Introduction

This statement denotes PT Sarana Multi Infrastruktur’s (Persero) or can also abbreviated as “PT SMI” commitment to the Environmental, Social, and Governance (ESG) aspects and their importance in shaping PT SMI’s policies, objectives, and operational activities. The 3P (Profit, Planet, People) aspects have always been PT SMI’s guide in carrying out business activities. To achieve more concrete sustainable development goals and to materialize meaningful sustainable finance, PT SMI is now progressing towards 5P approach: People, Planet, Prosperity¹, Peace², Partnership. 

PT SMI adheres and prioritizes sustainability principle by applying ESG policies in its daily operations and by conducting rigorous ESG impact and risk assessment in all pillars of business activities³. Implementation of ESG policies aims to boost operational efficiency, to uphold high governance standards, and to create financially sound, environmentally friendly, and socially aware projects.

ESG impact and risk assessment intends to bolster desirable impacts and to narrow adverse consequences of sustainable infrastructure projects financed and supported by PT SMI. The assessment is based upon PT SMI’s most recent related ESG policies, guidelines, and management systems that are aligned with standards applied by bilateral and multilateral development finance institutions. Those instruments consider environmental and social sustainability as the key to achieving sustainable development goals, complying with Indonesia's legal and regulatory framework and striving to meet international best practices.

Implementation and Monitoring

PT SMI strives to consistently implement its ESG commitments in its daily operations and to strengthen ESG management system.

As part of ESG implementation in business process

For each financing and capital investment origination PT SMI conducts Environmental and Social Due Diligence (ESDD) referring to PT SMI Environmental and Social Safeguard (ESS) Guidelines. In case gaps are identified based on the ESDD results, Corrective Action Plans (CAP) will need to be fulfilled by the clients/debtors.

Committees:

• The process of making decisions regarding ESG, encompassing PT SMI's day-to-day operations and its three business pillars, has been seamlessly integrated into the company's overall business framework. These decisions are facilitated through various committees within PT SMI, including those under the purview of the Board of Directors and the Board of Commissioners. 
• Discussions concerning ESG, covering various aspects such as financing, capital investment, project development, and advisory matters, are specifically addressed in the Financing Committee, Capital Investment Committee, and Project Development and Advisory Committee. Furthermore, corporate governance, risk management, and ESG-related issues are deliberated upon within the Risk and Capital Committee, Risk Monitoring Committee, as well as the Monitoring Committee. Meanwhile, the Company's objectives, including those pertaining to ESG,  are addressed in discussions held within the Target Committee. 
• These committees meet on a regular basis and as necessary. The Board of Directors strives to involve in dialogues concerning ESG implementation and ensures the availability of the required resources for its execution. Simultaneously, the Board of Commissioners pay attention to ESG implementation through consultative processes, offering guidance and directives related to ESG.

Monitoring and Reporting

PT SMI monitors CAP fulfillment for each financing facility using monitoring tools, including Safeguard Monitoring System (SMS) and Environmental and Social Monitoring Report (ESMR). Implementation Completion Report (ICR) is also prepared at the end of the financing agreement or in any case of termination of the agreement. PT SMI manages and monitors its progress in applying international best practices in ESG aspects particularly on environmental and social, and share these results with its stakeholders – through its annual report, or other instruments. 

Commitment to Continuous Improvement

PT SMI is devoted to ongoing improvement in its ESG performance, and openness to learning from its dialogue with leading institutions and relevant stakeholders. The improvement is materialized through revisions and up-dating related policies, guidelines, as well as operational handbooks, which together constitute PT SMI’s ESG management system, and through capacity development program at three different levels: individual, institutional and society.