GLossary

ADB Bank Pembangunan Asia (Asian Development Bank)

AFD Badan Pembangunan Perancis (French Development Agency)

AMDAL Analisis Mengenai Dampak Lingkungan

EIA Penilaian Dampak Lingkungan (Environmental Impact Assessment)

EMP Rencana Pengelolaan Lingkungan (Environmental Management Plan)

ESIA Penilaian Dampak Lingkungan dan Sosial (Environmental and Social Impact Assessment)

ESMF Kerangka Pengelolaan Lingkungan dan Sosial (Environmental and Social Management

Framework)

ESS Perlindungan Lingkungan dan Sosial (Environmental and Social Safeguards)

ESSBCM Environmental and Social Safeguards and Business Continuity Management Division

FS Study Kelayakan (Feasibility Study)

IFC Lembaga Keuangan Internasional (International Finance Corporation)

IPP Rencana Pengelolaan Masyarakat Adat (Indigenous People Plan)

LARAP Rencana Aksi Pemukiman Kembali dan Pembebasan Lahan (Land Acquistion and

Ressetlement Plan)

MFI Lembaga Keuangan Multilateral (Multilateral Finance Institution)

PT SMI PT Sarana Multi Infrastruktur (Persero)

RKL-RPL Rencana Pengelolaan dan Pemantauan Lingkungan (Environmental Management and

Monitoring Plan)

SIA Penilaian Dampak Sosial (Social Impact Assessment)

ToR Kerangka Acuan (Terms of Reference)

UKL-UPL Usaha Pengelolaan dan Pemantauan Lingkungan (Environmental Management and

Monitoring Effort)

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Summary of Environmental and Social Management Framework (ESMF)

Corporate

PT SARANA MULTI INFRASTRUKTUR

Introduction

PT Sarana Multi Infrastruktur (Persero) (PT SMI) is an infrastructure financing company which was

established on 26 February 2009, as a State-Owned Enterprises (SOE) wholly owned by the Government

of Indonesia through the Minister of Finance (MOF). PT SMI plays an active role in facilitating

infrastructure financing as well as preparing projects and serving in an advisory role for infrastructure

projects in Indonesia.

To enable PT SMI’s lending program, and to further facilitate their due diligence assessment of

government guaranteed projects, PT SMI prepared an Environmental and Social Management Framework

(ESMF) to guide PT SMI in their investment project cycle management, particularly in regards to

Environmental and Social Safeguard. The purpose of the current Environmental and Social Management

Framework (ESMF) is to detail the Social and Environment safeguard policies, principles, detailed

procedures, institutional arrangements and workflows that PT SMI should follow for making all of its

investments compatible with the requirements of national laws, stakeholder MFI ESS principles and

international best practice standards.

PT SMI are committed the implementation of the ESMF as part of their commitment to environmental

and socially sustainable infrastructure development, as an integral part of Environmental and Social

Safeguard (ESS) implementation at the corporate management level.

In general, the staff and divisions within PT SMI within its organizational structure responsible for ESS

management and input to the ESMF procedures are covering to President Director, Risk Management

Directorate (Director of Risk Management Directorate and ESS&BCM Division), Division of Business, and

other related divisions.

Application of Environmental and Social Management Framework (ESMF) Corporate

This ESMF details the environmental and social safeguard policies, principles, procedures and

requirements, institutional arrangements, and workflows for PT SMI to avoid, minimize, or mitigate any

adverse environmental and social impacts of infrastructure projects. The ESMF has been designed based

on a set of applicable Indonesian laws and regulations related to social and environmental management,

PT SMI’s ESS (Environmental and Social Safeguards) and International Standards including the three ADB

Safeguard Policies, the then World Bank Safeguard Operational Policies, the eight Performance Standards

(PS) of the International Finance Corporation (IFC) version 2012, which are also utilized by AFD and

Equator Principles financial organizations in their ESS assessment and management process (see latest

page of this summary).

The ESMF is intended for use by PT SMI institution, and by staff of all levels within the organization, as a

policy statement document, and It also serves a communications role with the public and potential

investors (such as MFIs) to assist external stakeholders to understand the Environmental Social Safeguards

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(ESS) policies and procedures of PT SMI. This ESMF will be applied for three main financial product

categories, as follows:

i) Advisory Services where PT SMI has been provided funding or instructed (i.e. most often from the Ministry of Finance) to provide project development advisory services, which does not involve any disbursement of PT SMI funds;

ii) Financing and Investment (fund-based products) where PT SMI provided finance and banking services to assist project developments (e.g. senior debt, subordinated debt, mezzanine funding, equity investment, bridge finance, refinancing, securitization) - involving actual disbursement of PT SMI funds;

iii) Project Development (fund-based products) where PT SMI manages and prepares the project developments directly in support of the project developer - involving actual disbursement of PT SMI funds.

The PT SMI infrastructure lending and development business will encompass the fund-based products,

and will also require a consideration of the different levels of project preparedness or readiness for

implementation as defined by the project types above. Thus, there will be four types of projects that

would fall under the PT SMI business process, which will require different types of ESMF review

procedures:

i) Type 1 – Projects in the early stages of preparation (with sites that have not been selected and design options that are still open). In addition to other subproject preparation documents (such as Feasibility Study or FS), the Clients will have to prepare and disclose Environmental and Social Safeguards documents (i.e. Environmental Impact Assessment or EIA, Environmental Management Plan or EMP, Social Impact Assessment or SIA, Land Acquisition and Resettlement Action Plan or LARAP, Indigenous People Plan or IPP, etc.), as relevant to project. In this stage, PT SMI will suggest the Clients to collaborate with the ESS team to prepare the necessary documents.

ii) Type 2 – Projects that have been fully prepared (where construction bids have been invited). PT SMI will review the E&S documents that are available and will ask the Client to supplement them or develop new ones, as applicable, prior to the final project appraisal If appraisal finds there are gaps, PT SMI have be ensure that ESS gaps are addressed by the Client, not only in terms of documents produced but in terms of addressing the resulting impacts/risks to avoid or minimize them

iii) Type 3 – Projects with facilities that have already been constructed or the projects which is under construction. PT SMI will carry out a due diligence to confirm that: (a) the project is in compliance with this ESMF; (b) there are no reputational risks for PT SMI and/or the supporting MFI; and (c) there are no legacy issues or no pending legal disputes or liabilities. Based on the findings of such an assessment, PT SMI will ask its client to implement remedial measures, as needed, or to mitigate potential reputational risks or to address legacy issues or liabilities, with all ESS documents and instruments to be disclosed prior to the final project appraisal.

iv) Type 4 – Projects provided with advisory services. PT SMI will carry out a due diligence to confirm that: (a) the project is in compliance with this ESMF; and (b) there are no reputational risks for PT SMI and/or the supporting MFI.

For Fund based products (financing and investment and project development), the standard ESMF steps and procedures outlined, in Section 2.3.3 and Chapter 4 of the main document, will apply. The projects provided with advisory services will need to be assessed differently, and will essentially involve advisory

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and consulting services to a range of clients such as the Government, private sector developers and regulatory agencies. The differences in ESS requirements and procedures among the differing Fund-Based and Advisory Services based types of service provision are described in more detail in Annex 10 of ESMF main document, which a provides a matrix containing risk exposure, example and approach to ESS risk assessment for different types of PT SMI business procedures.

This ESMF is designed to mainstream the ESS into the loan processing cycles for projects seeking funding support from PT SMI. The application of the ESMF procedures begin right from the time of subproject preparation and the loan application to PT SMI and proceeds through steps of: (1) loan application, (2) initial screening, (3) subproject appraisal, (4) contract signing, (5) loan disbursal, and (6) monitoring and evaluation. The ESMF also includes external audit, document update and disclosure norms. The ESMF operational guidance scope covers:

i) Environmental and social risk mitigation tools such as environmental impact assessment (EIA) and environmental management plan (EMP), based on the project risk categorization. The generic ToR of EIA and EMP are also provided so that can be used for project preparation studies (pre FS, FS) for PT SMI review activities;

ii) Land acquisition and resettlement policy framework, which includes principles, procedures, requirements and organizational arrangements for involuntary land acquisition and resettlement; comprehensive land acquisition and resettlement plan or abbreviated resettlement action plan based on the subproject risk categorization - (LARAP – Land Acquisition and Resettlement Action Plan);

iii) Indigenous Peoples Planning Framework, which includes principles, procedures, requirements and organizational arrangements to address Indigenous Peoples affected by project; Social Assessment and Indigenous Peoples Plan when Indigenous Peoples are affected - (IPP – Indigenous People Plan);

iv) Grievance redress and stakeholders consultation mechanisms to ensure a participatory and fair approach in evaluating and mitigating project risks;

v) Details on stakeholders and their responsibilities.

vi) Details on human resource strengthening required in PT SMI for implementing the framework.

vii) Guidance on capacity building.

viii) Instructions on the monitoring and update of this document.

This ESMF outlines the requirements and procedures for application of the frameworks in the business

cycles of PT SMI. The ESMF includes a set of tools such as templates for checklists and appraisal forms,

sample terms of reference (ToRs) for preparing documents for safeguards mitigation measures, outlines

for various environmental and social safeguards instruments, and a list of mandatory covenants to be

included in loan agreements. The ESMF also provides details on how to follow the operating procedures,

apply the frameworks, and use the templates, ToRs and outlines of EIA, UKL-UPL, LARAP, SA, and IPP are

provided.

Updating dan Operasionalisasi ESMF

The ESMF is a living document which may be updated by PT SMI from time to time in accordance to the

needs, lessons learned during the course of ESS management operations and project development, and

to align the ESMF both the PT SMI and stakeholder MFI environment and social safeguards, regulatory

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requirements, the nature / scale of projects and the status of the environment. The updated ESMF shall

be reviewed by the stakeholder MFI’s, approved by the board of management of PT SMI, and will be made

available to the stakeholders through PT SMI’s website.

Any external review findings / observations, and lessons learnt, should also be incorporated into the ESMF updating revision to ensure its continued suitability and adequacy. The updates should be recorded in the document control revision sheet of the ESMF to preserve the history, scope of review and reasons for changes. The ESSBCM Division environment and social safeguard staff of PT SMI is responsible for updates. The ESMF will also be operational, only after a review and approval process conducted internally by the board of management of PT SMI, and then a further review by stakeholder MFI’s as a peer review process of the PT SMI ESS standards.

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PT.SMI ESS, Asian Development Bank, World Bank and IFC Policies

PT SMI’s Environmental and Social Safeguards

1. ES-1: Assessment and Management of Environmental & Social Risks and Impact

2. ES-2: Labour and Working Conditions

3. ES-3: Pollution Prevention and Abatement

4. ES-4: Safety, Health and Security

5. ES-5: Land Acquisition and Resettlement

6. ES-6: Biodiversity Conservation and Natural Resources Management

7. ES-7: Indigenous Peoples and Local Communities

8. ES-8: Cultural Heritage

9. ES-9: Energy Conservation and Environment-Friendly Energy

10. ES-10: Consultation and Grievance Mechanisms

Asian Development Bank (ADB) Operational Policies

1. Safeguard Requirement 1 – Environment

2. Safeguard Requirement 2 – Involuntary Resettlement

3. Safeguard Requirement 3 – Indigenous Peoples

World Bank’s Safeguards Operational Policies

1. OP 4.01 Environmental Assessment

2. OP 4.04 Natural Habitats

3. OP 4.09 Pest Management

4. OP 4.11 Physical Cultural Resources

5. OP 4.12 Involuntary Resettlement

6. OP 4.10 Indigenous Peoples

7. OP 4.36 Forests

8. OP 4.37 Safety of Dam

9. OP 7.50 Projects on International Waterways

10. OP 7.60 Projects in Disputed Areas

International Finance Corporations Environmental and Social Performance Standards

1. PS 1 Assessment and Management of Environmental and Social Risks and Impacts

2. PS 2 Labour and working condition

3. PS 3 Resource use efficiency and pollution prevention and abatement

4. PS 4 Community health, safety, and security

5. PS 5 Land acquisition and involuntary resettlement

6. PS 6 Biodiversity conservation and sustainable natural resource

7. PS 7 Indigenous Peoples

8. PS 8 Cultural heritage