PT Sarana Multi Infrastruktur (Persero) Policy on Biodiversity Conservation and Natural Resource Management

As a Special Mission Vehicle under coordination of the Ministry of Finance of the Republic of Indonesia, PT Sarana Multi Infrastruktur ("PT SMI") (Persero) is committed to support the Government of Indonesia in accelerating national infrastructure development through the consistent application of a sustainable development approach. In conducting its business operations, PT SMI is dedicated to upholding the principles of the biodiversity mitigation hierarchy by avoiding, reducing or minimizing threats to biodiversity, at least to achieve no net loss of biodiversity, that may arise from financing and investment activities, project preparation, and advisory services. Furthermore, we intend to encourage our clients to make any possible efforts to manage natural resources aimed at preserving biodiversity ranging from preparation to operational phases. The mitigation measures can be a combination of several actions including but not limited to avoiding habitat disruption; implementing best management practices for affected habitats or restoration after the completion of the client’s business/activity; and offset of losses through the creation or effective conservation of comparable ecological areas managed for biodiversity.

PT SMI focuses on promoting the sustainable utilization of natural resources by adhering to the principles and standards of PT SMI’s Environmental and Social Safeguards (ESS) 6: Biodiversity Conservation and Natural Resources Management, which refers to the Law of the Republic of Indonesia Number 32 of 2009 on Environmental Protection and Management (State Gazette of the Republic of Indonesia Year 2009 No. 140, Supplement to the State Gazette of the Republic of Indonesia No. 5059), as amended by Government Regulation in Lieu of Law of the Republic of Indonesia Number 2 of 2022 on Job Creation, Paragraph 3: Environmental Approval; and adopts international standards, including ESS-6 of the International Finance Corporation Performance Standards, as well as the standards of the World Bank and the Asian Development Bank.

Our commitment in implementing Biodiversity Conservation and Sustainable Natural Resource Management, includes:

1. Not providing financing to client activities/businesses that are included in the Company's Exclusion List as stated in PT SMI's Environmental and Social Safeguards Procedures (Appendix I) (https://www.ptsmi.co.id/environmental-social-safeguard), or where such activities may result in any of the following:
   • Alteration and/or destruction of natural habitats and critical habitats which are not provided by appropriate environmental management plans;
   • Mining or excavation of live coral, and other activities that will disturb and damage coral reef habitats that are not accompanied by appropriate environmental management plans;
   • Conversion, clearing, burning, or commercial logging operations in humid tropical primary or protected forests included in the moratorium on new permit area;
   • Production or trade in timber or other forest products, other than from sustainably managed forests in line with PT SMI’s ESS-6;
   • Destruction, clearing of vegetation, drainage, burning, commercial or small-scale logging, plantation or agricultural activities on peatlands with a protection function or peat with a depth of more than 3 (three) metres;
   • Destruction, cutting of vegetation, drainage, or burning of freshwater wetlands that have protection functions; and
   • Destruction, cutting of vegetation, drainage, or burning of mangrove forests that are not equipped by appropriate environmental management plans.
2. In case the client does not have any other options to avoid project implementation in a natural habitat, the client shall ensure:
   • The availability of analyses demonstrating that the benefits gained from the project, including its environmental benefits, will significantly outweigh the potential impact on the surrounding ecology;
   • No net loss of biodiversity; and
   • All changes and degradations  should adhere to all applicable legal requirements, obtain necessary permits, and be properly managed.
3. In case the client does not have any other options to avoid project implementation in a critical habitat, the client shall ensure:
   • Restrictions on significant alteration or degradation in critical habitat;
   • The activity/business will not result in a decrease in the population of threatened or endangered species, and will not cause the disappearance of species in the habitat area, so as not to jeopardise the ability of the ecosystem to survive;
   • Impact assessments have been conducted to identify potential damage to critical habitats that have high biodiversity values or important ecological functions; and
   • Use a precautionary approach to the use, development and management of renewable natural resources.
4. Ensure that in every activity or business, the client should adhere to all applicable legal requirements and permits, relevant stakeholders communications and consultation; does not intentionally place or bring new species into the business/activity location; and has assessed environmental and social issues and mitigated risks that may arise if the business/activity needs to use surface water and/or groundwater.

The assessment of the Biodiversity Conservation and Natural Resource Management Policy will be undertaken through the Environmental and Social Due Diligence (ESDD) process. If necessary, to ensure compliance with this policy and PT SMI’s ESS-6, Corrective Action Plan will be applied. The approval will be determined by the financing committee, taking into consideration the results of the ESDD.

This policy reflects the company’s strong emphasis to contributing to the Sustainable Development Goals (SDGs), particularly SDG 13 (Addressing Climate Change), SDG 14 (Marine Ecosystems), and SDG 15 (Terrestrial Ecosystems).

Through Biodiversity Conservation and Natural Resource Management Policy, PT SMI works toward supporting environmentally friendly and socially responsible infrastructure developments to ensure ecosystem sustainability for future generations. With this step, PT SMI aims at making tangible contributions in achieving Indonesia's sustainable development goals.

PT Sarana Multi Infrastruktur (Persero) Policy on Sustainable Energy Development and Management

PT SMI has established specific criteria for managing increasing environmental and social risks related to the Energy sector. The implementation of the Sector Specific Statement by PT SMI is inseparable from the provisions outlined in the Environmental and Social Safeguards (ESS) Procedure, which explain in detail how PT SMI evaluates environmental and social risks.

Provisions related to specific energy sectors include:

• The specific sectors include power utilities, waste-to-energy, infrastructure related to the oil and gas industry, and other activities associated with energy use, based on PT SMI's financing objects in accordance with the Financial Services Authority Regulation (POJK) No. 16 of 2024 concerning the Supervision of PT Sarana Multi Infrastruktur (Persero).
• The scope of activities for power utilities includes electricity production, transmission, distribution, and supply. Power generation/production encompasses fossil fuel-based energy sources other than coal, new and renewable energy, as well as nuclear energy. Meanwhile, infrastructure related to the oil and gas industry includes supporting infrastructure  for extraction, refinery, processing, and transportation activities.
• PT SMI prioritizes projects that realize a just clean energy transition, energy efficiency, carbon emission reduction, and the use of green technology and infrastructure to ensure the availability and need for future energy demands. Evaluation towards projects is done in strict compliance with national regulations and international standards.
• The financing conducted by PT SMI focuses on renewable energy-based projects, including minihydro, biomass, water, geothermal, solar, wind, and other new and renewable energy sources, as part of its commitment to sustainable energy transition. This support aims to promote the use of more environmentally friendly energy sources, reduce carbon emissions, and enhance long-term energy resilience.
• In order to support the Government to manifest national energy independence and energy transition, PT SMI provides financing for non-coal-fired power generation sectors, such as Gas Power Plants (PLTG) and Gas and Steam Power Plants (PLTGU), while applying sustainability-based evaluation standards. In the financing process, PT SMI assesses and ensures the client/debtor’s efforts in monitoring Greenhouse Gas (GHG) emissions in accordance with national regulations and international standards, including the GHG Protocol. These efforts encompass emission inventory, regular measurement and reporting, the establishment of measurable emission reduction targets, and periodic reporting to ensure the effectiveness of decarbonization strategies in the funded projects.
• PT SMI is committed to ensure that all financing initiatives in the oil and gas sectors are conducted in alignment with sustainability principles and applicable environmental and social policies. During the financing process, PT SMI evaluates and ensures the client/debtor's efforts in adopting green technologies, monitoring GHG emissions in compliance with national regulations and international standards, including the inventory, measurement, and reporting of GHG emissions, implementing decarbonization strategies, and prioritizing the use of renewable energy for operational activities.
• In accordance with ESS-9 standard on Energy Conservation and Environmentally Friendly Energy Use, clients/debtors or business activities are encouraged to adopt energy-saving measures and the use of environmentally friendly renewable energy. These efforts not only represent proactive steps in environmental protection but also form part of the obligation to comply with national energy conservation regulations. This standard requires companies to implement energy conservation at every operational stage, utilize energy-efficient technologies, and systematically manage energy, including the development of programs, periodic evaluations, and reporting on the implementation of energy conservation measures.
• ESS-9 standard also highlights the importance of energy saving through clear policies, efficiency improvement evaluation, and utilization of energy saving tools in order to further decrease GHG emissions. In case direct reduction of energy consumption is not feasible, companies are expected to adopt compensatory measures that can mitigate environmental impacts.
• In the Five-Year Target of Sustainable Finance Action Plan (RAKB) from 2025-2029, PT SMI has set the following targets: reducing the financing/outstanding amount for coal-fired power plant projects to a maximum of 5%, increasing the portfolio of sustainable financing (green and social projects), and expanding financing sectors related to New and Renewable Energy (NRE) and renewable energy efficiency with an outstanding amount of up to Rp 16,541 trillion or at least 20% of the financing portfolio by the end of 2029. Additionally, PT SMI aims to increase the Renewable Energy (RE) generation capacity from its financed portfolio by at least 40 MW compared to the previous year and to raise the number of avoided emissions (carbon avoidance) from the RE power sector by 15% by the end of 2029, compared to the 2023 baseline.
• Projects have to comply with the energy efficiency standard that are appointed by national and international regulations.

In the implementation, monitoring, and reporting of other financing facilities, PT SMI establishes criteria for assessing financing in the energy use sector. These criteria include Environmental and Social Due Diligence (ESDD), guided by PT SMI's Environmental and Social Safeguard (ESS) Procedures. Additionally, compliance monitoring of the Corrective Action Plan (CAP) is conducted through the Safeguard Monitoring System (SMS) and periodically evaluated through the Environmental and Social Monitoring Report (ESMR) to ensure sustainability and adherence to established standards.

With this statement, PT SMI affirms its role in supporting sustainable economic growth, as well as encouraging the implementation of best practices in managing the energy sector in Indonesia.