Aspect 2: Function and Role of Board of Commissioners

03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report No Aspect; Principle; Recommendation Comply or Explain A.2.2. Recommendation 5 : Public Listed company stated the communication policy of Public Listed Company with the shareholders and investor in the website. The company has communications policy of Public listed company with shareholders or other issuer as stipulate under SP Corporate Secretary and has been uploaded in Bank Mandiri website. Note : Comply

B. Aspect 2: Function and Role of Board of Commissioners

B.1. Principle 3 : Strengthen the Membership and Composition of Board of Commissioners. B.1.1. Recommendation 6 : Determine the number of Board of commissioners member considering the Public listed company condition. Bank Mandiri has met the requirement as stipulate under Article 20 POJK No. 33POJK.042014 which is the number of Board of Commissioners member more than 2 two person. Number of Board of Commissioner Bank Mandiri is 8 eight person consist of 4 four independent commissioner and 4 four person non- independent. Note : Comply B.1.2. Recommendation 7 : Determining the composition member of Board of Commissioners in reference to diversity, skills, knowledge and experience needed. Based on the shareholders policy, the composition of Board of Commissioners should refer to the need and complexity of Bank Mandiri business which is by considering diversity, skills, educational background, and experience without distinguish gender. Such thing is needed for duty effectivity of BOD, for that Bank mandiri should maintain mixture of skills and experience of its BOC member. Note : Comply B.2. Principle 4 : Improving the Quality of Duty and Responsibility of BOC. B.2.1. Recommendation 8 : BOC has its own policy for self-assessment to rate BOC performance BOC has its own policy of self assessment as stated in the board manual as described in the BOC performance evaluation part. Note : Comply B.2.2. Recommendation 9 : Self-assessment to rate BOC performance stated in the Annual Report of Public Listed Company. The self assessment policy to rate BOC performance, stated in the Annual Report on Procedure of Assessment Implementation for BOC performance. Note : Comply B.2.3. Recommendation 10 : BOC has a policy related to membership withdrawal when involve in the financial crime. The Company has a policy related to the resignation of members of the Board of Commissioners if it is involved in financial crimes as stipulated in the Articles of Association. Referring to the Articles of Association Article 18, paragraph 12, when members of the Board of Commissioners no longer meets the requirements of the legislation, including engaging in financial crimes, the membership terms of the Board of Commissioners by itself ends. In the case of the Board of Commissioners members resignation as part of financial crimes involvement, then the members of the Board of Commissioners shall submit a request to the Company and the Company is obliged to carry out the AGM to decide on such resignation no later than 90 Ninety days after resignation submitted by the Company. Note : Comply 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance No Aspect; Principle; Recommendation Comply or Explain B.2.4. Recommendation 11 : Board of Committee or Committee which done the function of Nomination and Remuneration should draft success policy in Nominating BOD process. Bank Mandiri has the Remuneration and Nomination Committee to assist the BOC to submit recommendations to the shareholders of Series A Dwiwarna in term of: 1. Drafting, conducting and analyzing the nomination criteria and procedures for potential BOC and BOD 2. Identifying potential BOD both from the internal or external and potential BOC which meet the requirement to be proposedappointed as BOC or BOD. The appointment and dismissal of the Board of Directors is based on the principles of professionalism and corporate governance. As State-own Enterprise, the policy of successor BOD refers to the Regulation of State Own Enterprise Minister No. PER-03MBU2015 regarding the requirements, procedures for the appointment and dismissal of members of the Board of Directors of SOEs. In addition, as a public listed company, the Company policy also refers to the Regulation of the Financial Services Authority No. 33POJK.042014 regarding the Board of Directors and Board of Commissioners of Public Company. Note : Comply C. Aspect 3 : Function and Role BOD C.1. Principle 5 : Strengthening Membership and Composition of BOD. C.1.1. Recommendation 12 : Determining the number of BOD member in consideration with the Public listed Company condition and effectivity in making decision. Determining the number of Board of Directors referred to the Regulations applied which is based on POJK 33POJK.042014 regarding Board of Directors and Board of Commissioners of Public Company stated that the Board of Directors of Public Company consist of at least two 2 members the Board of Directors. The number of Directors of the Bank is 10 ten people and in its determination was based on the need to achieve the objectives of the Company and the Company adapted to the conditions suit the needs and complexity of Bank Mandiri. Note : Comply C.1.2. Recommendation 13 : Determining the composition of BOD member by considering diversity, skills, knowledge, and experience needed. Diversity composition of the Board of Directors is expected to provide an alternative solution to a problem that banks face which gets more complex compared to BOD that is homogeneous, so that the decisions made are the best after considering various alternatives decision from diversity of the Board of Directors. Based on the policy of Shareholders, the Board of Directors composition determination has been made to suit the needs and complexity of the Bank Mandiri. Note : Comply C.1.3. Recommendation 14 : BOD member for accounting or finance should have skills and knowledge on accounting. Director in charge of accounting or finance is Mr. Pahala N. Mansury with a brief history as follows: He holds a Bachelor of Economics in Accounting from University of Indonesia, and an MBA in Finance from the Stern School of Business, New York University, USA. Qualifying as a CFA charterholder from the CFA Institute since 2003. He joined Bank Mandiri and held various positions, including Group Head of Corporate Development, Change Management Office, Accounting and Economic Research 2003-2006, EVP Coordinator Finance Strategy 2006 and Chief Financial Officer. He is currently active as a board in CFA Indonesia as Vice President. Thus, it can be concluded that Mr. Pahala N. Mansury meet the criteria of expertise andor knowledge in the field of accounting Note : Comply 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report No Aspect; Principle; Recommendation Comply or Explain C.2. Principle 6 : Improving the Quality of Implementing Task and Responsible of BOD. C.2.1. Recommendation 15 : BOD has self-assessment policy to rate BOD performance. The Board of Directors had a self-assessment policy which listed in the manual board as described in the performance evaluation of the Board of Directors. Note : Comply C.2.2. Recommendation 16 : Self-assessment policy to rate BOD performance stated in the annual report of Public listed company. Self assessment in order to assess the performance of the Board of Directors has been done. Self assessment of company’s management presented in the Annual Report contained in the Corporate Governance section. Note : Comply C.2.3. Recommendation 17 : BOD has policy regarding resignation from the BOD membership when involved in the financial crime. The Company has a policy related to the resignation of members of the Board of Directors if it is involved in financial crimes as stipulated in Company Budget. Based on the Company Budget article 15, paragraph 2, which can be a member of the Board of Directors are those who meets the requirements upon appointment and during his tenure, one of which is within 5 five years prior to appointment and during his tenure: not been declared bankrupt; never a member of the Board of Directors andor members of the Board of Commissioners who were found guilty for causing a company to go bankrupt; never been sentenced for a criminal offense that is detrimental to the country’s financial andor related to the financial sector. Referring to the Articles of Association Article 15, paragraph 13, where members of the Board of Directors no longer meets regulatory requirements, including financial crimes involved in the tenure of the Board on its own ends. In the case of members of the Board of Directors his resignation if it is involved in financial crimes, then the members of the Board of Directors is obliged to submit a request to the Company and the Company is obliged to carry out the AGM to decide upon such resignation no later than 90 Ninety days after receipt of the resignation by the Company. Note : Comply 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance No Aspect; Principle; Recommendation Comply or Explain D. Aspect 4 : Stakeholders Participation D.1. Principle 7 : Improving Corporate Governance Aspect through Stakeholders Participation. D.1.1. Recommendation 18 : Public listed company has a policy to avoid insider trading. The policy to avoid insider trading is stipulate under SP SDM - Chapter III.D. 2 regarding the Code of Conduct and Business Ethics is the ethical standards that must be followed by all levels of the bank in performing official duties and every day and doing business with customers, partners as well as with colleagues. - Chapter III.D.4 concerning employee Disciplinary Regulations governing the obligations, prohibitions and sanctions to employees. SP Corporate Secretary Chapter III.A.5 Information Disclosure principle, which governs: - Employee who have insider information are prohibited from influencing any party, including the family Insiders to purchase or sell shares - People In addition to the Board of Directors and Board of Commissioners of the offense as set out above and proven transaction andor provide insider transformation will be subject to disciplinary sanctions as stipulated in the Standard Guidelines for Human Resources SPSDM - The Board of Directors and the Board of Commissioners and the parties because of the position, profession specific relationship with the Bank and insider trading responsibilities under the applicable provisions Note : Comply D.1.2. Recommendation 19 : Public Listed Company has Corruption and anti- fraud policy. Bank Mandiri has Anti-Fraud policy effective 2 May 2012, as a follow up of Bank Indonesia disposition letter No. 1328DPNP dated 09 December 2011 regarding Anti-Fraud Strategy Implementation SAF. SAF regulate about organization and 4 SAF Pillars of Bank Mandiri, namely: Pilar 1 : Anticipation Pilar 2 : Detection Pilar 3 : Investigation, Reporting and Sanction Pilar 4 : Monitoring, Evaluation and Follow up Bank Mandiri submitted SAF Report to OJK regularly every semester and incidental report on cases which may impact Bank operational as the applicable regulation. Gratuity Control Bank Mandiri has made improvements PTO on Gift Disclosure Statement to be PTO Gratuity Control and formed Gratification Control Unit Unit Pengendalian GratifikasiUPG to function as controller as per BOD Decree SK dated 3 July 2015. Note : Comply 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report No Aspect; Principle; Recommendation Comply or Explain D.1.3. Recommendation 20 : Public Listed Company has a policy on selection and improvement of supplier or vendor. The Implementation Corporate Governance Practice of Public Listed Company regarding Selection and Improvement of SupplierVendor skills has been applied by Bank Mandiri on: 1. Bank Mandiri Operational Policy KOBM, Article 420 regarding Procurement 2. Standard Operational Guideline SPO Procurement, Chapter III.B. Regulations for the Implementation of Procurement of Goods and Services includes: a. Procedures of procurement of goods and services b. Procurement process c. Steps of procurement process d. Work execution and handover e. Procedures of additional work additionalreduce especially on construction services f. Execution activities on procurement to manage special condition g. Documenting and payment process 3. On PTO Procurement, procedures of partner selection is described in Chapter XIII. The selection procedures of Partner with Pre-qualificationPost-qualification and accredited potential goods and services provider. 4. Basic principle for Procurement 5. Selection criteria of good and services provider Partner 6. In the event of selecting Goods and Services Provider, company has determine aspect that should be reviewed periodically as a basic for Vendor selection. 7. Company has determine partner criteria which recommended to be invited in the Procurement process. 8. Vendor evaluation should be done through 2 two model which are project performance evaluation and periodic evaluation Note : Comply D.1.4. Recommendation 21 : Public Listed Company policy on creditor rights. Policies on creditor rights stipulate on : SPO Fund Product, Manual Product and SPO Customer Complains Management, which in summary regulate : 1. Rights to receive enough explanation on product characteristic 2. Rights to receive access on rules and regulations product through Bank Mandiri website 3. Access to transaction from branches, e-banking services and other facilities provided by the Bank 4. Receive interest which number determine by the Bank regulation 5. Procedures on handling and solving customer’s complain Note : Comply 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance No Aspect; Principle; Recommendation Comply or Explain D.1.5. Recommendation 22 : Public Listed Company has a policy on whistleblowing system. 1. Whistleblowing system at Bank Mandiri implemented through a letter to CEO LTC. LTC is a facility to submit fraud complain report or fraud indication from employee as well as vendor to Group CEO by highlighting in the complaint statement to increase effectivity the implementation of internal control system at Bank Mandiri. 2. Company has a policy which rules about whistleblowing system. 3. LTC has been implemented since 2009 and revitalized in 2013. 4. Type of violation which can be reported through LTC are: corruption, fraud, theft, ignorance and violation. 5. Complain can be made by reporter using the following channels: - Email to lettertoceobankmandiri.co.id - Letter to Po Box 14000 JKTM 12700. - SMS to 0811900777. - Website, by clicking lettertoceo in the browser intranet. 6. Bank guarantee the confidentiality of reporter and allow not to include hisher name anonymous in the reportcomplaint. Bank also guarantee protection for reporter as stipulate in internal bank regulations. 7. Incoming report handled and follow up by Internal Audit according to service level agreement SLA which has been stated. Note : Comply D.1.6. Recommendation 23 : Public listed company has policy on giving long term incentive to BOD and Employees. At the Shareholders Annual General Meeting dated 21 March 2016, the shareholders have determined long-term incentives to directors and employees of the Company. The Company has implemented a long-term incentive as stipulated in the Shareholders Annual General Meeting and applicable Laws. The Company is currently working on a long-term incentive policy to the Directors and employees in reference to OJK Regulation No. 45POJK.032015 regarding Governance In Granting Remuneration for Commercial Banks and Regulation of Minister of State-own Enterprise No. PER-04MBU2014 on Guidelines Income for BOD, BOC and Board of Trustees for State Owned Enterprises. Note : Comply E. Aspect 5 : Transparent Information E.1. Principle 8 : Improving the Implementation of Transparent Information. E.1.1. Recommendation 24 : Public listed company utilize the use of information technology broadly other than website as media of transparency information Bank Mandiri website provide all information related to transparency information. Beside the website, Company utilize technology and other social media application such as SMS Banking, Phone Banking, Instagram, Facebook and Twitter. Note : Comply E.1.2. Recommendation 25 : the Company Annual Report disclose benefit to share owner of Public Listed Company at least 5 five percent, in addition to the beneficial for main shareholder and controller. The company stated information on shareholder which own more than 5 shares or more of the Company in the Annual Report. Note : Comply 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance 08 Corporate Social Responsibility 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report Preface As one of the largest State Owned Enterprises SOE in Indonesia, Bank Mandiri realizes that the companys performance is not only measured by economic aspects, but also based on social and environmental performance. This consideration is based on the corporate sustainability reflected in the concept of the triple bottom line, namely people, profit, and planet. Therefore, the implementation of Corporate Social Responsibility CSR, is an inseparable part of the Company’s operational activites . Through the implementation of CSR programs, Bank Mandiri strives to create synergies and a strong alliance with the Stakeholders through the employees’ involvement in the implementation of the CSR program. Bank Mandiri continues to improve the quality of its programs and its CSR activities held each year in order to continue Bank Mandiri’s business to be in line with the increase of society welfare and the environment. 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance Bank Mandiri CSR Kaleidoscope 2016 Throughout 2016, Bank Mandiri held various CSR activities as an answer to its environmental and community responsibility, ensuring synergy between Bank Mandiri and all stakeholders. This year, Bank Mandiri CSR program focuses on education, entrepreneurship, and poverty alleviation, among others: January February The Judging and Coaching of Wirausaha Muda Mandiri WMM March Wirausaha Muda Mandiri WMM Award and Expo April Flood Aid for Madiun district May CSR in the form of Public Facilities support in Flores NTT June The launch of Mandiri Digital Incubator June The launch of Mandiri Business Incubator 2016 July Bazaar July Break-fasting with orphans August Students learned about the Archipleago September The launch of WMM 2016 program October Mandiri education SOE teaching November Renovation Veterans’ Home in Maluku December Fostering SME retail segment December SOE creative home 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report Bank Mandiri CSR Policies, Methodology Programs CSR Policies Bank Mandiri strives to obey all regulations, legislations, and other prevailing rules implemented in the scope of CSR activities in Indonesia, among others: 1. Minister of State Enterprises Regulation No.PER-09 MBU072015 dated July 3, 2015 on the SOE Partnership Program with Small Businesses and Community Development Programs. 2. Law No. 8 of 1999 on Consumer Protection. 3. Financial Services Authority Regulation No. 1 POJK.072013 on Consumer Protection in the Financial Services Sector. 4. Law No. 13 of 2003 on Employment. These provisions govern how Bank Mandiri creates synergies with communities and the environment to secure synergies between the Bank and all its stakeholders. Bank Mandiri consistently provides solutions through well-designed programs, as reflected in the Bank’s CSR vision. CSR Vision “Building Self-Reliant Indonesian communities through CSR programs as inspiration to becoming a progressive Indonesian financial institution that grows in tandem with the growth of Indonesia” CSR Mission 1. Being the main reliable partner for the development of independent and prosperous societies. 2. Conduct PKBL programs that strengthen Bank Mandiri’s strategy by implementing the best governance. In accordance to manifest Bank Mandiri CSR vision, the following are the key pillars of the Bank Mandiri CSR program in 2016: Building a Self-Reliant Indonesia Fostering an integrated communities capacity, infrastructure, capabilities, and access. Focusing on some labor-intensive sectors: craftscreative, tourism, agriculture and marine. Empowering the pro-poor. Branding: Independent with Mandiri Creating independent future leaders which are ready to global competition. Education as a prerequisite of the creation of future leaders. Entrepreneurship as pathways creation of future leaders. Branding: Wira Usaha Muda Mandiri Educational programs and insights on the importance of skills to manage financial resources as part of a long-term life planning. Branding: Mandiri Financial Literacy. Independent Community Education and Entrepreneurship Financial Literacy 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance CSR Methodology As part of its overall CSR program implementation, Bank Mandiri uses 2 two approaches, namely: 1. The implementation of the 3 three pillars of sustainable CSR programs undertaken upon initiation of Bank Mandiri, i.e: Mandiri Bersama Mandiri MBM, program MBM initiated in 2010, aims to foster a community able to be competitive and able to process local potentials become a source of sustainable community economic wheel. Wirausaha Muda Mandiri WMM started in 2007 and focuses on the creation and development of entrepreneurial young seedlings in Indonesia. Financial literacy and programs that are integrated with banking educational programs to the community. 2. CSR programs that are philanthropic, in line with the needs of the community and stakeholder. For example, the construction of places of worship, public facilities support, and disaster relief. In the implementation, Bank Mandiri adopted a participatory method, a method formulated to ensures that all stakeholder elements are be fully engaged therefore the people themselves can influence and control the Bank’s development initiatives, and are able to use the provided resources to improve their lives and protect the environment. CSR Programs In carrying out the entire companys CSR activities along 2016, Bank Mandiri has considered all CSR programs with meticulous planning, responsible, and complying with the provisions and regulations prevailing in Indonesia. In general, the pillars of Bank Mandiris CSR programs in 2016 refers to the 4 four aspects, such as: 03 01 02 Product and customer Customers CSR related to Employee, Health Safety K3 CSR related to the relationship with the environment CSR related to the relationship with the community 04 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report CSR Roadmap In order to realize the long term aspiration of Bank Mandiri namely Indonesias best, Aseans prominent, Bank Mandiri is committed in running its programs and sustainable CSR activities to create the implementation of CSR framework 2016-2020 as follows: CSR activities that supports the business by conducting coaching to SMEs in order to climb new grade. Business process improvement at Bank Mandiri headquarters. 2016 Policy making CSR program for Mandiri Group to maximize the positive impact on society. 2017 Socialization and policy implementation of Mandiri Group CSR programs in the organizational environment in Bank Mandiri headquarters and region 1-12. 2018 Socialization and policy implementation of Mandiri Group CSR programs in subsidiaries. 2019 Monitoring and evaluation of policy implementation of Mandiri Group CSR programs. Aligning CSR Strategy as a corporate marketing strategy. 2020 Strategic Initiatives 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance CSR Management Structure and CSR Budget CSR Management Structure Bank Mandiri designates a working unit specifically responsible for managing companys overall CSR programs and sustainability. Their jobs range from planning, implementation, monitoring and evaluation of programs and activities of CSR Bank Mandiri. The unit designated to carry out the duties, responsibilities and oversight over the implementation of the entire CSR program is the CSR Center Department that works under the coordination of the Corporate Secretary Group unit. However, the realization of the Company’s CSR activities remains to be done by all Bank Mandiri units. More clearly, the management structure of Bank Mandiri’s CSR program is shown below: President Director Group Head Coporate Secretary Department Head CSR Center Corporate Social Responsibility department is also responsible for managing Bank Mandiri’s CSR funds in a professional manner, by promoting the principles of good corporate governance, especially in terms of accountability and transparency. Therefore, Bank Mandiri CSR funds are always audited together with financial statements. The CSR unit creates an annual CSR report that is submitted to the management of Bank Mandiri. CSR Budget Bank Mandiri considers CSR activities as a form of long-term investment that can bring added value in the stakeholders’s eyes. In addition, Bank Mandiri also assessed that the implementation of CSR programs and activities can also provide a positive impact on society and the environment, ensuring business continuity. Therefore, Bank Mandiri ensures careful planning and precise calculation in order to realize all CSR programs and activities. In general, the main source of Bank Mandiri CSR funding are: 1. Community Development program BL CSR funds is formed from a backup cost companies for social responsibility, which amount is tailored to the needs and capabilities of Bank Mandiri. 2. Community Development Program BL funds account originating from the setting aside of part of the Bank Mandiri’s profits allocated until the end of 2012. 3. Partnership Program PK funds account originating from the setting aside of part of the Bank Mandiri’s profits allocated until the end of 2012. 4. Loan administration servicesmarginsprofit sharing interest on term depositscurrent accounts in relation to PK and BL funds after deducting operating expenses. 5. Placement of PK funds by other SOEs, if any 6. Other legitimate sources. 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report The following table shows the budgetary allocation and realization of CSR funds for the latest 2 two years: Table Realization of BL Commitments PK Allocation 2015-2016 in million Rp No Province BL Commitments PK Allocation 2015 2016 2015 2016 1. Nanggroe Aceh Darussalam 52.50 297.50 - - 2. North Sumatra 99.12 1,242.79 - - 3. Jambi 29.55 92.20 - - 4. West Sumatra - 445.00 - - 5. Riau - 10.00 - - 6. South Sumatra 20.00 2,200.81 - - 7. Bangka Belitung - - - - 8. Bengkulu - 100.00 - - 9. Lampung - 75.00 - - 10. Banten - 1,889.00 - - 11. Special Capital City District of Jakarta 31,947.49 44,338.44 - - 12. West Java 427.15 2,049.55 - - 13. Central Java 1,438.10 7,487.49 745.00 - 14. Special Region of Yogyakarta - 2,410.57 - - 15. East Java 2,805.33 6,183.35 235.00 - 16. Bali - 1,436.44 - - 17. West Nusa Tenggara - 479.54 - - 18. East Nusa Tenggara - 445.03 - - 19. West Kalimantan - 240.00 - - 20. Central Kalimantan - - - - 21. South Kalimantan 295.62 432.96 - - 22. East Kalimantan - 826.45 - - 23. North Kalimantan - - - - 24. North Sulawesi - 405.80 - - 25. Central Sulawesi 259.00 197.81 - - 26. Gorontalo 291.51 75.00 - - 27. Southeast Sulawesi 4.33 643.45 - - 28. South Sulawesi 689.35 2,483.73 - - 29. Maluku 440.00 751.52 - - 30. North Maluku - 110.00 - - 31. Papua 310.71 1,861.14 - - 32. West Papua - 394.00 - - 33. Riau Islands 99.75 - - - 34. West Sulawesi - - - - Total 39,209.51 79,604.55 980.00 - PK fund distribution since 2013 were channeled selectively because Bank Mandiri is still awaiting the rulesregulations which comprehensively related to the use and the distribution of PK budget source. So that by 2016 Bank Mandiri will be more focused on improving the loan portfolio and the improvement of business processes. Furthermore, for the realization of the distribution of Community Development program in 2016 has used the source of On Balance Sheet budget of Rp66,444.09 million and Off-Balance Sheet of Rp13,160.47 million. The distribution of BL Program with Off-Balance Sheet is the realization of the BL program which has multi years program period and its commitment has been implemented in previous years. Meanwhile, the distribution of BL programs in 2016 recorded an increase compared to the previous year, this became a real form of commitments contribution of Bank Mandiri to the welfare of society and to build the Nation. 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance BL Commitments PK Allocation in 34 Provinces PK BL 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report Social Responsibility to the Environment As Bank Mandiri’s commitment towards the management and protection of the environment, Bank Mandiri decided that the environment is one of the main pillars in CSR activities. Bank Mandiri aims to create balance and harmony between operational activities and other parties, including the environment and stakeholders. Bank Mandiri obviously took steps and policies aimed to minimize the negative impacts from the company’s operational activites. Policies Bank Mandiri implementation of policies related to the management and protection of the environment is manifested in the form of appeals, edicts and regulations of the Company in order to minimize the impact of the Companys operations on the environment. The Implementation of 2016 Activities Throughout 2016, Bank Mandiri has implemented series of CSR activities programs in the environmental field with the following explanation: Green Office Program Green office program is a real contribution in managing head office areas with environment-friendly principles. In practice, the office management and all employees strive to implement various austerity programs such as paper-saving, electricity-saving and water-saving through socialization and encouragement program given by the Company. The program provides tangible benefits such as reducing operational costs, increasing efficiency and also improving the image of Bank Mandiri. Activities to support the realization of Green Office is done through the use of materials and energy consumption. Use of Materials Bank Mandiri divides the category of materials used for its business purposes into office supplies and materials needed for other operations. The explanation which related to the disclosure of office supplies in this CSR report is limited about paper use and fuel consumption. The issue of reducing paper consumption has become an urgent matter conducted by Bank Mandiri in recent years, considering the negative impact resulted from massive tree logging as well as very large waste from paper production process, either in the form of liquid, gas, or solid. Various initiatives have been taken by Bank Mandiri to reduce paper consumption, such as supporting documentation system without paper paperless, utilizing email as a communication media to disseminate announcements or internal socialization, using recycled papers or printing on the other side of papers for less important documents. Not only for employees, Bank Mandiri also educates all customers to reduce paper usage by implementing paperless systems on ATMs machine on every transaction which was started at the banking hall, including paper usage for deposit, withdrawal, transfer and other payment forms. This policy was made in order to motivate all customers to conduct transactions online Internet Banking, Phone Banking and SMS Banking, we have redesigned our forms and reports using recycled paper as the management policy related to day-to-day operations. As a real step in preserving the environment, Bank Mandiri has committed to implementing austerity policies of paper usage by the use of Xerox Multi-Function Printer with double sided printing capability or duplex printing since 2011 and annually intensified by Bank Mandiri. Energy Consumption Bank Mandiri always keeps its commitment to save the energy in every companys operations. It is shown by the implementation of quality improvement of supporting office equipments, for example by turning off the computer and other electronic equipment whenever being left or does not used in a couple of hours. Then, in order to save the electricity, Bank Mandiri has made some efforts, such as by turning off lights and computers during recess. In 2016, the total of electricity consumption at Head Office amounted to 33.97628 million Kwh. This figure shows a slight increase of 1.41 compared to electricity consumption in 2015 of 33.50208 million Kwh which was due to the monthly adjustment of the electrical base made by PT PLN. 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance Water Use In addition to the electrical energy savings, Bank Mandiri also commits to use water wisely according to the needs as Bank Mandiris concern to the problem of lack of clean water that plagued several regions in Indonesia and even throughout the world. Bank Mandiri always reminds all employees by putting up board sign “Use water wisely” in toilets, mosques and other working areas. Below is the allocation of water usage in Bank Mandiri Head Office in 2016: Office Facilities Water Consumption m 3 Cooling Tower 54,418 Park 5,100 Toilet 105,600 Foodcourt 13,200 Others 55,882 During 2016, PDAM water consumption was amounted to 234,200 m 3 , or 23.14 higher than 190,183 m 3 in 2015. This increase was in line with the development of Bank Mandiri’s operational activities in 2016. Since 2012, Bank Mandiri has been maximizing the utilization water recycle technology in Plaza Mandiri Building, that is by using recycled water used to operate the air conditioning machine cooling tower and for watering the garden at Plaza Mandiri building as well as other office units. During 2016, the water supplied by the Water Recycle technology is equal to 54.418 m 3 or reaching 18.85 of total clean water usage. The table below illustrate the volume of water usage to support Bank Mandiri’s operations in the last 4 four consecutive years: 2013 2014 2015 2016 Volume of Water Supplied by PDAM m 3 148,321 189,322 190,183 234,200 Volume of Recycled Water m 3 96,652 87,566 66,278 54,418 Reforestation As a form of Bank Mandiri’s contribution to improve the quality of environment, Bank Mandiri has implemented a reforestation program as an alternative program that effectively in managing and conserving the environment. Therefore, throughout 2016 Bank Mandiri has carried out numerous activities such as longan tree seedling in Solo, Social Activity planting 1,000 trees, free medical treatment as well as child support, and planting of mangrove seedlings in Hutumuri Beach and Coral Beach Hakurila. Certification During 2016, Bank Mandiri has not got any certifications yet related to the environment. 32.347.200 K wh 33.502.080 K wh 33.976.280 K wh 2014 2015 2016 1.41 In carrying out social responsibility in the field of environment, Bank Mandiri has spent a total cost up to Rp317,644,235 for natural disaster relief and amounted to Rp240,090,250 for natural conservation activities. 03 Company at a Glance 04 Management Discussion and Analysis on Companys Performance 05 Review of Business Support Function 01 Main Highlights 02 Management Report Social Responsibility to the Occupational Health and Safety K3 Bank Mandiri abides by the rules and regulations placed in the field of employment as a form of consciousness that occupational safety and health K3 for employees are critical to reach optimum work productivity. Therefore, Bank Mandiri is committed to ensure the safety and well being of all employees without discrimination. Policies Bank Mandiri recognizes that all employees are valuable assets that can support the sustainability of companys business. Bank Mandiri understands that the Occupational Health and Safety K3 of the employees is a main factor to ensure professionalism in their work. Therefore, in managing the Human Resources HR, Bank Mandiri complies with the Law of the Republic of Indonesia No. 13 Year 2003 on Employment and Labour Agreement CLA PT Bank Mandiri Persero Tbk. The Implementation of 2016 Activities Throughout 2016, Bank Mandiri has implemented series of CSR activities programs in the Health and Safety K3 field with the following explanation: Manpower Practices

1. Employee Welfare