DUBAI - PT Pupuk Indonesia (Persero) has signed a Memorandum of Understanding (MoU) for collaboration with PT Bank Mandiri (Persero) Tbk, for the development of an Environmental, Social, and Good Governance (ESG) Framework and the potential provision of green financing based on Sustainability Linked Loan.

The MoU was signed by the President Director of Pupuk Indonesia, Rahmad Pribadi, and the President Director of Bank Mandiri, Darmawan Junaidi, in Dubai, the United Arab Emirates (UAE), on Thursday (30/11/2023). Following the signing, Rahmad stated that Pupuk Indonesia, along with Bank Mandiri, shares the common goal of building sustainable businesses while considering Environmental, Social, and Governance (ESG) aspects.

"To realize our vision as a global fertilizer and petrochemical industry, Pupuk Indonesia is currently focusing on the strength to accelerate and create a new future through the environmentally friendly downstream industry. Thus, the implementation of ESG aspects becomes a crucial instrument in its future business development," said Rahmad.

Rahmad further explained that this collaboration is part of Pupuk Indonesia's program to reduce carbon emissions, aligning with the COP28 theme, the 28th United Nations Climate Change Conference, taking place in Dubai. During COP28, world leaders discuss and collaborate on ways to limit and prepare for mitigating the impacts and risks of climate change in the future.

In this signed collaboration with Bank Mandiri, the bank will provide financing to Pupuk Indonesia based on a Sustainability Linked Loan scheme for various projects related to sustainable ESG programs. These projects include investments in Soda Ash in Gresik & Bontang, renewable energy (EBT), financing related to green development, and the sustainable management of biological resources.

As information, Sustainability Linked Loan is a financial instrument that incentivizes borrowers to achieve predetermined sustainable performance goals. With this financing, Bank Mandiri and Pupuk Indonesia agree to set sustainability targets that must be achieved by Pupuk Indonesia.

In this agreement, he added, there are sustainability agreement components, such as reducing carbon emissions and transitioning to environmentally responsible and socially impactful business activities.

Meanwhile, the collaboration signed during COP28 boosts Pupuk Indonesia's potential to become a major player in the new and renewable clean energy sector and transition to a low-carbon energy system. Currently, Pupuk Indonesia, along with several strategic partners, is studying and developing clean energy infrastructure, such as green hydrogen, blue ammonia, green ammonia, and green methane.

The development of this green industry requires significant investment. It involves not only capital expenditure but also investment in research and development. Therefore, collaborative partnerships with banks, which are currently active in providing green financing, are essential in fulfilling these needs.

"In the future, Pupuk Indonesia strives to be a pioneer in the green industry and aims for low-emission operational transformation by building more efficient fertilizer plants, whether through revamping old plants, revitalization, or constructing new plants with advanced energy-efficient technologies," he concluded.