SYNERGY foR SuStainabilitypupuk-indonesia.co.id/public/uploads/2018/08/SR-Pupuk-Indonesia_English_FINAL-(1... · Jalan Taman Anggrek, Kemanggisan Jaya, ... LAPORAN KEPADA PEMANGKU

SustainabilityReport

SYNERGY foR SuStainability

PT Pupuk Indonesia (Persero)

Kantor Pusat | Head Office

Jalan Taman Anggrek, Kemanggisan Jaya,

Jakarta 11480, Indonesia

Phone (hunting): +62 21 536 54900

facsimile: +62 21 80647955

Email: [email protected]

Website: http://www.pupuk-indonesia.com

Layanan Informasi | For further information

0800-1-008001 (Toll free)

SYNERG

Y foR Su

Stain

ability




www.pupuk-indonesia.comPT Pupuk Indonesia (Persero)



Sustainable development is the biggest challenge to human beings today. Would we be able to meet the current needs

without diminishing the next generation’s capability to do the same for their needs? This is a fundamental question to us in growing the company based on three aspects in Sustainability Principles Profit, People, Planet.

The implementation of Sustainability Principles requires a synergy in the business chain of the Company and the stakeholders. We optimize the resources, create productive cooperation with the communities and partner with the government, as well as involving the stakeholders for the purpose of sustainability.

PT Pupuk Indonesia (Persero) Sustainability Report 1

2 TABEL of CoNTENTS

4 PERfoRMANCE oVERVIEW

6 SIGNIfICANT EVENT 2017

10 AWARd ANd CERTIfICATIoN

14 about the RepoRt

15 GRI Standard

16 Reporting Period and Boundaries

16 determining Report Content

17 Principles of determination

of The Content of The Report

17 List of Material Topics and Boundary

18 Materiality Level

19 Independent Assurance

20 pupuK inDoneSia pRoFile

22 Company Profile

24 Milestone

26 List of Subsidiaries and Operational Area

28 Scale of Organization

29 Vision, Mission and Values

32 RepoRt to StaKeholDeR

35 Report of The Board of Commissioners

37 Report of Board of directors

40 DeVelopinG SuStainable GoVeRnanCe

42 General Meeting of Shareholders

42 Governance Structure

43 Structure of the Board of Commissioners and directors

44 directors

44 Board of Commissioners

44 Anti-Corruption

45 Anti-Corruption Communications and Trainings

45 Political Contributions

46 Adoption and Support for International Initiatives

46 Membership in Indus trial Associations and other organizations

46 Stakeholder Involvement

47 Implementation of Sustainable Conception

Suppliers

50 DeVelopinG StaKeholDeRS’ eConomieS

52 Revenues

53 Profitability

53 Consumers

53 Production

54 Employee Awards

54 Contribution to the Government Income

55 Contributions to the Public

56 Investment in Infrastructure and Services

54 Contributions to Local Suppliers

54 Production use in Country

56 financial Assistance from the Government

59 Challenges from Climate Change and Loss of Land

60 Corporate Synergies

PT Pupuk Indonesia (Persero) Sustainability Report2

About the RepoRt pupuK INDoNeSIA pRoFILe

LApoRAN KepADA peMANGKu KepeNtINGAN

DeVeLopING SuStAINAbLe GoVeRNANCe

DeVeLopING StAKehoLDeRS’ eCoNoMIeS

DeVeLopING CoMpeteNt huMAN ReSouRCeS oF pupuK INDoNeSIA

DeVeLopING CoMMuNItY WeLFARe

AttAINING A heALthY WoRK AtMoSpheRe

DeVeLopING eXCeLLeNteNVIRoNMeNtALpeRFoRMANCe

DeVeLopINGtop -NotCh pRoDuCtS

TABEL of CoNTENTS

64 DeVelopinG Competent human ReSouRCeS oF pupuK inDoneSia

65 Employee demography

66 Employee by Employment Status

68 Recruitment

69 Employee by Age Group

70 Permanent Employees By Education Level

72 freedom to Unionize

72 Skills development

74 Workplace Equality, diversity, and opportunity

76 Employee Benefit

77 Retirement Preparations

78 DeVelopinG Community WelFaRe

80 Social Responsibility Program of Pupuk Indonesia

82 Partnership Program

84 Community development Program

88 Testimony of PKBL Pupuk Indonesia Beneficiaries

90 Awards

92 attaininG a healthy WoRK atmoSpheRe

93 occupational Health and Safety

94 Safe Working Hours

97 oHS Targets

97 Employee Representation in oHS Issue

98 Contractors and occupational Safety

98 oHS Training and Meetings

98 Healthcare for Employees

98 DeVelopinG eXCellent enViRonmental peRFoRmanCe

102 optimization of Production Resources

102 Challenges Ahead

105 Energy Consumption

108 Management of Water Utilization

109 Standards and Methodologies

110 Water Recycling

110 Maintaining Biodiversity

111 Emission Control

116 Waste Management

123 Policy Supervision

123 Environmental Related Complaints

124 Environmental Investment 2017

124 Compliance with Environmental Regulation

126 DeVelopinG top-notCh pRoDuCtS

127 Prioritizing Customer Health and Safety

129 Responsibility of Product Information and

Communication

130 Product Packaging Information

134 Commitment to Complying with Regulations

136 ASSURANCE STATEMENT

138 STATEMENT GRI STANdARdS CoRE IN ACCoRdANCE CHECK

139 INdEx STANdARd GRI

146 SdG’S LINK IN GRI STANdARd











PERfoRMANCE oVERVIEW 2017

ECONOMIC PERFORMANCE

Gas Consumption Ratio

Natural Gas Consumption Ratio

2015 20152016 20162017 2017

mbt

u/to

n

29.8637.46 30.2037.43 28.6936.10











The factory revitalization program, which is aimed to boost efficiency and competitive power amid the plummeting prices of ammonia and urea, has brought success for the Company in reducing urea gas consumption rate: at 2.5% (CAGR 2015-2017) and 1.79% (CAGR 2015-2017) respectively.

201720162015

Rp58.94 trillionRp64.16 trillionRp66.23 trillion

Consolidated Revenue

Profit for The Year

Contribution to the State (Tax)

PSo fertilizer Sales

Non-PSo fertilizer Sales

Rp3.08 trillionRp3.53 trillionRp3.39 trillion

9,298 thousand ton9,181 thousand ton8,881 ribu ton

3,207thousand ton2,913 thousand ton2,882 thousand ton

Rp5.50 trillion Rp4.94 trillionRp4.61 trillion

SOCIAL PERFORMANCE

OCCUPATIONAL HEALTH PERFORMANCE

ENVIRONMENT PERFORMANCEPupuk Indonesia gained Proper “Gold” award for the first time in 2017 through its subsidiary, PT Pupuk Kalimantan Timur, who has successfully demonstrated excellence in sustainable environmental management. Meanwhile, the other subsidiaries managed to maintain the Proper “Green” awards.











pRopeR “GReen”

Rp184.12 billion

Realization of Partnership and Community Development Program Financing 2017.

5,460,859 safe working hoursPT Petrokimia Gresik

3,569,493 safe working hoursPT Pupuk Iskandar Muda

4,923,428 safe working hoursPT Pupuk Kujang Cikampek

6,319,427 safe working hoursPT Pupuk Sriwijaya Palembang

6,774,477 safe working hoursPT Pupuk Kalimantan Timur

Rp66.58 billion

Realization of CSR Financing 2017.

pRopeR GolD

pRopeR blue

PT Pupuk Kalimantan Timur

PT Pupuk Iskandar Muda

Corporate Safe Working Hours

PT Pupuk Sriwidjaja Palembang PT Pupuk Kujang CikampekPT Petrokimia Gresik

SIGNIfICANT EVENTS 2017

General Meeting of Shareholders (GMS) to discuss the 2017 Budget & Business Plan, held in Jakarta.

On March 9, 2017, Pupuk Indonesia Group held Coordination Meeting in Bogor to discuss Corporate Performance In 2016 and its plans for 2017.

Inauguration of the Pusri IIB urea and ammonia plant on April 26, 2017. The plant is able to produce 907,500 tons of urea and 660,000 tons of ammonia per year.

4 January 2017

9 march 2017

26 april 2017











15 may 2017

12 June 2017

19 June 2017

26 mey 2017

Pupuk Indonesia held the General Meeting of Shareholders for FY 2016 on May 15, 2017 in Jakarta.

Pupuk Indonesia issued the Shelf Registration Bond I (PUB I) Tranche I 2017 valued at Rp3.57 trillion on June 12, 2017. The unsecured securities are rated AAA by FitchRatings.

Pupuk Indonesia took part in the Mudik Bersama BUMN organized by the Ministry of State-owned Enterprises on June 19, 2017.

Pupuk Indonesia and the National Audit and Development Supervisory Body (BPKP) signed a Memorandum of Understanding on Development, Implementation, and Strengthening Good Corporate Governance in PT Pupuk Indonesia on May 26, 2017.











At the summit of the “BUMN Hadir Untuk Negeri” (SOE for the Nation) event, Pupuk Indonesia along with SOEs namely PT Kawasan Berikat Nusantara (Persero), PT Sarinah (Persero), PT Jakarta Industrial Estate Pulogadung (Persero), and PT Perusahaan Pengelola Aset (Persero) gave a community assistance through the “Bedah Rumah Veteran” (Veteran House Renovation) and “Siswa Mengenal Nusantara” programs.

Pupuk Indonesia held the Extraordinary General Meeting of Shareholders (RUPS-LB) on September 14, 2017 in Jakarta. The General Meeting appointed former President Director of PT Inalum (Persero) Winardi as Director of Human Resources and Governance of PT Pupuk Indonesia (Persero). The former incumbent of the post, Achmad Tossin Sutawikara, was appointed as Director of Marketing in the same occasion.

15 may

14 September 2017











Pupuk Indonesia issued the Shelf Registration Bond I (PUB I) Tranche II 2017 valued at Rp4.38 trillion on November 9, 2017. The unsecured securities are rated AAA by FitchRatings.

On December 8, 2017, Pupuk Indonesia, PT Bukit Asam (Persero), PT Pertamina (Persero), and PT Chandra Asri Petrochemical signed the Head of Agreement on Cooperation in Gasification of Coal to Syngas for Raw Material of Urea, Polypropylene, and Dimethyl Ether Products

14 September 2017

8 Desember 2017











AWARd ANd CERTIfICATIoN

AWARD

Best Sustainability Report 2016 – Category Manufacture

1 SoLo, 24 fEBRUARY

Indonesia Corporate Secretary Communication Award II-2017 – 1ST Place – Category of SOE

2 JAKARTA, 22 MARCH

Public Relation Indonesia Awards 2017 – Gold Winner Category of Video Profile– Subcategory of SOE

3a BALI, 24 MARCH

Public Relation Indonesia Awards 2017 – Silver Winner Category of Website – Subcategory of SOE

Top CSR Award 2017 TOP IT & TOP TELCO Award 2017

4 53b BALI, 24 MARET JAKARTA, 5 APRIL JAKARTA, 31 ocToBER











BUMN Performance Excellent Award

6

9

JAKARTA, 6 NoVEMBER

LHKPN Award – Institution with Best E-LHKPN Implementation Year 2017(D1)

7 JAKARTA, 12 dECEMBER

The Best CFO 2017 (D4)

8 JAKARTA, 21 dECEMBER

Runner Up Asean Risk Awards 2017 – Category of Asean GRC Awards

7 dECEMBER 2017











CERTIFICATION

Company name of Certification Validity issued byPupuk Iskandar Muda

ISO 9001 – 2008 Quality Management System

4 June 2018 Sucofindo ICS

ISO 14001- 2004 Environment Management System

4 June 2018 Sucofindo ICS

Pusri ISO 9001 – 2008 Quality Management System

10 April 2018 SGS

ISO 14001 – 2004 Environment Management System

28 Maret 2018 SGS

ISO 7025

General requirements for the competence of testing and calibration laboratories

28 Juli 2019 Komite Akreditasi Nasional

Pupuk Kujang ISO 9001 – 2015 Quality Management System

4 Januari 2019 Sucofindo ICS


4 Januari 2019 Sucofindo ICS

ISO 17025:2008 General requirements for the competence of testing and calibration laboratories

22 Juli 2018 Komite Akreditasi Nasional

Petrokimia Gresik ISO 9001 - 2008 Quality Management System

23 April 2018 Sucofindo ICS


23 April 2018 Sucofindo ICS

ISO 17025 General requirements for the competence of testing and calibration laboratories

17 November 2019 Komite Akreditasi Nasional

Pupuk Kaltim ISO 9001 - 2015 Quality Management System

25 Mei 2019 TUV Rheinland


25 Mei 2019 TUV Rheinland

ISO 17025:2008 General requirements for the competence of testing and calibration laboratories

19 September 2021 Komite Akreditasi Nasional

Certificate of Environment Laboratory Competence Registration

19 September 2024 Kementerian Lingkungan Hidup

Rekind OSHAS 18001: 2007 29 November 2019 DNVISO 9001: 2015 20 Desember2019 DNVISO 14001 : 2015 Environmental Management System

31 Juli 2019 DNV





















About the RepoRt

pupuK INDoNeSIA pRoFILe

RepoRt to StAKehoLDeR


DeVeLopING StAKehoLDeRS’ eCoNomIeS

DeVeLopING CompeteNt humAN ReSouRCeS oF pupuK INDoNeSIA

DeVeLopING CommuNItY WeLFARe

AttAINING A heALthY WoRK AtmoSpheRe

DeVeLopING eXCeLLeNteNVIRoNmeNtALpeRFoRmANCe



about the RepoRt

Welcome to the 2017 Sustainability Report of PT Pupuk Indonesia (Persero), (hereafter referred to as “Pupuk Indonesia “ or “We” or “the Company”).

This report is our communication media to stakeholders; it contains Pupuk Indonesia’s performance in sustainability sector comprising three aspects -- economic, environmental, and social. Through this report, our stakeholders can know further about Pupuk Indonesia’s contribution to the realization of Sustainable Development Goals (Sustainable Development Goals/SDGs).

Pupuk Indonesia publishes a sustainability report annually since 2013. Sustainability Report of 2016 was published in July 2017.[GRI, 102-51 GRI 102-52]

Pupuk Indonesia presents this sustainability report as a realization of our responsibility to the stakeholders. This report elucidates Pupuk Indonesia’s and Subsidiaries’ activities throughout 2017. It is compiled based on transparency and accountability in order to meet sustainability goals.

GRI STANdARdSThis report has been prepared in accordance with GRI Standards: Core Options. [GRI 102-54]

To assist the readers in finding the GRI disclosures that are applied in this report, we the specific numbers of the relevant GRI disclosures have been provided on the content pages with red font and in brackets. The complete of the GRI Standards disclosures is presented on page 139. [GRI 102-55]

• ReportingPeriodandBoundaries

• DeterminingReportContent

• PrinciplesofDeterminationofThe ContentofTheReport

• ListofMaterialTopicsandBoundary

• MaterialityLevel

• IndependentAssurance

About the RepoRt










PT Pupuk Indonesia (Persero) Sustainability Report 2017 15

“This report is our communication media to stakeholders; it contains Pupuk Indonesia’s performance in sustainability sector comprising three aspects economic, environmental, and social.

REPoRTING PERIod ANd BoUNdARIESThis report concerns the activities of the Head offices and 10 subsidiaries for the period from 1 January to 31 December 2017. [GRI 102-50, GRI 102-45]

There has not been any fundamental change in the organization or the supply chain in 2017. Neither has there significant change in the scope nor the boundary of report compared to the previous year. As a result, there is no restatement of last year’s information.[GRI 102-48, GRI 102-49, GRI 102-10]

dETERMINING REPoRT CoNTENT [GRI 102-46]

We determine the content of this report in four steps as follows.

First Step; Identification, namely identifying the material topics in the context of sustainability. In addition, the location or boundary of the aspect must also be identified.

This identification process is carried out in Focus Group Discussion (FGD) where the Pupuk Indonesia Sustainability Report team was present. The FGD is then followed up by representatives of stakeholder groups

In the forum, went on materiality test into all the important topics as per the GRI Standards, where all the attending participants fill the worksheet to determine the material topics along with the boundary. The FGD

took place at Mega Anggrek Hotel, Arjuna Selatan no 4A Tanjung Duren Selatan, Jakarta Barat on 15 Jakarta March 2018.

Second Step; Priority, namely determining the priority of sustainability topics or issues identified in the previous step in order to the know the materiality level of these important issues that will be reported. This process is performed using the same worksheet as in the first step by posing the questions regarding the impacts and the how aspect impact the stakeholders and the company. Then the important topics are grouped into several issues and then a survey is carried out to determine the level of materiality through sending questionnaires to stakeholders including internal party of the company. This process is carried out based on the principles of materiality and stakeholder inclusiveness.

The survey results are presented in the graphic on page 19.

third Step; Validation, namely validating the material topics based on the principles of completeness and stakeholder inclusiveness. Through this process we can also identify the specific disclosures topics of GRI Standards to be reported, as well as the Management Approach (see page 139).

Fourth Step; Review, namely considering the feedback and result of review on the previous report so as to ameliorate this report (see Flowchart of Report Content Determination Process).

About the RepoRt











Flowchart of Report Content Determination Process

PRINCIPLES of dETERMINATIoN of THE CoNTENT of THE REPoRT [GRI 102-46]

In accordance with GRI Standards, we apply 4 (four) key principles in determining the report content:1. Stakeholders Inclusiveness; this principle requires the

stakeholders being involved in the report compilation process, starting from determining the report content to giving input/feedback on the published report.

2. Materiality; this principle requires that the report contain the issues or topics that are important or material, that are necessary to stakeholders in making decisions.

3. Sustainability Context; this principle requires that the report contains issues in the context of sustainability that are relevant to the Pupuk Indonesia.

4. Completeness; this principle requires that the report be made with a clear scope for a particular reporting period and is supported by comprehensive data for the scope and period of such reporting.

LIST of MATERIAL ToPICS ANd BoUNdARY

The process of determining the content of the report as discussed above results in the important topics, boundary and disclosure of GRI Standards as follows:

About the RepoRt











Sustainability Context Materiality Completeness

STEP 2PRIORITIzATION

STEP 1IDENTIFICATION

STEP 3VALIDATION

Stakeholder Inclusiveness

Stakeholder Inclusiveness

Sustainability Context

STEP 4REVIEW

MATERIALITY LEVELBelow is an overview of materiality level of the topics contained in this report. Materiality level is concluded in the workshop and the Focus Group Discussion (FGD) with the stakeholders.

list of material topics and boundarymaterial topic[GRi 102-47]

Why material [GRi 103-1]

GRi Standar number GRi

Standards Disclosure

Boundary

Within pupuk indonesia outside pupuk

indonesiapi pKG pKC pKt pim pSp ReKinD me piloG pie pip

economic

Economic Performance Poses significant affects towards stakeholders

201-1, 201-2, 201-4

√

Indirect Economic Impacts

Poses significant affects towards stakeholders

203-1, 203-2 √ √ √ √ √ √ √ √ √ √ √

Procurement Practice Poses significant affects towards economic growth

204-1 √ √ √ √ √ √ √ √ √ √ √

Anti-Corruption Poses significant affects towards development

205-1, 205-2 √ √ √ √ √ √ √ √ √ √ √

environmental

Material Poses significant affects towards sustainability

301-1 √ √ √ √ √

Energy Poses significant affects towards sustainability

302-1, 302-3, 302-4

√ √ √ √ √ √ √

Water Poses significant affects towards sustainability

303-1, 303-3 √ √ √ √ √

Emissions Poses significant affects towards sustainability

305-1, 305-2, 305-4, 305-5,

305-7

√ √ √ √ √ √

Effluents and Waste Poses significant affects towards sustainability

306-1, 306-2, 306-4

√ √ √ √ √

Environmental Compliance

Poses significant affects towards sustainability

307-1 √ √ √ √ √ √

Social

Employment Compliance towards law and regulations

401-1, 401-2 √ √ √ √ √ √ √ √ √ √ √

Occupational Health and Safety

Poses significant affects towards employees

403-1, 403-2, 403-3, 403-4

√ √ √ √ √ √ √ √ √ √ √

Training and Education

Poses significant affects towards employees

404-1, 404-2, 404-3

√ √ √ √ √ √ √ √ √ √ √

Diversity and Equal Opportunity

Poses significant affects towards employees and local communities

405-1, 405-2 √ √ √ √ √ √ √ √ √ √ √

Local Communities Poses significant affects towards stakeholders

413-1 √ √ √ √ √ √ √ √ √ √ √

Public Policy Poses significant affects towards communities

415-1 √ √ √ √ √ √ √ √ √ √ √ √

Customers Health and Safety

Poses significant affects towards consumers

416-2 √ √ √ √ √ √ √ √ √ √ √

Marketing and Labeling

Poses significant affects towards consumers

417-2, 417-3 √ √ √ √ √ √ √ √ √ √ √

Socio Economic Compliance

Poses significant affects towards economic growth

419-1 √ √ √ √ √ √ √ √ √ √ √ √

About the RepoRt











INdEPENdENT ASSURANCE [GRI 102-56]

We have assigned Moores Rowland Indonesia, Independent Assurer, to conduct limited assurance into this report. The appointment the assurer was preceded by assurance provider selection and has been approved by the Board of Directors, represented by the corporate secretary. Considerations in determining the assurer are professional experience and capability of assurer. The independent assurer’s report is presented on page 136.

We hereby state that we do not have any other professional ties with Moores Rowland Indonesia aside from the aforementioned assurance service.

To ensure that this report has been prepared in accordance with the GRI Standards, we have requested the National Center for Sustainability Reporting (NCSR) to provide GRI Standards In Accordance Check. The NCSR’s Report is presented on page 138.

the level of materiality topics

Low Medium High

Low

Med

ium

Hig

h

Company

Stak

ehol

der

Economic Performance

Energy Efficiency andConservation

Anti-Corruption and BriberyWater Usage

Infrastructure Development for Communities

Outsourcing

Biodiversity

Respect for Human RightsProduct Responsibility

Solid and Toxic Waste

Employee Welfare

Occupational Health and Safety

Greenhouse Gas Emissions

Procurement /Purchasing

Donation for the Community

About the RepoRt











PT Pupuk Indonesia (Persero)Head OfficeJalan Taman Anggrek, Kemanggisan Jaya,Jakarta 11480, IndonesiaPhone (hunting): +62 21 536 54900

Facsimile: +62 21 548 2455, 548 0607Email: [email protected]: http://www.pupuk-indonesia.comLayanan Informasi | For further information0800-1-008001 (Toll free)

For the purpose of improving the quality of future reports, we hope that the readers would provide input, idea and criticism about this Sustainability Report to:

[GRI 102-53]

ABOUTTHE REPORT

PUPUK INDONESIA PROFILE

REPORT TO STAKEHOLDER

DEVELOPING SUSTAINABLE GOVERNANCE

DEVELOPING STAKEHOLDERS’ ECONOmIES

DEVELOPING COmPETENT HUmAN RESOURCES OF PUPUK INDONESIA

DEVELOPING COmmUNITY WELFARE

ATTAINING A HEALTHY WORK ATmOSPHERE

DEVELOPING EXCELLENTENVIRONmENTALPERFORmANCE

DEVELOPINGTOP -NOTCH PRODUCTS


pRoFile oF pupuK inDoneSia

Pupuk Indonesia Group is the largest fertilizer producer in Southeast Asia and operates throughout Indonesia. Our commitment is to the support of Indonesia’s food security for the prosperity of the nation.

• CompanyProfile

• Milestone

• ListofSubsidiariesandOperationalArea

• ScaleofOrganization

• Vision,MissionandValues

ABOUTTHE REPORT











CoMPANY PRofILE

CoMPANY NAME [GRI 102-1]

Perusahaan Perseroan

PT Pupuk Indonesia (Persero) founded

on January 3, 1970.

HEAd offICE [GRI 102-3]

Jl. Taman Anggrek, Kemanggisan Jaya


Telephone: +62 21 53654900

Facsimile: +62 21 80647955


Website: www.pupuk-indonesia.com

@pupuk_indonesia

Pupuk Indonesia

@pt.pupukindonesia

LEGAL foRM ANd oWNERSHIP [GRI 102-5]Legal form: State-Owned Enterprise in the form of Limited Liability Company (PT)

Articles of Association:Deed No. 4 dated 3 January 1970, drawn before Soeleman Adjasasmita, Notary in Jakarta, as amended a number of times with the latest one amended based on Deed No. 14 dated 26 April 2013 drawn before Nanda Fauz Iwan, SH, Notary in South Jakarta.

ownership100% Government of Indonesia

oPERATIoNAL LoCATIoN [GRI 102-4, GRI 102-6]

PT Pupuk Indonesia (Persero) operates in Indonesia.

Plant Location: Gresik (East Java), Cikampek (West

Java), Bontang (East Kalimantan), Lhokseumawe

(Nanggroe Aceh Darussalam), Palembang (South

Sumatra). Marketing location: Throughout Indonesia

ABOUTTHE REPORT











BUSINESS LINE & PRodUCTS [GRI 102-2]

Implement corporate management services, trading and services in fertilizer, petrochemicals, agrochemicals, and

other chemicals, agro industries and other services. The products offered include:

• Fertilizers, including Urea, NPK, SP-36, ZA, ZK, and Organic.

• By-products, including cement retarder, aluminum fluoride, gypsum, liquid CO2, and hydrochloric acid.

• Basic chemicals, including ammonia, sulphuric acid, and phosphoric acid.

• Innovative products such as bio-fertilizer, seeds, decomposers, pesticides, etc.

ABOUTTHE REPORT











Subsidized urea1 Subsidized npK phonska 2

Subsidized Sp-36 3 Subsidized Za 4 Subsidized organic 5

20 2017 PT Pupuk Indonesia (Persero)Laporan Tahunan

Laporan Kepada Pemangku KepentinganReport to Stakeholders

Ikhtisar 20172017 Highlights

Profil PerusahaanCompany Profile

Sumber Daya ManusiaHuman Resources


Jejak Langkah PerusahaanCorporate Milestones

1959PT Pupuk Sriwidjaja didirikan berdasarkan Akta No. 177 tanggal 24 Desember 1959

PT Pupuk Sriwidjaja didirikan berdasarkan Akta No. 177 tanggal 24 Desember 1959

1997-1998Diterbitkan PP No.28 Tahun 1997 dan PP No 34 Tahun 1998, PT Pupuk Sriwidjaja (Persero) menjadi Perusahaan Induk (Operating Holding) yang membawahi 5 (lima) perusahaan (PT Pupuk Kalimantan Timur, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Iskandar Muda, PT Mega Eltra)

Diterbitkan PP No.28 Tahun 1997 dan PP No 34 Tahun 1998, PT Pupuk Sriwidjaja (Persero) menjadi Perusahaan Induk (Operating Holding) yang membawahi 5 (lima) perusahaan (PT Pupuk Kalimantan Timur, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Iskandar Muda, PT Mega Eltra)

1979-1980Dalam rangka kerjasama dengan negara-negara ASEAN dibentuk perusahaan patungan:

y PT Asean Aceh Fertilizer (AAF), Pupuk Indonesia menguasai 60% saham

y Asean Bintulu Fertilizer (ABF) Sdn.Bhd., Pupuk Indonesia menguasai 13% saham

Dalam rangka kerjasama dengan negara-negara ASEAN dibentuk perusahaan patungan:



2010PT Pupuk Sriwidjaja (Persero) berubah menjadi Strategic and Investment Holding dan didirikan PT Pupuk Sriwidjaja Palembang berdasarkan Akta No. 56 tanggal 24 Desember 2010

PT Pupuk Sriwidjaja (Persero) berubah menjadi Strategic and Investment Holding dan didirikan PT Pupuk Sriwidjaja Palembang berdasarkan Akta No. 56 tanggal 24 Desember 2010

2012PT Pupuk Sriwidjaja (Persero) berganti nama menjadi PT Pupuk Indonesia (Persero) berdasarkan Akta No. 3 tanggal 3 April 2012

PT Pupuk Sriwidjaja (Persero) berganti nama menjadi PT Pupuk Indonesia (Persero) berdasarkan Akta No. 3 tanggal 3 April 2012

1997-1998The issuance of Government Regulation (PP) Number 28 of 1997 and PP Number 34 of 1998 transformed PT Pupuk Sriwidjaja (Persero) into the Operating Holding which oversees five companies (PT Pupuk Kalimantan Timur, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Iskandar Muda and PT Mega Eltra).

1959PT Pupuk Sriwidjaja was established based on Deed No. 177 dated 24 December 1959.

1979-1980For the purpose of cooperation with ASEAN countries, the following joint ventures have been established:• PT Asean Aceh Fertilizer (AAF),

where Pupuk Indonesia owns 60% shares.

• Asean Bintulu Fertilizer (ABF), where Pupuk Indonesia owns 13% shares.

2010PT Pupuk Sriwidjaja (Persero) was transformed into Strategic and Investment Holding and PT Pupuk Sriwidjaja Palembang was established based on Deed No. 56 dated 24 December 2010.

2012PT Pupuk Sriwidjaja (Persero) changed its name to PT Pupuk Indonesia (Persero) based on Deed No. 3 dated 3 April 2012.

MILESToNE

ABOUTTHE REPORT











20 2017 PT Pupuk Indonesia (Persero)Laporan Tahunan

Laporan Kepada Pemangku KepentinganReport to Stakeholders

Ikhtisar 20172017 Highlights


Sumber Daya ManusiaHuman Resources



1959PT Pupuk Sriwidjaja didirikan berdasarkan Akta No. 177 tanggal 24 Desember 1959

PT Pupuk Sriwidjaja didirikan berdasarkan Akta No. 177 tanggal 24 Desember 1959

1997-1998Diterbitkan PP No.28 Tahun 1997 dan PP No 34 Tahun 1998, PT Pupuk Sriwidjaja (Persero) menjadi Perusahaan Induk (Operating Holding) yang membawahi 5 (lima) perusahaan (PT Pupuk Kalimantan Timur, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Iskandar Muda, PT Mega Eltra)

Diterbitkan PP No.28 Tahun 1997 dan PP No 34 Tahun 1998, PT Pupuk Sriwidjaja (Persero) menjadi Perusahaan Induk (Operating Holding) yang membawahi 5 (lima) perusahaan (PT Pupuk Kalimantan Timur, PT Petrokimia Gresik, PT Pupuk Kujang, PT Pupuk Iskandar Muda, PT Mega Eltra)

1979-1980Dalam rangka kerjasama dengan negara-negara ASEAN dibentuk perusahaan patungan:



Dalam rangka kerjasama dengan negara-negara ASEAN dibentuk perusahaan patungan:



2010PT Pupuk Sriwidjaja (Persero) berubah menjadi Strategic and Investment Holding dan didirikan PT Pupuk Sriwidjaja Palembang berdasarkan Akta No. 56 tanggal 24 Desember 2010

PT Pupuk Sriwidjaja (Persero) berubah menjadi Strategic and Investment Holding dan didirikan PT Pupuk Sriwidjaja Palembang berdasarkan Akta No. 56 tanggal 24 Desember 2010

2012PT Pupuk Sriwidjaja (Persero) berganti nama menjadi PT Pupuk Indonesia (Persero) berdasarkan Akta No. 3 tanggal 3 April 2012

PT Pupuk Sriwidjaja (Persero) berganti nama menjadi PT Pupuk Indonesia (Persero) berdasarkan Akta No. 3 tanggal 3 April 2012

212017PT Pupuk Indonesia (Persero) Annual Report

Analisa & Pembahasan ManajemenManagement Discussion & Analysis

Tata Kelola PerusahaanGood Corporate Governance

Tanggung Jawab Sosial PerusahaanCorporate Social Responsibility

Laporan Keuangan AuditAudited Financial Statement


2013Pada tanggal 23 Desember 2013, PT Pupuk Indonesia (Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Logistik.

Pada tanggal 23 Desember 2013, PT Pupuk Indonesia (Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Logistik.

20151. Pada tanggal 30 April 2015, PT Pupuk Indonesia

(Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Pangan

2. Revitalisasi Pabrik PKT 5

3. Pembangunan Pabrik NPK II PT Pupuk Kujang

1. Pada tanggal 30 April 2015, PT Pupuk Indonesia (Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Pangan

2. Revitalisasi Pabrik PKT 5

3. Pembangunan Pabrik NPK II PT Pupuk Kujang

20171. Revitalisasi Pabrik Pusri 2B

2. Mulainya Pembangunan Pabrik NPK Fusion II dalam rangka program pencanangan proyek NPK 2,4 Juta TPY

1. Revitalisasi Pabrik Pusri 2B

2. Mulainya Pembangunan Pabrik NPK Fusion II dalam rangka program pencanangan proyek NPK 2,4 Juta TPY

2014Pada tanggal 18 Agustus 2014, PT Pupuk Indonesia (Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Energi.

Pada tanggal 18 Agustus 2014, PT Pupuk Indonesia (Persero) mendirikan anak perusahaan bernama PT Pupuk Indonesia Energi.

2016Pembangunan Pabrik NPK Fusion I PT Pupuk Sriwidjaja Palembang

Pembangunan Pabrik NPK Fusion I PT Pupuk Sriwidjaja Palembang

2013On 23 December 2013, PT Pupuk Indonesia (Persero) established a subsidiary, PT Pupuk Indonesia Logistik.

2014On 18 August 2014, PT Pupuk Indonesia (Persero) established a subsidiary, PT Pupuk Indonesia Energi.

20151. On 30 April 2015, PT Pupuk

Indonesia (Persero) established a subsidiary, PT Pupuk Indonesia Pangan.

2. Revitalization of Plant PKT 53. Construction of Plant NPK of PT

Pupuk Kujang

2016Construction of Plant NPK Fusion I of PT Pupuk Sriwidjaja Palembang.

20171. Revitalization of Plant Pusri 2B2. The commencement of Plant

NPK Fusion II construction, part of the declared “NPK of 2.4 Million Tons a Year” program.

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LIST of SUBSIdIARIES ANd oPERATIoNAL AREA

PT PUPUK ISKANdAR MUdALHoKSEUMAWEJalan Raya Medan - Banda Aceh, Krueng Geukeuh,Lhokseumawe 24310 Nanggroe Aceh darussalamPhone : (62-645) 56222fax : (62-645) 56096E-mail : [email protected] : http://www.pim.co.id1 (one) Urea Prill Plant – 570,000 tons1 (one) Urea Granule Plant – 57,000 tons

PT PUPUK KUJANGCIKAMPEKJalan Jenderal A. Yani No. 39Cikampek, Karawang 41373, Jawa BaratPhone : (62-264) 314336-340, 313451-452,316123, 316141fax : (62-264) 314235, 314335,E-mail : [email protected] : http://www.pupuk-kujang.co.id

2 (two) Urea Prill Plants – 1,140,000 tons1 (one) NPK Blending Plant – 100,000 tons1 (one) NPK fusion Plant – 200,000 tons.

PT REKAYASA INdUSTRIJAKARTAJalan KalibataTimur I No. 36Kalibata, Jakarta Selatan 12740Phone : (62-21) 7988700, 7988707fax : (62-21) 7988701, 7988702E-mail : [email protected] : http://www.rekayasa.co.id

PT MEGA ELTRAJAKARTAJalan Menteng Raya No. 27Jakarta Pusat 10340Phone : (62-21) 3909018 (Hunting), 3909437fax : (62-21) 3909326, 3102937E-mail : [email protected] : http://www.megaeltra.com

PT PUPUK INdoNESIA LoGISTIKJAKARTAGedung Pusri 101, lantai 2 & 3Jl. Letjend S. Parman Kav. 101Jakarta Barat 11440Phone : (62-21) 2263 1881 - 83fax : (62-21) 2256 1904E-mail : [email protected] : www.pi-logistik.com

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PT PUPUK SRIWIdJAJA PALEMBANGPALEMBANGJalan Mayor Zen, Palembang 30118Phone : (62-711) 712111, 712222fax : (62-711) 712100, 712020E-mail : [email protected]/[email protected] : http://www.pusri.co.id4(four) Urea Prill Plants – 2,617,500 tons1 (one)NPK fusion Plant – 100,000 tons

PT PETRoKIMIA GRESIKGRESIKJalan Jend. A. Yani, Gresik 61119, JawaTimurPhone : (62-31) 3981811, 3981814,3982100, 3982200fax : (62-31) 3981722, 3892272E-mail : [email protected] : http://www.petrokimia-gresik.com

1 (one)Urea Prill Plant – 460,000 tons3 (three)ZA Plants – 750,000 tons1 (one) SP-36 Plant – 500,000 tons9 (nine)NPK Plants – 286,000 tons1 (one) Phosphate Plant – 500,000 tons1 (one) ZK Plant – 10,000 tons

PT PUPUK INdoNESIA ENERGIJAKARTAGedung Petrokimia GresikJl. Tanah Abang III No.16 Jakarta 10160Phone : (62-21) 3446678E-mail : [email protected] : http://www.pi-energi.com

PT PUPUK INdoNESIA PANGANJAKARTAGedung Petrokimia GresikJl. Tanah Abang III No.16 Jakarta 10160Phone : (62-21) 3446460E-mail : [email protected] : http://www.pi-pangan.com

PT PUPUK KALIMANTAN TIMURBoNTANGJalan James Simandjuntak No. 1Bontang 75313, Kalimantan TimurPhone : (62-548) 41204, 41202, 41203,fax : (62-548) 41616, 41626E-mail : [email protected],Website : http://www.pupukkaltim.com

2 (two) Urea Prill Plants - 1,140,000

3 (three) Urea Granule Plants - 2,290,000 tons

1 (one) NPK Blending Plants 150,0001 (one) NPK fusion Plant – 200,000 tons

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SCALE of oRGANIZATIoN

NUMBER of EMPLoYEES IN 2017

10,179

ToTAL NET REVENUE

Rp58.94trillion

AUTHoRIZEd CAPITAL

Rp40trillion

ToTAL fERTILIZER PRodUCTIoN IN 2017

11.42million ton

ISSUEd ANd fULLY PAId CAPITAL

Rp12.90trillion

ToTAL CAPITAL AS AT 31 dECEMBER 2017

Rp62.60trillion

oWNING 10 SUBSIdIARIES

10 Subsidiariesemployee

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VISIoN, MISSIoN ANd VALUES

VISIoNTo become an integrated, sustainable, and world-class agrochemical andfoodstuff company.

MISSIoN• Developingmainbusinessesinthefieldsoffertilizer,chemical,andenergy,along

with associated infrastructure• Developingbusinessesthatsupportfoodsecurity• DevelopinginvestmentportfoliotoenhancetheCompany’saddedvalue• Providinghighqualityandcompetitiveproductsandservices

VALUES1. Stakeholder Satisfaction2. Innovation and Total Value Added3. Integrity and Ethics4. Teamwork and Synergy5. Environmentally friendly

The dissemination of the Company’s Vision,Mission, and Values in 2016 took place throughthe following activities:1. dissemination through internal publication media, i.e. TV Media, e-mail, in-house magazine

and other media.2. dissemination through Company website.3. dissemination to new hires through Employee onboarding activity.

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SUPPLY CHAIN [GRI 102-9]

What is meant by suppliers is partners that produce organic fertilizers. These partners produce organic fertilizers in accordance with the Company’s requirements as set forth in cooperation contract. In 2017, there were 182 organic fertilizer partners with total production of 686,871 tons and total sales of Rp199.29 billion. A total of 1,570 workers were employed in these organic fertilizer partners.

fURTHER INfoRMATIoN oN THE VISIoN, MISSIoN ANd VALUES [GRI 102-16]

The Vision, Mission, and Values are stated in the Company’s Blue Print for 2011–2030, which hasobtained approval from the Minister of State-Owned Enterprises with the Letter No. S-265/MBU/05/2015 dated 7 May 2015.

VALUE CHAIN

Production process consists of liquid, solid, and gas phase in high temperature and very high pressure using high tech process.

The Company’s products are distributed in 4 levels (Provinces, District, and Other Groups) to various regions and provinces in Indonesia to support the production of food crops and Pupuk Indonesia Group’s participates in supporting food security.

The Company has been involved in various effortsand strategies to ensure the continuity of supply offertilizers with competitive price schemes, amongothers by:1. Revitalizing or replacing energy-intensive old

plants with new plants that are more energy efficient,

2. Substituting the use of natural gas with coal, as the main energy supply,

3. Revamping old plants,4. Conducting joint procurement involving all

subsidiaries for the raw materials for compound fertilizers,

5. Engaging in cooperations with owners of phosphate mines.

MARKET SHARE [GRI 102-6]

Our customers make up the most important part inour entire business. PT Pupuk Indonesia (Persero) iscommitted to maintaining and improving its strongrelationships with all customers and to living up toits social responsibility towards all stakeholders. Ourcustomers are divided into two segments: farmersand farmers’ collectives, and farming and plantationcompanies.

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Plant

Retailer warehouse

Line III warehouseDistributor

Definitive Plan of Farmer Group

Needs (RDKK)

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 Sub-

District)LINE IV

Lini II/UPP

DiStRibution meChaniSmProcurement and Distribution Flow: :1. In accordance with the Regulation of the Minister of Commerce No.15/2013 Pupuk Indonesia

regulates the procurement and distribution of subsidized fertilizers at the local scale, from Line 6 to Line IV based on six principles, which are the Right Type, Right Amount, Right Price, Right Location, Right Time and Right Quality.

2. The produces are obliged to assure smooth distribution of subsidized fertilizers based on the six principles above and to have/control warehouse at Line III in respective area they are in charge of.

3. Distributors are to execute subsidized fertilizer distribution from Line III to Line IV.4. Retailers distribute subsidized fertilizers based on the six principles to farmers and/or farmers

groups in line with the Farmer Group Needs (RDKK).5. Distribution of fertilizers to farmers/farmers’ groups starts from the gradual proposal from Retailer

through to Producer.

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RepoRt to ShaReholDeR

• ReportofBoardofCommissioner

• ReportofBoardofDirectors

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For tens of years has Pupuk Indonesia dedicated itself to the nation, to bring prosperity through food security. We continue making improvements and innovations to develop Pupuk Indonesia into an enterprise that prioritizes “profit, people, planet”. This sustainability report embodies our commitment and responsibility to the stakeholders, to report on economic, social and environmental performance.

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BoARd of CoMMISSIoNERBungaran Saragih

The Board of Commissioners gives its utmost appreciation to the management for their unremitting efforts to improve sustainable performance in the pursuit of advancing the public’s wellbeing for a prosperous nation.

The Government has successfully improved the sustainability of production and productivity of strategic staple crops such as rice, corn, soy, and sugarcane, among others. That success in with staple crops is no less attributable to the availability and affordability of production means – including fertilizers – and a host of other factors. Still, we must endeavor to increase Pupuk Indonesia’ role and contribution towards further improvements in the production and productivity of commodity crops – a prerequisite of national food self-sufficiency.

In 2017, Indonesia is successfully rice self-sufficient for the first time in 32 years. Moreover, production of other food crops such as corn is also on the rise. We are right to be proud for achieving this milestone and highly grateful that Pupuk Indonesia, along with farmers and other food crop producers, is successful in meeting the Government’s mandate of advancing public wellbeing for a prosperous nation.

The year 2017 is a year of challenges and opportunities. The Board of Commissioners gives its utmost appreciation to the management’s performance in 2017 for giving their level best, tackling challenges, and advancing to take advantage of opportunities. Indeed, the strategy of upstream and downstream synergy to secure fertilizer supply for national food self-sufficiency is a masterstroke.

Furthermore, the management has executed another equally important strategy: promoting the principle of sustainability to grow the company, “recording profits while building its people and preserving the planet.” The strategy is aligned with the principle of Sustainable Development, an idea that is front and center in the global public to ensure the wellbeing of the people of today and the future.

The Board of Commissioners is highly grateful for the management’s efforts to create conducive working environments for our employees. The same goes to their attention to raise the quality of life of the poor through the Partnership and Environmental Sustainability Programs. We believe that such programs enable the company to grow with the support from the surrounding population.

We are also highly appreciative of the management’s priority on environmental conservation. Several Subsidiaries succeeded in reaching Gold Rating (PT Pupuk Kalimantan Timur), Blue Rating (PT Pupuk Iskandar Muda) and Green Rating (PT Petrokimia Gresik, PT Pupuk Sriwidjaja Palembang and PT Pupuk Kujang Cikampek) Rating in the PROPER Awards organized by the Ministry of Environment and Forestry of Indonesia. The Board of Commissioners encourages all subsidiary companies to participate in the PROPER Awards. In relation to this, the Board of Commissioners mandates that corporate activities ought to be carried out in an environmentally-friendly manner. Environmental impacts must be detected as early as possible so that their symptoms can be tackled using strategic policies to ensure its conservation.

The Board of Commissioners would like to express its utmost gratitude to the directors, management, and every Pupuk Indonesia individuals across Indonesia for their hard work and dedication for a successful and sustainable performance.

We would also like to extend our mark of gratitude to our stakeholders for their support and contribution throughout 2017. Last but not least, we are thankful to the Government for entrusting us with the noble duty of preserving and building this country of ours through food self-sufficiency.

Jakarta, April 2018

BoARd of CoMMISSIoNERBungaran Saragih

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REPoRT of THE BoARd of CoMMISSIoNERS [GRI 102-14]

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BoARd of dIRECToRS Aas Asikin Idat

The availability of fertiliser one of the driving factors of food security realisation a significant condition for Indonesia’s economic stability.

Development in agriculture sector can no longer undermined, bearing in mind that it is the spearhead for attaining prosperity of the nation and reducing poverty. Pupuk Indonesia holds the honor to be one of the main partners of the Government and supporters in improving agricultural production in Indonesia. To that end, Pupuk Indonesia continues giving its commitment to the success of the national food security program through the assurance of supply of fertilizer in Indonesia. This report embodies our commitment to such effort, apart from reporting our significant involvement in sustainability efforts. We believe that a world-class organisation would not be detached from the care and concern over three key elements of sustainability, namely profit, people, planet.

SUSTAINABILITY PERfoRMANCEThe year 2017 is a milestone, for Pupuk Indonesia has booked profits totalling Rp3.08 trillion. The Company has recorded the highest fertizer production in its history, with a total production of 11.42 million tons. In addition to the highest production record throughout the history of the Company, the total sales in 2017 reached 12.51 million tons. In the context of sustainability, performance is measured not only from financial aspect, but also achievement in environmental aspects, social aspects, and th corporate governance application. The award is conferred to excellent and innovative companies and business players.

CHALLENGES ANd oPPoRTUNITIESOne of the largest challenges in 2017 was the plummeting prices of fertilizer in the international marketing; this scaled down competitive power as the gas price went up. The price of gas, a raw material, accounts for 70% of the cost of goods sold. Gas price in Indonesia was US$6 per MMBTU, while in other countries gas price for industry cost between US$1 to US$3 per MMBTU.

To tackle this issue, Pupuk Indonesia took efficiency steps as a strategy to stay in the market. Also we will replace steam unit, change fuel energy from gas to coal, as well as developing less-gas-consuming fertilizer products, such as the type NPK. We also revitalise our factories. There are three factories to revitalise, one of which is our oldest and historical factory that has supported Indonesia’s food security for 50 years, i.e. Pupuk Sriwijaya (Pusri). We built the Pusri 2B factory to replace the old and inefficient factory. This new factory applies the latest technology that allows gas fuel saving up to 14 MMBTU per ton of Urea, thus reduces the cost of goods sold and eventually bring us in the competition.

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REPoRT of BoARd of dIRECToRS [GRI 102-14]

Another challenge is world’s over supply fertilizer. The world’s fertilizer supply is currently 240 million tons, while the usage is only 180 million tons. Therefore, Pupuk Indonesia actively performs changes to address this, by producing a derivative fertilizer products so that dependence on Urea can be suppressed. We are also exploring the possibilities of developing other petrochemical products as an effort to increase corporate productivity.

In spite of these challenges we face, we remain being optimistic, believing that fertilizer and petrochemical industry has a bright future, because domestic fertilizer needs--especially for NPK--are ever increasing. NPK fertilizer has been proven having brought optimum results in increasing plant productivity, be it food plants or plantation

Looking ahead, we aware that research development is a key to the growth of fertilizer industry and related industries in the efforts to support national food security. To that end, Pupuk Indonesia cooperates in research with Sepuluh Nopember Institute of Technology (ITS). Research and development department as an important investment for the future. This cooperation demonstrates our serious efforts to develop the company into an advanced company with high profitability.

NoURISHING SUSTAINABILITY ACHIEVEMENTSPupuk Indonesia does not only focus on the Company performance that is related to profit gaining, but we also care about the community and environment around our operational locations. Social responsibility and environmental conservation efforts are important aspects to us, as these directly or indirectly support the continuity of our business.

We continue increasing employee competence through quality education and training programs. Not only focusing on professional performance, we also provide motivation training and mentoring/coaching support. The mandays of training in 2017 totalled 233.871 work days.

We are also constantly developing efforts to improve occupational health and safety (OHS). However, with deep regret, we reported that there was a fatal accident occurred in one of our subsidiaries. However, a thorough evaluation has taken place, and improvements have been applied to prevent this from reoccurring. This is evidenced by the decrease in Total Recordable Injury Rate (TRIR) in 2017, that decreased at 26% from the previous year. In terms of environment responsibility, in 2017 PT Pupuk Iskandar Muda received an administrative penalty from the Ministry of Environment and Forestry. This issue has been settled as the Letter Number S.1093/PHLHK/PPSA/GKM.O/11/2017 on Administrative Penalty Settlement in Environment and Forestry has been issued.

ENVIRoNMENT CoNSERVATIoN EffoRTSEnvironment conservation efforts that we have taken are, among others, the program of planting 1000 bamboo seedlings and training of bamboo processing technology transfer. Bamboo cultivation contains high economic value, when the bamboo is processed into different types of products and consecutively being sold at national and even international markets. Furthermore we perform activity of planting 1,500 trees in the complex area of PT Pusri Palembang. Other members of our holding also carried out environmental conservation efforts, such as PT Pupuk Kalimantan Timur who conducted the rehabilitation of coral reefs with the laying of 500 units of artificial reef in Bontang, and PT Petrokimia Gresik who planted 5,000 seeds trembesi seedlings.

These ongoing programs are in line with our commitment to the protection of the environment and reduction of global warning impacts. These efforts is a part of the our striving to maintain the earth for the next generations.

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We are highly committed to the compliance of regulations concerning the environment and to the environment management that is even beyond compliance. One of the members of our holding managed to obtain Proper “Gold” rating and other members obtained Proper “Blue” and “Green” from the Ministry of Environment and Forestry of Indonesia. The achievement of Proper “Gold”, the highest rating, indicates that our company has environmental excellence, thanks to the innovations in the use of natural resources and community development. Proper “Gold” achieved by PT Pupuk Kaltim becomes a pride and, at the same time, a challenge for all our subsidiaries to achieve equivalent level.

We are aware that the success in 2017 would not have been realised without the support and participation of the Board of Commissioners, Board of Directors, the staff and all stakeholders of Pupuk Indonesia. Therefore, I would like express my deepest gratitude to you all. Let us work harder in the coming years to book a better achievement in growing Pupuk Indonesia Group.

Jakarta, April 2018

BoARd of dIRECToRS Aas Asikin Idat

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DeVelopinG SuStainable GoVeRnanCe

Sustainable governance is the main foundation in running an environmentally and socially- responsible Company. Under this governance umbrella, decisions are made in accordance to the principles of 3P: Profit, Planet, and People. Each of the tenets of the principles are equally significant; not one deserves precedence over the other.

We expect that due consideration to the principles will result in:• a company that is able to create optimum economic

value in the long-run;• stakeholders that reap maximum benefits from the

Company’s operations;• positive corporate image and reputation in the long-

term; and,• first-class employee competence and professionalism.

Good governance has not only built the public trust, but also developed Pupuk Indonesia into a world-class company. Optimum sustainability performance could not have either been realized without strong support of the internal system and good corporate governance practice.

Under the guidelines of Sustainable Governance, we are highly committed to give due respect to integrity and embed the principles of 3P in its business activities. The main organs responsible to implement governance are shareholders/General Meeting of Shareholders (RUPS), Board of Commissioners and Directors, and supporting organs such as the Audit Committee, GCG &Risk Management Committee, Secretary of the Board of Commissioners, Corporate Secretary, Internal Oversight, and Corporate Governance Compartment.

The Board of Commissioners are supported by Board Committees, consisting of the Audit Committee and GCG &Risk Management Committee. As an organ that supports the Board of Commissioners, the GCG &

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• GeneralMeetingofShareholders

• GovernanceStructure

• StructureoftheBoardofCommissionersandDirectors

• Directors

• BoardofCommissioners

• Anti-Corruption

• Anti-CorruptionCommunicationsandTrainings

• PoliticalContributions

• AdoptionandSupportforInternationalInitiatives

• MembershipinIndustrialAssociationsandOtherOrganizations

• StakeholderInvolvement

• ImplementationofsustainableconceptionSuppliers

Risk Oversight Management Committee oversees the Corporate Governance Compartment and advises it on matters in good corporate governance. In addition, the Committee identifies items that require attention from the Board of Commissioners, particularly in general governance and regulatory compliance.

GoVERNANCE STRUCTURE [GRI 102-18]

In accordance with Law No. 40 Year 2007 on Limited Liability Companies, corporate governance bodies primarily consist of the General Meeting of Shareholders, the Board of Commissioners, and Directors. The governance structure of PT Pupuk Indonesia (Persero) involves both primary and supporting organs and designed to ensure the independence of each corporate organ in carrying out its duties.

The GCG structure in place in PT Pupuk Indonesia (Persero) is as follows:

directorsBoard of

Commissioners

Internal oversight Unit

Corporate Governance

Compartment

Secretary of the Board of

CommissionersCorporate Secretary

General Meeting of Shareholders

(RUPS)

Audit Committee

GCG & Risk Management

GENERAL MEETING of SHAREHoLdERS (RUPS)RUPS, both Annual General Meeting of Shareholders (RUPST) and Extraordinary General Meeting of Shareholders (RUPSLB), is the highest corporate organ and the formal forum in which shareholders resolve strategic decisions. Both RUPST and RUPSLB are held in accordance with the Company’s Articles of Associations (AD), various corporate policies, and prevailing legislation.

The General Meeting allows shareholders to exercise their rights: raise opinions and vote on important and strategic decisions in an independent and balanced manner. In this case, balanced refers to impartial decisions that takes due consideration the interests of other shareholders and the Company.

The General Meeting allows shareholders to formally exercise their rights and raise their opinions, give suggestions, and offer recommendations to the Directors.Decisions resolved in the General Meeting are binding

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to both the Commissioners and Directors. The interests of minority shareholders are represented by the Independent Commissioner.

The General Meeting is also a forum to assess the performance of two other major corporate organs, i.e. the Board of Commissioners and Directors, in attaining operational targets set at the start of the year. Director’s performance is measured by the number of Key Performance Indicators (KPI) it has achieved before being evaluated and accounted for in the General Meeting. TheKPI is determined every year and adjusted with the risks and opportunities faced by the Company. Aspects of performance that must be achieved and accounted for consist of, among others, economic, environmental, and social.In addition to evaluating the performance of Commissioners and Directors, the General Meeting resolves important decisions concerning various proposed corporate actions, such as:a. appointment and dismissal of Commissioners and

Directors;b. establishment of a subsidiary and/or joint venture;c. merger, consolidation, acquisition, spin-off, and

dissolving of subsidiaries and/or joint ventures;d. release and write-off of the Company’s fixed assets,

except fixed mobile assets whose industrial economic life is conventionally 5 (five) years; and

e. issue bonds and other debt instruments.

STRUCTURE of THE BoARd of CoMMISSIoNERS ANd dIRECToRS Pursuant to Indonesian legislation, PT Pupuk Indonesia (Persero) adopts a two-tiered board system consisting of the Board of Commissioners and Directors whose duties are clearly outlined in the Company’s Articles of Association and prevailing legislation. The Board of Commissioners and Directors are mutually responsible to maintain the going concern of PT Pupuk Indonesia (Persero).

To prevent conflicts of interest, a Commissioner is not permitted to concurrently hold office as a Director.Likewise, a Director is not permitted to assume an office one level below except in emergencies. Responsible to elect, appoint, and dismiss Commissioners and Directors is the General Meeting of Shareholders. The controlling shareholder reserves the right to initiate a proposal to appoint and dismiss a Commissioner and Director in the General Meeting of Shareholders. As a State-owned Enterprise, the holder of the controlling Series A share is the Government of Indonesia and exercises such rights by proxy of the Minister of State-owned Enterprises. The current structure and constituent organs of PT Pupuk Indonesia (Persero) are outlined in the Decree of Directors No. SK/DIR/011/2016 dated April 1, 2016.

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The primary functions of the Directors and Board of Commissioners of PT Pupuk Indonesia (Persero) are as follows:

dIRECToRSPT Pupuk Indonesia (Persero) is managed by one President Director and 5 (five) Directors. The directors are authorized and assume full responsibility in managing the Company. They also represent PT Pupuk Indonesia (Persero) both inside and outside of a court of law pursuant to the Articles of Association and prevailing legislation. The Directors perform their duties and assume collective responsibilities. Nonetheless they may act and take decisions in accordance to each of their duties and authorities, including on environmental and social matters..

BoARd of CoMMISSIoNERSThe main duty of the Board of Commissioners is to oversee corporate policies executed by the Directors that concerns both the Company and its business activities. The Board also advises the Directors in the Company’s interests. In its daily duties, the Board of Commissioners forms supporting committees to enhance its oversight functions in accordance with GCG principles. These committees are Audit Committee and GCG &Risk Management Committee. If so necessary, the Board may establish additional committees depending the Company’s circumstances and needs. Each committee is chaired by a Commissioner and may have at most 2 (two) non-Company members that are deemed competent to handle for the Committee’s tasks..

ANTI-CoRRUPTIoN [GRI 205-2]

Pupuk Indonesia have taken strategic measures to prevent corruption or fraud and has communicated those measures to our employees, Directors, and Board of Commissioners and its committees. The communication channels we used include, among others, meetings between the Directors and Board of Commissioners, GCG awareness activities, trainings, workshops, and coordinating meetings.

We are committed to prevent corruption by implementing various Company-wide systems and policies, such as establishment of a Fraud Risk System, signing of the Integrity Pact, Guidelines on Control of Grafts, Guidelines on Reporting of Assets of Officials, Guidelines on Conflicts of Interest, and Guidelines on the Whistle-blowing System (WBS).

We have implemented various corruption/fraud prevention systems, such as by annual signing of the Integrity Pact, signing of the Integrity Pact when executing corporate actions, and signing of the Integrity Pact in every procurement process.

Internal corporate policies underline that Pupuk Indonesia individuals are prohibited from receiving self-serving grafts for himself and his family, either presented from an offshore or domestic entity, sent through either electronic or non-electronic means. The commitment to prevent grafts is shown in our implementing of the Guidelines on Control of Grafts set out by the Decree of Directors No. SK/DIR/023A/2015 and renewed by the Guidelines on Control of Grafts No. PI-TKK-PD-002 Rev. 0 enacted on September 8, 2017.

Raising awareness on the forms of corruption/fraud, we have implemented a mandatory reporting of assets for Commissioner, Director, and Grade I and II officials. The mandatory reporting of assets was first enacted in 2014 by the Decree of Directors No. SK/DIR/020/2014 signed on May 20, 2014. The decree was then renewed by the Guidelines on Reporting of Assets of Officials No. PI-PD-TKK-003 Rev. 0 enacted on August 2, 2017.

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Furthermore, we raise awareness on all forms of corruption/fraud by implementing an online whistleblowing system that can be accessed by every employee. Reports sent through the system are made anonymously. Other efforts to increase anti-corruption awareness is by implementing policies on managing conflicts of interest and developing the Fraud Control System. One of the aims of the latter system is to detect risks and mitigate corruption/fraud.

As part of the efforts to anticipate corruption, we have identified areas of operations that are susceptible to corruption.[GRI 205-1]

An audit by SPI found no evidence to indicate acts of corruption within Pupuk Indonesia. This finding is further reinforced by zero complaints or investigations of corruption cases within Pupuk Indonesia Group in 2017.

In 2017, there were zero cases of fraud carried out by work units or employees, zero reports of corruption recorded to the WBS, zero termination of employment or disciplinary sanctions due to corruption, zero termination or non-extension of contracts with business partners due to corruption, and zero legal complaints.

ANTI-CoRRUPTIoN CoMMUNICATIoNS ANd TRAININGSPupuk Indonesia has, in the spirit to align perception, intent, and effectiveness of corruption prevention, held special trainings and workshops on anti-corruption/anti-fraud practices. In addition, we held awareness campaigns on transparent practices and anti-graft measures by implementing the Reporting of Assets of Officials and Control of Grafts for the Board of Commissioners, Directors, and employees of Pupuk Indonesia.

The series of activities, organized by our Corporate Governance Compartment, featured speakers from the Corruption Eradication Commission (KPK) of the Republic of Indonesia. The training was held on June 15, 2017 and attended by some 35 functionaries of the Governance Departments in the Pupuk Indonesia Group, who were then tasked with transferring knowledge from the training to the Board of Commissioners, Directors, and employees of each company group. Following this training, we expect that the importance of transparent practices and anti-graft measures are highlighted effectively to establish a corruption-free corporate governance within Pupuk Indonesia Group..

PoLITICAL CoNTRIBUTIoNS [GRI 415-1]

Pursuant to the provisions on contributions to political parties set out in Law No. 2 Year 2008 on Political Parties and Law No. 10 Year 2009 on General Elections, the Board of Commissioners, Directors, and officials of State-owned Enterprises are prohibited from contributing to political parties. We are compliant to such legislative provisions and have established a Code of Conduct that prohibits contributions made using Company-owned funds, goods, and facilities to support any political party and its candidates, except otherwise permitted by prevailing legislation.

Throughout the reporting period, Pupuk Indonesia has never handed over any sums of funds as political contributions, financial or otherwise, and has never offered such contribution, either directly or indirectly, to any organization in any country and to any recipient/beneficiary to any organization.

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AdoPTIoN ANd SUPPoRT foR INTERNATIoNAL INITIATIVES [GRI 102-12]

Pupuk Indonesia recognizes the importance of minimizing environmental impacts due to our operations. We participate in improving the quality of life of local residents in accordance with the goals of sustainable development. We recognize that the main challenges in achieving sustainable development are climate change and global warming.

We participate in the global effort to mitigate global warming by adopting several international initiatives on global warming, such as ISO 9001, ISO 14001, SDG, and the UN Global Compact..

MEMBERSHIP IN INdUSTRIAL ASSoCIATIoNS ANd oTHER oRGANIZATIoNS [GRI 102-13]

Pupuk Indonesia Group has initiated a number of activities that are aimed to support Indonesia’s economic growth through the fertilizer, petrochemicals and agri chemicals, steam and electricity, transport and distribution, trade, and EPC (Engineering, Procurement, and Construction) industries. In addition, we are active in a number of associations to expand our business network and enhance stakeholder involvement in resolving operational issues.

At the end of 2016, Pupuk Indonesia actively participated in the following organizations:1. International Fertilizer Association (member)2. Indonesia Fertilizer Producer Association (Presidium

Council)3. Institute of Certified Professionals of the Indonesian

Fertilizer Industry (Management Board)

STAKEHoLdER INVoLVEMENT [GRI 102-40, GRI 102-42, GRI 102-43, GRI 102-44]

Stakeholders are those who are affected or affects corporate policies, decision making, and operations. We believe that stakeholders plays a strategic role in our growth and that our performance are on our stakeholders.As such, we strive to maintain and cultivate a harmonious relationship with our stakeholders.

The following table describes stakeholder relationship and interactions in 2017.

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IMPLEMENTATIoN of SUSTAINABLE CoNCEPTIoN SUPPLIERSPupuk Indonesia recognizes that the lifecycle of our products may impact and contribute to the environment, starting from our goods/services suppliers, production, and usage.

Suppliers are part of our supply chain and operate on our behalf. Pupuk Indonesia’s image may be damaged by negative actions conducted by our suppliers as they their operations are conducted to our specifications and requirements. Examples of suppliers are Organic Fertilizer Producers and Fertilizer Distributors.

Goods/services suppliers also affect our reputation and image. For those reasons, we conduct a rigorous selection process for our suppliers that is benchmarked to the sustainability criteria set out in the General Guidelines on the Procurement of Goods and Services in PT Pupuk Indonesia (Persero) Group No. PI-PD-ADA-002 Rev. 0 enacted on May 29, 2017.

Only suppliers that fulfill the sustainability criteria may partner with us. The criteria assessed, among others, compliance to employment regulations such as minimum regional wages, occupational health and safety, and respect for human rights. In addition, suppliers have to comply with environmental regulations.

Stakeholder[GRi 102-40]

basis for Determining

inclusion[GRi 102-42]

engagement approach

[GRi 102-43]

Frequency of engagement[GRi 102-43]

topics/issues addressed[GRi 102-44]

Shareholders - Influence- Rresponsibility

General Meeting of Shareholders

Twice a year • Supervision and evaluation of the Company’s performance

• Determination and payment of dividends• Accuracy and ratification of financial

statements of The Company• Payment of taxes and non-tax state revenue

Customers of Subsidized Fertilizers: Farmers and Farmers’ Collectives

Influence Meeting and Mentoring

Throughout the planting season

• Guaranteed supply and prices• Guaranteed fertilizer quality• Customer satisfaction survey

Customers of Non-Subsidized Fertilizers

Influence Customer Service 56 times • Guaranteed supply and prices• Guaranteed fertilizer quality• Customer satisfaction survey

Employees Presentation • Establishment of Labor Unions

• Meeting with the Management

At least twice a year

• Guaranteed freedom of association and expression

• Health and work safety insurance• Equality, welfare, and certainty of career paths

Suppliers/Distributors Dependency • Meeting• Work Contract• CSMS

Implementation

• Information on opportunities for cooperation• Equality of opportunity for cooperation• Contract• Fulfillment of rights and obligations• Compliance with regulations

Public Proximity CSR programs and PKBL


• Social assistance

• Mentoring of business partners

Media Presentation • Press release• Press conference


• Corporate policies and actions• The Company’s performance

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Investment director

finance director

PRESIdENT dIRECToR

Head of Corporate Communication

SVP Finance & Treasury

SVP Corporate Research

Corporate Secretary

SVP Corporate Performance

SVP Corporate Planning

Head of Internal Audit Unit

SVP Accounting SVP Corporate Development

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Human Capital & Government

director

Technology director

Marketing director

SVP CommerceSVP Human

CapitalSVP Information

TechnologySVP Distribution General SVP SVP Manufacture

TechnologyHead of Training Center

SVP Corporate Governance

SVP Procurement

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DeVelopinG StaKeholDeRS’

eConomieS

• Revenues

• Profitability

• Consumers

• Production

• EmployeeAwards

• ContributiontotheGovernmentIncome

• ContributionstothePublic

• InvestmentinInfrastructureandServices

• ContributionstoLocalSuppliers

• FinancialAssistancefromtheGovernment

• ChallengesfromClimateChangeandLossofLand

• CorporateSynergies

As a State-owned Enterprise (BUMN), we support and implement the Government’s policies and programs designed to meet self-sufficiency in food, including fertilizer subsidies for farmers that in turn increases their farm’s production.

We strive to deliver well-rounded benefits in our operations, among which is by creating economic benefits for our stakeholders. As a company, we generate an economic value that is then channeled to our stakeholders, such as

As a producer and supplier of the national fertilizer needs, Pupuk Indonesia is a leader in national economic entities in supporting food security programs. In addition to supporting food security, the economic impacts arising from the company’s operations are also a direct economic value that are channeled to the state and stakeholders.

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wages and rewards to our employees, dividends, and taxes to the Government, interests to lenders, and investments to the public through various community development programs, such as the Partnership and Environmental Sustainability Program and CSR campaigns.

Thus, Pupuk Indonesia plays a vital role in developing the economic interests of both our internal and external stakeholders. Our net income is always given back to our stakeholders.

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Direct economic Value Generated and Distributed [GRI 201-1]

Description 2014 2015 2016 2017

1. Direct Economic Value Generated

a. Sales b. Interest Receivablesc. Dividendsd. Royaltiese. Property Leasesf. Asset Sales

64,617,200568,604

14,412--

9,460

66,230,955289,725

9,089--

3,098

64,164,003169,092

6,034--

29,253

58,942,682204,313

4,585--

3,168

total economic Value Generated 65,209,676 66,532,867 64,368,382 59,154,748

2. Economic Value Distributed

a. Operational CostsRevenue CostsSales CostsAdministrative and Sales Costs

49,419,2541,111,318

1,976,744

52,250,240751,614

2,108,740

49,929,129849,666

1,828,578

43,696,679737,489

1,813,664

Subtotal Operational Costs 52,507,316 55,110,594 52,607,373 46,247,832

b. Employee Salaries and AllowancesRevenue CostsSales CostsAdministrative and Sales Costs

1,963,271444,346

1,318,960

1,906,543383,352

1,448,455

2,043,078491,431

1,501,557

2,754,582598,480

1,556,946

Subtotal Employee Salaries and Allowances

3,726,577 3,738,350 4,036,066 4,910,008

c. Payment to LendersInterestsDividends

1,829,0361,869,016

1,823,8402,100,000

2,186,8461,527,550

3,784,8791,070,874

Subtotal Payment to Lenders 3,698,052 3,923,840 3,714,396 4,855,753

d. Payment to the Government 1,590,614 1,559,210 1,318,703 1,483,483

e. Investments to CommunityPartnership ProgramsEnvironmental Sustainability ProgramsCSR

114,20430,153

-

107,18231,563

30,930

133,27434,70096,304

128,56854,29366,575

Subtotal Investments to Community 144,357 169,675 264,278 249,436

total economic Value Distributed 61,646,893 64,502,881 61,948,163 57,747,767

3. Economic Value Retained (1-2) 3,562,783 2,029,986 2,420,219 1,406,981

REVENUESIn 2017, the Company recorded revenue in amount of Rp58.94 trillion or 89% of the Budget and Business Plan (RKAP). The achievement was 8% less compared with Rp64.16 trillion recorded in 2016. The reduction in revenues was due to:1. Reduction in commodity prices in 2017, particularly

ammonia, compared with previous years.

2. Reduction in subsidy revenues due to reduction in production costs, In that the costs of producing fertilizer and ammonia are reduced in line with the Company’s cost-efficiency programs and reduction in prices of raw materials.

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3. Reduction in Revenues from Services and Trade, particularly due to delays in Engineering, Procurement, and Construction (EPC) projects caused by slow recovery of investments in the petroleum industry.

PRofITABILITYThe Company has successfully recorded a profit of Rp3.08 trillion or 150% higher than the target set by its Shareholders. The achievement was 13% less compared with Rp3.53 trillion recorded in 2016. One of the Company’s efforts to increase profitability is by implementing a Cost Reduction Program (CRP) and building synergies among its subsidiaries. By assets, the Company increased its assets by 1% with a value of Rp128.49 trillion in 2017. In 2016, the Company’ assets was 127.09 trillion.

PRodUCTIoNAs the largest fertilizer producer in Asia, our main product is fertilizer – used to improve fertility and enrich nutrients in agricultural land.The total fertilizer production in 2017 was 11.42 million tons or 8% higher than 10.46 million tons produced in 2016. The increase in fertilizer production is due to operations of a number of new plants and improvements to the reliability of existing plants to ensure that every plant operates at optimum levels.

operational highlights, 2014-2017 (in millions of tons)

Description 2014 2015 2016 2017

Fertilizer Production 10,684 10,902 10,459 11,417

non-fertilizer production

Ammonia 5,058 5,524 5,239 5,422

Sulfuric Acid 572 922 1,160 1,198

Phosphoric Acid 205 224 313 288

Aluminium Fluoride 9 10 11 11

Others 26 26 33 34

Total Non-fertilizer Production 6,543 7,669 6,756 6,954

Fertilizer Sales 12,229 11,763 12,095 12,505

Non-Fertilizer Sales 1,907 2,121 1,443 1,323

CoNSUMERSThe primary consumers of Pupuk Indonesia are:1. Farmers and farmer groups;2. Industrial agriculture and plantations.

Domestic demand for NPK in the commercial market is sufficiently at a higher ratio compared with current NPK production capacity. The national demand for NPK is projected to reach 7.2 million tons per year, significantly

higher than the production capacity of 3.1 million tons per year. Demand for fertilizer in the agriculture sector is currently very high. Indeed, based on data from the Ministry of Agriculture, demand for fertilizer in the food crop sector exceeded 14 million tons per year whereas current supply can meet only 9.5 million tons per year.

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In the domestic non-subsidized market, the competitiveness of our products decreased somewhat. The sales of non-PSO fertilizers in 2017 was 2,198,088 tons or 98% of the target set in the Budget and Business Plan (RKAP) of 2,244,935 tons. The slight competitive decline is primarily caused by uncompetitive prices due to a rise in natural gas prices, which in turn affects production costs. Furthermore, an increase in assigning NPK products for PSO resulted in the Company to prioritize demands by the food crop sector. This decision impacted NPK sales in the non-PSO sector.

In terms of market potential, Asia has the capacity and demand for urea, not to mention it being its largest importer. The urea export market in 2017 suffered a decline in demand from overseas consumers. The sales of export urea in 2017 were 756,215 tons or 56% of the target set in the Budget and Business Plan of 1,360,000 tons. The reduction in export orders was due to earmarking of fertilizer inventory in Quarter I for the subsidized market in preparation for the growing season. However, due to a decline in urea prices in Quarters II and III, we prioritized the non-PSO market for its higher selling prices. In

addition, the subpar sales achievements were as result of limited fertilizer inventory due to a reduction in urea production.

EMPLoYEE REWARdSIn 2017, the total economic value distributed to employees increased to Rp6,641,486 per employee, an 8% rise compared with 2016, due to merit and promotion increases.

CoNTRIBUTIoNS To THE GoVERNMENT INCoMEPupuk Indonesia contributed to the state income by paying taxes, consisting of Income Tax (from Pupuk Indonesia Group and its employees), Value-added Tax, and other taxes.

taxes payable by pupuk indonesia Group, 2014-2017 (in millions of Rupiah)

tax 2014 2015 2016 2017

Corporate Income Tax 348,569 234,387 231,179 221,783

employee income tax 691,910 733,901 707,094 615,339

Value-added Tax 1,029,566 1,771,583 2,008,167 2,620,589

Other Taxes 2,332,635 1,874,053 2,557,695 1,486,055

total 4,402,680 4,613,924 5,504,135 4,943,766

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In our areas of operations, we contribute to Regional Governments and the Central Government by paying our Regional Taxes and Central Taxes. In 2017, Pupuk Indonesia and its subsidiaries paid a total of Rp4.94 trillion in taxes, a 10% decline compared with Rp5.50 trillion paid in 2016.

Regional taxes and Central taxes paid, (in millions of Rupiah)

Regional business units Regional taxes Central taxes total taxes paid

PT Pupuk Indonesia (Persero) 8,376 69,621 77,997

PT Petrokimia Gresik 26,469 1,252,201 1,278,670

PT Pupuk Kujang 6,936 331,394 338,329

PT Pupuk Kalimantan Timur 80,673 1,707,776 1,788,449

PT Pupuk Iskandar Muda 3,105 303,621 306,726

PT Pupuk Sriwidjadja Palembang 27,144 767,227 794,371

PT Rekayasa Industri 1,342 234,515 235,857

PT Mega Eltra 275 42,008 42,282

PT Pupuk Indonesia Logistik 0 51,177 51,177

PT Pupuk Indonesia Energi 14,407 14,210 28,616

PT Pupuk Indonesia Pangan 0 1,290 1,290

total 168,726 4,775,039 4,943,766

In addition to taxes, Pupuk Indonesia Group contributed dividend payments to State Income. As a State-owned Enterprise, shares of PT Pupuk Indonesia (Persero) is wholly-owned by the Government of the Republic of Indonesia with a paid-up capital of Rp12.90 trillion and an authorized capital of Rp40 trillion. Thus, we pay dividends to the Ministry of State-owned Enterprises on behalf of the Government of Indonesia every year.

In 2017, Pupuk Indonesia Group paid Rp1.07 trillion in dividends to its shareholders in accordance with the Directorate General of Budgets of the Ministry of Finance Letter No. S-63/MK.2/2017 dated June 7, 2017 for its performance in the 2016 fiscal year. The profits are paid to the Government as dividends as resolved by the Annual General Meeting of Shareholders. The Government sets the sum of dividends by means of the Ministry of State-owned Enterprises as its Proxy in the General Meeting of Shareholders.

CoNTRIBUTIoNS To THE PUBLICWe believe that a good company contributes positively to its surroundings and they benefitted from the company’s operations. We demonstrate our intent by channeling funds for the public through social investments that we

hope can provide positive and far-reaching benefits for locals in our areas of operation. In 2017, the direct economic value distributed by Pupuk Indonesia Group for the public was Rp250.691 billion. The social investments consisted of Partnership Programs, Environmental Sustainability Programs, and CSR. Our flagship programs were aimed at developing coastal residents, maintaining urban forests, funding small businesses, and assisting youths through education funding and scholarship awards.

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Social investments by pupuk indonesia Group, 2014-2017 (in millions of Rupiah)

type of investments 2014 2015 2016 2017

Partnership Programs (PK) 119,474 111,955 133,570 128,968

Environmental Sustainability Programs (BL) 4,860 14,644 41,751 55,148

CSR - 44,288 96,304 66,575

total 124,334 170,887 271,625 250,691

INVESTMENTS IN INfRASTRUCTURE ANd SERVICES [GRI 203-1]

Pupuk Indonesia is focused on expanding benefits to all of its stakeholders. As such, economic contributions may be expanded to have an even greater reach by touching on the benefits of each business activity.

In 2017, Pupuk Indonesia Group has invested in development projects such as the Amurea II Project in Gresik and in the Gresik Gas Cogeneration Plant independent power producer (IPP Gresik/GGCP). In 2017, the total investments made in development projects were Rp3.29 trillion.

We have made certain that there are no projects that violated any one person’s human rights. Our commitment is backed by zero legal claims or complaints concerning human rights violations from employees.

CoNTRIBUTIoNS To LoCAL SUPPLIERSWe strive to benefit our supply chain through a series of programs designed to improve the quality of our distribution chain in terms of human rights, environment, labor, and public as outlined in our goods and services procurement policy.

We are committed to assist the development of local residents by preferring to partner with local suppliers in our value chain through auctions/tenders. Our commitment is outlined in the General Guidelines on the Procurement of Goods and Services in PT Pupuk Indonesia (Persero) Group No. PI-PD-ADA-002, Item 6.8 on the Utilization of Domestic Products. [GRI 204-1]

PRodUCTIoN USE IN CoUNTRY [GRI 204-1]

From a corporate perspective, local suppliers are defined as companies that are based in or carry out production in the country. On the other hand, subsidiaries define local suppliers as companies that are based in or carry out production in the local city/regency/province in which the subsidiary operates.

In 2017, Pupuk Indonesia Group procured 53.78% of its needs from local suppliers at a total value of Rp11 trillion. Maximum involvement of local suppliers is proof of our effort to stimulate popular economic growth for mutual wellbeing.

To improve the quality of our suppliers, we have a set of requirements when selecting the most suitable suppliers. These are based on criteria such as labor, public, and environmental aspects. For example, suppliers have to be and comply with Occupational Health, Safety, and Environment regulations set out by each of our subsidiary. In addition, prospective suppliers have to comply with each subsidiary’s guidance policies on local labor, regional wages, and ban on child labor, among others.

Fertilizers produced by Pupuk Indonesia Group are distributed to consumers through two supply chains:• Non-subsidized Fertilizer The transaction is stipulated in the Sales Contract

(SPJB) with buyers of non-subsidized fertilizer. The contract stipulates, among others, sales volume, selling price, mutual agreements, contract duration, mechanisms of payment, and product delivery/collection.

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• Subsidized Fertilizer Consumers of subsidized fertilizers are farmers who

are members of a farmers’ group. These are farmers who engage in food plant sub-sector, plantation sub-sector, and horticulture sub-sector as well as farmers in aquaculture sector.. We cooperate with appointed distributors and retailers to distribute fertilizers to farmers/farmer groups. Both distributors and retailers are responsible for purchase, storage, sales, and marketing of subsidized fertilizers. Both are bound by the fertilizer SPJB.

We have conducted a supplier satisfaction survey to improve the quality of service to suppliers and, at the same time, enhance sustainable development processes in our internal and external supply chains. The satisfaction survey, conducted in December 2017, produced 3 (three) assessment results: supplier satisfaction index of 1.51 (“satisfied”); supplier dissatisfaction index of 2.31 (“satisfied”); and supplier loyalty of 4.23 (“loyal”).

At the end of the reporting period, we are partnered with 1,542 distributors and 45,005 retailers. Since these businesses create employment opportunities, our business impacted the community’s economy indirectly. [GRI 203-2]

fINANCIAL ASSISTANCE fRoM THE GoVERNMENT [GRI 201-4]

According to the Road Map designed by the Ministry of Agriculture, domestic demand for urea is predicted to increase at an average of 6.3% annually. This projection gave us the opportunity to strengthen our market share. The fertilizer industry is predicted to enjoy excellent prospects in the future, partly in relation to the government-subsidized public service obligation (PSO) that we participate in. The PSO is a cost borne by the state for disparities in selling prices set by state-owned enterprises and private producers for certain goods/services that the Government wishes to remain affordable to the better part of the public.

The PSO is grounded in Article 66 paragraph 1 of Law No. 19 Year 2003 on State-owned Enterprises, in that the Government may designate SOEs to carry out public welfare functions that align with their purposes and objectives. If such designations are deemed to be financially infeasible, the Government must compensate the cost spent by the SOE plus a reasonable margin on that cost.

The current model for subsidized fertilizer is price subsidies, where farmers purchase fertilizers for less than commercial market prices.

Subsidized fertilizers for farmers must meet 6 (six) principles of “Right” (type, amount, price, place, time, and quality). Fertilizers that are subsidized are urea and non-urea fertilizer (NPK, zA, SP-36, and organic).

Legislation concerning subsidized fertilizer in 2017 is as follows:a. Law Number 8 Year 2017 on the Amendment to Law

Number 18 Year 2016 on the National Budget for the 2017 Fiscal Year (State Gazette of the Republic of Indonesia Year 2017 Number 186, Supplement to the State Gazette of the Republic of Indonesia Number 6111);

b Regulation of the Minister of Agriculture Number 69/Permentan/SR.310/12/2016 on the Allocation and Maximum Retail Price of Subsidized Fertilizer for the Agriculture Sector for the 2017 Fiscal Year in conjunction with Regulation of the Minister of Agriculture Number 04/Permentan/SR.310/3/2017 on the Amendment of the Regulation of the Minister of Agriculture Number Regulation of the Minister of Agriculture Number 69/Permentan/SR.310/12/2016 on the Allocation and Maximum Retail Price of Subsidized Fertilizer for the Agriculture Sector for the 2017 Fiscal Year and

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c. Decree of the Minister of Agriculture Number 17/KPTS/SR.310/B/11/2017 on Amendment to the Allocation of Subsidized Fertilizer for the Agriculture Sector for the 2017 Fiscal Year.

d. Supply Agreement between the Ministry of Agriculture cq. DG of Infrastructure and Agricultural Facility with PT Pupuk Indonesia (Persero) Number: 001/SR.320/B.5/01 2017 and 001/SP/DIR-C10/2017 which was amended with Addendum I Supply Agreement No. 03/MoU/SR.320/B/05/2017 and 051/SP/DIR-C10/2017 and subsequently reopened with Addendum II Supply Agreement with No.604/MoU/SR.320/B/12/2017 and 123/SP/DIR- C10/2017.

Revenue from Government Subsidies, 2013-2017 (in millions of Rupiah)

year total

2017 26,218,561

2016 24,412,054

2015 29,140,459

2014 19,281,402

2013 16,899,027

In the table above, our revenues and payments of subsidized fertilizer increase consistently at an average rate of 12% every year (CAGR 2013 – 2017). Some 73% of our Group’s total fertilizer sales volume is dedicated to meet demands from the PSO sector. In other words, profit from 73% of our sales volume is guaranteed by law. The remaining 27% of our sales volume is allocated for the non-PSO sector (commercial segment) where our margins are greater than 8%.

Distribution of subsidized fertilizer is carried out pursuant to the Regulation of the Ministry of Trade Number No.15/M-DAG/PER/4/2013. The technical mechanism to manage subsidized fertilizer is set out in the Circular of the President Director of PT Pupuk Indonesia (Persero) No. SE-07/IV/2013 and supply agreements between PT Pupuk Indonesia (Persero) and its subsidiaries on PSO management in subsidiaries. The regulation is the basis of managing subsidized fertilizer as goods whose procurement and distribution is controlled by the Government to meet demands from farmers and farmer groups.

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To ensure that urea fertilizers are distributed as intended without any irregularities, the Regulation of the Minister of Agriculture No. 69/Permentan/SR.310/12/2016 on Allocation and Maximum Retail Price of Subsidized Fertilizer for the Agriculture Sector for the 2017 Fiscal Year was passed to enforce a closed-loop distribution system for subsidized fertilizers. Farmers or farmer groups can only have access to subsidized fertilizer after submitting a Definitive Plans for Group Activities (RDKK), with assistance from field workers, to appointed kiosks..

CHALLENGES fRoM CLIMATE CHANGE ANd LoSS of LANd [GRI 201-2]

One of the challenges that we face is global climate change, a phenomenon that affects global and national food resilience. Climate change changes pattern and intensity of rain, raises temperatures of air and sea, and increases frequency and intensity of natural disasters. Especially in the agricultural sector, such changes cause the pattern and calendar of the growing season to change, not to mention the widespread of pests and plant diseases that reduce agricultural production.

In Indonesia, climate change causes no less than 50% of farmable land to suffer from later rainy seasons and advanced dry seasons, resulting in a shorter growing season. Furthermore, rising the temperature by 1°C is predicted to increase rainfall by 2-3% annually. Data from the Ministry of Agriculture’s Strategic Plan (RENSTRA) 2015-2019 showed that in the last 5 years, 29,743 hectares of farmland suffered from floods and 82,472 hectares from drought.

Climate change may affect our operations and financial position in the past few years, in that it shifted the growing season, which accordingly affects the timeliness of fertilizer demand from farmers and its distribution. Consequently, farmer demand for fertilizer shifted compared with previous years. We have to consider the fertilizer accumulation in inventory since timely distribution is not possible. For now, we have to construct additional warehouses to store excess inventory. To anticipate overstocking that could lead to overflow in retail warehouses, we have constructed concrete-walled warehouses that are able to withstand overstock.

Another challenge that could financially affect Pupuk Indonesia the loss of agricultural land. Some 100 thousand hectares of agricultural rate is converted each year. The Government’s production of 40 thousand hectares of new agricultural land per year could not keep up with the current conversion rate. The majority (80%) of agricultural land conversion took place in Java, the center of national food production. The conversion is bound to affect the issue food resilience, unless supported by the availability of productive land. On the other hand, as the largest consumer of fertilizer, farmers suffers the brunt of loss of agricultural land – reducing farming efficiency and affecting their wellbeing. In 2012, the arable land in hectares per person is 0.22 hectares. It is predicted that by 2050, the arable land per farmer decreases to 0.18 hectares.

We respond to loss of agricultural land by increasing productivity to achieve the goal of national food resilience. For our part, we strive to ensure supply of fertilizer and improve fertilizer technology.

We maintain the continuity of our operations by synergizing our group’s subsidiaries and other SOEs. These in-group synergies include matters in common procurement practices, common insurance policies, common management of materials, transport, and finance. For 2017, we have carried out 20 synergies worth Rp4.7 trillion.

As for synergies with other SOEs, we synergize in matters such as procurement, services, distribution, finance, construction, and others. The synergies are expected to give added value to Pupuk Indonesia and our stakeholders.

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CoRPoRATE SYNERGIES

SYNERGY 2017 20 SERVICE Rp4,7 TRILLION

Ammonia

Transportation

Others

Urea

NPK

Electricity and Electrical Integration

Coal

Plastic bagSteam and Water

NPK Raw MaterialOther fertilizer

40%

22%

10%

10%

5%

4%3%

2% 2% 1%1%

GROUP SYNERGY PI2017 Synergy Achievement(Percentage)

no Soe Synergies parties involved

1 Procurement of natural gas PI - Subsidiary of Pertamina

2 Procurement/sale of excess electricity PI – PLN

3 Cooperation in surveys PI - PT Sucofindo & PT Surveyor Indonesia

4 Professional certification in radiography PI – BATAN

5 Procurement of Virtual Private Network (VPN) PI – PT Telekomunikasi Indonesia Tbk.

6 Procurement of fertilizer transport PI – PT BGR

7 Lease of laptops and computers PI – PT Sinergi Informatika Semen Indonesia

8 Procurement of Urea and NPK Fertilizer packaging PI – PT Rajawali Citramass & PT Dasaplast Nusantara

9 Consulting Service for Construction Management of PI Tower

PI – PT Virama Karya (Persero)

10 Supply of Gypsum and ALF3 PI – SOE in concrete and aluminium production

11 Appointment of fertilizer distributors PI – PT PPI, PT BGR & PT Pertani

12 Procurement/supply of fertilizer PI – SOE specializing in plantations

13 Procurement of call center systems and farming digitalization trials

PI – PT Telkom

14 Trials of Kartu Tani PI – BRI, BNI, Mandiri, BTN

15 Appointment of Financing Distributors PI – BRI, BNI dan Mandiri

16 Storage and management of regional fertilizer inventory PI – PT BGR & PT Varuna Tirta Prakasya

17 Use of port and warehousing facilities PI – SOE in port management & its subsidiaries

18 Distribution of fertilizer PI – SOEs in rail and logistics

19 Financing of investments and working capital PI – BRI, BNI dan Mandiri

20 Underwriting for PT Sang Hyang Seri PI –BRI

21 Capital market financing to issue 2017 Bonds PI – Mandiri Sekuritas, Danareksa, Bahana Sekuritas, and BNI Sekuritas

22 Development of Kartu Tani PI – SOE Banks

23 Application of fertilizer for palm oil & cocoa PI –Riset Perkebunan Nusantara SOE

24 Research and development among fertilizer manufacturers PI –UGM, Unpad, and ITB Research Centers

25 Procurement of Internet connection PI – PT Telkom

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no Soe Synergies parties involved

26 Purchase of EPC materials PI – Krakatau Steel & Wika Beton

27 Purchase of electricity in Mamuju PI – PLN

28 Provision of transmission construction services PI – PLN

29 Lubricant agent PI – PT Pertamina Lubricant

30 Construction of PKG urea plant, jetty, and PSP urea bulk storage

PI – PT Adhi Karya

31 Construction of PIE power plant PI – PT PP

32 Construction of USB PKT PI – PT Krakatau Engineering

33 Construction of coal gasification project PI – PTBA

34 Management of Employee Health Insurance PI – BPJS Kesehatan

35 Management of JHT, Work Accidents, and Death programs PI – BPJS Ketenagakerjaan

36 Post-retirement programs for Directors and Commissioners PI – SOE in insurance

37 Bank at work (payroll, ID Card) PI – SOE Banks

38 Provision of pledged deposit as collateral PI – PT Sang Hyang Seri & BRI

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DeVelopinG Competent human

ReSouRCeS oF pupuK inDoneSia

It goes that well-cared employees lead to a well-cared company. Pupuk Indonesia is highly committed towards care and development of its employees alongside development of the company.

EMPLoYEE CoMPoSITIoNPupuk Indonesia strives to employ the ideal number of individuals, thus ensuring that every project is completed efficiently by competent individuals. We recognize employees who have dedicated their best to Pupuk Indonesia. Our commitment is to provide a conducive working environment to allow our employees conduct their duties in good spirits and grow together with the company.

Pupuk Indonesia’s most valuable asset is its employees. We strive to retain the best talents by offering competitive remuneration packages, listening to their aspirations, and providing avenues to develop their talents further. Pupuk Indonesia expresses its heartfelt thank you to our individuals for their hard work and utmost dedication.

• EmployeeComposition

• EmployeebyEmploymentStatus

• Recruitment

• EmployeebyAgeGroup

• PermanentEmployeesByEducationLevel

• FreedomtoUnionize

• SkillsDevelopment

• WorkplaceEquality,Diversity,andOpportunity

• EmployeeBenefit

• RetirementPreparations

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In 2017, Pupuk Indonesia employs a total of 10,179 people. In addition to permanent employees, Pupuk Indonesia employs 3,107 contract employees.

The number of permanent employee declined slightly compared with 2016, where we employed 10,439 people. The decline, caused mostly by retirement, was felt in Pupuk Indonesia’s subsidiaries, such as PT Pupuk Kalimantan Timur’s loss of 149 people, PT Pupuk Sriwidjaja Palembang’s 110 people, and PT Mega Eltra’s loss of 98 people.

Employee diversity in terms of gender, age, and education are expressed in the tables on the following pages.

Number of Employee by Employment Status, 2016-2017

ContractPermanent Employees

3,1073,01010,17910,439

2016 2017

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EMPLoYEE BY EMPLoYMENT STATUS [GRI 102-8]

The majority of our employees are full-time permanent employees with the Petrokimia Gresik employing the most at 3,226 people. Appointing employees to permanent status creates a retention effect as they can feel secure and enjoy benefits and facilities offered by the company.

Composition of Employees by Employment Status, 2016-2017

Company permanent Contract total

2016 2017 2016 2017 2016 2017

PT Pupuk Indonesia 186 219 30 30 216 249

PT Petrokimia Gresik 3,129 3226 637 635 3,001 3661

PT Pupuk Kujang 1,154 1135 168 164 2,318 1299

PT Pupuk Kalimantan Timur 2,150 2001 862 966 3,991 2967

PT Pupuk Iskandar Muda 656 627 403 403 1,557 1030

PT Pupuk Sriwidjaja Palembang 2,364 2254 649 649 1,305 2903

PT Rekayasa Industri 538 526 182 182 720 708

PT Mega Eltra 199 101 61 61 260 162

PT Pupuk Indonesia Logistik 24 26 9 8 33 34

PT Pupuk Indonesia Energi 24 49 5 5 29 54

PT Pupuk Indonesia Pangan 15 15 4 4 19 19

total 10,439 10,179 3,010 3,107 13,449 13,286

Permanent Employees 2013-2017

2013 2014 2015 2016 2017

10,17910,43911,098 10,73911,256

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Number of Permanent Employees, 2013-2017 [GRI 102-8]

Company 2014 2015 2016 2017

PT Pupuk Indonesia 89 104 186 219

PT Petrokimia Gresik 3,251 3,198 3,129 3,226

PT Pupuk Kujang 1,183 1,175 1,154 1,135

PT Pupuk Kalimantan Timur 2,447 2,375 2,150 2001

PT Pupuk Iskandar Muda 972 675 656 627

PT Pupuk Sriwidjaja Palembang 2,435 2,434 2,364 2254

PT Rekayasa Industri 526 546 538 526

PT Mega Eltra 195 192 199 101

PT Pupuk Indonesia Logistik - 22 24 26

PT Pupuk Indonesia Energi - 18 24 49

PT Pupuk Indonesia Pangan - - 15 15

total 11,098 10,739 10,439 10,179

Permanent Employees by Gender, 2016-2017

Company 2015 2016 2017

male Female total male Female total male Female total

PT Pupuk Indonesia 75 29 104 134 52 186 158 61 219

PT Petrokimia Gresik 3092 106 3198 3.025 104 3129 3119 107 3226

PT Pupuk Kujang 1074 101 1175 1.055 99 1154 1038 97 1135


2214 161 2375 2.004 146 2150 1865 136 2001


630 45 675 612 44 656 585 42 627

PT Pupuk Sriwidjaja Palembang

2210 224 2434 2.146 218 2364 2046 208 2254

PT Rekayasa Industri 382 164 546 376 162 538 368 158 526

PT Mega Eltra 149 43 192 154 45 199 78 23 101

PT Pupuk Indonesia Logistik

4 18 22 4 20 24 4 22 26

PT Pupuk Indonesia Energi

13 5 18 17 7 24 35 14 49

PT Pupuk Indonesia Pangan

0 0 0 10 5 15 10 5 15

RECRUITMENT [GRI 401-1]

We understand that recruiting the right person for the right position the key to our success. To fill vacancies and meet demand for fresh talent, Pupuk Indonesia recruited 246 people in 2017. The figure was less by 18% compared with 2017, where we recruited 291 people.

New Recruits in Pupuk Indonesia Group, 2017

location Jumlah Recruitment Grade

Head Office 32 Bachelor

Subsidiaries 214 Graduate, Diploma, and High School

total 246

Recruitment in Pupuk Indonesia Group 2014-2017

Description 2014 2015 2016 2017

Pension 681 849 527 626

Death 42 24 19 21

Violation 6 0 0 0

Resign 72 51 16 31

total 801 924 562 678

Turnover rate 7.22% 8.60% 5.23% 6.66%

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EMPLoYEE BY AGE GRoUP [GRI 405-1]

To build a cohesive dynamic in our performance, Pupuk Indonesia recruited employees from various backgrounds and age groups. We combine the experienced, seasoned employees with youthful, young employees in accordance with their competence and skills. In 2017, a total of 7,001 employees, or 69%, is in the productive age group (under 50 years old). The number of employees in the above 50 age group in 2017 decreased compared with the previous year, mainly due to retirement. Indeed, the regeneration is warmly welcomed as it paved the way for new leaders and enabled the transfer of technology and skills to the younger age group.

Employees by Age Group, 2016-2017

CompanyGrade i Grade ii Grade iii Grade iV Grade V-Vii total

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

PT Pupuk Indonesia 28 33 47 55 22 26 41 48 48 57 186 219

PT Petrokimia Gresik 30 32 77 65 205 226 792 806 2,025 2,097 3,129 3,226

PT Pupuk Kujang 17 11 54 57 147 148 303 295 633 624 1154 1135


39 40 120 120 285 260 646 600 1,060 980 2,150 2,001


13 13 30 31 67 63 275 263 271 257 656 627


24 23 95 90 210 203 583 564 1,452 1,375 2,364 2,254

PT Rekayasa Industri 13 11 32 32 22 21 162 158 309 304 538 526

PT Mega Eltra 7 4 33 17 17 9 46 23 96 48 199 101


0 0 7 8 5 5 8 9 4 4 24 26


2 4 5 10 3 6 6 12 8 17 24 49


4 4 1 1 3 3 6 6 1 1 15 15

Jumlah 177 175 501 486 986 970 2,868 2,785 5,907 5,764 10,439 10,179

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Permanent Employees by Age Group 2016 - 2017

0

500

>50 >45-50 >40-45 >35-40 >30-35 >25-30 s/d 25

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2016 2017

PERMANENT EMPLoYEES BY EdUCATIoN LEVEL [GRI 405-1]

Pupuk Indonesia employs various experts in its ranks to support its growth. We employ 434 individuals holding master’s (S2) and doctorate (S3) degrees. Nonetheless, we are also readily welcoming to employees at other education levels who are keen to contribute to the company.

Permanent Employees by Education Level 2016-2017

Company

Graduate/postgraduate bachelor Diploma high School total

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

PT Pupuk Indonesia 54 57 119 148 10 11 3 3 186 219

PT Petrokimia Gresik 87 91 541 574 69 122 2,432 2,439 3,129 3,226

PT Pupuk Kujang 25 18 286 279 130 129 713 709 1,154 1,135

PT Pupuk Kalimantan Timur 76 75 424 419 208 209 1,442 1298 2,150 2,001

PT Pupuk Iskandar Muda 23 21 169 163 112 111 352 332 656 627

PT Pupuk Sriwidjaja Palembang 87 95 700 724 380 345 1,197 1,090 2,364 2254

PT Rekayasa Industri 56 55 413 403 69 68 0 0 538 528

PT Mega Eltra 10 9 101 71 19 9 69 12 199 101

PT Pupuk Indonesia Logistik 3 2 18 21 2 2 1 1 24 26

PT Pupuk Indonesia Energi 8 9 14 23 1 3 1 14 24 49

PT Pupuk Indonesia Pangan 2 2 12 12 0 0 1 1 15 15

total 431 434 2,797 2,837 1,000 1,009 6,211 5899 10,439 10,179

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Employees by Education Level, 2016-2017

SLTA D3 S1 S2/S3

2016 2017

3,211 100 2,797 4312,899 109 2,837 434

Employee Composition by Grade, 2016-2017

Company Grade i Grade ii Grade iii Grade iV Grade V-Vii total

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

PT Pupuk Indonesia 28 33 47 55 22 26 41 48 48 57 186 219

PT Petrokimia Gresik 30 32 77 65 205 226 792 807 2,025 2,098 3,129 3,227

PT Pupuk Kujang 17 11 54 57 147 148 303 295 633 625 1154 1136


39 40 120 120 285 260 646 600 1,060 981 2,150 2,002


13 13 30 31 67 63 275 263 271 258 656 628


24 23 95 90 210 203 583 564 1,452 1376 2,364 2,255

PT Rekayasa Industri 13 11 32 32 22 21 162 158 309 300 538 521

PT Mega Eltra 7 4 33 17 17 9 46 23 96 48 199 102


0 0 7 8 5 5 8 9 4 4 24 26


2 4 5 10 3 6 6 12 8 16 24 49


4 4 1 1 3 3 6 6 1 1 15 15

total 177 174 501 485 986 970 2,868 2785 5,907 5,765 10,439 10179

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2016 2017

Employee Composition by Grade, 2016-2017

Grade I

149 480 1,140 2,490 6,480177 501 986 2,868 5,907

Grade II Grade III Grade IV Grade V

fREEdoM To UNIoNIZEOne of the ways we foster work satisfaction is by building excellent and open communication channels for employees to voice their aspirations. To that end, Pupuk Indonesia established the Federation of Pupuk Indonesia Workers’ Union to allow our employees to have their voices heard.

SKILLS dEVELoPMENT [GRI 404-1, GRI 404-2]

The most important asset for a company is not technology, equipment, or information, but the very individuals who wield that technology, operate that equipment, and process that information. As such, Pupuk Indonesia are always improving the skills and competence of our employees and encouraging them to take part in trainings held continuously throughout 2017. To develop this competence-based human capital, Pupuk Indonesia and its subsidiaries have held trainings and courses for every level of employees. In 2017, the total mandays training was 227,368 work days. The following table is overall training days held in Pupuk Indonesia’s subsidiaries.

Achievements of Training Mandays

mandays target 2017 Realization up to December 2017 percentage from target

PT Pupuk Indonesia (Persero) 2,590 4,240 163.71%

(Persero) & Subsidiaries 233,871 233,128 95.41%

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mandays trainingsCompany 2017 target Realization up to December 2017 percentage from target

PT Pupuk Indonesia 2,590 4,240 163.71%

PT Petrokimia Gresik 155,412 144,511 92.99%

PT Pupuk Kujang 9,389 10,769 114.70%

PT Pupuk Kalimantan Timur 40,150 40,373 100.56%

PT Pupuk Iskandar Muda 9,632 10,492 108.93%

PT Pupuk Sriwidjaja Palembang 12,951 10,151 78.38%

PT Rekayasa Industri 5,180 4,917 94.92%

PT Mega Eltra 830 435 52.41%

PT Pupuk Indonesia Logistik 159 209 131.45%

PT Pupuk Indonesia Energi 84 1,209 1438.10%

PT Pupuk Indonesia Pangan 84 63 75.00%

total 236,461 227,368 96.15%

in-houSe tRaininG. In-house trainings are highly beneficial as it tackles everyday challenges and issues. Participants can interact and share specific information regarding their duties. Topics that have been discussed during in-house trainings were, among others: Energy Planning Training, KPKU Assessor Training, SNI ISO31000:2011 Training & Certification, Process Safety Management Training, Anti-fraud Training, Leadership Development Program, Training Of Trainers, Turnaround Master Class Workshop, Problem Solving & Decision Making, and PKBL Accounting Guideline Training.

CeRtiFiCationS. Pupuk Indonesia is committed to ensure that its employees have professionally-recognized skills. To that end, we have held certification trainings, especially for employees who work with urea, ammonia, utility, and maintenance. Furthermore, the certifications are aimed to foster a culture of occupational health and safety. Our commitment is reflected through establishment of the Professional Certification Institute (LSP) under Pupuk Indonesia’s umbrella.

outplant tRaininG. We often send our employees and management to participate in external trainings in specialist areas such as gasification, leadership, marketing, fertilizer, research, ISO 31000:2011 Certification, law, SAP, and human resources. The external trainings enable our individuals to observe current trends and updates, in addition to building professional, collegial networks.

CoaChinG anD CounSellinG. Coaching and counselling are effective strategies to improve productivity by analyzing the challenges faced by our employees and offering on-point solutions for their problems. The two-pronged strategy was proven effective in improving employee morale and motivation.

SoFt SKillS tRaininG. Soft skills are skills that relate to how a person carries herself towards others, such as social and communication, character, optimism, and initiative. The skills are indeed important, but often overlooked by employers. Recognizing its importance, Pupuk Indonesia held training sessions to develop such skills through sessions such as Leadership Development Program, Leader as Coach, Problem Solving, and Communication Skills.

leaRninG aSSiGnment. As part of our looking-forward vision and the desire to improve the quality and professionalism of our employees, Pupuk Indonesia offers its employees temporary leave to study either domestic or abroad. Learning assignments is offered for disciplines in oil & gas management, marketing, soil science, chemical engineering, business administration, instrumentation, and agriculture. In 2017, a total of 33 employees went on study leave; 24 of whom studied in Indonesia and 11 abroad. The following table is a breakdown of learning assignments in Pupuk Indonesia:

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Number of Recipient Task force Workers 2017

Companylearning assignment

totaldomestic overseas

PT Pupuk Indonesia 5 1 6

PT Petrokimia Gresik 1 3 4

PT Pupuk Kujang 9 2 11

PT Pupuk Kalimantan Timur 4 2 6

PT Pupuk Iskandar Muda 0 0 0

PT Pupuk Sriwidjaja Palembang 4 1 5

PT Rekayasa Industri 1 0 1

total 24 9 33

In 2017, Pupuk Indonesia has invested a total of Rp101,226,899,126 in the studies and trainings of its employees. The figure was a 13.9% increase compared with Rp88,849,125,023 invested in 2016.

Human Resources development Costs 2014-2017 (in million rupiah)

Description 2014 2015 2016 2017

Realization of Employee Development 42.77 85.40 88.80 101.23

Pupuk Indoonesia do a performance management on all employees of Pupuk Indonesia and its subsidiaries using Performance Management System (SMK) which is objective and comprehensive. The results of this assessment are discussed with the workers as a further basis for personal development and employee career improvement. The results of this assessment are also used to determine the advanced training required by the employee, in addition to determining the rotation, transfer or promotion (RMP). Each Pupuk Indonesia worker is assessed by: [GRI 404-3]

a. Soft Competency Assessment 360o. Each worker is judged by their boss, two co-workers, and self-assessment. The results of this assessment are discussed with the boss, as feedback that is beneficial to the employee.

b. Performance assessment using KPI (Key Performance Indicator), ie targets that have been established and agreed by employees within a period of one year. Further assessments are made within three years, as a follow-up evaluation for employees to obtain promotion or position movement.

WoRKPLACE EQUALITY, dIVERSITY, ANd oPPoRTUNITY [GRI 405-1]

Pupuk Indonesia is committed to provide equal opportunities for qualified applicants without regard for sex, ethnicity, religion, and race. Diversity offers a unique sense of strength which Pupuk Indonesia protects closely. The non-discrimination policy is enforced in every aspect, such as is in matters of salaries and remuneration. Pupuk Indonesia does not discriminate basic salaries and allowances offered to its male and female employees. We calculate an employee’s basic salary and remuneration against her performance and position. Thus, the ratio of basic wages and remuneration for our female and male employees is 1:1. [GRI 405-2]

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The non-discrimination policy is enforced at every step of employment, from initial recruitment to training, remuneration, and promotion. We offer equal opportunities to male and female employees to grow with and contribute to the company. Nonetheless, due to the inherent nature of the manufacturing sector, male employees outnumber female employees.

In terms of employment opportunity, Pupuk Indonesia extends its welcome to employees working in our subsidiaries. We show our token of appreciation for locals by offering higher salaries than the statutory minimum, wherever we operate. [GRI 202-1]

We promote religious diversity by facilitating our employees to observe their religious beliefs. At various Pupuk Indonesia sites, we have prepared facilities for worship and celebrate religious festivities as a team.

In 2017, there has been no incidents or complaints of discrimination against Pupuk Indonesia. [GRI 406-1]

Employee Profile by Gender in Pupuk Indonesia Group 2014-2017

Description 2014 2015 2016 2017

Female 879 867 902 916

Male 10,219 9,872 9,537 9,263

total 11,098 10,739 10,439 10,179

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EMPLoYEE BENEfIT [GRI 401-2]

Pupuk Indonesia shows concern for its employees’ well-being by offering a competitive benefit package. Good remuneration and benefit packages have been proven to attract potential high-talents and retain employees with proven track-records. Pupuk Indonesia fringe benefits are prepared not only with due consideration to our employees, but also to their families. The well-being program is founded on the principles of fairness, appropriateness, and compliance to prevailing legislation, in particular Law No. 13 Year 2013 on Employment.

We offer the following in our well-being program: • Pupuk Indonesia’s basic salary is highly competitive.

The minimum salaries provided by Pupuk Indonesia’s subsidiaries exceed the statutory minimum pay set by regional governments.

• Position allowances are provided for employees who undertake certain duties or responsibilities in accordance with their functional or structural positions.

• Working facilities allowance are facilities provided to enhance an employee’s work, such as uniforms, shoes, computers

• Religious Holiday Allowance (THR) is provided to assist employees celebrate religious holidays.

• Leave allowance is given to employees who have worked at least 1 (one) year in the company.

• Long-service Leave is provided to employees who have worked for a certain period at the company.

• BPJS Ketenagakerjaan is protection provided to employees, consisting of Occupational Injury Insurance (JKK), Old-age Savings (JHT), Life Insurance (JKM), and Pension Funds (JP).

• Bereavement assistance is provided to employees and their employees in case of accidents.

• Pension fund program is prepared by the company for employees nearing retirement age. This program is described further in the “Retirement Preparations” section below.

Benefit Packages by Employment Status [GRI 401-2]

benefits Form permanent employee Contract Worker

Basic Salary √ √

Position Allowance √ -

Working Facilities Allowance √ √

Holiday Allowance √ √

Health Program √ √

Leave Allowance √ √

Long Leave Allowance √ -

* For contract workers who work more than one year. All permanent employees and contracts are covered by health care.

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Pupuk Indonesia does not discriminate benefits that it offers to permanent and non-permanent employees. Both receive remuneration, wages, and allowances in accordance with their position and competence.

For expecting mothers, Pupuk Indonesia offers maternity leave for both childbirth and miscarriage, in accordance with the provisions of Law No 13 Year 2013, Corporate Policy, and Collective Bargaining Agreement. Pupuk Indonesia also offers a three month maternity leave for childbirth whereas miscarriages are offered the right to paid leave for 45 calendar days.

RETIREMENT PREPARATIoNS [GRI 404-2]

As a token of gratitude for the contributions of employees nearing retirement, Pupuk Indonesia has prepared a comprehensive retirement package. Furthermore, Pupuk Indonesia provides a competitive retirement allowance in the hopes that retirees can enjoy their later years in comfort following their productive years with Pupuk Indonesia. The retirement package consists of a pre-retirement mental preparation training and a financial package.

Pupuk Indonesia policy mandates a retirement age of 56 years old. Prior to retirement, Pupuk Indonesia holds a pre-retirement seminar for our employees and their spouses. The seminar discusses issues that are faced by retirees, such as:• Mental preparation prior to retirement• Financial management after retirement• Entrepreneurship training • Life views and challenges after retirementThe seminars are led by experts in their respective fields. Thus far, participants of the retirement preparation program have expressed positive feedback.Pupuk Indonesia prepares the following financial package for its retiring employees:• Defined-contribution Pension Program (PPIP), a

retirement savings contributed and the remainder contributed by the company.

• BPJS Ketenagakerjaan’s program consisting of Old Age Guarantee and Pension Guarantee.

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DeVelopinG Community WelFaRe

“People, planet, profit” are our focus as a company which accepts and bears its responsibility. Not only directed to gaining profits, Puuk Indonesia has also formulated strategic policies to increase the welfare of marginal communities. We believe that if the Company does not take these issues seriously, it will not survice in the long run. That is why we orient well-designed programs in the fields of social and community affairs.

Pupuk Indonesia’s social responsibility policies and programs are mainly stipulated in the Code of Conduct on Society and Environment. The Company also refers to Minister of State-Owned Enterprises (SOE) Regulation No. PER-09/MBU/07/2015 dated 3 July 2015 on the Partnership and Community Development Program of SOEs, and its amendments No. PER-03/MBU/12/2016 dated 16 December 2016 and PER-02/MBU/7/2017 dated 5 July 2017. Meanwhile, the application procedures are to be

Community welfare and environment conservation are two fields of concern for Pupuk Indonesia. This is because we aware that this company grows in parallel with the growth and support of the community as well as a well-preserved environment. We commit to the development of Pupuk Indonesia as a company that cares about and prioritizes sustainability principles while remaining profit oriented.

decided by each Pupuk Indonesia subsidiary, bearing in mind that community conditions and needs are different from one location to another.

Pupuk Indonesia CSR is aiming to meet four strategic goals as follows:1. nature-related. Pupuk Indonesia strives to conduct

greening and environmental conservation activities.2. Welfare-related. Pupuk Indonesia strives to conduct

activities that can improve both internal and external welfare.

3. Community-related. Pupuk Indonesia strives to engage in activities that have impacts that improve the community surrounding its operation locations.

4. economy-related. Pupuk Indonesia always strives to generate profits to support the state economy

• SocialResponsibilityProgramofPupukIndonesia

• PartnershipProgram

• CommunityDevelopmentProgram

• TestimonyofPupukIndonesiaBeneficiaries

• Awards

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SoCIAL RESPoNSIBILITY PRoGRAM of PUPUK INdoNESIA [GRI 413-1]

We aware that the communities surrounding the Company’s operational areas are not an external party, but rather a part of a our large family that have also played a role in Pupuk Indonesia’s operational success. For that reason, we seriously dedicate our attention to our social responsibility programs.

The objective of Pupuk Indonesia’s corporate social responsibility (CSR) program is to improve the surrounding communities’ welfare, either through providing employment or developing the local economy. It is expected that through this approach, the surrounding communities will receive positive impact from Pupuk Indonesia’s business activities.

To demonstrate its commitment social responsibility, Pupuk Indonesia established a Partnership and Community Development Program (PKBL) Division, assigned to execute, supervise and evaluate PKBL and CSR program application. Pupuk Indonesia’s entities also have their respective special unit for effective application of PKBL and CSR, as detailed below:1. CSR Unit of PT Petrokimia Gresik (Gresik, East Java)2. PKBL Unit of PT Pupuk Sriwidjaja Palembang

(Palembang, South Sumatera)3. PKBL Unit of PT Pupuk Kujang (Kujang Cikampek,

West Java)4. PKBL Unit of PT Pupuk Iskandar Muda (Lhokseumawe,

North Aceh, Aceh)5. CSR Unit of PT Pupuk Kalimantan Timur (Bontang,

East Kalimantan)6. PKBL & Comdev Unit of PT Rekayasa Industri (East

Kalibata, South Jakarta).

Pupuk Indonesia Group PKBL fund distribution 2014-2017 (in million rupiah)

Company 2014 2015 2016 2017

PT Pupuk Sriwijaya Palembang 6,867 12,962 44,307 38,542

PT Petrokimia Gresik 65,478 67,275 64,206 74,635

PT Pupuk Kujang 31,022 31,667 31,645 29,698

PT Pupuk Kalimantan Timur 29,661 20,074 21,873 32,826

PT Pupuk Iskandar Muda 3,766 1,597 925 1,569

PT Rekayasa Industri 7,563 5,141 5,319 5,590

The objective of Pupuk Indonesia’s social responsibility program is to improve the welfare of surrounding communities, both through employment and local economic development.

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Pupuk Indonesia PKBL funds realized in 2017 amounted to Rp182.86 billion, up 9% from that in 2017 of Rp167.97million. A large portion of PKBL funds were allocated for Partnership Programs, amounting to Rp128.57 million, aimed at increasing the well-being of the community through employment and revenue increases. The remaining Rp54.29 million was realized to finance community development programs.

Pupuk Indonesia Group PKBL fund distribution 2013-2017(in million Rupiah)

2014 2015 2016 2017

PKBL 144.36 138.75 167.97 182.86

PKBL funding by Entity(in million Rupiah)

2014 2015 2016 2017

Partnership Program 114,204 107,182 133,274 128,568

Community Development 30,153 31,563 34,700 54,293

total 144,357 138,745 167,974 182,861

Social Performance(in billion Rupiah)

2015 2016 2017

Partnership and Community Development Program Financing

138.75 167.97 182.86

CSR Financing Realization 30.93 96.30 66.58

Customer Satisfaction Index 2016

Customer Satisfaction Index 2016 (commerce)

4.24 4.19 4.43

Social Investment fund distribution of Pupuk Indonesia Group 2014-2017(in million Rupiah)

investment activity type 2014 2015 2016 2017

Partnership Program (PK) 114,204 107,182 133,274 128,568

Community Development (BL) Program

30,153 31,563 34,700 54,293

CSR Program - 30,930 96,304 66,575

total 144,357 169,675 264,278 249,436

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PARTNERSHIP PRoGRAMOne objective of the partnership programs is to develop small-scalled entrepreneurs in expanding employment and business opportunities, building and encouraging entrepreneurs in various sectors. The strategies and partnership programs of Pupuk Indonesia include:1. Developing Micro-, Small- and Medium-Scalled

Enterprises to become independent and solid businesses.

2. Providing soft loans to create employment opportunity and social independence.

3. Providing skills training to locals so that they can earn more revenue and consequently improve their livelihoods.

The loans are channeled to partners in the partnership programs as it is deemed that they can not access bank-sourced capital, as under the un-bankable status. These loans had a very low interest rate, i.e. 6% flat per year. However, since the government regulation number PER-02/MBU/7/2017 has been put into effect on July 5, 2017 the interest became 3% per year of the initial loan balance for partners with new loans. Furthermore, Pupuk Indonesia provides capacity building programs free of charge in the forms of training, promotion of business output and provision of tools or equipment for business start ups.

The partnership program loan funds are sourced from loan repayment funds which are recycled back into use. In 2017, the partnership program funds disbursed amounted to Rp 128,568 million, comprising small-scaled business loans amounting to Rp122,000 million and partnership development funds of Rp6,562 million.

Partnership Program funding distribution 2017(in million Rupiah)

Small-scaled business loans 122,005

Partnership development funds 6,562

total 128,568

There are 1,422 development partners throughout the operation locations of subsidiaries, where the agriculture sector accounts for the largest loan disbursement area.

Partnership funds distribution of Pupuk Indonesia Sector-Wise(in million Rupiah)

no Company Development partner loan amount

1 Industry 63 3,393

2 Trading 442 20,208

3 Agriculture 477 64,662

4 Plantation 75 2,804

5 Fishery 29 2,579

6 Farming 134 17,609

7 Services 202 10,751

total 1,422 122,005

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Total of Pupuk Indonesia Group development Partners Sector-Wise

no Company 2015 2016 2017

1 Industry 98 109 63

2 Trade 410 395 442

3 Agriculture 485 594 477

4 Plantation 26 42 75

5 Fishery 31 56 29

6 Farming 180 268 134

7 Service 148 248 202

total 1,379 1,712 1,422

Total of Pupuk Indonesia Group development Partners

no Company 2015 2016 2017

1 PT Petrokimia Gresik 635 544 529

2 PT Pupuk Kujang 164 152 144

3 PT Pupuk Kalimantan Timur 352 369 331

4 PT Pupuk Iskandar Muda 23 28 25

5PT Pupuk Sriwidjaja Palembang 128 547 335

6 PT Rekayasa Industri 77 72 58

total 1,379 1,712 1,422

As of the commencement of development partnership program in each entity, by year end 2017 total development partners over the years number 58,197, distributed in subsidiary operational locations with details as follows:

Accumulated Number of Pupuk Indonesia Group’s development Partners as of 2017

no Company s.d. 2016 2017 total s.d. 2017

1 PT Petrokimia Gresik 7,335 529 7,864

2 PT Pupuk Kujang 4,537 144 4,681

3 PT Pupuk Kalimantan Timur 27,639 331 27,700

4 PT Pupuk Iskandar Muda 4,128 25 4,153

5PT Pupuk Sriwidjaja Palembang 11,476 335 11,811

6 PT Rekayasa Industri 1,930 58 1,988

total 56,775 1,422 58,197

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education quality for the surrounding communities. This is based on the view that education is one of the essential issues in the improvement of the community welfare. That is why from 2007 to 2016, Pupuk Kalimantan Timur conducted the PKTPP scholarship program addressed to the communities in East Kalimantan.

The beneficiaries of this program are basically senior high school students of Bontang and East Kalimantan with good academic records, yet not able to afford the tuition. The scholarships fully cover the enrollment fee of university up to graduation; this is aimed so that the students can obtain undergraduate degrees and eventually, find a job to improve the family’s livelihood.

The objectives of PKTPP implementation are:1. Improving human resources quality of young people

in East Kalimantan, particularly Bontang (education sector)

2. Providing opportunity for students with good academic records to be able to continue their education to university.

CoMMUNITY dEVELoPMENT PRoGRAMThe Community Development Program embodies the Company’s social responsibility of improving the social condition of communities living in Pupuk Indonesia Group’s surrounding areas. Funds distributed include grants in eight sectors as follows:

1. Assistance for natural disaster victims;2. Education and training assistance;3. Health improvement assistance;4. Assistance for infrastructure and public facilities

development5. Religious facility assistance;6. Environmental conservation assistance;7. Social assistance in the form of poverty eradication;

Community development funding distribution in 2017 amounted to Rp54,293 million, of which the largest portion was allocated to education and training as well as poverty eradication.

Community development fund distribution 2016-2017(in million Rupiah)

no usage of funds 2016 2017 percentage

1 Natural Disaster Victims 2,329 0.533 (77%)

2 Education/Training 9,611 11,210 17%

3 Health Improvement 2,678 3,773 41%

4 Infrastructure/Public Facilities 5,122 9,994 95%

5 Religious Facilities 5,810 7,789 34%

6 Environmental Conservation 1,220 0,925 (24%)

7 Poverty Eradication 4,106 20,069 389%

8 Partnership Development 3,823 - 0%

total 34,700 54,293 56%

SOCIAL COMMUNITY RESPONSIBILITY PROGRAM

In 2017, PI Group conducted a number of activities related to economic and social community empowerment in accordance with the CSR program pillars of PI Group, including:

pupuk Kalimantan timur peduli pendidikan program

Pupuk Kaltim Peduli Pendidikan (PKTPP) is a manifestation of the Company’s concern with improving

3. Fostering moral ties between Pupuk Kaltim and the communities surrounding the Company’s operational areas.

4. As a concrete approach of Pupuk Kaltim’s support, to create positive image in the eyes of the communities.

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Total Scholarship Program Assistance of PKTPP

no total Students university total assistance

1 14 Universitas Gadjah Mada Rp85,525,148

2 1 Institut Teknologi Bandung Rp14,602,768

3 4 Institut Pertanian Bogor Rp83,570,291

4 8 Institut Teknologi Sepuluh Nopember Rp105,058,126

5 14 Universitas Airlangga Rp165,049,044

6 4 Universitas Padjajaran Rp78,502,777

7 4 STEI Tazkia Bogor Rp80,745,000

8 3 Institut Teknologi Kalimantan Rp26,510,000

9 1 Universitas Mulawarman Rp8,000,000

total Rp647,563,154

petro Scholarship (bestro)

Since 2012, Petrokimia Gresik has played an active role in distributing scholarships for senior high school and undergraduate students. The scholarships are given to the local people of Gresik and have assisted minimum 200 promising students who resided in the Ring 1 area to pursue their education at higher levels.

In the first year of the Bestro program, the Company provided full coverage scholarships to graduated senior high school students to continue education to the tertiary level. The financing covers fees of public university selection (SNMPTN), registration fee, education contribution fee, pocket money, accomodation cost, tuition, school operational costs and cost to return to home.

The scholarship is provided in stages every year. The cost is directly transferred to Bestro recipient’s bank accounts, with clear details. The Company has set clear criteria for reference of the selection team in reviewing documents. The selected scholarship recipients are those deemed having above-average academic achievement and having the targeted economic condition.1. Full Cover Undergraduate (S1) Scholarship The undergraduate scholarship distribution

amounting to Rp1.92 billion is detailed as follows: - Cost for 29 students selected in 2014 totaled

Rp816.3 million- Cost for 29 students selected in 2015 totaled

Rp758.3 million

- Cost for 8 students selected in 2016 totaled Rp191 million

- Cost and university enrollment fee of 12 students selected in 2017 totaled Rp161.7 million [ed. Living cost is only food and apartment money. The title is “Full Scholarship”. This needs addressing.]

2. Full Cover Senior High School (SMA) ScholarshipThe senior high school scholarship distribution amounting to Rp 1.08 billion is detailed as follows:- Cost for 47 students selected in 2014 amounting

to Rp211.5 million.- Cost for 50 students selected in 2015 amounting

to Rp487.5 million.- Cost for 25 students selected in 2016 amounting

to Rp225 million.- Cost for 25 students selected in 2017 amounting to

Rp162.5 million.

Kampung Sehat (“healthy Kampong”) petrokimia Gresik

“Kampung Sehat” is one of the regular programs that demonstrate the Company’s concern for the surrounding communities. In the provision of health assistance, PT Petrokimia Gresik cooperates with Petrokimia Gresik Hospital. Free medicines are provided monthly to the residents of eight villages in Ring 1 are the Company,

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namely Ngipik, Sukorame, Karangturi, Karangpoh, Tlogopojok, Kroman, Lumpur, Roomo, Trate, Kebungson and Sukomulyo, as well as for nine villages in Ring 2..

The Kampung Sehat 2017 activity distributed Rp679 million for health assistance for communities in the Ring 1 area.

their limitations. In addition to salary to participants in the productive phase, it is expected that business activities in Inkubator Bisnis Permata Bunda will be able to become additional financing sources for the operational of the Permata Bunda SLB (Special School), the majority students of which are qualified as coming from “pre-prosperous families”.

malahing Village program

A village situated over-looking the sea nearby Bontang City did not have any special attraction; now it possesses a unique charm that leads to a better hope. Malahing village is home to 52 families, whose livelihood had been far from the government’s or the Company concern. In those days, the children had difficulties to access surrounding schools as the facilities and infrastructure were insufficient, and the locals’ knowledge and work skills were limited.

PT Pupuk Kaltim (PKT) came in with its Partnership Program and Environmental Development (PKBL) Division and is striving to bring changes to Malahing Village, to become a place where the locals would have a better social and economic life.

Patient Visit datamonth number of Villages number of patients

January 201717 11 807

Feb 2017 11 745

March 2017 11 828

April 2017 11 732

May 2017 11 695

June 2017 11 846

July 2017 13 871

August 2017 11 683

September 2017 11 690

October 2017 11 783

November 2017 11 650

Decembe 2017 11 836

number of patients 9,166

inkubator bisnis permata bunda

Inkubator Bisnis Permata Bunda (Women’s Business Incubator Program) facilitates children with special needs to prepare them for independent life in the future. The program implemented under Inkubator Bisnis Permata Bunda is based on Sustainable Entrepreneurship Program for Those with Disabilities, namely continuous training of entrepreneurship skills. Inkubator Bisnis Permata Bunda does not only enable children with special needs to earn livelihoods by working, it also, with an integrated approach, empowers them to be able to maximize their potentials to be able to be creative by doing entrepreneurship. The goals of Inkubator Bisnis Permata Bunda program are that these children become independent and to make the children more acceptable in community’s social life. These are realized through a productivity and creativity-based approach, so that the communities no longer see children with special needs remaining in a marginal position, or focusing only on

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From 2014 until present, PT Pupuk Kaltim, coordinated with the local government and has been actively involved the community to understand the challenges and needs they face.

A variety of infrastructure development assistance projects were delivered by Pupuk Kalimantan Timur. Starting from assistance for SD (primary school) YPPI Malahing building renovation, school equipment, drying of seaweed, village gateway, garbage drum and seedling provision, floating deck, and public toilet, to name just a few.

Activities of community empowerment such as training for capacity building have been organized. These include training in seaweed cultivation, repair of vessel machinery, culinary skills to process and package seaweed, sewing, entrepreneurship, online-based marketing and training for obtaining a household food industry certificate number. Out of these programs, the locals stopped seeing their life individually, but rather as communal living.

In 2017, the Better Living in Malahing program achieved the first place in national-level CSR Awards category of social initiative organized by CSR Indonesia Magazine and Meprindo Communications. Better Living in Malahing is also one of the programs that brought PT Pupuk Kaltim to achieve “Proper Emas” awards in the Proper Awards Conferring 2017 by the Ministry of Forestry and the Environment.

Kampung hortikultura of pusri palembang

“Kampung Hortikultura”, or Holticultural Village, covers two sub-districts, nine local districts and 26 neighborhood associations, with 377 beneficiaries, leading to the formation of five farming groups comprising 208 people. This program contributes to food security as the locals can produce their own food and even sell it to other communities.

Fresh vegetables and fruits produced in Kampung Hortikultura have twice the vitamin and micro-nutrition compared to the products sold at supermarkets at the same prices. The food resulted from Kampung Hortikultura Kebumen Palembang is also proven safer, compared to industrial agriculture products, which undergo long travel to reach the market in the cities.

Apart from that, Kampung Hortikultura Kebumen Palembang, located at the heart of Palembang City, preserves the natural resources and contributes to a healthy environment. Activities in Kampung Hortikultura Kebumen Palembangmay are regarded as a form of Urban Farming that balances the availability of healthy food. Besides, the activities have helped the Palembang habitants’ economy, with the 3E-based concept: ecology, education and economy.

bumn hadir untuk negeri

For the “SOE Success For the Country” 2017 program in Jakarta Province, PT Pupuk Indonesia was trusted to hold the position as Chief State-owned enterprise (PIC); the four Co-PICs are PT Jakarta Industrial Estate Pulogadung, PT Kawasan Berikat Nusantara (Persero), PT Perusahaan Pengelola Aset (Persero) and PT Sarinah (Persero). The funds realized totaled Rp4,766 million, with implementation in four activities as follows: • Republic of Indonesia Independence Day

Commemoration sponsoring the flag ceremony• Healthy Walk of 5 Km• Veteran House Renovation for 48 homes• Student exchange for 20 senior high schools and

special schools from East Kalimantan to Jakarta.

bumn hadir di Kampus

PT Pupuk Indonesia collaborated in synergy with other state-owned enterprises (SOEs) in organising the “SOE Success on Campus” activity on October 28, 2017 at Sepuluh Nopember Technology Institute (ITS) Surabaya. This activity was aimed at providing an overview to the academic circles regarding national economic condition and SOEs’ strategic roles in the development of the national economy; and to bridge the SOEs and public universities who have professional human resources. The number of participants was 1,732 people. In the event, Pupuk Indonesia provided CSR assistance for Training Center of ITS Campus Surabaya amounting to Rp500 million and scholarship assistance amounting[ed. If this amount is part of the above scholarship detailed money, this should be stated here.] to Rp1,878 million from Pupuk Kaltim and Rp417 million from PT Petrokimia Gresik.

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TESTIMoNY of PKBL PUPUK INdoNESIA BENEfICIARIES

I can live from this amplang business, thanks to the PKBL assistance of Pupuk Kalimantan Timur. The company has paid attention to me as a Development Partner situated in its buffer zone. Thank you Pupuk Kalimantan Timur.

Due to work capital loans from PT Petrokimia Gresik, with relatively longer period of repayment and affordable administration fee, I gain more profits. In addition, I received support in the training of financial management, production, intellectual property rights and e-commerce for Development Partner, also invited to participate in exhibitions both local and national level.

PARTNERSHIP PROGRAM

At first I didn’t have any idea of developing a business; but by becoming a Development Partner of PT Pupuk Kaltim I can finally have the capacity. Thanks to PT Pupuk Kaltim who has supported by providing work capital loans, training and production equipment assistance.

The assistance funds helped us a lot in increasing the number of fabric produced and marketing areas

Mrs. sri rahayu, froM “Tondo roso” chips becoMing goaT farMer,developMenT parTner of pupuk kalTiM

inTan sari, inTan songkeT MiTra binaan pusri paleMbang

Mrs. napsiyah, aMplang aiko, developMenT parTner of pupuk kalTiM

Mrs. painah, baTik sari kenongo, developMenT parTner ofpeTrokiMia gresik

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From the aspect of CSR, the assistance distribution program of PT Pupuk Sriwidjaja Palembang for the residents of Kelurahan 2 Ilir Palembang for building Kampung Hortikultura is beneficial. CSR is a part of corporate responsibility which consists of social, economic and environmental aspects. As a form of community empowerment, this activity increases revenues for our households.

siTi Muzayah, keTua keloMpok kaMpung holTikulTura kebuMen

We the villagers of Kampung Malahing, living directly on top of the sea, used to only think of how we can feed ourselves to survive. But with the presence of PT Pupuk Kalimantan Timur’s PKBL program, we have been substantially assisted. We have received significant public facilities and broadening of knowledge so that we may develop ourselves with it.

Kampung Sehat (Healthy Village) is very much needed by the communities living near the company, particularly in terms of medical treatment. Some examples of diseases that the habitants suffer from are acute upper respiratory tract infections and itches. Yet, these health problems can be addressed by Petrokimia Gresik. With the existence of free medical treatment on a routine basis, the locals can get to know the condition of their health and treat the disease suffered. It is expected that this activity will continue and be improved.

nasir laka’da, chief of rT 30 Malahing

ngipik headMan, kaMpung sehaT

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AWARdSNot only the communities that benefit from CSR programs convey their appreciation to Pupuk Indonesia, but also the government, the media and the general public. We could not have achieved these awards without a good cooperation between Pupuk Indonesia People and the many groups within the community. Therefore, Pupuk Indonesia would like to express a thank you for their recognition of Pupuk Indonesia.

no Company awards Date organization location Keterangan

1 PT Pupuk Sriwidjaja Palembang

UNS Small Medium Enterprise’s (SME’S) Award 2017

14-Jul-17 UNS Research and Community Service Institution and Ministry of Cooperative & MSMEs

SEBELAS MARET UNIVERSITY, Solo

PKBL Implementing Agency The Best MSME Developer

2 PT Pupuk Indonesia (Persero)

TOP CSR 05-Apr-17 Majalah Business News Indonesia

Balai Kartini, Jakarta

TOP CSR Improvement 2017 and TOP Leader CSR Commitment Awards

PT Petrokimia Gresik

TOP CSR on Nawacita 7: Regeneration Award


TOP CSR 2017 on Fertilizer Sector Award

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no Company awards Date organization location Keterangan

3 PT Pupuk Kaltim CSR Award 23-Feb-17 MEPRINDO (Media Pribumi Indonesia)

Ballroom Golf Pondok Indah, Jakarta

2nd place for Cipta Guna Sehati Category, 3rd place for Cipta Karsa Mandiri Category, 1st place for Reka Karsa Sosial Category, 1st place for Didaktika Pratama Unggul Category, 1st place for Daya Karsa Pratama Category, 1st place for Karsa Budaya Prima Category

4 PT Pupuk Kaltim Proper Daerah 13-Jun-17 Pemprov. Kalimantan Timur

Gedung Olah Bebaya, Samarinda

Proper Daerah Tingkat Emas

5 PT Pupuk Kaltim ANRI Award 17-Agt-17 ANRI Hotel Mercure, Ancol - Jakarta

1st and 3rd place of Arsiparis Teladan Nasional Non-PNS

6 PT Pupuk Kaltim Anugerah Proper 2017 Award

18-Dec-17 Ministry of Forestry and the Environment

Vice President Palace

“Gold” Proper Title

7 PT Petrokimia Gresik

Nusantara CSR 06-Sep-17 The La Tofi School of CSR

Hotel Indonesia Kempinski, Jakarta

Awards in 3 Categories: Community Economy Elevation, Community Education Level Improvement, Community Health Quality Improvement


Indonesia’s Best SOE Subsidiary 2017

23-Aug-17 Indonesian Embassy in Singapore

Organised by: Economic Review Magazine, Perbanas Institute, IPMI International Business School, Daya Makara UI, Indonesia-Asia Institute, Ideku Group


Anugerah Proper 2017 Award

18-Dec-17 Ministry of Forestry and the Environment

Vice President Palace

“Green” Proper Title


Green Industry Award

21-Dec-17 Ministry of Industry Gedung Kemenperin

Level-5 Green Industry

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DEVELOPING PUPUK INDONESIAINDIVIDUALS



attaininG a healthy WoRK atmoSpheRe

• OccupationalHealthandSafety

• SafeWorkingHours

• OHSTargets

• EmployeeRepresentationinOhsIssue

• ContractorsandOccupationalSafety

• OhsTrainingandMeetings

• HealthcareforEmployees

Every type of business is exposed to risks. Manufacturing companies, including Pupuk Indonesia, are particularly exposed to risks, as the business involves chemical processing and machinery. We are committed to maintaining a healthy and safe work environment for each of our workers. “Prioritize safety,” is our slogan. That is the reason why we provide full-fledged health equipment and maintain this in good condition, to ensure good functioning upon needed usage Apart from that, through a variety of training practices, we build a culture of health and safety among the workers, emphasizing the importance of all workers taking good care of each other, so that they come home safe every day.

Our objective is creating a healthy, safe and conducive work atmosphere. The highest standards of occupational health and safety are necessary to support company performance, reduce unnecessary loses and protect the Company’s most valuable asset - its workers.

oCCUPATIoNAL HEALTH ANd SAfETYMost of accidents during work are due to a human factor. For this reason, Pupuk Indonesia upholds high standards of Occupational Health and Safety (OHS). We set strict procedures and apply management of OHS in all subsidiaries of Pupuk Indonesia. These procedures meet the standards set by the Indonesian government, alongside the best practices that we apply such as “Behavioral Based Safety” and “Process Safety Management”.

Behavioral Based Safety (BBS) is a proactive accident prevention effort that focuses on preventing dangerous behavior that may trigger an accident. BBS uses

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psychological approach to promote occupational safety culture by involving all employees. This includes encouraging employees to make a list and collect data on safe and non-safe practices that are on-going in the Company. Based on the results of such observations, a team comprising employees performs analysis and builds an action plan, all aimed to continue increasing occupational health and safety practices towards zero accidents.

Process Safety Management (PSM) refers to management principles and systems which identify and control the danger due to production processes, as part of the protection efforts in work areas. While Bila Behavioral Based Safety (BBS) focuses on human factors of the employees, PSM is directed more to work processes. PSM contains guidelines on work processes such as the process of hazardous substance handling, proper equipment maintenance and operations, and work procedure change management.

Every subsidiary of Pupuk Indonesia also undertakes periodic measurement, evaluation and reporting on OHS performance. We run leading indicator measurements, i.e. periodic proactive measurement and reporting on specific actions taken to prevent occupational accidents. We furthermore measure the lagging indicator, that is a measurement on assessing past safety performance.[ed. the definition of lagging indicator does not match, if lagging indicator is the English term.] Such effective measurement and evaluation is beneficial in the efforts to improve OHS system and management and ensure compliance with OHS regulation. It is expected that, being in a safe and comfortable work environment, the employees will perform their work without undo worry [ed. It is required that employees have some worry, as no concern itself leads to accidents.] and in turn will perform their tasks well.

SAfE WoRKING HoURS [GRI 403-2]

In 2017, Pupuk Indonesia recorded one fatal occupational accident, occurring at subsidiary PT Petrokimia Gresik. Pupuk Indonesia deeply regrets this accident and the OHS team addressed the situation immediately, evaluated thoroughly the causes of the accident, and provided recommendations of improvements to prevent similar accident from occurring in the future.

In order to overcome this, Pupuk Indonesia has taken improvement efforts, namely more intensive briefs to employees, to ensure that BBS and PSM, as well as all OHS procedures, are internalized and well-observed by the employees.

Hazard Operability Studies (HAzOP) are applied to identify and map potential dangers arising from any changes that take place in the factory or in modified or improved processes. A Job Safety Analysis (JSA) lists the tasks, the dangers and the measures to control them reemphasizes the need for vigilance. Not only does JSA help prevent occupational accidents, but it also protects work equipment from damage, and consequently improves work productivity. Pupuk Indonesia also ensures the availability of all required APD, or Personal Protective Equipment, and that every employee works with the proper work permit. In addition, the Company also rigorously and consistently holds training and communicates regarding dangers in the work environment.

In terms of occupational accidents, the Company meets all obligations to the workers and families.1. Compensation for 60% x 80 months of wages2. Compensation of Rp200,000/month for 24 months3. Funeral cost of Rp2,000,0004. Additional work accident-related severance pay in

accordance with the Collective Bargaining Agreement in the pertinent business unit.

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Safe Working Hours 2015-2017unit bisnis 2015 2016 2017

PT Petrokimia Gresik 13,257,604 17,335,631 5,460,859PT Pupuk Kujang 20,086,145 1,071,082 4,923,428PT Pupuk Kalimantan Timur 16,216,380 7,925,132 6,774,477PT Pupuk Iskandar Muda 17,804,920 3,066,262 3,569,493PT Pupuk Sriwidjaja Palembang 43,960,974 8,365,597 6,319,427

Key Performance Indicators K3 Pupuk Indonesia Group in 2017unit bisnis lti ltiFR medical

treatmentRWDC tRiR

PT Petrokimia Gresik 1 0.183 0 0 0.183

PT Pupuk Kujang 0 0 6 0 1.218

PT Pupuk Kalimantan Timur 0 0 2 0 0.30

PT Pupuk Iskandar Muda 0 0 0 0 0

PT Pupuk Sriwidjaja Palembang 2 0.158 4 0 0.5468

Number of Accident Events in Subsidiaries of PT Pupuk Indonesia (Persero) 2015-2017unit bisnis low middle heavy Fatality total

2017Head Office 0 0 0 0 0PT Petrokimia Gresik 0 0 0 1 1PT Pupuk Kujang 3 6 0 0 9PT Pupuk Kalimantan Timur 2 1 0 0 3PT Pupuk Iskandar Muda 0 0 0 0 0PT Pupuk Sriwidjaja Palembang 3 4 2 0 9

2016Kantor Pusat 0 0 0 0 0PT Petrokimia Gresik 2 2 0 0 4PT Pupuk Kujang 1 2 0 1 4PT Pupuk Kalimantan Timur 8 9 0 1 18PT Pupuk Iskandar Muda 8 3 0 0 11PT Pupuk Sriwidjaja Palembang 0 12 0 0 12

2015Kantor Pusat 0 0 0 0 0PT Petrokimia Gresik 3 4 1 2 10PT Pupuk Kujang 4 5 0 0 9PT Pupuk Kalimantan Timur 2 0 3 0 5PT Pupuk Iskandar Muda 3 2 0 0 5PT Pupuk Sriwidjaja Palembang 8 2 0 0 10

All coverage are in accordance with PP No. 84/2010, paid through BPJS Ketenagakerjaan. On top of the compliance to the government regulations, the Company provides additional severance pay to alleviate the burden of the affected family.

Information on safe working hours is as follows.

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Compared to last year, generally speaking, the level of low, middle and heavy injury at Pupuk Indonesia’s subsidiaries in 2017 went up at 50%. As per its definition, low injury is an accident that only requires minor aid, or

2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

1.213.730.010.1830.230 0.54681.432.050.302.270.59 03.590.11


PT Pupuk Kujang PT Pupuk Kalimantan Timur


PT Pupuk Sriwidjaja

Palembang

Injury Rate in PT Pupuk Indonesia (Persero) Subsidiaries 2015-2017 [GRI 403-2]

Note: Injury rate: Number of hours lost per 1 million working hours

first aid, and does not cause lost day. Middle injury is an accident that causes lost days not more than 21 calendar work days and does not inflict the lost of body function. While heavy injury is accident that causes lost days more than 21 calendar work days, or that causes the lost of body parts of function.

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oHS TARGETSNot setting clear targets would make a company unable to create an appropriate and effective strategy. Pupuk Indonesia is committed to the establishment of clear OHS targets every year. For 2017, our main OHS targets is achieving zero accidents.

EMPLoYEE REPRESENTATIoN IN oHS ISSUEIn relation to the monitoring of OHS application, the Company along with its employees joined in the formation of Committees for the Development of HSE (P2K3), working together to ensure compliance with OHS systems, procedures and strategies. A P2K3 team is formed in every subsidiary of Pupuk Indonesia and is comprehensively coordinated by Pupuk Indonesia head office.

Pupuk Indonesia and its employees also agree to enter into a Collective Bargaining Agreement (PKB) to ensure the representation and protection of all employees of the Company. The percentage of employees represented by P2K3 may vary from time to time in every subsidiary. The representation percentages for 2017 are as follows: [GRI 403-1]

Employee Representation in P2K3

Company Representation

PT Pupuk Iskandar Muda 12%

PT Pupuk Sriwidjaja Palembang 12%

PT Pupuk Kujang 12%

PT Petrokimia Gresik 12%

PT Pupuk Kalimantan Timur 12%

PT Rekayasa Industri 12%

earing in mind the importance of OHS to the employees, the Company ensures the inclusion of OHS articles in the Collective Bargaining Agreement. Therefore both the Company and the employees fully participate in OHS application and monitoring. This active participation will expectedly bring about good OHS application and monitoring.

Of all the 72 articles of the PKB, six, or about 8%, concern OHS issues. The subjects discussed are core subjects regarding occupational safety related to employees, including: [GRI 102-41, GRI 403-4]

Aspects of oHS Collective Bargaining Agreement

article in pKb ohS aspects

Chapter XII Article 52 General HSE Aspects

Chapter XII Article 53 Working Attire

Chapter XII Article 54 Working Equipment

Chapter XII Article 55 Health and Safety Protective Equipment

Chapter XII Article 56 Inspection of Safety Equipment

Chapter XII Article 57 Work Health

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CoNTRACToRS ANd oCCUPATIoNAL SAfETY

In carrying out its operations, Pupuk Indonesia involves workers coming from labor suppliers. However, we ensure that each contractor has the same Occupational Health and Safety standards as those of Pupuk Indonesia. Every contractor must meet the requirements stated in the Contractor Safety Management System (CSMS), which comprises health, safety and environment issues. Some of the issues we focus on are:1. Contractors have official permits as a valid company

and have skills in the relevant fields. 2. Contractors meet the occupational health and safety

requirements and are compliant with the applicable OHS rules and regulations.

3. Contractors meet the required technical requirements and all workers have certifications in their jobs.

Pupuk Indonesia regularly holds OHS campaigns for all workers, including those from the contractors. We organize training with the aim to raise contractor awareness of and commitment to OHS.

oHS TRAINING ANd MEETINGSIn order to ensure OHS application, in 2017, Pupuk Indonesia held training and meetings to discuss OHS application and evaluation. Training sessions are held at every subsidiary of Pupuk Indonesia at management level and worker level. Meanwhile, meetings on OHS are held at every subsidiary, with presence of the Committee for the Development of HSE (P2K3), and ideally once a month. The P2K3 meeting frequency at each subsidiary of Pupuk Indonesia is as follows:

frequency of P2K3 Centralized Meetings in 2015-2017

Company 2015 2016 2017

PT Pupuk Iskandar Muda 12 12 12

PT Pupuk Sriwidjaja Palembang 12 12 12

PT Pupuk Kujang 12 12 12

PT Petrokimia Gresik 12 12 12

PT Pupuk Kalimantan Timur 12 12 12

PT Rekayasa Industri 4 4 4

Notes: P2K3 meetings discuss Health, Safety and Environment where the workers’ and the management’s representatives are present and is chaired by a P2K3 chief. It is conducted once every three months at a minimum.

In addition, to coordinate all OHS activities, Pupuk Indonesia holds joint meetings at its Head Office in Jakarta, where representatives of every subsidiary are present. One meeting was held in 2017, and issues like occupational accident rate, OHS application programs and accident prevention programs were discussed.

HEALTHCARE foR EMPLoYEES [GRI 403-3]

The work environment of Pupuk Indonesia’s subsidiaries is related to intensive contact with chemicals that may provoke health problems. That is why Pupuk Indonesia provides full-fledged health facilities for all Pupuk

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Indonesia’s employees. One of the facilities is annual medical check-up for all employees. In addition, for employees working under condition of being exposed to loud noise and chemical substance, audiometry and spirometry examinations are taken.

Pupuk Indonesia Group provides a clinic in every Pupuk Indonesia factory, which contain facilities at general-

clinic standards such as examination bed, first aid, ambulance and certified medical professionals. These clinics are for handling minor injury and for first aid in emergency situation. In case of necessity of further treatment and more advanced equipment, the clinics will refer the patients to hospitals nearby, with which they cooperate.

frequency of Medical Check-Up at PT Pupuk Indonesia

high Risk Jobs Frequency of medical Check-up Coverage of medical Check-up

Employee health examination Once a year Medical check up

Employees exposed to loud noise Once a year Audiometry

Employees exposed to air pollution Once a year Spirometry

Pupuk Indonesia provides health security to all employees and their families in accordance with applicable company rules, including:1. Corporate health insurance for emergency, in-patient

and out-patient treatment2. Vaccination and Immunisation

3. “BPJS Kesehatan”, or Workers Social Security Agency, service in accordance with governmental regulations.

Employees are valuable assets to Pupuk Indonesia Group. Thus, their health is an important element that optimally supports the Company’s performance.

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DeVelopinG eXCellent enViRonmental

peRFoRmanCe

We recognize the impacts on the environment that are caused by the company. Therefore, we always strive to comply with the provisions and standards, norms and best practices that apply in the environment field. In addition, we also use “beyond compliance approach” primarily related to resource use efficiency, waste minimization, biodiversity protection, and community development. The development of each project is carried out by first fulfilling an environmental permit that requires an Environmental Impact Assessment (AMDAL) or Environmental Monitoring and Management (UKL – UPL) documents. [GRI 102-11]

Pupuk Indonesia Group has always been committed to the minimizing of external impacts of its activities by complying with all the applicable requirements and standards in the environment sector. Pupuk Indonesia is also committed to taking a part to protect Indonesia’s biodiversity richness; this is one of the important aspects in the Company’s production chain. All the commitment in environment sector is realized through a number of programs -- a concrete contribution to the Sustainable Development Goals.

We have made various efforts to improve the environment quality, among others through the implementation of the following policies:• Implementing Environmental Management System

(ISO 14001);• Applying the principle of reuse, reduce, recycle (3R)

in operational activities;• Prioritizing the choice of environmental friendly and

energy-efficient process technology;

• OptimizationofProductionResources

• ChallengesAhead

• EnergyConsumption

• ManagementofWaterUtilization

• StandardsandMethodologies

• WaterRecycling

• MaintainingBiodiversity

• EmissionControl

• WasteManagement

• PolicySupervision

• EnvironmentalRelatedComplaints

• EnvironmentalInvestment2017

• CompliancewithEnvironmentalRegulation

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• Protection of Biodiversity;• Following the Proper Program of the Ministry of

Environment and Forestry as a means of evaluating the achievement of environmental performance.

Consistent efforts to implement these policies have been implemented so that several Subsidiary Companies of Pupuk Indonesia successfully obtained “GREEN” rating in the PROPER held by the Ministry of Environment and Forestry of the Republic of Indonesia. Pupuk Kaltim successfully achieved PROPER“Gold”rating. While Pupuk Sriwidjaja, Pupuk Kujang and Petrokimia Gresik scored PROPER“Green”.

oPTIMIZATIoN of PRodUCTIoN RESoURCESPolicies of Pupuk Indonesia Group related to sustainability, particularly related to materials and energy, are implemented through eco-efficiency and plant revitalization. Business development is focused on improving efficiency and development to non-urea products, whether in the form of NPK fertilizers or other

petrochemical products. Meanwhile, the construction of new urea plants is prioritized in increasing the efficiency of raw material consumption, rather than the addition of production capacity.

CHALLENGES AHEAdThe main challenge we face especially in the energy field is the condition of the old plants which causes the high demand of gas consumption. This has an impact on higher production costs, resulting in less competitive product prices. To overcome this, the Company operates an efficiency program in factory operations and factory revitalization programs.The eco-efficiency program is, among other things, done by ensuring that each plant is operating well and getting regular maintenance so there is no unscheduled shutdown that can lead to energy wastage.

RAW MATERIALS - NATURAL GAS [GRI 301-1]

Raw materials used in the production of fertilizers include natural gas (non renewable), air, and water (renewable). Total volume of gas used in the reporting period was 137,405 mmscf.

Use of Gas Raw Materials

no Company2014 2015 2016 2017

1 Pupuk Iskandar Muda 15,925.94 18,853.62 14,616.21 12,944.32

2 Pupuk Sriwidjaja 33,502.21 32,915.92 29,130.25 39,304.78

3 Kujang 14,799.73 14,738.01 15,252.34 15,570.44

4 Petrokimia Gresik 9,681.70 9,942.45 9,638.87 9,617.05

5Pupuk Kalimantan Timur 53,686.65 67,400.60 62,530.84 59,968.62

total 127,596.23 143,850.59 131,168.52 137,405.22

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NPK PRODUCT RAW MATERIALS

Pupuk Indonesia Group produces Nitrogen-based raw materials Urea (Carbonic diamide)and zA (Amonium Sulfate) while P and K-based (Potassium) raw materials such as DAP, Phospate rock and KCL must be imported,asthey are not available domestically. Pupuk Indonesia has an NPK Plant which covers two processes:the NPK steam granulation process and NPK chemical process. NPK steam granulation is operated by PSP, PKC, PKG and Pupuk Kalimantan Timur; while the NPK Chemical process is operated by PKG.

npK Steam Granulation

I. Petrokimia Gresik Use of NPK Raw Materials

notype of raw materials

number of npK Raw material (ton)

2014 2015 2016 2017

1 Urea 85,298.97 67,644.2 68,694.37 68,158.33

2 zA 60,659.76 132,933.50 67,894.53 132,363.99

3 DAP 100,854.71 192,632.35 117,508.60 173,582.61

4 Rock Phos 20,185.87 3,472.74 13,536.17 4,063.88

5 KCl 143,453.65 150,079.58 122,333.07 144,897.80

6 Clay 11,350.09 42,019.80 46,712.52 57,999.67

II. Pupuk Kalimantan Timur Use of NPK Raw Materials



2014 2015 2016 2017

1 Urea 36,483 32,759 20,107 24,569

2 zA - 21,717 29,638 29,450

3 DAP 30,837 55,507 52,394 57,111

4 Rock Phospate (steam Granul) 15,555 6,390 659 1,739

6 KCl 37,723 50,913 48,102 49,985

7 Clay 21,095 30,833 25,321 22,306

III. KujangUse of NPK Raw Materials



2014 2015 2016 2017

1 Urea 12,085 25,737 21,551 35,924

2 zA 1,348 861 7,678

3 DAP 13,146 30,992 30,806 58,355

4 Rock Phospate (steam Granul) 2,431 639 294 378

6 KCl 13,971 28,288 22,782 44,200

7 Clay 7,508 21,235 18,094 30,203

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IV. Pupuk SriwidjajaUse of NPK Raw Materials

no type of raw materials number of npK Raw material (ton)

2014* 2015* 2016 2017

1 Urea - - 15,656 16,292

2 zA - - 332 903

3 DAP - - 25,331 29,225

4 KCl - - 19,513 22,614

5 Clay - - 19,432 22,713

* belum beroperasi

npK Chemical

I. Petrokimia GresikUse of NPK Raw Materials

no type of raw materials number of npK Raw material (ton)

2014 2015 2016 2017

1 Asam Fosfat 559,868.46 594,802.26 564,843.85 643,521.11

2 NH3 263,323.97 283,753.32 263,590.54 301,087.14

3 Asam Sulfat 397,959.18 445,108.02 420,449.50 478,631.74

4 zA 314,732.06 326,333.18 293,246.67 364,359.52

5 Urea 44,609.39 39,379.23 37,649.54 33,400.32

6 KCl 523,194.60 534,882.65 477,063.84 482,504.39

PLANT REVITALIzATION PROGRAM

The revitalization of old plants is done as a saving of the raw material of natural gas. Pupuk Indonesia Group is building thePusri 2B plant in Palembang and theAmurea 2 plant in Gresik,as well as planning to expand capacity of the NPK plant in East Kalimantan. In addition, we also undertook a study for the development of a petrochemical project in Bintuni.

To maintain the plant performance, we have implemented Plant Integrity Management System (PIMS) and Production Management System (Sistem Manajemen Produksi/SIMPRO). In addition, preventive, predictive and corrective maintenance measures are also taken to maintain the reliability and efficiency of the plant.

The Company utilizes natural gas as raw material and energy source in fertilizer production process. Other energy sources used by Pupuk Indonesia are coal, electricity and fuel oil for transportation.

This report separates the calculation of the volume of gas and other energy sources as product raw materials and the utilization of gas as an energy source. Calculation of gas consumption includes subsidiaries which are producing fertilizers.

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ENERGY CoNSUMPTIoN [GRI 302-1]

Gas Consumption for Heating and Steam

business unit unit 2014 2015 2016 2017

PT Petrokimia Gresik MMSCF 11,593 12,352 12,496 13,138

PT Pupuk Kujang MMSCF 7,119 7,645 6,420 7,161

PT Pupuk Kalimantan Timur MMSCF 6,862 8,254 7,414 7,085

PT Pupuk Iskandar Muda MMSCF 3,302,93 3,572,36 4,014,15 3,835,01

PT Pupuk Sriwidjaja Palembang MMSCF 14,213 13,599 13,763 11,333

total 43,090 45,422 44,107 42,551

Gas consumption for steam and heating needs in Pupuk Indonesia Group in 2017 decreased by 2,156 MMBTU or 4.8% 44,107 mmscf in 2016 to 42,551 mmscf in 2017.

As one of the production energy resources, natural gas is one of the main obstacles of the Company in 2017 which leads to a decrease in competitiveness. Natural gas prices for fertilizer producers in Indonesia are much higher when compared to natural gas prices in other countries. The average natural gas price of the Fertilizer Industry in Indonesia is USD5.2 per MMBTU, while the average natural gas price in competing countries is around USD 0.8 – 3.1 per MMBTU. To overcome the obstacles of high gas prices, the Company implements a comprehensive efficiency and cost reduction program on non-gas costs.

Coal Consumption


PT Petrokimia GresikTon 286,989 209,954 259,663 214,967

GJ 7,039,840 5,150,171 6,369,531 5,273,141

PT Pupuk Kalimantan TimurTon 609,105 622,037 522,259 446,226

GJ 11,155,049 11,856,306 11,372,915 9,496,483

totalton 896,094 831,991 781,922 661,193

GJ 18,194,889 17,006,477 17,742,445 14,769,624

Coal is used for energy sources and gradually to replace natural gas energy use for steam and heat. Coal is chosen because it is cheaper than natural gas. The calculation of coal use is based on the coal volume used by the subsidiaries producing fertilizer. The volume of coal being used is then converted into energy unit Giga Joule (GJ). In 2017, coal consumption in Pupuk Indonesia Group in general decreases by 2,972,822 GJ or 17% from 17,742,445 GJ in 2016 to 14,769,624 GJ in 2017.

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Efforts to Save Electricity Usagebusiness unit unit 2014 2015 2016 2017

PT Pupuk Indonesia (Persero) kWh 125,889 177,372 186,068 258,826

GJ 453 638 669 931

PT Petrokimia Gresik kWh 629,937,699 690,353,224 705,376,178 721,986,095

GJ 2,267,776 2,485,272 2,539,354 2,599,150

PT Pupuk Kujang kWh 19,957,000 19,030,000 29,606,000 41,018,000

GJ 71,865 68,527 106,611 147,706

PT Pupuk Kalimantan Timur kWh 622,425,516 747,081,208 677,977,715 644,762,126

GJ 2,240,732 2,689,492 2,440,720 2,321,144

PT Pupuk Iskandar Muda kWh 46,993,500 54,752,140 110,190,560 70,088,680

GJ 169,176 197,107 396,686 252,319

PT Pupuk Sriwidjaja Palembang kWh 240,424,552 250,117,273 231,965,613 283,173,717

GJ 865,521 900,415 835,070 1,019,417

totalkWh 1,559,864,156 1,761,511,217 1,755,302,134 1,761,287,444

GJ 5,615,523 6,341,452 6,319,110 6,340,667

The electricityusage calculation includes the Company’s Head Office in Jakarta and its subsidiaries. The calculation method is based on the meter number shown and then converted using gigajoule energy unit (GJ). Electrical energy used is sourced from PT PLN (Persero) and self-generating operations.

EFFORTS TO SAVE ELECTRICITY USAGE

The Company through its subsidiaries perform various ways to save electricity usage, including:1. Performing the usual lamps replacements with LED light bulbs for street lighting2. Using a solar cell3. Modify / replace the air conditioning equipment4. Turning off power tools while not in use, and5. Interconnecting of power plant network.

FUEL CONSUMPTIONfuel consumption


PT Petrokimia Gresik Liter 529,103 466,389 420,005 272,707

GJ 20,032 17,657 15,901 10,325

PT Pupuk Kujang Liter 398,329 375,024 236,228 230,371

GJ 15,399,40 14,498,40 9,132,56 8,860

PT Pupuk Kalimantan Timur Liter 913,058 1,137,447 920,225 1,154,307

GJ 35,609 44,360 35,889 45,018

PT Pupuk Iskandar Muda Liter 100,330 108,320 109,943 72,454

GJ 4,033 4,354 4,419 2,912

PT Pupuk Sriwidjaja Palembang Liter 362,863.00 416,379,00 328,308,00 251,513.00

GJ 14,151.66 16,238.78 12,804.01 9,809.01

totalliter 2,303,683.13 2,503,558.84 2,014,709.24 1,981,351.76

GJ 89,225.35 97,108.81 78,145.80 76,924.45

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The calculation of fuel consumption forvehicles includes production and support activities throughout the subsidiaries. The calculation is based on the recording of fuel purchases and is converted using gigajoule energy unit (GJ). The Company also undertakes efforts to reduce fuel usage, among other means, the application of an official vehicle fuel quota system, the replacement of old service cars with more fuel efficiency, and the use of bicycles in some work areas.

REDUCTION OF ENERGY CONSUMPTION [GRI 302-4]

Energy Efficiency Results (GJ)

Company2014 2015 2016 2017

PUSRI 6,543,282 7,041,098 7,212,538 4,645,471

Kujang 815,847 1,992,606 4,668,177 4,153,186

Petrokimia Gresik 865,445 1,470,993 1,359,351 2,284,076

Pupuk Kalimantan Timur 182,069 308,917 367,809 443,661

total absolute energy efficiency 8,406,643 10,813,614 13,607,875 11,526,394

Pupuk Indonesia Group has made various efforts to save energy through modification program and interconnection between plants in the production process so that they can save energy consumption. Replacement of light bulbs with solar cell, modification and cooling arrangements and use of energy saving lamps to reduce electricity consumption and modification of means of transportation to reduce fuel consumption. Standard calculation performed by comparing between before and after modification or compared with business as usual conditions.

In the field of energy consumption, in 2017, Pupuk Indonesia implemented a number of strategic policies to maintain the Company’s performance and competitiveness. One of these efforts is to increase efficiency, especially the efficient use of gas raw materials, through a number of steps, among others by increasing the reliability of plants[ed. If mentioned in another section, mention should just generally be made of reduced downtime, or some other type of efficiency measure – also pointing the reader to that other section.] in order to reduce gas consumption, shut down old factories reduction of wasteful consumption of gas, and continuation of the fertilizer plant revitalization program. Another efficiency program that has a significant impact is the Cost Reduction Program for non-gas costs.

ENERGY INTENSITY RATIO [GRI 302-3]

Intensity of Gas Usage (Ammonia) MMCTU/Ton NH3

business unit2014 2015 2016 2017

mmbtu/ton nh3

PT Petrokimia Gresik 37.64 38.09 37.64 37.68

PT Pupuk Kujang 38.8 39.6 38.5 38.4

PT Pupuk Kalimantan Timur 36.57 34.30 34.76 34.79

PT Pupuk Iskandar Muda 41.53 39.76 40.75 43.41

PT Pupuk Sriwidjaja Palembang 41.34 42.55 42.29 36.15

total 38.30 37.4 37.47 36.15

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Intensity of Gas Usage (Urea)

business unit2014 2015 2016 2017

mmbtu/ton ureaPT Petrokimia Gresik 25,21 25,33 24,88 25,11PT Pupuk Kujang 30,8 30,3 30,0 29,7 PT Pupuk Kalimantan Timur 28,49 26,63 26,78 26,72 PT Pupuk Iskandar Muda 31,55 32,55 34,16 34,96PT Pupuk Sriwidjaja Palembang 31,87 35,85 35,04 30,00total 28,02 30,19 29,88 28,67

The average intensity of gas consumption for the production of each ton of ammonia in 2017 reached 36.15 MMBTU/Tton. The amount is decreased by 1.32 mmbtu / ton or 4% compared to 2016 which reached 37.47 MMBTU / Tton. The decrease was caused by the energy efficiency program implemented that is the increase of asset utilization and the reduction of unscheduled shutdown frequency.

Meanwhile, the average intensity of gas consumption for the production of each ton of urea in 2017 reached 28.76 mmbtu / ton. The amount is decreased by 1.22 mmbtu /ton or 4% compared to the year 2016 reaching 29.88 mmbtu /ton.

The calculation of the energy intensity ratio above is done by calculating all energy consumption used as raw materials and used to generate steam and generate electricity for production purposes.

The type of energy included in the calculation is the use of coal, electricity and natural gas used as energy. All data reported here is the ratio of energy intensity including the boundary within the company only. We do not report energy intensity outside the company.

MANAGEMENT of WATER UTILIZATIoN [GRI 303-1]

The fertilizer industry consumes significant amounts of water in its production processes, both for process and for cooling. The use of desalinated seawater for cooling is only carried out in PT Pupuk Kalimantan Timur. We measure water use efficiency by evaluating processes that require high water consumption, using flow meters and compared with targets.

Water utilization is used for production process and domestic need of office and plant. Required water is obtained from surface water sources including seawater through the desalination process, ground water, rainwater, and wastewater preparations from recycled products.

Water Resources Utilization (m3)Water Resources 2014 2015 2016 2017

Pupuk Iskandar Muda

Groundwater - - - -Surface water (river) 6,389,477 6,286,000 6,085,010 5,871,679 Rainwater - - - -Utilization of processedwastewater 19,030 19,320 77,615 57,027

Seawater (desalinated) - - - -

Pupuk Sriwidjaja

Groundwater - - - -Surface water (river) 12,563,296 11,831,716 10,892,509 12,758,581 Rainwater - - - -Utilization of processedwastewater 872,956 888,499 1,208,116 1,228,710


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Water Resources 2014 2015 2016 2017

Pupuk Kalimantan Timur

Groundwater 4,688,170 3,881,856 3,741,504 3,890,652 Surface water (river) - - - -Rainwater 4,050 3,155 3,600 3,750 Utilization of processedwastewater 8,401,687 12,385,320 10,021,455 10,760,500

Seawater (desalinated) 1,171,107,665 1,179,224,908 1,369,092,009 1,160,473,835

PKC

Groundwater - - - - Surface water (river) 9,196,811 9,427,381 8,417,150 9,509,220 Rainwater 1,790,474 1,797,821 1,912,027 1,051,069 Utilization of processedwastewater 1,055,580 1,299,984 1,035,428 1,209,397


Petrokimia Gresik

Groundwater - - - -

Surface water (river) 21,111,971 24,901,470 25,829,286 29,675,300 Rainwater - - - -Utilization of processedwastewater 6,298,301 6,581,520 8,941,680 9,701,723


total

Groundwater 4,688,170 3,881,856 3,741,504 3,890,652 Surface water (river) 49,261,555 52,446,567 51,223,955 57,814,780 Rainwater 1,794,524 1,800,976 1,915,627 1,054,819 utilization of processedwastewater 16,647,554 21,174,643 21,284,294 22,957,357

Seawater (desalinated) 1,171,107,665 1,179,224,908 1,369,092,009 1,160,473,835

STANdARdS ANd METHodoLoGIESIn general, the volume of water from various sources used by the subsidiaries of PT Pupuk Indonesia (Persero) in 2017 or decreased by 202,739,009 m3 or 14% compared

to the year 2016 a decrease was caused by the Water Efficiency Program by Pupuk Indonesia Group, especially the use of seawater for the process at PT Pupuk Kaltim.

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Increased river surface water intake was experienced by all but one Pupuk Indonesia subsidiaries in 2017. PKG and PSP have increased because in 2017 is being done Pusri IIB project in PSP and Amurea II in PKG. However, this is offset by increased utilization of processed wastewater by PKG and PSP over the past four years.

The process of taking and utilizing water from surface water sources is carried out under strict supervision including the use of seawater through the desalination process at PT Pupuk Kalimantan Timur. Pupuk Indonesia Group meets the water harvesting threshold requirements, as well as avoids the utilization of water from sources that have high biodiversity.

WATER RECYCLING [GRI 303-3]

Some of the water that has been used is then processed in a wastewater treatment plant (IPAL) facility. Some of the wastewater processed water is reused for the production process, while the rest is flowed into water bodies. In 2017 the volume of recycled water reaches 22,957,357 m3 or about 1.9% of total water use is recycled water calculated based on total recycled water usage of the Company compared to total surface water, groundwater and rainwater used for the process production.

Periodic monitoring is carried out to ensure waste water quality meets the quality standards set by the authorities before being discharged. This is part of the implementation of Water Conservation Policy and Wastewater Pollution Reduction to maintain the healthof water sources. Thus, wastewater treated and then discharged into water bodies will not cause pollution or disrupt the biodiversity present in water bodies.

MAINTAINING BIodIVERSITY Pupuk Indonesia is committed to taking the role of protecting Indonesia’s biodiversity as one of the important aspects in its production chain. Pupuk Indonesia manages biodiversity by identifying biodiversity potentials and then creating programs aimed at maintaining and enhancing biodiversity status. Pupuk

Indonesia periodically monitors and evaluates the status of biodiversity in accordance with the programs set by each subsidiary.

PLANTING MANGROVES AND CORAL REEFS

Since 2010, PT Pupuk Kalimantan Timur (Pupuk Kalimantan Timur) has been planting mangrove in Kedindingan Island, Bontang. Mangrove planting is a manifestation of the Company’s commitment in synergy with the Government of Bontang City in rehabilitating the marine area around Kedindingan Island.

Until the end of 2017, PT Pupuk Kalimantan Timur has planted 100,000 mangroves, with an area of six hectares. Now Kedindingan Island has become the location for breeding marine biota similar starfish, klomang and shellfish.

Mangrove conditions also grow well, while replanting has been done for dead mangroves so that they remain sustainable.

Other environmental conservation efforts in the marine field are transplantation or building of artificial reefs in the waters of Tobok Batang, Bontang. Until 2017 it was recorded that there were XXX of artificial reefs which were transplanted to the seabed. Now the waters in TobokBatangare growing soft coral, hard corals and various types of reef fish.

PT PUPUK KUJANG BIODIVERSITY PARK

PT Pupuk Kujang is one of the subsidiaries that also participated in deer breeding. One type of deers that became the inhabitants of PT Pupuk Kujang are Chital (Axis axis). The deer were gifts from President Soeharto when he visited PT Pupuk Kujang in 1982. Chital came all the way from Bogor Palace. Initially, there were three imported deer. Today, there are tens deer and have become part of the fauna collection.

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PT PupukKujang has been developing thePupukKujang Biodiversity Park since 2013, in an area of47.7 ha, or 39.75% of the total green area of PT PupukKujang. In managing this Bio-Park, the Company cooperates with the West Java Environmental Management Agency. Taman KeanekaragamanHayati is an area outside the conservation area built into a reserve of local biological resources and has a conservation function in accordance with applicable standards and regulations.

Establishment of TKHPK as biodiversity park of West Java is based on West Java Provincial Environmental Agency (BLH Jabar) inventory. The survey conducted by BLH Jabar found 20 species of rare trees in TKHPK. The scarcity status is based on the BPLHD Jabar Expert Team Review. The number includes 22.5% of the total 89 species of rare trees that exist in West Java province.

In the TKHPK area, there are several springs and small lakes or ponds, which are natural sources of water. The existence of springs and lakes shows that this area still has a good water regulatory function. The existing springs and lakes are utilized by the community for daily household needs. Thus PT Pupuk Kujang directly plays a role in providing water for the surrounding community.

EMISSIoN CoNTRoLAs a fertilizer and petrochemical industry, the existence of Pupuk Indonesia Group--directly or indirectly-- contributes to emissions, both green house gas (GHG) and other emissions. GHG emissions, among others, result from fertilizer production activities. In addition, the use of fertilizer also contributes to GHG emissions. We are aware of this and therefore we strive to continually control the emissions resulting from our operations.

Pupuk Indonesia Group GRK Emission Group [GRI 305-1]

business unit Source 2014 2015 2016 2017

PT Petrokimia GresikIPPU 411,861 412,180 391,787 396,157

Energi 1,171,808 1,062,990 1,111,963 1,152,864

PT Pupuk KujangIPPU 252,167 219,208 239,147 222,135

Energi 1,035,778 1,080,575 970,788 1,073,836

PT Pupuk Kalimantan TimurIPPU 1,065,668,30 1,734,400,28 1,580,965,09 1,397,131,54

Energi 3,963,793,85 4,218,136,38 3,218,595,93 3,071,707,50

PT Pupuk Iskandar MudaIPPU 103,072,91 107,791,30 88,976,86 69,341,53

Energi 164,259,35 197,585,51 151,300,80 123,786,22


IPPU 484,147 554,897 544,419 512,562

Energi 2,543,693 2,438,146 2,397,573 2,041,492

total 11,196,248 12,025,909 10,695,516 10,061,013

In 2015, the Company continues its GHG emission control program by standardizing GHG emission calculation. In addition, GHG emission calculation are done computerized and no longer manual. This makes GHG emission calculation more accurate.

The Tier 1 emissions calculation method is based on the IPCC method to calculate the emissions generated from production activities. The calculation is done by internal company. GHG emission calculation performed includes direct GHG emissions (Scope 1), derived from production activities in producing fertilizer subsidiaries. Total GHG emissions

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(Scope 1) in 2017 reached or decreased a total of 634,503 tonnes of CO2eq or 5.9% from 2016 which reached 10.695.516 ton CO2eq. The decrease is due to a decrease in total energy intensity in both the ammonia plant and the urea plant.

Indirect GHG Emissions [GRI 305-2]

business unit

2014 2015 2016 2017

pln electricity

ConsumptionkWh

ton Co2 eq pln electricity

ConsumptionkWh


ConsumptionkWh


ConsumptionkWh

ton Co2 eq


97,057,611 71,920 67,722,334 50,182 95,762,921 70,960 97,768,000 72,446

PT Pupuk Kujang

19,957,000 14,469 19,030,000 13,797 29,606,000 21,464 41,018,000 29,738


3,435,690 1,590 3,817,994 2,173 3,168,000 2,619 3,435,690 2,356

total 117,014,611 86,389 86,752,334 63,979 125,368,921 92,425 138,786,000 102,184

Only three of Pupuk Indonesia Subsidiaries use electricity from PT PLN, namely Petrokimia Gresik, Pupuk Kujang and Pupuk Iskandar Muda. The electricity needs of Pupuk Kaltim and Pupuk Sriwidjaja Palembang can be fulfilled by the generators themselves.

The calculation of indirect GHG emission loads in Pupuk Indonesia and a number of subsidiaries is based on the use of electricity sourced from the supplier, PT PLN and measured by grid in each location. The base year used is 2010, in accordance with the agreement with the Ministry of Industry as leading emissions sector. The sources of GHG emission and emission factors used are IPCC and monitoring guidance, evaluation and reporting of BAPPENAS with GWP CO2 = 1, CH4 = 21, and N2O = 310.

EMISSIONS INTENSITY [GRI 305-4]

GHG emission intensity is calculated as GHG emission generated for every ton of urea fertilizer production. GHG emission intensity in 2017 is 1.47 tons CO2eq / ton of urea fertilizers derived from the production process and energy use..

GHG Emission Reduction Program

GRK emission Reduction program 2014-2017 [GRi 305-5]

Reduction Result (in tons Co2eq)

2014 2015 2016 2017

Uses for urea raw materials 309,404 321,888 309,879 331,939

Raw Material Reduction zA II 73,851 62,962 57,619 67,989

Liquid CO2 production 23,831 26,231 23,588 5,092,614

total 407,086 411,082 391,086 405,020

As a follow-up to the identification of GHG emission sources and GHG emission accounting, Pupuk Indonesia Group has made various efforts to reduce GHG emissions, among others by saving energy and reusing CO2 as a product raw material.

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Based on the emissions reduction program results, in 2017 the company was able to reduce direct emissions generated by 13,934 ton CO2eq. The gases included in this calculation are CO2, CH4, and N2O, with the base year of calculation being 2010 as agreed with the Ministry of Industry as a leading sector of greenhouse gas emissions. The calculation is performed by taking direct measurements of raw materials with measuring instruments, as well as using the average carbon uptake assumption of each tree for calculating the yield of the greening program.

OTHER EMISSION CONTROLS [GRI 305-7]

In addition to GHG emissions, Pupuk Indonesia Group also manages and controls other emissions. The emission types that are managed and controlled in accordance with Minister of Environment Decision No. 133 of 2004 on Emission Quality Standard for Fertilizer Industry Activities. Calculations based on concentration of compound with flow rate and operating time.During 2017, PI and its subsidiaries did not receive a sanction for violating limits for emissions release.

I. PT Pupuk Iskandar Mudaother Air Emission

no emission Source parameter ton 2014 2015 2016 2017

1 Primary Reformer NOx Ton 73.34 87.52 80.55 100.43

SO2 Ton 1.43 85.82 7.32 5.36

2 WHB / GTG NOx Ton 51.74 132.78 60.80 55.91

3 Priling Tower/ Granulasi

Total Partikulat Ton 0.10 2.48 7.50 6.89

NH3 Ton 9.86 26.04 12.92 24.94

4 Boiler Total Particulate Ton 0,00 0,00 0,76 3,23

SO2 Ton 1,04 6,44 1,77 1,37

NO2 Ton 38,75 70,89 89,71 55,11

II. PT Pupuk Kujangother Air Emission

no emission Source parameter unit 2014 2015 2016 2017

1 Primary Reformer NOx Ton 1319.83 967.97 546.28 878.99

SO2 Ton 0 0 0 0

2 WHB / GTG NOx Ton 364.23 265.59 160.31 77.45

3 Priling Tower/ Granulasi Total Particulate

Ton 30.23 67.14 35.92 62.67

NH3 Ton 92.91 49.91 304.78 307.96

4 Boiler Total Particulate

Ton 9.02 10.84 12.13 13.9

SO2 Ton 31.83 36.37 35.37 72.8

NO2 Ton 375.01 347.94 506.11 742.2

5 Scrubber NPK Total Particulate

Ton 8.50 28.10 11.10 78.00

Fluor Ton 0.00 0.00 0.00 0.06

Amoniak Ton 3.20 5.80 20.40 16.75

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III. PT Petrokimia Gresikother Air Emission

no emission Source parameter unit 2014 2015 2016 20171 Primary Reformer NOx Ton 113.21 4.19 38.20 37.42 WHB / GTG NOx Ton 280.65 149.57 317.46 26.73 Priling Tower/ Granulasi Total Particulate Ton 21.42 103.41 78.85 5.99

NH3 Ton 26.34 180.73 107.00 1.874 Boiler Total Particulate Ton 60.96 81.88 16.34 13.7

SO2 Ton 31.29 11.30 15.33 7.1NO2 Ton 226.01 323.31 278.23 24.2

5 Chimney BB Total Particulate Ton 1869.90 1613.43 1869.90 171.6SO2 Ton 5217.50 1599.42 5217.50 75.8NO2 Ton 1584.49 562.15 1584.49 108.8

6 Scrubber NPK Phonska I Total Particulate Ton 154.39 133.32 134.99 282.4Amoniak Ton 614.39 264.15 405.15 24.5Fluor Ton 11.46 27.01 19.61 6.4

7 Scrubber NPK Phonska II Total Particulate Ton 499.88 677.16 334.87 270.0Amoniak Ton 257.01 53.51 535.74 109.8Fluor Ton 48.93 10.10 14.26 4.0

8 Scrubber NPK Phonska III Total Particulate Ton 468.05 661.03 1089.37 213.5Amoniak Ton 105.92 991.10 435.79 186.6Fluor Ton 1.23 13.81 32.20 3.1

9 Scrubber NPK Phonska IV Total Particulate Ton 333.58 60.83 235.66 181.3Amoniak Ton 184.93 167.23 163.14 104.6Fluor Ton 10.45 0.15 5.73 5.0

10 Scrubber NPK Granulasi I Total Particulate Ton 153.38 10.73 2.41 43.1Amoniak Ton 271.28 44.74 101.52 38.6Fluor Ton 13.49 4.31 2.02 2.1

11 Scrubber NPK Granulasi II Total Particulate Ton 307.11 95.89 18.44 34.1Amoniak Ton 547.23 152.00 40.69 36.7Fluor Ton 9.76 5.63 1.52 0.7

12 Scrubber NPK Granulasi III

Total Particulate Ton 293.37 284.75 70.19 177.0Amoniak Ton 697.36 548.93 372.92 148.9Fluor Ton 1.72 16.23 6.21 10.3

13 Scrubber NPK Granulasi IV

Total Particulate Ton 592.68 323.90 66.76 112.3Amoniak Ton 1457.61 650.43 266.63 97.0Fluor Ton 43.59 12.32 7.86 7.4

pupuk Fosfat14 Ball mill Total Particulate ton 22.55 14.83 21.91 40.915 Unit reaksi Total Particulate ton 840.53 415.18 710.81 264.0

Fluor ton 0.75 5.71 80.39 6.316 Unit Granulasi Total Particulate ton 742.03 57.79 153.36 46.0

Fluor ton 25.34 0.89 34.63 1.1asam Fosfat

17 Ball Mill Total Particulate ton 63.55 27.20 37.49 21.518 Fume Scrubber Fluor ton 58.17 1.24 2.54 0.519 Gas Scrubber (Pabrik

AlF3)Total Particulate ton 21.41 14.95 18.06 11.7

20 Asam Sulfat Fluor ton 2.24 0.64 0.90 0.5SO2 ton 476.29 597.10 641.41 407.5

21 Dust scrubber (cement retarder)

Total Particulate ton 55.84 42.24 19.68 20.9Fluor ton 3.15 0.06 0.88 0.7

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IV. PT Pupuk Kalimantan Timurother Air Emission

emission Source parameter unit 2014 2015 2016 2017

Primary Reformer NOx Ton 397,34 1148,78 537,29 75,47

SO2 Ton - - - -

WHB / GTG NOx Ton 61,54 146,38 531,31 70,31

Priling Tower/ Granulasi Total Particulate

Ton 136,17 295,54 556,09 666,43

NH3 Ton 462,24 707,35 1210,48 1559,11

Boiler SO2 Ton 37,49 18,17 28,20 12,97

NO2 Ton 36,90 93,67 44,35 18,09

Chimney BB Total Particulate

Ton 54,35 37,92 15,39 47,30

SO2 Ton 820,62 1203,41 918,83 898,07

NO2 Ton 411,78 203,56 68,91 20,70

Scrubber NPK Total Particulate

Ton 9,35 12,56 12,43 8,62

Fluor Ton 0,00 0,00 0,01 0,02

Amoniak Ton 32,03 46,94 65,94 31,19

V. PT Pupuk Sriwijaya Palembangother Air Emission

no emission Source parameter unit 2014 2015 2016 2017

1 Primary ReformerWHB / GTG

NOx Ton 154,998 198.4 167.07 153.76

SO2 Ton 431.02 176.31 135.48 129.38

2 NOx Ton 187.65 222.58 141.63 117.44

3 Priling Tower/ Granulasi Total Particulate

Ton 187.56 82.68 26.39 20.9

NH3 Ton 613.91 281.88 1.587 126.4

4 Boiler Total Particulate

Ton 63.32 83.18 52.53 50.24

SO2 Ton 246.61 99.36 283.76 273.18

NO2 Ton 90.15 219.93 118.95 104.51

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WASTE MANAGEMENT [GRI 306-4]

The Company is very concerned about environmental factors in running the company’s operations. Environmental management and industrial wastes are very much appreciated, and it was proven in 2017 that one of our subsidiaries had achieved Proper emas rating and our three subsidiaries have achieved the Proper “Green” rating from the Ministry of Environment.

Both liquid waste and solid waste are inevitable waste products in the production of fertilizers, insignificant amounts and withsignificant impacts if not well-managed.Strict supervision from the government makes this aspect especially important to the Company. Pupuk Indonesia ensures the management of liquid waste and solid waste generated remains in accordance with the quality standards and regulations set by the Government.During 2017, PI and its subsidiaries received no sanction from the government due to waste releases exceeding regulation. Pupuk Indonesia regularly monitors the quality and quantity of liquid and solid waste to ensure liquid waste and solid waste generated in accordance with the quality standards stipulated by the government.

Pupuk Indonesia regularly monitors the quality and quantity of liquid and solid waste to ensure liquid waste and solid waste generated in accordance with the quality standards stipulated by the Government.

The production process of Pupuk Indonesia generates B3 and Non-B3 waste. The generating waste is then managed in accordance with the provisions applicable by a third party except the following generated B3 wastes produced by PT Pupuk Kalimantan Timur: laboratory waste, laboratory packaging waste and cotton waste which are incinerated by PT Pupuk Kalimantan Timur. Waste management and processing in this report includes the producing fertilizer subsidiaries. Each subsidiary is equipped with a waste management installation.

DATA OF LIQUID WASTE OF PT PUPUK INDONESIA (PERSERO) SUBSIDIARIES [GRI 306-1]

Liquid waste from each subsidiary are monitored and measured monthly. Measurements are carried out by KAN-accredited laboratories using the SNI-compliant method of sampling liquid waste and liquid waste analysis methods or other standards.

I. PT Petrokimia Gresik – chanelled to Java Sea

Pollution Load data (Kg / Ton)

no parameter 2014 2015 2016 2017

1 pH 7,108 7,512 7,462 6,903

2 Cod 0,086 0,088 0,027 0,015

3 TSS 0,068 0,088 0,028 0,057

4 Minyak Lemak 0,000 0,000 0,000 0,000

5 Amoniak Total 0,303 0,306 0,135 0,307

6 TKN 0,400 0,355 0,178 0,404

7 flour 0,001 0,000 0,001 0,001

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II. PT Pupuk Iskandar Muda - chanelled to Malacca Strait


no parameter 2014 2015 2016 2017

1 pH 9,134 8,908 9,508 9,308

2 Cod 0,236 0,254 0,329 0,363

3 TSS 0,029 0,009 0,090 0,023

4 Minyak Lemak 0,000 0,000 0,002 0,000

5 Amoniak Total 0,285 0,105 0,287 0,336

6 TKN 0,546 0,228 0,528 0,599

III. PT Pupuk Sriwidjaja Palembang - chanelled to Musi River


no parameter 2014 2015 2016 2017

1 pH 8,696 8,872 8,958 9,408

2 Cod 0,108 0,096 0,117 0,144

3 TSS 0,067 0,077 0,063 0,076

4 Minyak Lemak 0,009 0,010 0,017 0,027

5 Amoniak Total 0,213 0,217 0,148 0,087

6 TKN 0,393 0,507 0,368 0,426

IV. PT Pupuk Kalimantan Timur - chanelled to Makassar Strait


no parameter 2014 2015 2016 2017

1 pH 8,483 8,628 8,628 8,582

2 Cod 0,141 0,128 0,137 0,149

3 TSS 0,005 0,007 0,007 0,004

4 Minyak Lemak 0,001 0,002 0,001 0,001

5 Amoniak Total 0,136 0,333 0,193 0,243

6 TKN 0,144 0,367 0,262 0,328

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PT Pupuk Kujang - chanelled to Cikaranggelam River

Pollution Load data Kg / Ton (except pH)

no parameterpollution load Data of kg / ton (except ph)

2014 2015 2016 2017

1 pH 8,729 8,329 8,683 8,225

2 Cod 0,091 0.085 0.088 0.102

3 TSS 0,062 0.036 0.085 0.052

4 Minyak Lemak 0,000 0.000 0.001 0.002

5 Amoniak Total 0,145 0.063 0.066 0.144

6 TKN 0,300 0.073 0.144 0.112

TOXIC AND HAzARDOUS (B3) WASTE

Pupuk Indonesia Group strives to reduce B3 waste generated and uses B3 waste that can still have economic value. The program of reducing and utilizing B3 waste is undertaken by, among others: reducing primary reformer catalysts, replacing B3 with Non-B3 materials, utilizing gypsum and coal ash and working with B3 waste users that hold license from the Ministry of Environment and Forestry.

The B3 waste management is carried out in accordance with the processing permit standards of the Ministry of Environment and Forestry, including air emission standard and combustion of at least 99.99%. Initially, B3 waste generated by the company will be transported by land and sea transportation modes with a transport that already has a transport permit from the Ministry of Environment and Forestry with the assistance of the Ministry of Transportation. Then, B3 waste is processed by means of thermal / kiln using licensed B3 waste beneficiaries. In the scope of Pupuk Indonesia Group, only PT Pupuk Kalimantan Timur has thermal B3 waste processing license for certain B3 wastes, including used cotton waste, laboratory liquid waste, and chemical packaging waste.

Data of b3 waste of pt pupuk indonesia (persero) Subsidiaries

I. PT Pupuk Sriwidjaja Palembang

Total Waste B3

no. type of b3 Waste unit 2014 2015 2016 2017

1 Engine lubricant waste Ton 174.32 138.44 169.26 168.6

2 Laboratory waste Ton 2.26 1.2 2.06 4.905


4 Used cartridges Ton - - 0.0635 0.2115

5 Used cells Ton 5.95 6.125 0.728 5.18

6 Used TL bulbs Ton 0.16 - 0.5949 0.1846

7 Rags Ton 0.133 0.17 0.02 0.09

9 Used resin Ton - 48.45 33.22 3.68

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10 Used active carbon Ton - - 3.03 -

12 Used packaging Ton 1.24 1 12.008 23.322

13 Electronic waste Ton - 0.05 0.0178 0.024

14 Expired chemical substances Ton - 7.546 - 15.6593

15 Used lubricant filters Ton 0.673 4.204 0.06 0.512

16 B3-contaminated soil Ton - 24.36 - -

18 Used catalyst tubes Ton - - 4.48 -

19 Used air filters - 1.2 - -

total ton 431.94 505.47 376.76 498.9234

II. PT Pupuk Iskandar Muda

Total Waste B3


1 Engine lubricant waste Ton 36.36 2.1 12 35.6

2 Laboratory waste Ton - - 0.13 -

3 Laboratory waste Ton 32.16 - 50 -

4 Used cells Ton 1.7 - - 0.45

5 Used TL bulbs Ton 0.05 0.04 - -

6 Rags Ton 0.05 0.04 0.01 -

7 Used resin Ton - - 27 -

total ton 70.32 2.18 89.14 36.05

III. PT Pupuk Kujang

Total Waste B3



2 Used catalysts Ton 77.4 - 145.24 -

3 Used cells Ton 2.706 1.295 1.1246 0.512

5 Used TL bulbs Ton 16.8 0.18 0.067 -

6 Rags Ton 1 0.84 0.197 -

7 Used resin Ton 33.04 1.66 12.46 11.7

8 Used active carbon Ton 1 40.99 - 30.52

9 Used air filters Ton - - 0.59 -

10 Expired chemical substances Ton - 22.188 1.573 -

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11 Solvents Ton 3.96 14.448 - 18.74

12 Used raw materials Ton 20.98 - - -

13 CuAlCl4 slag Ton 15.35 16.17 - -

14 Glass woll Ton - 1 2.42 -

15 Gas mask filters Ton - 0.014 - -

16 Molsieve Ton 2.5 - - -

17 Used Battery Ton - 0.11 - -

18 AMDEA waste Ton - 0.975 - -

total ton 209.66 123.09 176.63 74.07

IV. PT Pupuk Kalimantan TimurTotal Waste B3


1 Used cells Ton 0.35 0.71 17.07 4.85


3 Incinerator ash *) Ton 0.96 - - -

4 B3-contaminated waste Ton - - 9.20 38.5

5B3 packaging/laboratory packaging waste Ton 2.28 5.89 3.26 2.55

6 Used lubricants Ton 43.92 38.16 57.60 101.5

7 Resin/ion exchanger waste Ton - 24.82 47.45 32.5

8 Used cartridges and toners Ton 0.03 0.23 0.25 0.01

9 Used TL bulbs and mercury bulbs Ton 0.43 0.39 1.63 0.95

10 Printed circuit boards Ton - - - -

11Used air contamination control filters Ton - - 12.00 51.3

12 B3-contaminated rags Ton 0.51 0.84 1.84 1.87

13 Active carbon Ton - - 3.70 5.00

14 Used catalysts Ton 95.6 300.48 221.06 278.2

15Used batteries from electronic appliances Ton - - - -

16Isolation material containing asbestos Ton - - 31.20 140.1

17 Steel slag Ton - - - -

18 Used refractories Ton - - 32.50 58.5

19 Fly ash & bottom ash Ton 25.109 38.312.00 29.375.00 39.358.00

total ton 25.255.90 38.686.02 29.814.86 40.076.63

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V. PT Petrokimia GresikTotal Waste B3

no type of b3 Waste unit 2014 2015 2016 2017


2 Laboratory waste Ton - - - 0.26

3 Used catalysts Ton 170.73 150.00 313.86 157.81

4 Used cartridges Ton 0.50 0.30 0.28 0.55

5 Used cells Ton 0.57 1.53 2.23 4.02

6 Used TL bulbs Ton 0.10 0.06 0.06 0.11

7 Rags Ton 0.25 0.27 0.25 0.69

8 Fly ash & bottom ash Ton 11,531 8,049 9,675 8,281

9 Expired chemical substances Ton - - - 22

10 Contaminated sawdust Ton 4 4 3 4

11 Gypsum Ton 561,450 1,040,338 1,720,941 1,727,491

12 Chalk Ton 154,585 305,084 511,218 146,055

13 Alumina ball Ton - - 53 -

total ton 727,870 1,353,725 2,242,257 1,882,069

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NON-B3 WASTE

Non-B3 waste in the form of organic waste made compost, paper waste, and non-organic waste partly recycled and sent to landfill. [GRI 306-2]

Generated non-B3 wastebusiness unit type of Waste unit 2014 2015 2016 2017

PT Petrokimia Gresik Organic waste Ton 5,271 4,508 4,020 3,464 Non-organic waste Ton 5,471 4,736 4,068 3,501 Paper waste Ton 91 81 72 58

PT Pupuk Kujang Organic waste Ton 971 1,319 967 746 Non-organic waste Ton 603 454 402 436 Paper waste Ton 45 40 38 65


Organic waste Ton 444 385 393 330 Non-organic waste Ton 3,679 599 2,914 4,200 Paper waste Ton 29 237 288 239


Organic waste Ton 1,524 1,777 897 941 Non-organic waste Ton 860 691 674 589 Paper waste Ton 5 4 4 4


Organic waste Ton 1,795 473 421 509 Non-organic waste Ton 1,991 1,243 680 615 Paper waste Ton 15 12 9 11

Managed non-B3 waste

business unit type of Waste unit 2014 2015 2016 2017 Descriptions

PT Petrokimia Gresik Organic waste

Ton 2,022 3,173 3,343 2,841 Composting

Non-organic waste

Ton 1,540 1,474 1,525 1,400 Recycle

Paper waste 91.4 80.5 72 58 RecyclePT Pupuk Kujang Organic

wasteTon 970.91 1.318.98 773.63 686.18 Composting

Non-organic waste

Ton 4.80 0.92 1.18 1.10 Recycle

Paper waste Ton 0.09 0.09 0.06 - RecyclePT Pupuk Kalimantan Timur

Organic waste

Ton 181.96 154.64 153.40 137.26 Composting

Non-organic waste

Ton 734.65 138.74 2.035.27 3.767.47 Recycle

Paper waste Ton - - - - RecyclePT Pupuk Iskandar Muda

Organic waste

Ton 278.45 353.12 484.43 451.44 Composting

Non-organic waste

Ton - - - - Recycle

Paper waste Ton - - - - RecyclePT Pupuk Sriwidjaja Palembang

Organic waste

Ton 1795 473.25 420.5 508.7 Composting

Non-organic waste

Ton 1450.5 486.3 435.5 510 Recycle

Paper waste Ton 14.97 12.21 8.8 11.02 Recycle*) A table with blank numbers means directly in the landfill to a third party

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PoLICY SUPERVISIoN [GRI 307-1]

SURVEY OF ENVIRONMENTAL SATISFACTION

To see the public response to the role and contribution and corporate social responsibility, the assessment of environmental satisfaction, especially to the surrounding community, is conducted. The Environmental Performance Indicator or Key Performance Indicator (KPI) of Pupuk Indonesia Group management in 2017 showed the following results:

Result of Environmental Satisfaction Survey

2016

Company number of respondents Score level of Satisfaction

PT Pupuk Iskandar Muda 170 88,30 Highly satisfied

PT Pupuk Kalimantan Timur 193 86,53 Highly satisfied

PT Pupuk Sriwidjaja Palembang 183 83,50 Highly satisfied

PT Petrokimia Gresik 180 83,10 Highly satisfied

PT Pupuk Kujang Cikampek 185 92,51 Highly satisfied

PT Rekayasa Industri 180 93,92 Highly satisfied

Nilai Kepuasan PT Pupuk Indonesia (Persero) 87,98 Highly satisfied

2017

Company number of respondents Score level of Satisfaction

PT Pupuk Kujang 200 92,60 Highly satisfied

PT Pupuk Sriwidjaja Palembang 192 83,75 Highly satisfied

PT Petrokimia Gresik 180 85,04 Highly satisfied

PT Pupuk Kalimantan Timur 180 87,65 Highly satisfied

PT Pupuk Iskandar Muda 170 86,33 Highly satisfied

PT Rekayasan Industri 165 93,94 Highly satisfied

Nilai Kepuasan PT Pupuk Indonesia (Persero) 88,22 Highly satisfied

Referring to the above results exposure, the Key Performance Indicator (KPI) value of Environmental Satisfaction in Pupuk Indonesia Grop in 2017 is 88.22. This value is recorded to increase compared to the value of Environmental Satisfaction Survey in 2016 amounted to 87.98. With this increase, the survey results occupy a highly satisfying level.

ENVIRoNMENTAL RELATEd CoMPLAINTSPupuk Indonesia Group’s commitment to and compliance with the rules and standards is also demonstrated by its receiving and managing any complaints from the public related to possible environmental disturbances. Pupuk Indonesia Group has a series of environmental related complaint management mechanisms involving at least 3 (three) functions in Pupuk Indonesia Group, i.e. Health, Safety, and Environment Department, Production Department, and Public Relations Department.

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The progress of complaints filed at the Pupuk Indonesia Group during 2017 is shown in the following table:Number of Complaints and follow-Up

Company Complaint problem number of Complaints number of Complaints Followed

number of Complaints Completed

PT Pupuk Kujang Water pollution 1 1 1

Other complaints 1 1 1


Ammonia odor 1 1 1

Waste 1 1 1



PT Petrokimia Gresik Ammonia odor 2 2 2


Ammonia odor 8 8 8


Most of the environmental complaints sent by communities living around the factory are complaints about ammonia smell. If rapid action is needed in terms of the smell of ammonia, operational control is carried out responsively. Similarly, regarding the settlement of waste pollution complaints about water bodies, Pupuk Indonesia continues to accommodate and resolve every complaint from the community in deliberation with the principle of win- win solution.

During the reporting period, every problems or complaints regarding environmental issues are resolved nicely and impartial to all parties fairly.

ENVIRoNMENTAL INVESTMENT 2017

no Description (2017) amount Rupiah in million

1 Environmental Preservation 12,600

2 Consulting and Licensing Services 2,811

3 B3 Waste Management 44,075

4 Awareness 291

total 59,777

The environmental investment for environmental management in 2017 totaled Rp59.78 billion. This fund is used for environmental maintenance activities, consultancy and licensing services, waste management, and environmental awareness campaigns.

CoMPLIANCE WITH ENVIRoNMENTAL REGULATIoNS [GRI 307-1]

PT Pupuk Indonesia Group has operated its operations by complying all laws and regulations. In 2017 we never againts the applicable laws and regulations in the environment field. In 2017 PT Pupuk Iskandar Muda get administrative sanction from the Ministry of Environment and Forestry and has been declared done by the issuance of the letter No. S.1093 / PHLHK / PPSA / GKM.0 / 11/2017 on the Fulfillment of Administrative Sanctions from the Ministry Environmental and forestry.

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DeVelopinG top-notCh pRoDuCtS

PRIoRITIZING CUSToMER HEALTH ANd SAfETY [GRI 416-2]

Customers are the focus of Pupuk Indonesia, as they are the one who support the success of this company. Our mission is to efficiently produce and market prime-quality fertilizer and agribusiness products for customer satisfaction. Customer satisfaction and fulfillment of their needs are our focus, and we effectuate this through:• Producing quality fertilizer through quality

improvement efforts and emphasis on innovation.• Addressing customer responses and complaints.• Being on alert to provide solution and anticipate

potential problems.• Nurturing good relations with customers and other

stakeholders.• Ensuring that fertilizer is duly distributed, with the

most efficient cost.

Customer satisfaction is determinant factor for the success of the company. We care about our customers and are committed to delivering the best products and services to them.

Customers’ suggestions and feedback are important to us to improve our products’ quality. Therefore, Pupuk Indonesia runs a survey to know about customer satisfaction. In addition, the survey--containing current information from the field--also serves as the basis for us to make the best decisions. The survey is undertaken by independent party, with sampling method covering Indonesian territory. Our efforts of making customer satisfaction the first priority have borne fruits, reflected in customer survey result of “highly satisfied” and “satisfied” as shown in the table below. Furthermore, during the reporting period, there has not been any incident of violation related to health and safety of Pupuk Indonesia Group’s product and service.

• PrioritizingCustomerHealthandSafety

• ResponsibilityofProductInformationandCommunication

• ProductPackagingInformation

• CommitmenttoComplyingwithRegulations

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Customer Survey Respondent Category of Pupuk Indonesia Group year 2017Subsidized Fertilizer Customers of non-Subsidized Fertiliser Customers of non-Fertilizer

Distributor Distributor Distributor

Kiosk Exporter/Trader Exporter/Trader

Farmer Plantation company Industry

Industry

Survey Results of Customer Satisfaction Index of Pupuk Indonesia Group Year 2013-2017

2014 2015 2016 2017

Customer Satisfaction Index 4.22 4.24 4.19 4.26

Customer Dissatisfaction Index 1.68 1.60 1.70 1.51

Customer Loyalty Index 4.87 4.70 4.38 4.23

Customer Satisfaction Index of Non-Subsidized fertilizer Year 2013-2017

Description urea npK ammonia

Customer loyalty index

Value 4.32 4.08 4.24

Very satisfied Very satisfied Very satisfied

Customer Satisfaction index

Value 4.82 4.00 4.41


Customer Dissatisfaction index

Value 1.48 1.55 1.44


Even though our customers are mostly under “very satisfied” category, we welcome suggestions, complaints and queries of customers in relation to Pupuk Indonesia’s products and services. Looking into customer complaints, we have the opportunity to identify what needs to be improved, which is essential for the progress of our business. Therefore, we address each and every complaint thoroughly, in the following stages:

• Analysis of problems/complaints conveyed by the customers, for subsequent follow up of the complaints by related units.

• Identification of alternative solutions;• Determination of the solution

• Implementation of solution• Communicating the solution to customers.• Documenting and evaluating all incoming

complaints for follow-up, including making necessary improvements, to ensure that the same complaints do not recur and to increase customer satisfaction.

Various communication channels are used to support a smooth communication between Pupuk Indonesia and its customers through official websites, emails, call centers, and social media such as: Twitter, and Instagram.

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Recapitulation of Customer Complaints of PT Pupuk Indonesia Group 2017

type of Complaint number of Complaint number of Complaint Resolved percentage

Scarcity of Fertilizers 29 29 100

Fertilizer Non-Compliance 1 1 100

Complaint on Product 49 49 100

Disruption of Distribution 5 5 100

Issue of Service 9 9 100

total 93 93 100

RESPoNSIBILITY of PRodUCT INfoRMATIoN ANd CoMMUNICATIoN [GRI 417-2, GRI 417-3]

The general public needs to have clear information on every product packaged by Pupuk Indonesia. We believe a good labeling increases efficiency and effectiveness of the use of fertilizers as well as protect the public and the environment from harmful effect as a result of excessive use. Therefore, on every packaging of fertilizer, we state clear information on the content, time of circulation, usage instruction and all other important information related to the product. We enclose this information in such a way to make it clear and comprehensible. Taking into account that fertilizer is a categorized as hazardous and toxic substances if consumed by humans,

we ensure that every product is packaged in a special material that is not easily broken, in order to prevent the fertilizer from being spilled out. Therefore, the consumers would be protected from possibility of experiencing health issues when storing or using the fertilizers.

Pupuk Indonesia formulated several programs to satisfy and to foster strong relationships with its customers, as follows:a. Subsidized Fertilizer Sales territory Division.

In the distribution process of subsidized fertilizer, Pupuk Indonesia refers to the Regulation of the Minister of Commerce No. 15/M-DAG/PER/4/2013 on Subsidized Fertilizers Procurement and Distribution for the Agriculture Sector. We have also mapped the regions so as to accelerate subsidized fertilizer distribution. It is expected that with this rayonization-

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-which allows shorter and less costly distribution route, farmers and farmers’ groups would be able to obtain the required fertilizer at the right time and the right price. This fertilizer rayonization applies to distribution of subsidized fertilizers, i.e. Urea and organic fertilizer, in accordance with the following regulations:

• Letter of the President Director of PT Pupuk Indonesia (Persero) No. U-1797/A00000.UM/2015 dated 3 December 2015 on the Accountability for the Procurement and Provision of Subsidized Fertilizers for the Agriculture Sector.

• Letter of the President Director of PT Pupuk Indonesia (Persero) No. U-1298/A00.UM/2016 dated 27 July 2016 on the Changes to the zoning of Accountability for the Procurement and Distribution of Subsidized Urea for the Agriculture Sector in West Kalimantan Province.

• Letter of the President Director of PT Pupuk Indonesia (Persero) No. U-1674/A00.UM/2016 dated 26 September 2016 on the Changes to the zoning of Accountability for the Procurement and Distribution

of Subsidized Urea for the Agriculture Sector in Jambi Province.

• Letter of the President Director of PT Pupuk Indonesia (Persero) No. U-1331/A00.UM/2016 dated 30 July 2016 on the Accountability for the Procurement and Distribution of Subsidized Organic Fertilizers for the Agriculture Sector.

• Letter of the President Director of PT Pupuk Indonesia (Persero) rayon letter NPK No. U-1925/A00.UM/2016 dated 8 November 2016 on the Accountability for the Procurement and Distribution of Fertilizer.

b. integrated Fertilizer outletTo increase service for farmers, Pupuk Indonesia had engaged in fertilizer trading agreement contract (SPJB) with various distributors and retailers. The number of subsidized fertilizer distributors now stands at 1,542 companies, consisting of 59 State Owned Enterprises/ Regional Government Owned Enterprises, 149 cooperatives, and 1,344 private parties. It is expected that such sales system would increase efficiency and effectiveness in fertilizer distribution to farmers.

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PRodUCT PACKAGING INfoRMATIoN

Call Centre

Type of fertilizer

The Time of CirculationManufacturers Address

Registration Number

ManufacturersSNI Logo and SNI Number

Net Weight

Content of fertilizer

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c. Subsidized Fertilizer Coloring In order to prevent abuse by unauthorized parties in

the distribution of subsidized fertilizers, specific color indications are given. The color for urea fertilizer is now pink, whereas the color for zA fertilizer is orange. This is intended to distinguish between subsidized fertilizer (white colored) and commercial ones. The change in color does not affect the compositions and contents. Both fertilizers remain safe for usage, have eco-friendly characteristics, and will not poison the crops as they are produced from nonhazardous materials and are soluble in water.

d. one-brand bag uniformity There are times when farmers prefer certain brands

as they are already familiar with them. This is despite the fact that similar products can be use when certain products are not available. The Company has implemented a one-brand bag uniformity in order to optimize service to farmers. When demand rises, we would recommend farmers to be flexible in choosing similar products. Thus the supply of fertilizer of guaranteed excellence quality can be made. This also facilitates supervision. The one-brand bag uniformity methodology has been applied to subsidized urea and organic fertilizers.

Subsidized urea1 Subsidized npK phonska 2

Subsidized Sp-36 3 Subsidized Za 4 Subsidized organic5

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e. Joint promotion/Sponsorship and Counselling For enhancing overall effectiveness and efficiency

in promotion, Pupuk Indonesia strives to achieve synergy in joint promotion/sponsorship and national-scaled counseling activities. These counselling activities are also beneficial to farmers as we are backed with advance technology to improve farmers’ business. On several occasions, the counselling was organized in collaboration with related institutions in the agriculture sector.

f. Direct Selling to end users for Commercial Sector By direct selling to end users, Pupuk Indonesia and its

subsidiaries are expected to offer the best price and provide optimum service to the end users, which in turn will foster customer loyalty.

g. Distribution improvements Distribution route is a significant factor in the

distribution of our fertilizers. Smooth distribution process benefits the customers and supports the Company’ efficiency. For this objective, we apply the following strategies:

• Undertaking distribution service contract, for a period of 3 years, with the Subsidiaries, as an implementation of the Cost Reduction Program (CRP).

• Putting synergy in distribution, between PT Pupuk Indonesia Logistik and fertilizer-producing subsidiaries.

h. Fertilizer inventory management We apply rules to increase efficiency and effectiveness

in fertilizer distribution, which include:• Implementation of the Subsidized Fertilizer

Inventory Control Guidelines• Implementation of Optimum Fertilizer Inventory

Control Guidelines

To facilitate customers and other stakeholders in obtaining information on product and company profile, Pupuk Indonesia provides various facilities and channels made accessible.

During the reporting period there was no incidence of non-compliance with regulations relating to labeling and product and service information. And there are no incidents of non-compliance related to marketing communications.

information Support Requirements effectiveness measurement

Company profile, Info Product, Distributor

Website: www.pupuk-indonesia.com Easy access Number of visit

Products and services Telepon: 0800-100-800-1 Toll free Response Time

Product and Activity Information

Advertisement Informative Brochure, Print Media,Electronic MediaFacsimile: 201-80647955Email: [email protected]: @pt.pupukindonesiaTwitter: @pupuk_indonesia

Informative Information content

Pupuk Indonesia also opens a communication channel to accommodate the customers to provide input for advancing our business:

SegmentCustomer

Customer Group

media

Survey e-mail Fax Call Center ae Service Facebook

Subsidy Farmers √ √ √

Non subsidy Plantation √ √ √ √ √ √

Industry √ √ √ √ √ √

Export Trader √ √ √ √ √ √

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The customer input management process is in the mechanisms as follows:

Customer Care mechanism based on market Segmentation

Segment Customer Group Requirements and expectations

products mechanism

Subsidy Farmers

Availability UreaNPKSP-36

Sales representativeForum Group Discussion (FGD)

Product Quality zAOrganic

Non subsidy

Plantation

Product Quality Urea Sales representative Forum Group Discussion (FGD) Toll Free Phone Service, SMS, Customer Survey, Website

Product Type NPK

Price

IndustryProduct Quality urea Toll Free Phone Service, SMS, Customer Survey,

WebsitePrice ammoniac

Export TraderProduct Quality Urea Sales representative Forum Group Discussion (FGD)

Phone Service, SMS, Customer Survey, Website

Price NPK

Customer communication channel of product quality, customer support and transactions

type Feedback

Customer Survey letter/e-mail Call center SR/ae

Product quality √ √ √ √

Customer support √ √ √ √

Transaction √ √ √ √

Customer Support Channel Requirement

Account Executive (AE) Service Always ready for 1 x 24 hours to handle issues on site, based on scope of responsibility

Group Discussion Forum At the latest within 2 x 24 hours has been submitted to related parties to be followed up

Call Center - Toll free- 3x incoming call must be answered- Answering machine

SMS Centre - Toll free- At the latest within 2 x 24 hours has been answered

Letter/Email - At the latest within 2 x 24 hours has been answered

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CoMMITMENT To CoMPLYING WITH REGULATIoNS [GRI 419-1]

It is our commitment to the compliance with all applicable rules and regulations, as we aim to maintain Pupuk Indonesia Group’s business growth and soundness. During the reporting period of 2017, no legal breach occurred in relation to anti-competition, anti-trust, as well as monopoly practices, that may harm the industry in general.

We demonstrate our commitment to regulation compliance by implementing the Corporation-Based Food Production Enhancement Movement (GP3K). The GP3K is an embodiment of the Presidential Instruction No. 5/2011 on National Rice Production Security to Overcome Extreme Climate. In this Presidential Instruction, the SOE Ministry has the following duties: 1. Providing land in forest area with production

intercropping scheme for rice crops.

2. Providing and distributing production and distribution facilities of unhulled rice/rice, and

3. Providing and managing the Government’s unhulled rice/rice supply.

Pupuk Indonesia has been appointed being one of the GP3K operators, with total assigned area as follows:• Year 2011 - 100,000 hectares• Year 2013 - 1,000,000 hectares • Year 2014 - 1,200,000 hectares • Year 2016 - 1,380,000 hectares, or 75.2% of the target,

with average rice productivity of 1.13 tons/ha, or 20% higher than the preceding planting season’s figure.

• Year 2017 - crop realization reached 844,444 hectares, or 64,1% of the target and 5.7% higher than the realization in 2016. The average rice production in 2017 was 6.6 million tons per year.

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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

Independent Assurance Statement Report No.0418/BD/0010/JK

To the management of PT Pupuk Indonesia (Persero) Our engagement by PT Pupuk Indonesia (Persero) (‘PTPI’) was to provide assurance in respect to its Sustainability Report 2017 (‘the Report’). This engagement was carried out by our multi-disciplined assurance team who bring a wealth of experience to complement their diverse skills, and thus bring a high level of competence to conducting the assurance engagement. Independence We were not involved in the preparation of any key part of the Report and carried out all assurance undertakings with independence and autonomy. We did not provide any services to PTPI during 2017 that could conflict with the independence of the assurance engagement. Assurance Standards We conducted our work in accordance with ISAE3000 ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Accounting Standards Board. In addition, we have also planned and carried out our work in accordance with AA1000AS (2008) ‘AA1000 Assurance Standards (2008)’, issued by AccountAbility. Level of assurance and criteria used Our evidence-gathering procedures were designed to obtain a limited level of assurance based on ISAE3000 and a moderate level of assurance engagement as set out in AA1000AS (2008), thus providing confidence to readers by reducing risks or errors to a very low level, but not necessarily to zero. Moreover, the AA1000 AccountAbility Principles Standard (2008) of Inclusivity, Materiality and Responsiveness was also used as criteria in evaluating the Report.

Scope of Assurance We provided Type 2 assurance engagement under AA1000AS (2008). This involved: 1) assessment of PTPI’s adherence to the AA1000

AccountAbility Principles Standard (2008); and 2) assessment of the accuracy and quality of specified

sustainability performance information contained within the Report, in relation to the agreed scope, which consisted of: Partnership and community stewardship program Occupational health and safety Environmental management.

Responsibility

PTPI is responsible for all information and claims contained in the Report. These include established sustainability management targets, performance management, data collection, etc. as well as report preparation. Our responsibility to the management of PTPI in performing this engagement, meanwhile, is solely for the purposes of verifying its statements relating to its sustainability performance, specifically as described in the agreed scope, on which we are responsible to express our conclusions. Methodology

In assessing the veracity of certain assertions and specified data sets included within the report, as well as the systems and processes used to manage and report these, we employed the following methods during the engagement process: Reviewed report, internal policies, documentation,

management and information systems Interviewed staff involved in sustainability-related

management and reporting Followed data trails to the initial aggregated

source, checking samples of data to a greater depth.



Limitations Our scope of work was limited to a review of the accuracy and reliability of specified data and interviews with data providers, persons in charge of data collection and processing, as well as persons in charge of sustainability performance-related information. Conclusions Conclusions in regard to adherence to the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness include the following findings: Inclusivity

An assessment was made on whether PTPI has included all key stakeholders in developing and achieving an accountable and strategic response to sustainability issues. Our assessment determined that PTPI has an effective system in place for key stakeholders to participate in the development of the organization's response in the context of sustainability, thus demonstrating a strong commitment to stakeholder inclusivity. The conduct of needs assessment surveys and materiality level survey of the key stakeholder groups were prime examples of PTPI’s concern. Nevertheless, we recommend that PTPI continues to monitor its stakeholder inclusivity systems and procedures on a regular basis, plus implement improvements where these will strengthen the effectiveness of inclusivity.

Materiality With stakeholders requiring material information on which to base their informed judgments, decisions and actions, an assessment was carried out to determine the extent to which PTPI has included such information in the Report. Key material issues were adequately reported and balanced information provided about PTPI's sustainability performance, indicative of its strong commitment in this field. With the breadth of information required continuing to widen, however, we recommend that PTPI continues to play close attention to conducting materiality tests on a regular basis in future reports.

Responsiveness

Responding to meeting stakeholder expectations is increasingly important and an assessment was carried out to determine whether PTPI demonstrates its accountability in responding to them. PTPI's allocation of resources to stakeholder engagement, the timeliness and accessibility of reported information, and the types of communication mechanisms regularly employed were all indicative of its responsiveness to key stakeholder concerns and expectations. As in other areas, however, vigilance is key and we recommend that PTPI continues to monitor and improve stakeholder engagement procedures on a regular basis in future reports.

Based on our limited assurance engagement, nothing has come to our attention that causes us to believe that the data of the Report has been materially misstated. All key assurance findings are included herein, while detailed observations and follow-up recommendations have been submitted to PTPI management in a separate report. Jakarta, April 20, 2018

James Kallman Chief Executive Officer Moores Rowland is an international organization specializing in audit, accounting, tax, legal and advisory services. Moores Rowland is a member of Praxity AISBL, the world's largest Alliance of independent and unaffiliated audit and consultancy companies. With more than 33,400 professionals operating in 97 countries across the globe, each sharing the same values and sense of responsibility, Praxity is served by Moores Rowland in Indonesia, one of the leading sustainability assurance providers.

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Limitations Our scope of work was limited to a review of the accuracy and reliability of specified data and interviews with data providers, persons in charge of data collection and processing, as well as persons in charge of sustainability performance-related information. Conclusions Conclusions in regard to adherence to the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness include the following findings: Inclusivity

An assessment was made on whether PTPI has included all key stakeholders in developing and achieving an accountable and strategic response to sustainability issues. Our assessment determined that PTPI has an effective system in place for key stakeholders to participate in the development of the organization's response in the context of sustainability, thus demonstrating a strong commitment to stakeholder inclusivity. The conduct of needs assessment surveys and materiality level survey of the key stakeholder groups were prime examples of PTPI’s concern. Nevertheless, we recommend that PTPI continues to monitor its stakeholder inclusivity systems and procedures on a regular basis, plus implement improvements where these will strengthen the effectiveness of inclusivity.

Materiality With stakeholders requiring material information on which to base their informed judgments, decisions and actions, an assessment was carried out to determine the extent to which PTPI has included such information in the Report. Key material issues were adequately reported and balanced information provided about PTPI's sustainability performance, indicative of its strong commitment in this field. With the breadth of information required continuing to widen, however, we recommend that PTPI continues to play close attention to conducting materiality tests on a regular basis in future reports.

Responsiveness

Responding to meeting stakeholder expectations is increasingly important and an assessment was carried out to determine whether PTPI demonstrates its accountability in responding to them. PTPI's allocation of resources to stakeholder engagement, the timeliness and accessibility of reported information, and the types of communication mechanisms regularly employed were all indicative of its responsiveness to key stakeholder concerns and expectations. As in other areas, however, vigilance is key and we recommend that PTPI continues to monitor and improve stakeholder engagement procedures on a regular basis in future reports.

Based on our limited assurance engagement, nothing has come to our attention that causes us to believe that the data of the Report has been materially misstated. All key assurance findings are included herein, while detailed observations and follow-up recommendations have been submitted to PTPI management in a separate report. Jakarta, April 20, 2018

James Kallman Chief Executive Officer Moores Rowland is an international organization specializing in audit, accounting, tax, legal and advisory services. Moores Rowland is a member of Praxity AISBL, the world's largest Alliance of independent and unaffiliated audit and consultancy companies. With more than 33,400 professionals operating in 97 countries across the globe, each sharing the same values and sense of responsibility, Praxity is served by Moores Rowland in Indonesia, one of the leading sustainability assurance providers.

Statement GRI Standards Core in Accordance Check

The National Center for Sustainability Reporting (NCSR) has conducted a GRI Standards Core in Accordance Check on the PT Pupuk Indonesia (Persero) Sustainability Report 2017 (“Report”). The check communicates the extent to which the GRI Standards Core criteria 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: Core option.

Jakarta, 18 April 2018

National Center for Sustainability Reporting

Dewi Fitriasari, Ph.D., CSRA, CMADirector

STATEMENT GRI STANdARdS CoRE IN ACCoRdANCE CHECK

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GRi StandardDisclosure

page no title

GeneRal DiSCloSuRe

GRI 102 General Disclosure 2016

organization profile

102-1 Name of the organization 22

102-2 Activities, brands, products, and services 23

102-3 Location of headquarters 22

102-4 Location of operations 22

102-5 Ownership and legal form 22

102-6 Markets served 22

102-7 Scale of the organization 28

102-8 Information on employees and other workers 66

102-9 Supply chain 30

102-10 Significant changes to the organization and its supply chain 16

102-11 Precautionary Principle or approach 101

102-12 External initiatives 46

102-13 Membership of associations 46

Strategy

102-14 Statement from senior decision-maker 35, 37

ethics and integrity

102-16 Values, principles, standards, and norms of behavior 30

Governance

102-18 Governance structure 42

Stakeholder engagement

102-40 List of stakeholder groups 46

102-41 Collective bargaining agreements 97

102-42 Identifying and selecting stakeholders 46

102-43 Approach to stakeholder engagement 46

102-44 Key topics and concerns raised 46

INdEx STANdARd GRI [GRI 102-55]

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page no title

Reporting practice

102-45 Entities included in the consolidated financial statements 16

102-46 Defining report content and topic Boundaries 16, 17

102-47 List of material topics 18

102-48 Restatements of information 16

102-49 Changes in reporting 16

102-50 Reporting period 16

102-51 Date of most recent report 15

102-52 Reporting cycle 15

102-53 Contact point for questions regarding the report 19

102-54 Claims of reporting in accordance with the GRI Standards 15

102-55 GRI content index 15

102-56 External Assurance 19

SpeCiFiC topiC DiSCloSuRe

eConomy impaCt

economic performance

GRI 103 Management Approach 2016

103-1 Explanation of the material topic and its Boundary 18

103-2 The management approach and its components 52-59

103-3 Evaluation of the management approach 52-59

GRI 201 Economic Performance

201-1 Direct economic value generated and distributed 52

201-2 Financial Implications and Other Risks and Opportunities due to Climate Change

59

201-4 Financial Assistance Received from Government 57

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page no title

indirect economic impacts





GRI 103 Significant indirect economic impacts

203-1 Infrastructure Investments and Services Supported 56

203-2 Significant indirect economic impacts 57

procurement practice



103-2 The management approach and its components 56

103-3 Evaluation of the management approach 56

GRI 204 Procurement Practice

204-1 Proportion of Spending on Local Suppliers 56

anti-Corruption





GRI 205 Anti-Corruption

205-1 Operations assessed for risks related to corruption 45

205-2 Communication and training about anticorruption policies and procedures

44

enViRonmental impaCt

materials





GRI 301 Materials 301-1 Materials used by weight or volume 102

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page no title

energy





GRI 102 Energy 302-1 Energy consumption within the organization 105

302-3 Energy intensity 107

302-4 Reduction of energy consumption 107

Water





GRI 303 Water 303-1 Water withdrawal by source 108

303-3 Water Recycled and Reused 110

emissions





GRI 305 Emissions 305-1 Direct (Scope 1) GHG emissions 111

305-2 Energy indirect (Scope 2) GHG emissions 112

305-4 Greenhouse Gas Emission Intensity 112

305-5 Reduction of GHG emissions 112

305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions

113

effluents and Waste





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page no title

GRI 306 Effluents And Waste

306-1 Water discharge by quality and destination 116

306-2 Waste by type and disposal method 112

306-4 Transport of Hazardous Waste 116

environmental Compliance





GRI 307 Environmental Compliance

307-1 Non-compliance with environmental laws and regulations 123-124

SoCial impaCt

employment



103-2 The management approach and its components 68, 76

103-3 Evaluation of the management approach 68, 76

GRI 401 Employment 401-1 New employee hires and employee turnover 68

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

76

occupational health and Safety





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page no title

GRI 403 Occupational Health and Safety

403-1 Workers representation in formal joint management worker health and safety committees

97

403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

94, 97

403-3 Workers with High Incidence or High Risk Diseases related to Their Occupation

98

403-4 Health and safety topics covered in formal agreements with trade unions

97

training and education





GRI 404 Training And Education

404-1 Average hours of training per year per employee 72

404-2 Programs for upgrading employee skills and transition assistance programs

72, 77

404-3 Percentage of Employees Receiving Regular Performance and Career Development Reviews

74

Diversity and equal opportunity





GRI 103 Diversity And Equal Opportunity

405-1 Diversity of governance bodies and employees 69, 70, 74

405-2 Ratio of basic salary and remuneration of women to men 74

local Communities





GRI 413 Local Communities

413-1 Operations with Local Community Engagement, Impact Assessments and Development Programs

80

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page no title

public policy





GRI 415 Public Policy 415-1 Political Contributions 45

Customers health and Safety





GRI 416 Customers Health and Safety

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services

127

marketing and labeling





GRI 417 Marketing and Labeling

417-2 Incidents of non-compliance concerning product and service information and labeling

129

417-3 Incidents of non-compliance concerning marketing communications

129

Socio economic Compliance





GRI 419 Socio economic Compliance

419-1 Non-compliance with Laws and Regulations in the Social and Economic Area

134

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materiality link in the Report link to SDGs

Topic specific standard: [GRi 200]ECONOMIC

Topic specific disclosure [GRi 201]ECONOMIC PERFORMANCE

Fostering the Prosperity of the Country

Disclosure [GRi 201-2]Financial implications and other risksand opportunities due to climatechange


Disclosure [GRi 201-4]Financial assistance received from government


Topic specific disclosure: [GRi 203]INDIRECT ECONOMIC IMPACTS

Disclosure [GRi 203-1]Infrastructure investments and services supported

Disclosure [GRi 203-2] Significant indirect economic impacts

Cultivating Employees’ Performance Reliability


SdG’S LINK IN GRI STANdARd

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Topic specific disclosure: [GRi 204] PROCUREMENT PRACTICES

Disclosure [GRi 204-1]Proportion of spending on local suppliers Fostering the Prosperity of the Country

Topic specific disclosure: [GRi 205] ANTI-CORRUPTION

Disclosure [GRi 205-1] Operations assessed for risks related to corruption

Disclosure [GRi 205-2] Communication and training about anti-corruption policies and procedures


Topic specific standard: [GRi 300] ENVIRONMENTAL

Topic specific disclosure: [GRi 301] MATERIALS

Disclosure [GRi 301-1]Materials used by weight or volume

Cultivating Sustainability for the Future

Topic specific disclosure: [GRi 302]ENERGY

Disclosure [GRi 302-1] Energy consumption within the organization

Disclosure [GRi 302-3]Energy intensity

Disclosure [GRi 302-4]Reduction of energy consumption


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Topic specific disclosure: [GRi 303]WATER

Disclosure [GRi 303-1] Water withdrawal by source

Disclosure [GRi 303-3]Water recycled and reused


Topic specific disclosure: [GRi 303]BIODIVERSITYHabitats Protected or Restored


Topic specific disclosure: [GRi 305]EMISSIONS

Disclosure [GRi 305-1]Direct (Scope 1) GHG emissions

Disclosure [GRi 305-2]Energy indirect (Scope 2) GHG emissions

Disclosure [GRi 305-4]GHG emissions intensity

Disclosure [GRi 305-5]Reduction of GHG emissions

Disclosure [GRi 305-7] Nitrogen oxides (NOX), sulfur oxides(SOX), and other significant air emissions


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Topic specific disclosure: [GRi 306]EFFLUENTS AND WASTE

Disclosure [GRi 306-1] Water discharge by quality anddestination

Disclosure [GRi 306-2]Waste by type and disposal method

Disclosure [GRi 306-4]Transport of hazardous waste


Topic specific disclosure: [GRi 307]ENVIRONMENTAL COMPLIANCE

Disclosure: [GRi 307-1]Non-compliance with environmental laws and regulations


Topic specific disclosure: [GRi 400]SOCIAL

Topic specific disclosure: [GRi 401] EMPLOYMENT

Disclosure: [GRi 401-1] New employee hires and employeeturnover

Disclosure: [GRi 401-2] Benefits provided to full-time employees that are not provided to temporary orpart-time employees



Topic specific disclosure: [GRi 403] OCCUPATIONAL HEALTH ANDSAFETY

Disclosure: [GRi 403-1] Workers representation in formal joint management–worker health and safetycommittees


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Disclosure: [GRi 403-2] Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-relatedfatalities

Disclosure: [GRi 403-3] Workers with high incidence or high riskof diseases related to their occupation

Disclosure: [GRi 403-4] Health and safety topics covered in formalagreements with trade unions




Topic specific disclosure: [GRi 404]TRAINING AND EDUCATION

Disclosure: [GRi 404-1] Average hours of training per year peremployee

Disclosure: [GRi 404-2] Programs for upgrading employee skillsand transition assistance programs

Disclosure: [GRi 404-3] Percentage of employees receiving regular performance and career development reviews




Topic specific disclosure: [GRi 405] DIVERISTY AND EQUALOPPORTUNITY

Disclosure: [GRi 405-1] Diversity of governance bodies andemployees

Disclosure: [GRi 405-2] Ratio of basic salary and remuneration ofwomen to men



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Topic specific disclosure: [GRi 413]LOCAL COMMUNITIES

Disclosure: [GRi 413-1] Operations with local communityengagement, impact assessments, anddevelopment programs

Cultivating Welfare in Togetherness

Topic specific disclosure: [GRi 415]PUBLIC POLICY

Disclosure: [GRi 415-1] Political contributions

Cultivating Sustainable Governance

Topic specific disclosure: [GRi 416]CUSTOMER HEALTH AND SAFETY

Disclosure: [GRi 416-2]Incidents of non-compliance concerning the health and safety impacts of products and services

Cultivating Pride in Our Products

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Topic specific disclosure: [GRi 417]MARKETING AND LABELING

Disclosure: [GRi 417-2]Incidents of non-compliance concerning product and service information and labeling

Disclosure: [GRi 417-3] Incidents of non-compliance concerning marketing communications



Topic specific disclosure: [GRi 419]SOCIOECONOMIC COMPLIANCE

Disclosure: [GRi 419-1]Non-compliance with laws and regulations in the social and economic area


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Sustainability Report

SYNERGY FoR SuStainability

PT Pupuk Indonesia (Persero)

Kantor Pusat | Head Office

Jalan Taman Anggrek, Kemanggisan Jaya,


Telepon | Phone (hunting): +62 21 536 54900

faksimile | Facsimile: +62 21 80647955


Website: http://www.pupuk-indonesia.com

Layanan Informasi | For further information

0800-1-008001 (Toll free)

SYNERGY foR SuStainabilitypupuk-indonesia.co.id/public/uploads/2018/08/SR-Pupuk-Indonesia_English_FINAL-(1... · Jalan Taman Anggrek, Kemanggisan Jaya, ... LAPORAN KEPADA PEMANGKU

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