OECD Focus Group Discussion I: Transition finance in Indonesia, 21 March 2023, virtual meeting

1. BMRI Transition
Initiatives towards
Low Carbon Economy
Environmental, Social, and Governance Group
PT Bank Mandiri (Persero) Tbk
Jakarta, 2023

2. 1
Commitment
SDGs
Strategy &
Initiatives
BECOMING INDONESIA’S SUSTAINABILITY CHAMPION FOR A BETTER FUTURE
1 | 6 | 7 | 8 | 9 | 11 | 12 | 13 |14 | 15 | 17 3 | 4 | 5 | 6 | 7 | 8 | 10 | 11 | 12 | 13 | 16 1 | 2 |3 | 4 | 5 | 8 | 9 | 10 | 11 | 13 | 17
SUSTAINABLE BANKING SUSTAINABLE OPERATION SUSTAINABILITY BEYOND BANKING
1. ESG Aspect in Priority Sectors
(Workshop/Benchmarking, Sector
Policy Enhancement, Alignment
with Indonesia Green Taxonomy)
2. Sustainable Product/Services
(Green Loan, Social Loan,
Sustainability Linked Loan,
Sustainability Bond, ESG Repo)
3. Proactive Strategy on Data Privacy & Security
4. Equality & Diversity on work environment
5. Green Working Culture Transformation
a. Empowering HR in Green Campaign
b. Green Office/Building
6. Environmental Future through
a. Carbon Tracking (scope 1,2,3 operational)
b. Carbon Insetting / Natural Based Solution
7. Empowering Society & Communities
Entrepreneurship for Indonesia Migrant
Worker, Young Entrepreneur, KUR,
Branchless Banking, Rice Milling Unit,
Rumah BUMN
8. Leading Sustainability Research to
accelerate Indonesian Low Carbon
Economy (by Mandiri Institute)
ENABLER 9. Strengthening ESG Governance, Capacity Development & Disclosure
Lead Indonesia’s Transition
to Low Carbon Economy
Net Zero Operational Carbon Emissions
(Scope 1 & 2) by 2030
Catalyzing Multiple Growth
for Social Impact to Achieve SDGs
Sustainable Finance
Product & Service
Development
Internal Capability
Development
Organization, Risk
Management,
Governance/
Procedure
related to
Sustainable Finance
Principles
1
2
3
Sustainable Finance
Priorities (POJK 51/2017)
Bank Mandiri has established a 3 Pillar Framework for implementing Sustainable Finance in accordance with
POJK 51/2017 and achieving the aspiration of becoming a Sustainability Champion

3. 2
Rp 228 Tn or 24.5%
Rp 106 Tn or 11.4%
Green Portfolio
Rp 122 Tn or 13.1%
Social Portfolio
Sustainable Portfolio
Sustainable Funding
01. Sustainability Bond 02. ESG Repo
Sustainability Bond of USD 300 Mn
to finance/ refinance Green & Social
criteria activities
Sustainable Policy
Counterparty Tenor Amount
Counterpart A 4 - 5 Yrs USD 225 Mn
Counterpart B 4 - 4.5 Yrs USD 275 Mn
Total USD 500 Mn
ESG Cross Currency Repo of USD 500 Mn
(proceeds comply to BMRI Sustainability Bond
Framework)
Renewable Energy
6.1 Tn
Sustainable Agriculture
92.9 Tn
Eco-Efficient Products
3.3 Tn
Clean Transportation
3.1 Tn
MSMEs
117 Tn
Others
(green buildings, etc.)
5.1 Tn
54%
46%
Social Assets Green Assets
Integrating ESG Aspects in Priority Sectors - Industry Acceptance Criteria (IAC)
Palm Oil Energy
Mining
Coal
FMCG Others
Negative List
• ISPO/RSPO certification
• Occupational Health & Safety
• Preventing & handling land fires
according to applicable standards
• Waste Treatment Plant
• No Deforestation, No Peat, and No
Exploitation (NDPE)
Construction of a new Coal-fired
Power Plant:
• Alignment with the government’s
energy transition timeline
• Environmental (carbon emissions,
coal ash, water & waste
management) and Employment
policies
• Alignment with the
government’s Coal
phase-out regulations
• Prioritizing clients with
transition strategy and
climate-related risk
management.
Good Mining Practices, including the
Annual Work Plan & Budget (RKAB),
which has been approved by the
Indonesian Ministry of Energy and
Mineral Resources
Environmental policies (such as the use
of chemicals and water & waste
management) & certification from the
National Agency of Drug and Food
Control (BPOM).
Environmental Management
Certifications and Occupational
Health and Safety (OHS)
management certifications
Any activities that harm the Environment
Illegal Logging
Utilization of Peatland
Pornography & Human Right Violations
Gambling Business
Drugs & Narcotics
Other activities prohibited by laws and
regulations
The Sustainable Banking pillar focuses on the development of Sustainable Financial Products and the
integration of ESG aspects in Financing Process & Policies
(according to POJK 51/2017 classification)

4. 3
BMRI role ESG Coordinator
Facility Syndication Loan (total limit of IDR 4.15 Tn, 5 years tenor)
Interest Rate - 10 bps (if meet all KPIs) / + 7.5 bps (if not meet all KPIs)
KPI/SPTs GHG Reduction (Scope 1)
Scope 1 CO2 emission to be equal to or less than [520] kgCO2 per tonne
cement eqv. (17.4% reduction from baseline) or ambitious target up to [493]
kgCO2 per tonne cement eqv (21.5% reduction from baseline) by 2032
BMRI role MLA & Bookrunner
Facility Syndication Loan (total limit of IDR 2.33 Tn, 5 years tenor)
Interest Rate -1 to 4 bps (if meet all KPIs) / remain unchanged (if not meet all KPIs)
KPI/SPTs 1. To maintain annual avg. Somatic Cell Count at the Group Level
2. Total estimated electricity to be generated from Renewables
3. Total GHG emission to be reduced (0.9419 kg CO2 / kWh)
Bank Mandiri's commitments to Lead Indonesia's Transition to Low Carbon Economy are implemented by
providing Transition Finance Instruments such as Sustainability Linked Loans
SECTOR SPECIFIC EXPERTISE
Transition Finance requires specific capability & expertise in each
business sectors to develop sustainability framework & targets setting
CLIENT’S PUSH FACTORS
COMPLEX STRUCTURE
It requires encouragement from shareholders and regulators for clients to
develop a transition strategy
Transition Finance requires a highly customized structure, with longer process
and additional costs (e.g framework development & Second Party Opinion)
CAPABILITY DEVELOPMENT
• Bank Mandiri actively conducts training & workshops related
to Sustainable & Transition Finance in priority sectors
• Develop Guidelines for Sustainable & Transition Finance
CLIENT’S ENGAGEMENT
Bank Mandiri promotes ESG awareness among clients
through workshops that involve clients, sector expertise &
relevant stakeholders
Cement Industry Dairy Farm
BMRI Sustainability Linked Loan
Challenges in Transition Finance

5. 4
Green & Sustainable Finance have focused on supporting low-carbon emissions activities. However, to
eventually achieve NZE, a much larger amount of financing is required to decarbonize carbon-intensive sectors
Financial Institutions need transition finance framework & guidelines that caters following elements:
Clear Identification of Transition Activities
➢ Guidelines on transition finance definitions &
Taxonomy
Transparency & Monitoring
➢ Disclosure & Reporting standard
Innovative Financing Instruments
➢ Guidelines for Transition Finance products
development
• Transition Loan
• Sustainability Linked Loans & Bonds
Government Support
➢ Fiscal, tax & other green finance-
related incentives
Mitigating Social Impact
➢ A Just Transition (greening the economy
in a way that is as fair and inclusive)

6. PT Bank Mandiri (Persero) Tbk
Environmental, Social, and Governance Group
Plaza Mandiri
Jalan Jend Gatot Soebroto Kav 36-38
Jakarta 12190, Indonesia
Email Address
esggroup@bankmandiri.co.id