero) year 2015-2017 August 63/Kom- August 30, The response and report on the duty President Director's letter to the Board of VIII/2018 2018 performance of the Board of Commissioners Commissioners No. U-2092/A00.UM/2018 dated of PT Pupuk Indonesia (Persero) up to October 25, 2018 regarding response and Quarter II 2018 report the duty performance of the Board of Commissioners of PT Pupuk Indonesia (Persero) up to Quarter II 2018 August 64/Kom- August 30, Follow up to the Board of Commissioners President Director's letter to the Board of VIII/2018 2018 Meeting with the Director of Technology Commissioners No. U-1856/A00.UM/2018 dated in relation to ERP of PT Pupuk Indonesia September 26, 2018 regarding Response and (Persero) suggestions of Board of Commissioners on the Board of Commissioners Meeting with the Director of Technology in relation to ERP of PT Pupuk Indonesia (Persero) September 73/Kom-IX/2018 September Follow up to the Board of Commissioners President Director's letter to the Board of 26, 2018 Meeting with the Director of Technology Commissioners No. U-2024/A00.UM/2018 in relation to ERP of PT Pupuk Indonesia dated October 17, 2018 regarding response and (Persero) suggestions of Board of Commissioners on the concept of 2017 Audited Financial Report of PT Pupuk Indonesia (Persero)
POLICY ON REMUNERATION [GRI 102-35] PROCESS TO DETERMINE REMUNERATION Policies on remuneration on the Board of [GRI 102-36] Commissioners and the Board of Directors The process to determine remuneration is based on the analysis by taking into account the issues such as: the Remuneration for the Board of Commissioners refers results of financial performance and the replenishment to the Regulation of Minister of SOE No. 04 of 2014 of reserves as stipulated in the prevailing regulations and about the Guidelines for Remuneration of the Board laws, fairness with groups, and consideration on the targets of Directors, the Board of Commissioners and the and long term goals and strategies of the company. supervisory board of SOEs and the Decision of Minister of SOE No. SK-46/MBU/2014 about the Guidelines for the Pupuk Indonesia gives appreciation decently in the form calculation of Remuneration of the President Director of income which motivates the Board of Commissioners and the bonuses/performance incentives for the Board and Board of Directors for their contribution to the company. of Directors, Board of Commissioners and Supervisory The remuneration for the Board of Commissioners and Board of SOEs. Board of Directors of Pupuk Indonesia is not only based on the Key Performance Indicator (KPI) annually, but also The policies on remuneration is calculated by based on the short-term and long-term achievement as considering the performance of the Board of the results of the systems developed. Commissioners and Board of Directors in achieving the company objectives, including the objectives related to economic, environmental and social aspects.
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The approval on giving the remuneration to the Board and transportation allowances. The other allowances of Commissioners and Board of Directors determined by include the religious holiday allowances and post- GMS. Based on the SOE’s regulations, the shareholder service benefits. Board of Commissioners also receive determines the adjustment on remuneration for the supporting health facilities, legal assistance and Board of Commissioners and Board of Directors by bonuses. considering: i. Factor of business scale Remuneration for the Board of Commissioners of ii. Factor of Business Complexity Pupuk Indonesia is stipulated by the letter issued by iii. Inflation rate the Mnitry of SOE: Regulation of Minister of SOE as iv. Condition and capability of the company. the shareholders No. PER-04/MBU/2014 about the Guidelines on Remuneration for Boards of Directors, In the case that the calculation of honorarium by Board of Commissioners, the Monitoring Body for state- considering the factors causing the honorarium lower owned enterprises. that the previous year, the honorarium applied is the same as the honorarium of the previous year. The The components in the remuneration for the Board mechanism to provide compensation for the Board of of Directors of Pupuk Indonesia per month consists of Commissioners and the Board of Directors is as follows: Salary and Housing allowances. The other allowances • The Board of Commissioners conducts an analysis they receive include religious holiday allowances (THR) on the compensation provided in the market for the and post-service insurance. The Board of Directors jobs related to the other company with the similar also receive supporting facilities such as office cars, business and status. health facilities, legal assistance and bonuses. The • By considering the business performance of the remuneration received by the Board of Commissioners, company and the contribution of each individual, Board of Directors and each employee is private and and the results is then discussed by the Board of confidential, therefore we cannot share them in this Commissioners to prepare recommendations report. [GRI 102-38, GRI 102-39] • The propositions on remuneration for the members of the Board of Commissioners is presented to the ANTI-CORRUPTION shareholder for discussion and approval in GMS. Corruption, gratuities, bribery and fraud are very GMS gives approval and determines remuneration detrimental to the company and the state as it sacrifices for the Board of Commissioners. The scheme of the company to meet interests of individuals, family remuneration for the Board of Commissioners of and groups. All the personnel in Pupuk Indonesia is Pupuk Indonesia is as follows: prohibited from receiving gratuities which benefits
individuals, family and groups, which are received in INVOLVEMENT OF STAKEHOLDERS IN country or abroad, both through and without electronic DETERMINING REMUNERATION devices. In determining the remuneration, all stakeholders (represented in the GMS) also gives approval and The company has a Code of Conduct which determines remuneration for Board of Commissioners. emphasizes the importance to avoid any behavior The remuneration proposal is submitted to the GMS to which potentially causes conflict of interests, corruption, obtain approval from from shareholders. [GRI 102-37] collusion, and nepotism. The interest of the company should come before the interest of individual, family, ANNUAL TOTAL COMPENSATION RATIO The component of the annual total compensation of the remuneration for Board of Commissioners of Pupuk Indonesia per month consists of an Honorarium
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and groups. Not only a guideline on policies, Pupuk good governance can be implemented within the Indonesia also apply a number of mitigation systems structure of Pupuk Indonesia. such as: 1. Fraud Risk System 6. Guidelines on Whistle Blowing System (WBS) This system is to identify and manage risks of [GRI 102-17] fraud from various sources, by developing control WBS aims to give opportunity to all employees mechanism through the implementation of fraud to report misconducts, including corruption risk assessment program the results of which is the allegations within the company. The WBS can be risk map of fraud. accessed by all employees online, and apply an anonymous reporting mechanism. 2. Signing Integrity Pacts Integrity pact is signed by each employee on The dissemination on the Code of Conduct needs to be a regular basis annually beside during the carried out for all employees at all level, including the procurement process of goods and services. The Board of Commissioners and Board of Directors. All integrity pact and anti-corruption policy is also instruments of communications can be utilized, such as: disseminated to all partners (100%) related to the 1. The meetings of Board of Directors and Board of risks of corruption. [GRI 205-2] Commissioners 2. Coordination meetings 3. Guidelines for Controlling Gratification 3. Dissemination on transparency and anti-bribery The commitment to control gratuities is stipulated 4. Training and workshops with the themes on anti- under the Decision Letter of Board of Directors corruption and anti-fraud No. SK/DIR/023A/2015 and had been renewed 5. Induction for new hires by the issuance of the Guidelines of Controlling 6. Dissemination through the company website. Gratification Number: PI-TKK-PD-002 Rev. 0 passed on 08 September 2017. Pupuk Indonesia continues to disseminate the company’s Code of Conduct, since this dissemination is 4. Guidelines for Assets Declaration for Officials an important stage in developing employees of Pupuk The company applies the policy to declare their Indonesia who behave in accordance to the company’s assets for all officials from the level of Board of culture. The Code of Conduct is communicated and Commissioners, Board of Directors, Grade I, and disseminated to the Board of Commisioners and all its Grade II. The regulation which requires officials to supporting organs, Board of Directors, and the officials declare their assets had been applied since 2014 by one level below the Board of Directors as well as all the the issuance of Decision Letter of Board of Directors employees. No. SK/DIR/020/2014 signed on 20 May 2014 and had been renewed by the Guidelines for Assets 247 participants are assigned to transfer the results of the Declaration for Officials No. PI-PD-TKK-003 Rev. 0 training to Board of Commissioners, Board of Directors, passed on 02 August 2017. and all employees in each company. All communication and training on anti-corruption are summarized in the 5. Guidelines on Conflict of Interest table below. [GRI 205-2] The purpose of this guidelines is to understand, prevent and address conflicts of interests in the company, to take decisive actions on conflicts of interests in the company. By examining the sources of conflicts of interest and all types of situations and providing the reporting channels, it is hoped that
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Training and Communication on Anti-corruption Total %
Board of Commissioners 6 100
Board of Directors 7 100
Note: Board of Commissioners and Board of Directors are all located in Jakarta
Training and Communication on Anti-corruption Total %
Grade I 35 100
Grade II 58 100
Grade III 28 100
Grade IV 51 100
Grade V -VII 60 100
Training and Communications on Anti-corruption Total %
PT Pupuk Indonesia (Kantor Pusat) 247 100
PT Petrokimia Gresik 2,824 98.80
PT Pupuk Kujang 760 68
PT Pupuk Kalimantan Timur 1,880 100
PT Pupuk Iskandar Muda 749 100
PT Pupuk Sriwidjaja Palembang 985 46
Rekayasa Industri 492 100
*as our operational areas are based on our subsidiaries located in many locations, the data of employees based on locations have been represented by the data above.
In the reporting year, assessments of several POLITICAL CONTRIBUTION [GRI 415-1] operational companies had been carried out, and 59 In accordance with the existing policies, the Board risks of fraud have been identified in the operational of Commissioners, Board of Directors and the SOE areas of the company from four areas of business process officials are prohibited from making contributions to of Pupuk Indonesia, including: finance, marketing, political parties. The policy on this issue is stipulated in procurement and investment which are considered to the Law of Political Party No. 2 of 2008 and the Law have risks related to corruption. [GRI 205-1] No. 10 of 2008 about the general election. In addition, in the Guidelines of Ethics and Code of Conduct of Throughout 2018, no corruption incidents were found; Pupuk Indonesia, it is stated that no contribution from no corruption incidents were found with business company’s funds, goods and facilities are intended to partners; and no public accusation against the company support political parties and any candidates, unless it regarding corruption. [GRI 205-3] is limited to the support allowed by the existing laws and regulations.
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ENGAGEMENT WITH STAKEHOLDERS Pupuk Indonesia considers that developing harmonious and mutually supportive relationships with stakeholders is important and needs special attention, as all stakeholders have greater or lesser influence on to the policies, decision making and operational activities of the company. The following is the table showing the interaction developed by Pupuk Indonesia with various stakeholders.
Stakeholders Stakeholders’ Involvement Meeting Topics/issues [102-40] Stipulation Approach frequency [GRI 102-44] [GRI 102-42] [GRI 102-43] [GRI 102-43]
Shareholder Influence General Meeting Twice a year • Monitoring and evaluation of the company of shareholders performances • Determining and paying dividend • Accuracy and the approval of the company financial report • Payments of tax and PNBP (submission of memorandum bill invoice)
Consumers of Influence Meeting and During the • Guarantee for supplies and price subsidised fertilizers: accompaniment planting • Guarantee of the quality of fertilizer farmers and farmer seasons • Customer satisfaction survey groups
Consumers of non- Influence Consumer 56 times • Guarantee for supplies and price subsidised fertilizers services • Guarantee of the quality of fertilizer • Customer satisfaction survey
Employees Representation Establishment of Twice a year at • Guarantee on freedom to associate and to labour union least express opinion • Health insurance and work safety Meetings with • Equity, welfare and career development management body
Suppliers/ Distributors Dependence • Meeting • Equal access to information on work • Cooperation opportunities contracts • Equal access to work opportunity • Application of • Working contract CSMS • Fulfilment of rights and obligations • Compliance and regulation
Communities Proximity CSR & PKBL Twice a year at • Social assistance for communities Programs least • Coaching for business partners
Media Representation • Press release Twice a year at • Policies and company actions • Press least • Performance of the company conference
APPLICATION OF SUSTAINABILITY CONCEPT TO SUPPLIERS The application of sustainability concept is not only for internal operation of the company, but also for the partners. and suppliers of goods and services, as the entire life cycle of the company will bring impacts to environment. The suppliers are all the parties involved in the activities on behalf of the company. When the name of the company is represented by the suppliers, the image of the company is influenced by the supplier performances. Therefore, it Is important for Pupuk Indonesia to apply the same standards to all suppliers, including the suppliers of organic fertilizers and the distributors of fertilizers.
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Pupuk Indonesia conducts selection for suppliers thoroughly by observing sustainability criteria in accordance with the General Guidelines for Procurement of Goods and Services in PT Pupuk Indonesia (Persero) No. PI-PD-ADA-002 Rev. 0 passed on 29 May 2017. The criteria include the compliance to labour regulations, for example standard minimum regional wage, health standards, and work safety standards as well as respect to human rights. In addition, the suppliers also should observe the prevailing regulation in the environmental sector.
Among all the new suppliers, 100% have been selected using the new environmental criteria. [GRI 308-1]
All our suppliers have been assessed for their environmental impacts, and we will not involve/use suppliers identified to have brought negative impacts to environment significantly, so that in this reporting period no supplier is identified as a supplier which brought an actual negative impact to environment and have potential significant impact in the supply chain. [GRI 308-2]
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ABOUT PT PUPUK INDONESIA (PERSERO)
Pupuk Indonesia offers fertilizers made by the best people to help Indonesia achieve food self-security.
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CORPORATE IDENTITY
COMPANY NAME [GRI 102-1] LEGAL ENTITY AND OWNERSHIP [GRI 102-5]
Perusahaan Perseroan (Persero) PT Pupuk Indonesia. We are a State-owned Company (Persero) incorporated Established on December 24, 1959. as a Perusahaan Terbatas (Limited Liability Company, PT). Our Articles of Association are contained in Deed Number 4 dated January 3, 1970 made before Soeleman Ardjasasmita, a Notary in Jakarta. Our Articles of Association have been amended several times and last amended by Deed Number 14 dated April 26, 2013 made before Nanda Fauz Iwan, S.H, a Notary in Jakarta Selatan. Owner: Wholly-owned by the Indonesian Government. HEAD OFFICE [GRI 102-3]
Jl. Taman Anggrek, Kemanggisan Jaya Jakarta 11480, Indonesia Telepon: (021) 53654900 Faksimile: (021) 5481755, 5480607 Email: [email protected] Website: www.pupuk-indonesia.com @pupuk_indonesia Pupuk Indonesia BUSINESS SEGMENTS AND PRODUCTS [GRI 102-2] @pt.pupukindonesia We are engaged in corporate management, trading, and services in the fertilizer, petrochemicals, and other chemicals segment. We are also engaged in agroindustry. Our products include: • Fertilizers; consisting of Urea, NPK, SP-36, ZA, ZK, and Organic fertilizers. • Byproducts; consisting of cement retarder, aluminum
fluoride, gypsum, liquid CO2, and hydrochloric acid. OPERATING AREAS [GRI 102-4, 102-6] • Basic chemicals; consisting of ammonia, sulfuric PT Pupuk Indonesia operates in Indonesia with plants acid, and phosphoric acid. located in: • Innovative products; such as biofertilizers, seeds, • Gresik, East Java decomposers, pesticides, others. • Cikampek, West Java • Bontang, East Kalimantan • Lhokseumawe, Nanggroe Aceh Darussalam • Palembang, South Sumatra Our products are sold across Indonesia.
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MILESTONES
1959, 1979-1980 1997-1998 2010-2013
After the issuance of the PT Pupuk Sriwidjaja (Persero) Government Regulation No. is changed into a Strategic and 28 Year 1997 and Government Investment Holding company. Regulation No. 24 Year 1998, Consequently, PT Pupuk PT Pupuk Sriwidjaja (Persero) Sriwidjaja Palembang was was named a Perusahaan established under Deed No. 56 Induk (Operating Holding) that dated December 24, 2010. controls 6 (six) companies: PT Pupuk Kalimantan Timur, PT PT Pupuk Sriwidjaja (Persero) PT Pupuk Sriwidjaja was Petrokimia Gresik, PT Pupuk changed its name to PT Pupuk established under Deed No. 177 Kujang, PT Pupuk Iskandar Indonesia (Persero) under dated December 24, 1959. Muda, PT Mega Eltra, and PT Deed No. 3 dated April 3, 2012. Rekayasa Industri. To cooperate with ASEAN On December 23, 2013, PT member states, we established Pupuk Indonesia (Persero) the following companies: established a subsidiary called 1. PT ACEH FERTILIZER (AAF) PT Pupuk Indonesia Logistik. ACEH FERTILIZER (AAF). Pupuk Indonesia has a 6% shareholding.
2. ASEAN BINTULU FERTILIZER (ABF) Sdn Bhd. Pupuk Indonesia has a 13% shareholding.
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2014-2017 2018
On August 18, 2014, PT Pupuk Indonesia (Persero) established a subsidiary called PT Pupuk Indonesia Energi.
1. On April 30, 2015, PT Completion of the Amuera Pupuk Indonesia (Persero) established a subsidiary II project and its first urea called PT Pupuk Indonesia Pangan. production by Petrokimia 2. Inauguration of the PKT 5 Plant. Gresik, a subsidiary of Pupuk 3. Construction of the NPK II Plant operated by PT Indonesia. Pupuk Kujang.
Construction of the NPK Fusion I Plant operated by PT Pupuk Sriwidjaja Palembang.
Completion of the Pusri IIB Plant.
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MARKET SHARE [GRI 102-6]
Our products are distributed across Indonesia to improve agricultural output and to achieve food security. Our customers consisted of two segments: farmers and farmer groups; and agriculture companies and plantations.
SCALE OF ORGANIZATION [GRI 102-7] [GRI 102-8]
Total Employees in 2018 9,661 people
Subsidiaries We have 10 subsidiaries and operate distribution networks in every region in Indonesia.
Net Sales Rp69.45 trillion
Liabilities as at December 31, 2018 Rp72,876,593 million
Capital as at December 31, 2018 Rp62.6 trillion
Authorized Capital Rp100 trillion
Issued and Paid-in Capital Rp25 trillion
Total Production 18,414,231 tons
SUBSIDIARIES AND OPERATING AREAS [GRI 102-4]
PT PUPUK ISKANDAR MUDA PT PUPUK SRIWIDJAJA PALEMBANG LHOKSEUMAWE PALEMBANG
Jalan Raya Medan - Banda Aceh, Krueng Jalan Mayor Zen, Palembang 30118 Geukeuh, Phone : (62-711) 712111, 712222 Lhokseumawe 24310 Nanggroe Aceh Fax : (62-711) 712100, 712020 Darussalam E-mail : [email protected]/[email protected] Phone : (62-645) 56222 Website : http://www.pusri.co.id Fax : (62-645) 56096 E-mail : [email protected] Website : http://www.pim.co.id
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PT PUPUK KUJANG PT PETROKIMIA GRESIK KARAWANG GRESIK
Jalan Jenderal A. Yani No. 39 Jalan Jend. A. Yani, Gresik 61119, JawaTimur Cikampek, Karawang 41373, Jawa Barat Phone : (62-31) 3981811, 3981814, Phone : (62-264) 314336-340, 313451-452, 3982100, 3982200 316123, 316141 Fax : (62-31) 3981722, 3892272 Fax : (62-264) 314235, 314335, E-mail : [email protected] E-mail : [email protected] Website : http://www.petrokimia-gresik.com Website : http://www.pupuk-kujang.co.id
PT PUPUK KALIMANTAN TIMUR PT PUPUK INDONESIA LOGISTIK BONTANG JAKARTA
Jalan James Simandjuntak No. 1 Gedung Pusri 101, lantai 2 & 3 Bontang 75313, Kalimantan Timur Jl. Letjend S. Parman Kav. 101 Phone : (62-548) 41204, 41202, 41203, Jakarta Barat 11440 Fax : (62-548) 41616, 41626 Phone : (62-21) 2263 1881 - 83 E-mail : [email protected], Fax : (62-21) 2256 1904 Website : http://www.pupukkaltim.com E-mail : [email protected] Website : www.pi-logistik.com
PT MEGA ELTRA PT PUPUK INDONESIA ENERGI JAKARTA JAKARTA
Jalan Menteng Raya No. 27 Gedung Petrokimia Gresik Jakarta Pusat 10340 Jl. Tanah Abang III No.16 Jakarta 10160 Phone : (62-21) 3909018 (Hunting), 3909437 Phone : (62-21) 3446678 Fax : (62-21) 3909326, 3102937 E-mail : [email protected] E-mail : [email protected] Website : http://www.pi-energi.com Website : http://www.megaeltra.com
PT PUPUK INDONESIA PANGAN PT REKAYASA INDUSTRI JAKARTA JAKARTA
Gedung Petrokimia Gresik Jalan KalibataTimur I No. 36 Jl. Tanah Abang III No.16 Jakarta 10160 Kalibata, Jakarta Selatan 12740 Phone : (62-21) 3446460 Phone : (62-21) 7988700, 7988707 E-mail : [email protected] Fax : (62-21) 7988701, 7988702 Website : http://www.pi-pangan.com E-mail : [email protected] Website : http://www.rekayasa.co.id
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SUPPLY CHAIN [GRI 102-9] levels: provinces, regencies, sub-regencies, and other
In the fertilizer manufacturing process, we cooperate groups across Indonesia. with partners to manufacture organic fertilizers that follow a set of standards as expressed in our cooperation Our strategies and measures to safeguard fertilizer contract. As at 2018, we have 182 partners that availability and maintain competitive prices include: manufacture organic fertilizers. The total production 1. Revitalizing old plants. volume was 653,404 tons and sales were Rp189.58 2. Improving fuel efficiency in old plants and billion. Our organic fertilizer manufacturer partners performing energy audits to carry out the necessary employ 1,570 people. modifications. 3. Substituting our energy source from natural gas to
BUSINESS CHAIN coal. 4. Taking efficiency measures when procuring We employ the latest technologies in our production raw materials for compound fertilizers in every process, from liquid, solid, and gas phases at high subsidiary. temperatures and pressures. Our primary objective is to 5. Cooperating with phosphate mine owners. achieve food security by ensuring fertilizer availability. Our products are distributed to four administrative
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DISTRIBUTION MECHANISMS 2. Manufacturers must ensure that distribution of
We have a distribution and warehouse network across subsidized fertilizers is uninterrupted that meet Indonesia to ensure fertilizers are distributed timely, the 6 (six) principles of fitness and own the Level III efficiently, and readily, especially during growing season. warehouses in their areas of responsibility. The fertilizer distribution workflow is as follows: 3. Distributors distribute subsidized fertilizers from 1. Under the Regulation of the Minister of Trade No. Level III to Level IV. 15 Year 2013, PT Pupuk Indonesia (Persero) regulates 4. Retailers further directly distribute the subsidized domestic availability and distribution of subsidized fertilizers that meet the 6 (six) principles of fitness fertilizers for the agriculture sector on a national to farmers or farming groups Definitive Plans for scale, from Level 1 until Level IV. Fertilizers must Group Needs. meet the 6 (six) Principles of Fitness: Fitness by Type, 5. Fertilizer distribution process starts from a request by Quantity, by Price, by Location, by Time, and by made by farmers/farming groups to Retailers, who Quality. then conveyed it up the distribution chain all the way to the Manufacturer.
LINE I Regulation of the Ministry of Agriculture (Allocation per Province) LINE II Regent Regulation (Allocation per Sub-District) LINE III Regent Regulation (Allocation per LINE IV Sub-District)
Plant
Definitive Plan of Farmer Group Needs (RDKK) Line II/UPP
Line III Distributor Retailer Warehouse
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VISION, MISSION, AND CORPORATE
VALUES [GRI 102-16]
Our Vision, Mission, and Corporate Values are the reference for every Pupuk Indonesia employee to develop a leading company. The Vision, Mission, and Corporate Values are stated in the Company Blue Print 2011- 2030 as approved by the Minister of State-owned Enterprises Negara in her letter No. S-265/MBU/05/2015 dated May 7, 2015.
“To become a world-class agrochemical and VISION petrochemical company that is highly competitive and sustainable and contributes to national food security and world needs.”
MISSION • Providing products and services that are highly competitive, safe and environmentally friendly with global reach.
• Providing excellent service to customers.
• Supporting national food security and sovereignty programs.
• Develop core and derivative businesses and a synergistic business portfolio.
• Doing business commercially with the principles of good governance and effective risk management through professional HR.
• Providing maximum benefits and added value to companies and stakeholders.
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CORPORATE VALUES
Pupuk Indonesia is founded on noble values that enabled us to achieve our vision and objectives. These values serve as reference for every Pupuk Indonesia individual.
CUSTOMER FOCUS SYNERGY Our people prioritizes customers. With a view of market Our people cherish unity, synergy, and team work when conditions, they offer the best service to customers and performing duties and assignments, both individually stakeholders. and in units and among subsidiaries.
In 2018, we communicated our vision, mission, and ACHIEVEMENT ORIENTED corporate values to every Pupuk Indonesia employee, as Our people are highly dedicated in carrying out every follows: duty and assignment. They seek to achieve higher goals and provide greater benefits to stakeholders. 1. Communication to Pupuk Indonesia Directors and employees using internal channels: Media TV, email, internal magazine, and outdoor spaces. RESPONSIVE 2. Communication on the corporate website. Our people always adapt to the market conditions and 3. Communication to new employees during training business competition. They seek to innovate and they and orientation. are forward looking visionaries. 4. Communication in employee meetings and training held in 2018.
ETHICAL Personnel of Pupuk Indonesia prioritize unity, synergy, and cooperation in carrying out their tasks and duties, both as individuals and work units and subsidiaries.
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EXTERNAL INITIATIVES [GRI 102-12]
As a company that focuses on good governance for sustainable business, we observe nationally and internationally prevailing laws, regulations, and standards, such as: • ISO 9001-2008 Quality Management System. • ISO 14001-2004 Environment Management System. • ISO 17025 Testing Laboratory and Calibration Laboratory. • ISO 9001:2015 Quality Management System. • International Fertilizer Association (IFA) Protect and Sustain.
ORGANIZATIONAL MEMBERSHIPS [GRI 102-13]
We are members in organizations to expand our insight, build new networks, and create opportunities to learn the latest industry trends: • Indonesian Fertilizer Producers Association (Asosiasi Produsen Pupuk Indonesia) • International Fertilizer Association (IFA) • Professional Certification Institute for the Indonesian Fertilizer Industry (Lembaga Sertifkasi Profesi Industri Pupuk Indonesia)
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ABOUT SUSTAINABILITY REPORT
Pupuk Indonesia has a strong commitment to contribute in Sustainable Development Goals (SDGs). This sustainability report is evidence towards our commitment as a company that is accountable to all stakeholders, to communicate our performance in economic, environmental and social areas.
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Annually, Pupuk Indonesia issues a report as a form of our However, since some of the companies’ impacts are commitment to sustainability issues. The sustainability too small to be presented in a report, we deliberately
report serves as an evidence for accountability of excluded them from this report. For example, the CO2 the company to public concerning the impact of the emission or air pollutants emission from a relatively company operation to economy, environment and small subsidiary office is not included in the tables. society beside our contribution to the achievement of sustainable development goals. GRI STANDARDS AND ASSURANCE
This sustainability report is prepared following the GRI REPORTING PERIOD, SCOPE AND STANDARDS standards: Comprehensive Option. To facilitate the This sustainability report is the sixth annual report, readers, the number of GRI is written in green fonts as consisting of the data and information from 1 the end of each relevant statement. We also provide the January 2018 up to 31 December 2018. We have issued complete list of GRI Standards Index at the page 156. sustainability reports since 2013. The previous report is [GRI 102-54] [GRI 102-55] the sustainability report of 2017 issued in May 2017. [GRI 102-50] [GRI 102-51] [GRI 102-52] To ensure that this report has been prepared following the GRI Standards, we appointed National Center for There were no fundamental and strategic changes in Sustainability Reporting (NCSR) to conduct examination PT Pupuk Indonesia, both In the organization and supply following GRI Standards in Accordance Check. chain, so that no significant changes come up in the material topics including the limitations if compared to We value the importance of transparency and accuracy the previous report. However, some changes are shown in the report writing to increase the report credibility in the number in this report due to the standardization in and of PT Pupuk Indonesia in general. Therefore, each calculating process, from various subsidiaries, including of our report, including this sustainability report, has the calculation of electricity consumption from power passed the examination by an independent assurer to company (PLN) substations resulted from one of our assure that this report is free from material errors. subsidiaries, and the use of a more accurate energy unit in this report (MMBTU). For this report, we appointed Moores Rowland as [GRI 102-10] [GRI 102-48] [GRI 102-49] our independent assurer. PT Pupuk Indonesia does not have any professional relationship with Moores This report covers all the operational activities of PT Rowland other than the relationship related to this Pupuk Indonesia and its 10 subsidiaries as follows: assignment to examine this report. The assigning of [GRI 102-45] an independent assurer through a thorough process 1. PT Petrokimia Gresik and with the approval from the Directors represented 2. PT Pupuk Kalimantan Timur by the Company Secretary, by taking into account the 3. PT Pupuk Kujang quality of the appointed assurer, by considering their 4. PT Pupuk Sriwidjaja Palembang professional records and capabilities. [GRI 102-56] 5. PT Pupuk Iskandar Muda 6. PT Rekayasa Industri 7. PT Mega Eltra 8. PT Pupuk Indonesia Logistik 9. PT Pupuk Indonesia Energi 10. PT Pupuk Indonesia Pangan
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PROCESS TO DETERMINE THE CONTENTS OF REPORT a questionnaire to all stakeholders. Through this AND MATERIAL ASPECTS [GRI 102-46] process, we ensure the stakeholder inclusiveness in
This report is prepared and written through the the preparation of this report. following steps: 3. Validation. To ensure that the material topics are
1. Identification. We identify the topics (materials) complete, we conduct a validation process, and important for stakeholders, which are individuals or identify specific topics from GRI Standards which entities which are potentially affected significantly will be reported. by our activities or products. We identify the boundary, where those aspects can occur, inside or 4. Review. We value all the inputs and feedbacks for outside the company. our report from the previous year, and we use this information to improve our report for the current
2. Priority. After identifying the sustainability topics or year. issues, we set priorities or the level of materiality of those topics. The priorities are determined through The flow of the process in determining the content of a survey to set the materiality level by circulating this report is illustrated as follows:
BAGAN ALIR PROSES PENETAPAN KONTEN LAPORAN
STEP 1 STEP 2 STEP 3 IDENTIFICATION PRIORITY VALIDATION
Laporan 1 Keberlanjutan
Sustainability Context Materiality Completeness
Stakeholder Engagement
PT Pupuk Indonesia (Persero)
STEP 4 REVIEW
Stakeholder Sustainability Context Engagement
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In this report we present the issues important for the overall operation of PT Pupuk Indonesia to build all stakeholders, which include the shareholders, a sustainable company. individuals, organizations and communities who are affected by our activities, as well as important for the 3. Materiality. We present the topics relevant and continuity of our businesses. The process to determine Important for all stakeholders, the topics which the contents of this report refers to four principles of GRI reflect the social, environmental and economic Standards as follows: impacts, which are considered to be substantial and influential towards the decision making process by 1. Engagement with stakeholders. We Identify the all stakeholders. stakeholders, engage with them in the reporting process, so that we are able to respond to relevant 4. Comprehensiveness. We provide information on issues and important for them. We involved all each topic sufficiently supported by adequate the stakeholders from the process of determining data, in order to share sufficient information for all contents up to obtaining inputs for the published stakeholders to allow them to conduct evaluation to reports. our performance along the reporting period. 2. The context of sustainability. We present the organisational performance in relation to the concept of sustainability, which includes the economic, environmental and social aspects from
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MATERIALITY LEVEL
Economic Performance High Energy Efficiency and Con- Employee Welfare servation
Occupational Health and Safety Solid and Toxic Waste
Water Usage Anti-Corruption and Bribery
Respect for Human Rights Greenhouse Gas Emissions Product Responsibility Medium Procurement /Purchasing Infrastructure Development for Communities
Outsourcing
Donation for the Community Biodiversity Low Important to Stakeholders Important to Low Medium High
Important to the Company
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LIST OF MATERIAL TOPICS [GRI 102-47]
Twenty topics are considered as material, as presented in the table below:
Material topics Why GRI Boundary Material Number [GRI 103-1] Inside Pupuk Outside Indonesia Pupuk Indonesia
ECONOMY
Economic performance Bring significant impact to stakeholders 201-1 √ 201-2 201-3 201-4
Market Presence Bring significant impact to stakeholders 202-1 √ 202-2
Indirect economy impact Bring significant impact to stakeholders 203-1 √ 203-2
Procurement practices Significantly impact to economic growth 204-1 √
Anti-Corruption Significantly impact to development 205-1 √ 205-2 205-3
ENVIRONMENT
Material Significantly impact to sustainability 301-1 √ 301-2 301-3
Energy Significantly impact to sustainability 302-1 √ √ 302-2 302-3 302-4 302-5
Water Significantly impact to sustainability 303-1 √ √ 303-2 303-3
Emission Significantly impact to sustainability 305-1 √ √ 305-2 305-3 305-4 305-5 305-6 305-7
Effluents and Waste Significantly impact to sustainability 306-1 √ √ 306-2 306-3 306-4 306-5
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Material topics Why GRI Boundary Material Number [GRI 103-1] Inside Pupuk Outside Indonesia Pupuk Indonesia
Environmental Compliance Significantly impact to sustainability 307-1 √ √
Suppliers Environmental Significant impact on reputation of the 308-1 √ Assessment organization 308-2
SOCIAL
Employment Compliance to regulating laws 401-1 √ 401-2 401-3
Occupational Health and Safety Significantly impact to employees 403-1 √ 403-2 403-3 403-4
Training and education Significantly impact to employees 404-1 √ 404-2 404-3
Diversity and equity Significantly impact to employees 405-1 √ 405-2
Non-Discrimination Significantly impact to employees 406-1 √
Freedom of Association and Significantly impact to employees 407-1 √ Collective Bargaining
Local communities Significantly impact to employees 413-1 √ 413-2
Public Policy Significantly impact to communities 415-1 √ √
Customer Health and Safety Significantly impact to consumers 416-1 √ √ 416-2
Marketing and Labeling Significantly impact to consumers 417-1 √ √ 417-2 417-3
Socio-economic compliance Significantly impact to economic growth 419-1 √ √
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In the report of material topics, we refer to the reporting • COMPARABILITY principles of GRI Standards as follow: The issues and information shared in this report have been selected and collected consistently. We • ACCURACY presented the data and performance from the The data and information in this report is presented previous years for comparison and further analysis. in detailed and accurate manners, applying measurement techniques and systems, reliable for • RELIABILTY the prevailing standards. To increase the quality of this report, it is prepared thoroughly, and all the information collected for • BALANCE the report have been analysed and documented The report present both the positive and negative meticulously. impacts which allow all stakeholders to evaluate overall performance holistically and equally. • TIMELINESS We issued the sustainability reports consistently • CLARITY every year in right timing, so that all stakeholders In this report we attempt to present clear can use the reports for their decision making information and easy to understand; and we ensure process. that this report is accessible by all stakeholders.
We appreciate all inputs, ideas and feedbacks from the readers to improve the quality of this report in the future. Please send and share your inputs to [GRI 102-53]
PT PUPUK INDONESIA (PERSERO) Head Office Jalan Taman Anggrek, Kemanggisan Jaya Jakarta 11480, Indonesia Phone : +62 21 536 54900 Fax : +62 21 80647955 E-mail : [email protected] Website : http://www.pupuk-indonesia.com Call Centre : 0800-1-008001 (Toll Free)
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Independent Assurance Statement Report No. 0819/BD/0023/JK
To the management of PT Pupuk Indonesia (Persero) 2) assessment of the accuracy and quality of the specified sustainability performance information We were engaged by PT Pupuk Indonesia (Persero) contained within the Report, in relation to the (‘PTPI’) to provide assurance in respect to its agreed scope, which consisted of: Sustainability Report 2018 (‘the Report’). The assurance Partnership and community stewardship program engagement was carried out by our highly experienced Occupational health and safety assurance team whose diverse and complementary skills Human resources training and development ensure a high level of competence in carrying out their Environmental management. duties. Responsibility Independence PTPI is responsible for the preparation of the Report We carried out all assurance undertakings with and all information and claims therein, which include independence and autonomy having not been involved established sustainability management targets, in the preparation of any key part of the Report. Nor did performance management, data collection, etc. In we provide any services to PTPI during 2018 that could performing this engagement, meanwhile, our conflict with the independence of the assurance responsibility to the management of PTPI is solely for engagement. the purpose of verifying the statements it has made in relation to its sustainability performance, specifically as Assurance Standards described in the agreed scope, and expressing our opinion on the conclusions reached. Our work was carried out in accordance with ISAE3000 ‘Assurance Engagements other than Audits or Reviews Methodology of Historical Financial Information’ issued by the International Auditing and Accounting Standards Board. In order to assess the veracity of certain assertions and In addition, the work was also planned and carried out specified data sets included within the report, as well as to conform to AA1000AS (2008) ‘AA1000 Assurance the systems and processes used to manage and report Standards (2008)’, issued by AccountAbility. them, the following methods were employed during the engagement process: Level of assurance and criteria used Review of report, internal policies, documentation, management and information systems By designing our evidence-gathering procedures to Interview of relevant staff involved in obtain a limited level of assurance based on ISAE3000 sustainability-related management and reporting and a moderate level of assurance engagement as set out Following data trails to the initial aggregated in AA1000AS (2008) readers of the report can be source, to check samples of data to a greater depth. confident that all risks or errors have been reduced to a very low level, although not necessarily to zero. Limitations Moreover, the Report was also evaluated in accordance with the criteria of AA1000 AccountAbility Principles Our scope of work was limited to a review of the (2018) of Inclusivity, Materiality, Responsiveness and accuracy and reliability of specified data and interviews Impact. with data providers, persons in charge of data collection and processing, as well as persons in charge Scope of Assurance of sustainability performance-related information.
We provided a Type 2 assurance engagement under AA1000AS (2008) This involved: 1) assessment of PTPI’s adherence to the AA1000 AccountAbility Principles (2018); and
PT. Moores Rowland Indonesia Jl. Sisingamangaraja No. 26 – Jakarta Selatan 12120 - Indonesia Tel: +62 21 720 2605 - Fax: +62 21 720 2606 - www.moores-rowland.com
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Conclusions PTPI's allocation of resources to stakeholder engagement, the timeliness and accessibility of Conclusions in regard to adherence to the AA1000 reported information, and the types of AccountAbility Principles of Inclusivity, Materiality, communication mechanisms regularly employed Responsiveness and Impact include the following were all indicative of its responsiveness to key findings: stakeholder concerns and expectations. As in other areas, however, vigilance is a key and we . Inclusivity recommend that PTPI conducts regular monitoring An assessment was made on whether PTPI has and improves stakeholder engagement procedures included all key stakeholders in developing and where necessary in future reports. achieving an accountable and strategic response to sustainability issues. . Impact An assessment was made on whether PTPI has Demonstration of PTPI’s strong commitment to monitored, measured and is accountable for how its stakeholder inclusivity included the conduct of actions affect their broader ecosystems. needs assessment surveys and materiality level survey of the key stakeholder groups. Thus our PTPI has integrated identified impacts into key overall assessment was that PTPI has set in place an management processes, for example, the materiality effective system that enables key stakeholders to assessment process and organisational strategy, participate in the development of the organization's governance, goal-setting and operations. response in the context of sustainability. In order to strengthen the effectiveness of assessment In order to maintain and strengthen the effectiveness and disclosure of impacts, however, we recommend of this inclusivity, however, we recommend that that PTPI provides the necessary competencies and PTPI carries out regular monitoring of its systems resources to measure, evaluate and manage the and procedures, plus implements improvements impacts and conducts regular monitoring of its where necessary. systems and procedures, plus implements improvements where necessary. . Materiality With stakeholders requiring material information on Based on our limited assurance engagement, nothing which to base their informed judgments, decisions has come to our attention that causes us to believe the and actions, an assessment was carried out to data of the Report has been materially misstated. determine the extent to which PTPI has included such information in the Report. All key assurance findings are included herein, while detailed observations and follow-up recommendations PTPI’s strong commitment to meet stakeholder have been submitted to PTPI management in a separate needs in this field was evidenced by the provision of report. adequately reported and balanced information on key material issues. Nevertheless, as demands for Jakarta, July 31, 2019 information continue to increase, we recommend that PTPI conducts materiality tests on a regular basis for inclusion in future reports. James Kallman . Responsiveness Chief Executive Officer
It is increasingly important to respond in meeting Moores Rowland is an international organization stakeholder expectations and an assessment was specializing in audit, accounting, tax, legal and advisory carried out to determine the degree to which PTPI services. Moores Rowland is a member of Praxity AISBL, demonstrates its accountability in this area. the world's largest Alliance of independent and
unaffiliated audit and consultancy companies. Praxity is served by Moores Rowland in Indonesia, one of the leading sustainability assurance providers.
PT. Moores Rowland Indonesia Jl. Sisingamangaraja No. 26 – Jakarta Selatan 12120 - Indonesia Tel: +62 21 720 2605 - Fax: +62 21 720 2606 - www.moores-rowland.com
PT Pupuk Indonesia (Persero) 140 Sustainability ABOUT SUSTAINABILITY REPORT Report
Statement GRI Standards in Accordance Check
The National Center for Sustainability Reporting (NCSR) has conducted a GRI Standards in Accordance Check on PT Pupuk Indonesia (Persero) Sustainability Report 2018 (“Report”). The check communicates the extent to which the GRI Standards has been applied in the Report. The check does not provide an opinion on the sustainability performance of the reporter or the quality of the information provided in the report.
We conclude that this report has been prepared in accordance with GRI Standards - Comprehensive option.
Jakarta, 12 July 2019
National Center for Sustainability Reporting
Dewi Fitriasari, Ph.D., CSRA, CMA Director
PT Pupuk Indonesia (Persero) Sustainability 141 Report
GRI STANDARDS INDEX COMPREHENSIVE OPTIONS [GRI 102-55]
Disclosure GRI Standard Page No Title
GENERAL DISCLOSURE
Organizational Profile
GRI 102: General 102-1 Name of The Organization 116 Disclosure 2016 102-2 Activities, Brands, Products, and Services 116
102-3 Location of Headquarters 116
102-4 Location of Operations 116
102-5 Ownership and Legal Form 116
102-6 Markets served 116
102-7 Scale of The Organization 120
102-8 Information on Employees and Other Workers 120
102-9 Supply chain 122
102-10 Significant Changes to The Organization and Its Supply 130 Chain
102-11 Precautionary Principle or Approach 26
102-12 External initiatives 126
102-13 Membership of Associations 126
Strategy
102-14 Statement From Senior Decision-Maker 18, 20
102-15 Key Impacts, Risks, and Opportunities 22
Ethics and Integrity
102-16 Values, Principles, Standards, and Norms of Behavior 124
102-17 Mechanisms for advice and concerns about ethics 110
Governance
102-18 Governance Structure 97
102-19 Delegating authority 100
102-20 Executive-level responsibility for economic, 100 environmental, and social topics
102-21 Consulting stakeholders on economic, environmental, 100 and social topics
102-22 Composition of the highest governance body and its 100 committees
102-23 Chair of the highest governance body 103
102-24 Nominating and selecting the highest governance body 103
102-25 Conflicts of interest 105
102-26 Role of highest governance body in setting purpose, 105 values, and strategy
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Disclosure GRI Standard Page No Title
102-27 Collective knowledge of highest governance body 105
102-28 Evaluating the highest governance body’s performance 106
102-29 Identifying and managing economic, environmental, 107 and social impacts
102-30 Effectiveness of risk management processes 107
102-31 Review of economic, environmental, and social topics 107
102-32 Highest governance body’s role in sustainability 107 reporting
102-33 Communicating critical concerns 107
102-34 Nature and total number of critical concerns 107
102-35 Remuneration policies 108
102-36 Process for determining remuneration 108
102-37 Stakeholders’ involvement in remuneration 109
102-38 Annual total compensation ratio 109
102-39 Percentage increase in annual total compensation ratio 109
Stakeholders Engagement
102-40 List of Stakeholder Groups 112
102-41 Collective Bargaining Agreements 44
102-42 Identifying and Selecting Stakeholders 112
102-43 Approach to Stakeholder Engagement 112
102-44 Key Topics and Concerns Raised 112
Reporting Practice
102-45 Entities Included in The Consolidated Financial 130 Statements
102-46 Defining Report Content and Topic Boundaries 131
102-47 List of Material Topics 134
102-48 Restatements of Information 130
102-49 Changes in Reporting 130
102-50 Reporting Period 130
102-51 Date of Most Recent Report 130
102-52 Reporting Cycle 130
102-53 Contact Point For Questions Regarding The Report 136
102-54 Claims of Reporting In Accordance With The GRI 130 Standards
102-55 GRI Content Index 130
102-56 External Assurance 130
PT Pupuk Indonesia (Persero) Sustainability 143 Report
Disclosure GRI Standard Page No Title
SPECIFIC TOPIC DISCLOSURE
ECONOMIC IMPACTS
Economic Performance
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 74-79, 92
103-3 Evaluation of The Management Approach 74-79, 92
GRI 201: Economic 201-1 Direct economic value generated and distributed 74 Performance 2016 201-2 Financial implications and other risks and opportunities 79 due to climate change
201-3 Defined Benefit Plan Obligations and Other Retirement 92 Plans
201-4 Financial assistance received from government 77
Market Presence
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 88
103-3 Evaluation of The Management Approach 88
GRI 202: Market 202-1 Ratios of standard entry level wage by gender compared 88 Presence 2016 to local minimum wage
202-2 Proportion of senior management hired from the local 88 community
Indirect Economic Impacts
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 61-77
103-3 Evaluation of The Management Approach 61-77
GRI 203: Indirect 203-1 Infrastructure Investments and Services Supported 76 Economic Impacts 2016 203-2 Significant Indirect Economic Impacts 61-68, 77
Procurement Practices
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 77
103-3 Evaluation of The Management Approach 77
GRI 204: Procurement 204-1 Proportion of spending on local suppliers 77 Practices 2016
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Disclosure GRI Standard Page No Title
Anti-Corruption
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 110-111
103-3 Evaluation of The Management Approach 110-111
GRI 205: Anti-Corruption 205-1 Operations assessed for risks related to corruption 111 2016 205-2 Communication and training about anti-corruption 110 policies and procedures
205-3 Confirmed incidents of corruption and actions taken 111
ENVIRONMENTAL IMPACTS
Materials
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 26-27
103-3 Evaluation of The Management Approach 26-27
GRI 301: Materials 2016 301-1 Materials used by weight or volume 26
301-2 Recycled input materials used 27
301-3 Reclaimed products and their packaging materials 27
Energy
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 28-30
103-3 Evaluation of The Management Approach 28-30
GRI 302: Energy 2016 302-1 Energy consumption within the organization 28-29
302-2 Energy consumption outside of the organization 29
302-3 Energy intensity 30
302-4 Reduction of energy consumption 29
302-5 Reduction in energy requirements of products and 29 services
Water
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 30-31
103-3 Evaluation of The Management Approach 30-31
GRI 303: Water 2016 303-1 Water Withdrawal by Source 30
303-2 Water sources significantly affected by withdrawal of 31 water
303-3 Water recycled and reused 31
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Disclosure GRI Standard Page No Title
Emissions
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 33-34
103-3 Evaluation of The Management Approach 33-34
GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions 33
305-2 Energy indirect (Scope 2) GHG emissions 33
305-3 Other indirect (Scope 3) GHG emissions 34
305-4 Greenhouse Gas Emission Intensity 34
305-5 Reduction of GHG emissions 34
305-6 Emissions of ozone-depleting substances (ODS) 34
305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other 34 significant air emissions
Effluents and Waste
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 35-37
103-3 Evaluation of The Management Approach 35-37
GRI 306: Effluents and 306-1 Water discharge by quality and destination 35 Waste 2016 306-2 Waste by type and disposal method 36, 37
306-3 Significant spills 36
306-4 Transport of hazardous waste 36
306-5 Water bodies affected by water discharges and/or runoff 35
Environmental Compliance
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 37
103-3 Evaluation of The Management Approach 37
GRI 307: Environmental 307-1 Non-compliance with environmental laws and 37 Compliance 2016 regulations
Environmental Assessment of Suppliers
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 113
103-3 Evaluation of The Management Approach 113
GRI 308: Environmental 308-1 New suppliers that were screened using environmental 113 Assessment of Suppliers criteria 2016 308-2 Negative environmental impacts in the supply chain and 113 actions taken
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Disclosure GRI Standard Page No Title
SOCIAL IMPACTS
Employment
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 83, 92
103-3 Evaluation of The Management Approach 83, 92
GRI 401: Employment 401-1 New Employee Hires and Employee Turnover 83 2016 401-2 Benefits Provided to Full-Time Employees That are Not 92 Provided to Temporary or Part-Time Employees
401-3 Parental leave 92
Occupational Health and Safety
GRI 103: Management 103-1 Workers Representation in Formal Joint Management– 134 Approach 2016 Worker Health and Safety Committees
103-2 Types of Injury and Rates of Injury, Occupational 41-45 Diseases, Lost Days, and Absenteeism, and Number of Work-Related Fatalities
103-3 Workers with high incidence or high risk of diseases 41-45 related to their occupation
GRI 403: Occupational 403-1 Workers Representation in Formal Joint Management– 44 Health and Safety 2016 Worker Health and Safety Committees
403-2 Types of Injury and Rates of Injury, Occupational 41 Diseases, Lost Days, and Absenteeism, and Number of Work-Related Fatalities
403-3 Workers with high incidence or high risk of diseases 45 related to their occupation
403-4 Health and Safety Topics Covered in Formal Agreements 44 With Trade Unions
Training and Education
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 89-90
103-3 Evaluation of The Management Approach 89-90
GRI 404: Training and 404-1 Average hours of training per year per employee 89 Education 2016 404-2 Programs for upgrading employee skills and transition 89 assistance programs
404-3 Percentage of Employees Receiving Regular 90 Performance and Career Development Reviews
Diversity and Equal Opportunity
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 86-88
103-3 Evaluation of The Management Approach 86-88
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Disclosure GRI Standard Page No Title
GRI 405: Diversity and 405-1 Diversity of governance bodies and employees 86, 88 Equal Opportunity 2016 405-2 Ratio of basic salary and remuneration of women to men 88
Non-discrimination
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 89
103-3 Evaluation of The Management Approach 89
GRI 406: Non- 406-1 Incidents of discrimination and corrective actions taken 89 discrimination 2016
Freedom of Association and Collective Bargaining
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 89
103-3 Evaluation of The Management Approach 89
GRI 407: Freedom 407-1 Operations and suppliers in which the right to freedom 89 of Association and of association and collective bargaining may be at risk Collective Bargaining
Local Communities
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 58
103-3 Evaluation of The Management Approach 58
GRI 413: Local 413-1 Operations with Local Community Engagement, Impact 58 Communities 2016 Assessments and Development Programs
413-2 Operations with significant actual and potential negative 58 impacts on local communities
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Disclosure GRI Standard Page No Title
Public Policy
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 111
103-3 Evaluation of The Management Approach 111
GRI 415: Public Policy 415-1 Political contributions 111 2016
Customer Health and Safety
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 48-49
103-3 Evaluation of The Management Approach 48-49
GRI 416: Customer 416-1 Assessment of the health and safety impacts of product 48 Health and Safety and service categories 2016 416-2 Incidents of non-compliance concerning the health and 48-49 safety impacts of products and services
Marketing and Labeling
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 50-51
103-3 Evaluation of The Management Approach 50-51
GRI 417: Marketing and 417-1 Requirements for product and service information and 50 Labeling 2016 labeling
417-2 Incidents of non-compliance concerning product and 51 service information and labeling
417-3 Incidents of non-compliance concerning marketing 51 communications
Socio-economic Compliance
GRI 103: Management 103-1 Explanation of The Material Topic and its Boundary 134 Approach 2016 103-2 The Management Approach and its Components 55
103-3 Evaluation of The Management Approach 55
GRI 419: 419-1 Non-compliance with laws and regulations in the social 55 Socio-economic and economic area Compliance 2016
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LINKING THE SDGS AND GRI STANDARDS
SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
1. NO POVERTY Earnings, wages GRI 202: Market 202-1 Ratios of standard entry 88 and benefits Presence level wage by gender End poverty in all its compared to local forms everywhere minimum wage
Economic GRI 203: Indirect 203-1 Infrastructure 76 development Economic Investments and in areas of high Impacts ServicesSupported poverty
2. ZERO HUNGER Economic GRI 203: Indirect 203-1 Infrastructure 76 development Economic Investments and Service End hunger, achieve in areas of high Impacts Supported food security and poverty improved nutrition and promote sustainable Economic GRI 201: Economic 201-1 Direct economic 74 agriculture Performance Performance value generated and distributed
Air quality GRI 305: 305-1 Direct (Scope 1) GHG 33 3 GOOD HEALTH AND Emissions emissions WELL BEING 305-2 Energy indirect (Scope 2) 33 GHG emissions Ensure healthy lives and promote wellbeing 305-4 Greenhouse Gas 34 for all at all ages Emission Intensity
305-5 Reduction of GHG 34 emissions
305-6 Emissions of ozone- 34 depleting substances (ODS)
305-7 Nitrogen oxide (NOx), 34 Sulfur oxide (SOx), and other significant air emission.
PT Pupuk Indonesia (Persero) 150 Sustainability Report
SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
Occupational GRI 403: 403-1 Workers Representation 44 Health and Safety Occupational in Formal Joint Health and Management Worker Safety Health and Safety Committees
403-2 Types of Injury and Rates 41 of Injury, Occupational Diseases, Lost Days, and Absenteeism, and Number of Work-Related Fatalities
403-3 Workers with high 45 incidence or high risk of diseases related to their occupation
403-4 Health and Safety Topics 44 Covered in Formal Agreements With Trade Unions
Customer Health GRI 416: 416-1 Assessment of the health 48 and Safety Customer Health and safety impacts of and Safety product and service 2016 categories
416-2 Incidents of non- 48-49 compliance concerning the health and safety impacts of products and services
Marketing and GRI 417: 417-1 Requirements for 50 Labeling Marketing and product and service Labeling information and labeling
417- 2 Incidents of non- 51 compliance concerning product and service information and labeling
417-3 Incidents of non- 51 compliance concerning marketing communications
PT Pupuk Indonesia (Persero) Sustainability 151 Report
SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
Waste GRI 306: Effluents 306-1 Water discharge by 35 and Waste quality and destination
306-2 Waste by type and 36, 37 disposal method
306-3 Significant spills 36
306-4 Transport of hazardous 36 waste
306-5 Water bodies affected by 35 water discharges and/or runoff
4 QUALITY EDUCATION Training and GRI 404: 404-1 Average hours of training 89 Education Training and per year per employee Ensure inclusive and Education 404-2 Programs for upgrading 89 quality education for all employee skills and and promote lifelong transition assistance learning programs
404-3 Percentage of Employees 90 Receiving Regular Performance and Career Development Reviews
5 GENDER EQUALITY Equality of Men GRI 202: Market 202-1 Ratios of standard entry 88 and Women Presence level wage by gender Achieve gender compared equality and empower to local minimum wage all women and girls GRI 405: 405-1 Diversity of governance 86, 88 Diversity and bodies and employees Equal Opportunity 405-2 Ratio of basic salary and 88 remuneration of women to men
6 CLEAN WATER AND Water GRI 303: Water 303-1 Water Withdrawal by 30 SANITATION Source
Waste GRI 306: Effluents 306-1 Waste by type and 35 Ensure access to and Waste disposal method water and sanitation sustainable for all 306-2 Waste by type and 36, 37 disposal method
306-5 Water bodies affected by 35 water discharges and/or runoff
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SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
7 AFFORDABLE AND Energy Efficiency GRI 302: Energy 302-1 Energy consumption 28-29 CLEAN ENERGY within the organization
302-3 Energy intensity 30 Ensure access to affordable, reliable, sustainable and modern energy for all
8 DECENT WORK AND Freedom of GRI 102: General 102-41 Collective Bargaining 44 ECONOMIC GROWTH association Disclosure Agreements Earnings, wages GRI 202: Market 202-1 Ratios of standard entry 88 Support sustainable and benefits Presence level wage by gender economic development, compared to local productive employment minimum wage and decent work for everyone 202-2 Proportion of senior 88 management hired from the local community GRI 201: Economic 201-3 Defined Benefit Plan 92 Performance Obligations and Other Retirement Plans GRI 401: 401-1 New Employee Hires and 83 Employment Employee Turnover 401-2 Benefits Provided to Full- 92 Time Employees That are Not Provided to Temporary or Part-Time Employees Equality GRI 202: Market 202-2 Proportion of senior 88 Presence management hired from the local community GRI 405: Diversity 405-2 Ratio of basic salary and 88 and Equality remuneration of women to men GRI 406: Non 406-1 Incidents of 89 Discrimination discrimination and improvement being conducted Employment GRI 401: 401-1 New Employee Hires and 83 Employment Employee Turnover 401-2 Benefits Provided to Full- 92 Time Employees That are Not Provided to Temporary or Part-Time Employees 401-3 Parental leave 92
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SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
Occupational GRI 403: 403-1 Workers Representation 44 Health and Safety Occupational in Formal Joint Health and Safety Management–Worker Health and Safety Committees
403-2 Types of Injury and Rates 41 of Injury, Occupational Diseases, Lost Days, and Absenteeism, and Number of Work-Related Fatalities
403-3 Workers with high 45 incidence or high risk of diseases related to their occupation
403-4 Health and Safety Topics 44 Covered in Formal Agreements With Trade Unions
Training and GRI 404: Training 404-1 Average hours of training 89 Education and Education per year per employee
404-2 Programs for upgrading 89 employee skills and transition assistance programs
404-3 Percentage of Employees 90 Receiving Regular Performance and Career Development Reviews
GRI 205: Anti 205-2 Communication and 110 Korupsi training about anticorruption policies and procedures
9 INDUSTRY, INNOVATION Economic GRI 203: DIndirect 203-1 Infrastructure 76 AND INFRASTRUCTURE development Economic Impact Investments and Services in the highest Supported Build resilient poverty area infrastructure, promote sustainable industrialization and foster innovation
10. REDUCED Economic GRI 203: Indirect 203-1 Infrastructure 76 INEQUALITIES development in Economic Investments and Services areas of high Impacts Supported Reduce inequality within poverty and among countries
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SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
11 SUSTAINABLE CITIES Infrastructure GRI 203: Indirect 203-1 Infrastructure 76 AND COMMUNITIES investments Economic Investments and Services Impacts Supported Make cities inclusive, safe, resilient and sustainable
12 RESPONSIBLE Air quality GRI 305: Emissions 305-1 Direct (Scope 1) GHG 33 CONSUMPTION AND emissions PRODUCTION 305-2 Energy indirect (Scope 2) 33 GHG emissions Ensure sustainable consumption and 305-4 Greenhouse Gas 34 production patterns Emission Intensity
305-5 Reduction of GHG 34 emissions
305-7 Nitrogen oxides (NOX), 34 sulfur oxides (SOX), and other significant air emissions
Waste GRI 306: Effluent 306-1 Waste by type and 35 and Waste disposal method
306-2 Waste by type and 36, 37 disposal method
Product GRI 416: Customer 416-1 Assessment of the health 48 Responsibility Health and Safety and safety impacts of product and service categories
416-2 Incidents of non- 48-49 compliance concerning the health and safety impacts of products and services
Product GRI 417: 417-1 Requirements for 50 and service Marketing product and service information and Labeling information and labeling labelling 417- 2 Incidents of non- 51 compliance concerning product and service information and labeling
417-3 Incidents of non- 51 compliance concerning marketing communications
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SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
13 CLIMATE ACTION Air quality GRI 305: Emission 305-1 Direct (Scope 1) GHG 33 emissions Take urgent action to 305-2 Energy indirect (Scope 2) 33 combat climate change GHG emissions and its impacts 305-4 GHG emission intensity 34
305-5 Greenhouse Gas 34 Emission Intensity
305-6 Emissions of ozone 34 depleting substances (ODS)
Energy Efficiency GRI 302: Energy 302-3 Energy Intensity 30
14. LIFE BELOW WATER Waste GRI 306: 306-1 Water discharge based 35 Effluents and on quality and purpose Conserve and sustainably Waste 306-5 Water bodies affected by 35 use the oceans, seas and water discharges and/or marine resources for runoff sustainable development Water GRI 303: Water 303-1 Water consumption from 30 its sources
15. LIFE ON LAND Air quality GRI 305: Emission 305-1 Direct (Scope 1) GHG 33 emissions Protect, restore and 305-2 Energy indirect (Scope 2) 33 promote sustainable GHG emissions use of terrestrial ecosystems, sustainably 305-4 GHG emission intensity 34 manage forests, combat 305-5 Greenhouse Gas 34 desertification, and Emission Intensity halt and reverse land degradation and halt 305-6 Emissions of ozone 34 biodiversity loss depleting substances (ODS)
Waste GRI 306: Effluents 306-2 Waste by type and 36, 37 and Waste disposal method
PT Pupuk Indonesia (Persero) 156 Sustainability Report
SDG’s Business Theme Relevant GRI Disclosure Title Indicator Page Standard
16. PEACE, JUSTICE AND Anti-Corruption GRI 205: 205-2 Communication and 110 STRONG INSTITUTIONS Anti-Corruption training about anticorruption Promote peaceful and policies and procedures inclusive communities 205-3 Confirmed incidents of 111 for sustainable corruption and actions development, taken provide access to justice for all, and build Ethical and Legal GRI 102: General 102-16 Value, Principles, 124 effective, accountable Behavior Disclosure Standards, and Norms of and inclusive institutions Behavior at all levels Inclusive Decision GRI 102: General 102-18 Governance Structure 97 Making Disclosure 102-40 List of Stakeholder 112 Groups
102-41 Collective Bargaining 44 Agreements
102-42 Identifiying and Selecting 112 Stakeholders
102-43 Approach to Stakeholder 112 Engagement
102-44 Key Topics and Concern 112 Raised
17. PARTNERSHIP FOR External Initiative GRI 102: General 102-12 External initiatives 126 THE GOALS Disclosure
Strengthen the means of implementation and revitalize the global partnership for sustainable development
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