SYNERGY foR SuStainability - Pupuk Indonesia · 2018. 8. 20. · Development Supervisory Body...

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 trillionConsolidated 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 billionRealization 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 billionRealization 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

Jakarta 11480, Indonesia

Telephone: +62 21 53654900

Facsimile: +62 21 80647955

Email: [email protected]

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 wh

SYNERGY foR SuStainability - Pupuk Indonesia · 2018. 8. 20. · Development Supervisory Body...

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