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20240815_OPPM_Laporan Informasi dan Fakta Material_31705589_lamp4.pdf
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PT OKI PULP & PAPER MILLS GREEN BOND
DNV GREEN BOND PERIODIC REVIEW
Scope and objectives
In 2023, PT OKI Pulp & Paper Mills. (“APP OKI” or “Issuer”) issued Green bonds (henceforth referred to as
“Bonds”) with nominal issuance value of 1,566.115 IDR Billion. DNV Business Assurance Singapore Pte.
Ltd. (‘DNV’) conducted a Green Bond Eligibility Assessment on the bond using the Green Bond Principles
2021 (“GBP”), ASEAN Sustainability Bond Standards, 2022 (ASEAN SBS) and Indonesia Financial Services
Authority Regulation Concerning Green Bonds (Number 60/POJK.04/2017).
Detail of the Bonds is shown below:
Name of Bond Month of Issuance Total Issuance (IDR billion)
Obligasi Berwawasan
Lingkungan l OKI Pulp & Paper Oct 2023 1,500.00
Mills Tahap l Tahun 2023
Obligasi Berwawasan
Lingkungan l OKI Pulp & Paper Dec 2023 66.115
Mills Tahap ll Tahun 2023
Total 1,566.115
APP OKI has used the proceeds of the Bond to finance the nominated projects falling under the following
categories:
• Renewable Energy and Pollution Prevention & Control.
DNV has been commissioned by APP OKI to provide the Periodic Review of the Bond. Our criteria and
information covered to achieve this are described under ‘Work Undertaken’ below. The Periodic Review
was conducted on the information provided by APP OKI in May to June 2024.
No assurance is provided regarding the financial performance of the Bond, the value of any investments
in the Bonds, or the long-term environmental benefits of the transaction. Our objective has been to provide
an assessment that the Bond has met the criteria established on the basis set out below.
The scope of this DNV opinion is limited to the Green Bond Principles 2021 (“GBP”), the ASEAN
Sustainability Bond Standards, 2022 (“ASEAN SBS”) and Indonesia Financial Services Authority Regulation
Concerning Green Bonds.
Responsibilities of the Management of APP OKI and DNV
The management of APP OKI has provided the information and data used by DNV during the delivery of
this review. Our statement represents an independent opinion and is intended to inform APP OKI
management and other interested stakeholders in the Bond as to whether the established criteria have
been met, based on the information provided to us. In our work we have relied on the information and the
facts presented to us by APP OKI. DNV is not responsible for any aspect of the nominated projects referred
to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions are incorrect.
Thus, DNV shall not be held liable if any of the information or data provided by APP OKI’s management
and used as a basis for this assessment were not correct or complete.
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Basis of DNV’s opinion
We have adapted our Green Bond Principles methodology, which incorporates the requirements of the GBP,
to create an APP OKI-specific Green Bond Eligibility Assessment Protocol (henceforth referred to as
“Protocol”). Our Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion. The
overarching principle behind the criteria is that a green bond should “enable capital-raising and investment
for new and existing projects with environmental benefits”.
As per our Protocol, the criteria against which the Bond has been reviewed are grouped under the four
Principles:
• Principle One: Use of Proceeds. The Use of Proceeds criteria are guided by the requirement
that an issuer of a green bond must use the funds raised to finance eligible activities. The eligible
activities should produce clear environmental benefits.
• Principle Two: Process for Project Evaluation and Selection. The Project Evaluation and
Selection criteria are guided by the requirements that an issuer of a green bond should outline the
process it follows when determining eligibility of an investment using green bond proceeds and
outline any impact objectives it will consider.
• Principle Three: Management of Proceeds. The Management of Proceeds criteria are guided
by the requirements that a green bond should be tracked within the issuing organization, that
separate portfolios should be created when necessary and that a declaration of how unallocated
funds will be handled should be made.
• Principle Four: Reporting. The Reporting criteria are guided by the recommendation that at
least Sustainability Reporting to the bond investors should be made of the use of bond proceeds
and that quantitative and/or qualitative performance indicators should be used, where feasible.
Work Undertaken
Our work constituted a high-level review of the available information, based on the understanding that
this information was provided to us by APP OKI in good faith. We have not performed an audit or other
tests to check the veracity of the information provided to us. The work undertaken to form our opinion
included:
• Creation of an APP OKI-specific Protocol, adapted to the purpose of the Bond, as described above
and in Schedule 2 to this Assessment;
• Assessment of documentary evidence provided by APP OKI on the Bond and supplemented by a
high-level desktop research. These checks refer to current assessment best practices and
standards methodology;
• Discussions with APP OKI management, and review of relevant documentation;
• Documentation of findings against each element of the criteria. Our opinion as detailed below is a
summary of these findings.
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Findings and DNV’s opinion
DNV’s findings are listed below:
1. Principle One: Use of Proceeds. APP OKI is using the proceeds of the Bond to finance one project
on Biomass under the category of Renewable Energy and Pollution Prevention & Control. DNV
undertook an analysis of the associated project type including type and location to determine eligibility
of the project as “Green” in line with the GBP. DNV evaluates and concludes that APP OKI’s nominated
project is aligned with one eligible green project category specified in the GBP.
2. Principle Two: Process for Project Evaluation and Selection. The Bond’s proceeds are being
allocated to finance the project as defined in Schedule 1. DNV has reviewed evidence that
demonstrates that APP OKI regularly assesses opportunities for improvement and devises action plans
and initiatives to mitigate negative environmental impacts from its operations.
3. Principle Three: Management of Proceeds DNV has reviewed evidence showing how APP OKI is
tracing the proceeds from the Bond, from the time of issuance to the time of disbursement. APP OKI
has monitored the allocation of an amount equal to the proceeds via internal information systems. As
stated above, DNV provides no assurance regarding the financial performance of the Bond, the value
of any investments in the Bond, or the effects of the transaction. DNV has confirmed the issuance
value (1,566.115 IDR Billion) is less than the APP OKI exposure to the eligible project. DNV confirmed
that at the time of review bond proceeds had been 100% allocated to the nominated project.
4. Principle Four: Reporting. APP OKI has prepared reporting report on its, the following:
i) Allocation per Eligible Project Categories
ii) Example of projects financed by the proceeds, including their description (date, location,
category, progress) and the corresponding allocated amount (in IDR Billion)
iii) Remaining balance of unallocated proceeds
iv) Portion of financing and refinancing;
On the basis of the information provided by APP OKI and the work undertaken, it is DNV’s opinion that the
APP OKI Green Financing Framework and Bond continue to meet the criteria established in the Protocol
and are aligned with the stated definition of green bonds within the Green Bond Principles 2021. Based on
the External Review procedures conducted, nothing has come to our attention that causes us to believe
that the APP OKI Green Financing Framework and Bond are not, in all material respects, in accordance
with the ASEAN Sustainability Bond Standards 2022 and Indonesia Financial Services Authority Regulation
Concerning Green Bonds.
for DNV Business Assurance Singapore Pte. Ltd.
Singapore, 28 June 2024
Vishal Gangwar Thomas Leonard
Lead Verifier Assurance Reviewer
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Page 4 of 11 About DNV Driven by our purpose of safeguarding life, property, and the environment, DNV enables organizations to advance the safety and sustainability of their business. Combining leading technical and operational expertise, risk methodology and in-depth industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We continuously invest in research and collaborative innovation to provide customers and society with operational and technological foresight. With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 12,000 professionals are dedicated to helping customers make the world safer, smarter, and greener.
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SCHEDULE 1: DESCRIPTION OF NOMINATED PROJECTS TO BE
FINANCED AND REFINANCED THROUGH APP OKI GREEN
BOND
Use of Proceeds Project Category Location
Green Projects
Renewable Energy and Pollution
Biomass Indonesia
Prevention & Control
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SCHEDULE 2: GREEN BOND ELIGIBILITY ASSESSMENT PROTOCOL
1. Use of proceeds
Ref. Criteria Requirements Work Undertaken DNV Findings
1a Type of bond The bond must fall in one of the Review of: The reviewed evidence confirms that the Bond falls in the
following categories, as defined • APP OKI Green Financing category: Green Use of Proceeds Bond.
by the Green Bond Principles: Framework
• Green Use of Proceeds Bond
• Green Use of Proceeds Correspondence with APP OKI
Revenue Bond management
• Green Project Bond
• Green Securitized Bond
1b Green Project The cornerstone of a Green Bond Review of: As identified by the Bond Issuance Information the purpose of
Categories is the utilization of the proceeds • Bond Issuance Information the Bond is to use the proceeds for the financing of one
of the bond which should be • APP OKI Green Financing Renewable Energy and Pollution Prevention & Control Project
appropriately described in the Framework as seen in Schedule 1 above. The APP OKI Green Financing
legal documentation for the Framework considers Use of Proceeds from Green perspectives.
security. Correspondence with APP OKI
management
DNV’s assessment concluded that the project would present
significant environmental benefits in the target areas and for
the target populations.
1c Environmental All designated Green Project Review of: Renewable Energy and Pollution Prevention & Control
benefits categories should provide clear • Bond Issuance Information The Biomass project investment will result in resource
environmentally sustainable • APP OKI Green Financing efficiency and minimize generation of waste with more than
benefits, which, where feasible, Framework 98% of OKI's energy will get generated from renewable waste
will be quantified or assessed by products obtained from manufacturing pulp (i.e. Black Liquor)
the Issuer. Correspondence with APP OKI while the used of coal will be only to start up the machine. This
management
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Ref. Criteria Requirements Work Undertaken DNV Findings
investment has a direct impact on Carbon (CO2) Avoidance1:
5,045,694 tCO2 / year or 1.4 tCO2 /ton Coal. DNV can confirm
that the investment is well aligned with the GBP.
DNV can confirm that the Use of Proceeds associated with the
APP OKI Green Bond is considered to qualify under and be well-
aligned with the Use of Proceeds and associated Categories
Green Bond Principles.
1d Refinancing In the event that a proportion of Review of: DNV can confirm that 100% of the bonds is allocated for
share the proceeds may be used for • Bond Issuance Information financing of Biomass Project aligned with the Green Bond
refinancing, it is recommended • Bond disclosure Principles.
that issuers provide an estimate documentation
of the share of financing vs. re- • Green Financing Framework
financing, and where
appropriate, also clarify which Correspondence with APP OKI
investments or project portfolios management
may be refinanced.
2. Process for Project Selection and Evaluation
Ref. Criteria Requirements Work Undertaken DNV Findings
2a Investment- The Issuer of a Green Bond should Review of: As per the APP OKI Green Financing Framework, the Issuer
decision outline the decision-making process • Bond Issuance Information has set out the following for project selection:
process it follows to determine the eligibility • APP OKI Green Financing
of projects using Green Bond Framework • Sustainability Financing Committee has been established
proceeds. This includes, without that consist of members from the Finance & Treasury
limitation: team, Sustainability team and senior management team
(COO and CFO). This will be reviewed by OKI’s Business
1
Calculations of CO2 avoidance is done by PTOKI.
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Ref. Criteria Requirements Work Undertaken DNV Findings
• A process to determine how the Development, Sustainability and Stakeholder Engagement
projects fit within the eligible Green Division and approved by APP’s Board of Directors.
Projects categories identified in the • The Sustainability Financing Committee will meet annually
Green Bond Principles; or on other ad hoc basis, if necessary, to review the Green
• The criteria making the projects Bond/Loan Principles and ensure projects identified,
eligible for using the Green Bond selected for the Green Financing Framework and proceeds
proceeds; and used in relation to the Green Bonds/Loans are as per set
• The environmental sustainability out in the Framework.
objectives • The Sustainability Financing Committee will also review the
achievements and realization of the commitments,
evaluate the impact metrics that are relevant and further
develop to improve the targets.
DNV has reviewed the structure and function of the Project
Selection criteria and confirmed it is in line with the criteria set
out in the GBP.
2b Issuer’s In addition to information disclosed Review of: DNV has also carried out a high-level media review of APP OKI.
environment by an issuer on its Green Bond • APP OKI Environmental DNV notes that APP OKI has in place a number of policies and
al and process, criteria and assurances, Policies and Procedures procedures that are regularly updated and developed to
governance Green Bond investors may also take • APP OKI Green Financing continue to work towards compliance and best practice.
framework into consideration the quality of the Framework
issuer’s overall framework and Based on the evidence reviewed and the discussion we had with
performance regarding Correspondence with APP OKI senior managers, we found that APP OKI’s current Green
environmental sustainability. management Financing framework is in line with good practice of the industry
for the nominated project within the proposed Bond.
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3. Management of proceeds
Ref. Criteria Requirements Work Undertaken DNV Findings
3a Tracking The net proceeds of Green Bonds Review of: The evidence reviewed shows how APP OKI is tracing the Bond’s
procedure should be credited to a sub-account, • Bond Issuance Information proceeds, from the time of issuance to the time of disbursement.
moved to a sub- portfolio, or • Bond Proceeds and Reporting
otherwise tracked by the Issuer in Framework APP OKI monitors the allocation of an amount equal to the
an appropriate manner and attested proceeds via internal information systems. A register has been
to by a formal internal process that created to facilitate the monitoring and reporting of the issued
will be linked to the Issuer’s lending Correspondence with APP OKI Bonds and the deployment of an amount equal to the net
and investment operations for management proceeds.
Green Projects.
DNV concludes that the process set out in the Issuer’s
Framework is aligned with the Management of Proceeds as set
out in the Green Bond Principles.
3b Tracking So long as the Green Bonds are Review of: The evidence reviewed shows that APP OKI is tracing the
procedure outstanding, the balance of the • Bond Issuance Information proceeds from the Bond, from the time of issuance to the time
tracked proceeds should be • APP OKI Green Financing of disbursement. On an annual basis, the outstanding balance of
periodically reduced by amounts Framework the Bond will be and has been reviewed.
matching eligible green investments
or loan disbursements made during Correspondence with APP OKI DNV can confirm that 100% of the bond has been tracked by
that period. management APP OKI and allocated in 2023.
3c Temporary Pending such investments or Review of: The net proceeds of the bonds has been disbursed and fully
holdings disbursements to eligible Green • Bond Proceeds and Reporting allocated to the nominated project as per the APP OKI Green
Projects, the Issuer should make Framework Financing Framework. DNV confirmed that the information
known to investors the intended provided by APP OKI as at periodic review indicated that 100%
types of temporary investment of proceeds have been allocated.
instruments for the balance of Correspondence with APP OKI
unallocated proceeds. management APP OKI has nominated the use of proceeds as per Schedule 1
within its Green Financing Framework. If, for reasons beyond
the control of the Issuer, these investments are required to be
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Ref. Criteria Requirements Work Undertaken DNV Findings
altered in nature or scope, other compliant green investments
will be identified with approval from APP OKI Management.
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4. Reporting
Ref. Criteria Requirements Work Undertaken DNV Findings
4a Periodical In addition to reporting on the use Review of: APP OKI is committed to reporting for its corporate website and
reporting of proceeds and the temporary • Bond Proceeds and Reporting integrated annual reporting including the following:
investment of unallocated proceeds, Framework
Issuers should provide at least Allocation Reporting:
annually a list of projects to which Correspondence with APP OKI
Green Bond proceeds have been management • A list of approved Eligible Green Projects, including
allocated including - when possible, amounts allocated
with regards to confidentiality
and/or competitive considerations - Impact Reporting:
a brief description of the projects
and the amounts disbursed, as well Where feasible, APP OKI has also reported on the impact of the
as the expected environmentally portfolio by category from environmental perspective on an
sustainable impact. annual basis, subject to the availability of information and
baseline data and based on methodologies that will be publicly
available. APP OKI has set out a broad range of potential
metrics in their Green Financing Framework.
DNV considers the proposed financial and impact reporting
proposed and the means of communication to be aligned with
the criteria set out in the GBP.
DNV has reviewed the impact reporting for the period and
confirms that the reporting includes impacts associated with:
Environmental Impacts
• Avoided CO2 emissions
DNV confirms that the impacts reported are consistent with the
aims of the project and proposed benefits and contributions
towards the nominated SDGs.
Names mentioned 5 people and organisations named in the text · linked when the evidence is strong
unresolved
org
PT OKI PULP
p.1 ×2
unresolved
org
IDR Billion. DNV Business Assurance Singapore Pte. Ltd.
p.1
unresolved
org
Financial Services Authority
p.1 ×3
unresolved
org
DNV Business Assurance Singapore Pte. Ltd.
p.3
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