GCG PT.

UNILEVER INDONESIA

Unilever is a British-Dutch transnational consumer goods company co-headquartered

in London, United Kingdom and Rotterdam, Netherlands. Its products include food and
beverages (about 40 percent of its revenue), cleaning agents and personal care products. It is
the world's largest consumer goods company measured by 2012 revenue.It is Europe’s
seventh most valuable company.Unilever is one of the oldest multinational companies; its
products are available in around 190 countries.

While in Indonesia, established on 5 December 1933, now Unilever Indonesia has grown to
become one of Indonesia’s leading Fast Moving Consumer Goods companies. We have been
accompanying Indonesian societies through Unilever Indonesia’s product range includes
world renowned brands such as Pepsodent, Lux, Lifebuoy, Dove, Sunsilk, Clear, Rexona,
Vaseline, Rinso, Molto, Sunlight, Wall’s, Royco, Bango and more.

For more than 80 years, the Corporate mission has remained unchanged, which are they work
to create a better future every day; to help consumers feel good, look good and get more out
of life with brands and services that are good for them and for others; they would like to
inspire people to take small everyday actions that can add up to a big difference for the
world; and we develop new ways of doing business that will allow us to grow while reducing
our environmental impact and increasing our positive social impacts.

The Company’s shares were first offered to the public in 1981 and have been listed on the
Indonesia Stock Exchange since 11 January 1982. At the end of 2015, Unilever Indonesia
was the fourth largest company by market capitalization on the Indonesia Stock Exchange.

For Unilever, human resources are at the center of all the Company’s activities. They have
made it a priority to develop the professionalism, life balance and capacity of their 6,000
plus employees to contribute to the Company. The Company also manages and develops the
business in a responsible and sustainable manner. The Company’s values and standards are
set out in our Code of Business Principles (CoBP), which are also shared with our business
partners, including our suppliers and distributors.

As a socially responsible company, Unilever Indonesia has an extensive Corporate Social

Responsibility (CSR) program that is founded on the principles of our Unilever Sustainable
Living Plan (USLP). The three pillars of the USLP are Improving Health and Well-being,
Reducing Environmental Impact and Enhancing Livelihoods.

The Company currently owns nine factories in the Jababeka Industrial Zone, Cikarang and in
Rungkut, Surabaya, and its head office is in Jakarta. The Company’s products, which
comprise 39 core brands and almost 1,000 stock keeping units (SKU), are marketed through a
network of more than 800 independent distributors who reach hundreds of thousands of
stores all over Indonesia.
Unilever stated to be committed to protect the interests and needs of their stakeholders and
increasing value to the shareholders. For the company, to achieve this, they have to
consistently implement the principles of good corporate governance in all their business
operations.

Therefore, for the Company, the purposes of Good Corporate Governance are to:

Support the achievement of the Company’s long-term vision and mission;

Ensure the effective and efficient operation and monitoring of the business;

Enhance sustainable value for stakeholders; and

Increase the Company’s competitiveness within the industry.

Principles of Good Corporate Governance Unilever Upholds:

To achieve those purposes, they strive to uphold the five core principles of good corporate
governance, as follows:

TRANSPARENCY

As stated by the company, Unilever takes the initiative to consistently provide clear and
relevant information to the shareholders and other stakeholders and as required to comply
with the laws and regulations.

ACCOUNTABILITY

The Company is responsible for the decisions and actions it takes and ensuring that they are
managed properly, fairly, and measurably in accordance with the interests of the
stakeholders.

RESPONSIBILITY

The Company complies with the prevailing laws and regulations, and acts responsibly with
regard to society and the environment, so that the business can grow sustainably.

INDEPENDENCE

The Company is professionally managed without any conflicts of interest and without any
pressure or intervention from any parties.

FAIRNESS

The Company ensures equal and fair treatment in fulfilling the rights of the stakeholders, in
line with prevailing laws and regulations.
Laws and Guidelines the Company Follows

The Company’s implementation of corporate governance has legal and policy foundation that
includes the following laws, regulations and guidelines:

Law No. 40/2007 on Limited Liability Companies (‘the Company Law’);

Law No.8/1995 on the Capital Market.

Otoritas Jasa Keuangan (OJK)/Financial Services Authority (FSA)

Circular Letter No. 30/SEOJK.04/2016 on the Form and Contents of Annual Reports Filed
by Issuers or Public Companies;

OJK Regulation No.21/POJK.04/2015 dated 16 November 2015 on the Implementation of

the Governance Guidelines for Listed Companies;

OJK Regulation No.32/POJK.04/2014 on the Plans and Organisation of the General Meeting
of Shareholders in a Public Company;

OJK Regulation No.33/POJK.04/2014 on the Board of Directors and Board of

Commissioners of Issuers and Public Companies;

The Good Corporate Governance Guidelines issued by the National Committee on

Governance Policy (KNKG).

The ASEAN Corporate Governance Scorecard.

The Company’s good corporate governance is also underpinned and guided by the following
internal documents:

The Unilever Code of Business Principles and the Code Policies (the Code);

The Articles of Association;

The Charters of the Board of Commissioners and Board of Directors;

The Charters of the Audit Committee and Internal Audit;

The Responsible Sourcing Policy and Sustainable Agriculture Code (USAC);

The Creditor protection policy;

The Outwardly Appropriate Obligation Policy;

The Shareholders’ Communication Policy;

The Responsible Business Partner Policy;

The Related Party Transactions Policy.

Commitment from Employees

Commitment is also one of the things they pay attention to, in the practice, all new employees
are required to sign a declaration of commitment to Unilever’s Code of Business Principles
and Code Policies, which is then refreshed annually. When refreshing their commitment to
the Code, employees are also encouraged to sign the Integrity Pledge. For everyone at
manager level and above, signing the Integrity Pledge is mandatory.

Strengthening GCG

The Company is committed to the continuous improvement of corporate governance across

the business in line with the development of national, regional and global best practice. In
2017, we conducted a self-assessment of our governance implementation using the ASEAN
Corporate Governance Scorecard, an instrument developed by the ASEAN Capital Market
Forum (ACMF) based on the OECD Principles of Corporate Governance. The results were
externally assessed and reviewed by the Indonesian Institute for Corporate Directorship
(IICD), and we have used them both as an objective measure of our corporate governance
performance and as a tool for implementing and improving GCG practice on a day-to-day
basis. The results are presented in the next section. During the year we took several other
actions to strengthen our GCG framework, policy and implementation. They included the
following:

Amended the Board of Directors' Charter to ensure better compliance with OJK regulations;

Undertook continuous, comprehensive self-assessment using the ASEAN Good Corporate

Governance Scorecard;

Aligned our governance practices by improving our disclosure based on Bapepam Regulation
LK.X.K.6; Held refresher sessions on the Code of Business Principles and Code Policies;

Issued a Creditor Protection Policy;

Issued a Shareholders’ Communication Policy; Issued a Related Party Transactions Policy

Assessment

The implementation of good corporate governance is reflected in the Company’s consistent

efforts to comply with the relevant regulations and standards in achieving our vision, mission
and values. As, noted above, they use the ASEAN Corporate Governance Scorecard (ACGS)
to assess Unilever corporate governance performance on an ongoing basis. The assessment of
the implementation of GCG was carried out by an independent institution, namely the
Indonesian Institute for Corporate Directorship (IICD) for the ASEAN Corporate Governance
Scorecard parameters. In 2017, for the performance of 2016 Unilever achieved a score of
93.02 (2016: 53.85) on the ACGS, earning the predicate of “very good”, which signifies that
the Company’s GCG practices reflect international standards. This result pushed the
Company’s ACGS ranking from the top 20-30 Indonesian issuers in 2016 to the top 10-20 in
2017. Ratings are based on public information, particularly in the annual report as well as the
Company’s website. We also self-assessed our GCG performance against the Governance
Guidelines for Listed Companies issued by OJK through OJK Regulation No.
21/POJK.04/2015 and OJK Circular Letter No 32/SEOJK.04/2015. Unilever have continued
to strengthen their implementation of the recommendations in the Guidelines.

Structure

In compliance with Law No. 40/2007 on Limited Liability Companies, and as stated in
Unilever Indonesia’s Articles of Association, the Company comprises three main corporate
organs, which are mutually independent: the General Meeting of Shareholders (GMS), the
Board of Commissioners (BoC) and the Board of Directors (BoD). The Board of
Commissioners (BoC) and the Board of Directors (BoD) are both accountable to the GMS.
These three organs are responsible for establishing the framework for good corporate
governance, and for leading its GCG implementation with the assistance of the Corporate
Secretary and the Committees under the Board of Commissioners.

This good corporate governance framework is supported by several mechanisms that work in
a complementary manner to ensure that corporate governance is applied effectively and
consistently across our operations and by everyone in the organisation. The mechanisms are,
among others, the internal control system, the risk management system, the internal and
external audits, the Code, the Articles of Association, the Unilever Code of Business
Partners, quality system management, and our standard operating procedures and business
processes.

Remuneration of the Board of Commissioners and Board of Directors

Remuneration policy

Each year, the Annual General Meeting of Shareholders delegates authority to the Board of
Commissioners to determine the total remuneration amount. The Board of Commissioners
then instructs the Nomination and Remuneration Committee to propose a remuneration
package based on the indicators below. The Board of Commissioners then approves the final
amount, acting on the authority delegated by the AGMS.

Remuneration procedure

The procedure for determining the remuneration is as follows:

The Nomination and Remuneration Committee reviews the structure and amount of the
Board of Commissioners’ and Board of Directors’ remuneration in the current year;

The Committee makes recommendations on the next year’s remuneration increment for both
the Board of Commissioners and Board of Directors;

The recommendations are evaluated by the Board of Commissioners;

The Board of Commissioners proposes these recommendations to the next General Meeting
of Shareholders for the shareholders’ approval
Embedding GCG as a Culture

On a personal and corporate level, the Company’s commitment to good governance is

embodied in Unilever Indonesia’s four corporate values: integrity, respect, responsibility, and
pioneering spirit.

They serve as a reminder to everyone in the organisation of the mindset and moral character
they are expected to bring to every decision and action they take in the course of their work.
At any Company gathering, from town halls to small team meetings, leaders are encouraged
to include ‘Integrity Moments’ when these values can be discussed. Every member of the
organisation is asked to refresh his or her commitment to these values on an annual basis by
signing the Integrity Pledge or Annual Code Declaration. Signing the Pledge is mandatory for
everyone at assistant manager level and above.

Code of Business Principles

Unilever Indonesia’s Code of Business Principles and Code Policies (‘the Code’) describe
and define the Company’s ethics, values and compliance practices. The Code presents the
expected standards of behaviour for the Company’s people when interacting with coworkers,
business partners, customers and consumers. For clarity, these behaviours are set out in a
simple‘must’ or ‘must not’ framework. The Code is a clear statement of our commitment to
maintaining a balance between the Company’s short-term and long-term interests, and
between all the interests of the Company, our shareholders, our employees, our consumers,
our business partners and the general public. The Unilever Indonesia Code of Business
Principles is set out below.

Standard of Conduct

We conduct our operations with honesty, integrity and openness, and with respect for the
human rights and interests of our employees. We shall similarly respect the legitimate
interests of those with whom we have relationships.

Obeying the Law

Unilever companies and employees are required to comply with the laws and regulations of
the countries in which they operate.

Employees

Unilever is committed to diversity in a working environment where there is mutual trust and
respect and where everyone feels responsible for the performance and reputation of their
company. Unilever will recruit, employ and promote employees on the sole basis of the
qualifications and abilities needed for the work to be performed. They are committed to safe
and healthy working conditions for all employees. They will provide employees with a total
remuneration package that meets or exceeds the legal minimum standards or appropriate
prevailing industry standards. Unilever will not use any form of forced, compulsory or child
labour. They are committed to working with employees to develop and enhance each
individual’s skills and capabilities. They respect the dignity of the individual and the right of
employees to freedom of association. They will maintain good communications with
employees through company based information and consultation

Business Partners

Unilever is committed to establishing mutually beneficial relations with their suppliers,

customers and business partners. In business dealings they expect partners to adhere to
business principles consistent with their own.

Community Involvement

Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfil
their responsibilities to the societies and communities in which they operate.

Public Activities

Unilever companies are encouraged to promote and defend their legitimate business interests.
Unilever will co-operate with governments and other organisations, both directly and through
bodies such as trade associations, in the development of proposed legislation and other
regulations which may affect legitimate business interests. Unilever neither supports political
parties nor contributes to the funds of groups whose activities are calculated to promote party
interests.

The Environment

Unilever is committed to making continuous improvements in the management of our

environmental impact and to the longer-term goal of developing a sustainable business.
Unilever will work in partnership with others to promote environmental care, increase
understanding of environmental issues and disseminate good practice.

Innovation

In scientific innovation to meet consumer needs we will respect the concerns of their
consumers and of society. They will work on the basis of sound science, applying rigorous
standards of product safety

Competition
Unilever believes in vigorous yet fair competition and supports the development of
appropriate competition laws. Unilever companies and employees will conduct their
operations in accordance with the principles of fair competition and all applicable
regulations.

Business Integrity

Unilever does not give or receive, whether directly or indirectly, bribes or other improper
advantages for business or financial gain. No employee may offer, give or receive any gift or
payment which is, or may be construed as being, a bribe. Any demand for, or offer of, a bribe
must be rejected immediately and reported to management. Unilever accounting records and
supporting documents must accurately describe and reflect the nature of the underlying
transactions. No undisclosed or unrecorded account, fund or asset will be established or
maintained.

Conflicts of Interest

All Unilever employees are expected to avoid personal activities and financial interests which
could conflict with their responsibilities to the company. Unilever employees must not seek
gain for themselves or others through misuse of their positions.

Compliance – Monitoring – Reporting

An essential element in their business success. The Unilever Board is responsible for
ensuring these principles are applied throughout Unilever. The Chief Executive Officer is
responsible for implementing these principles and is supported in this by the Global Code and
Policy Committee which is chaired by the Chief Legal Officer. Day-to-day responsibility is
delegated to all senior management of the geographies, categories, functions and operating
companies. They are responsible for implementing these principles, supported by local Code
Committees. Assurance of compliance is given and monitored each year. Compliance is
subject to review by the Board, supported by the Corporate Responsibility Committee, and
for financial and accounting issues, the Audit Committee. Any breaches of the Code must be
reported. The Board of Unilever will not criticise management for any loss of business
resulting from adherence to these principles and other mandatory policies. Provision has been
made for employees to be able to report in confidence and no employee will suffer as a
consequence of doing so

Company-wide Application of the Code of Conduct

The Code of Business Principles, which sets out clear standards of conduct, is supported by
24 Code Policies that provide a framework of simple ‘musts’ and ‘must nots’ – translating the
standards into behaviours that protect Unilever and each and every one of the employees. The
Code applies to every member of the Company, without exception, up to Board of Directors
level. All members of the Company are asked to sign the Integrity Pledge every year, known
as the Annual Code Declaration, in which they declare that they: Are committed to doing
business with integrity and that they know and apply the Code; Ensure that everyone
reporting to them understands the Code and knows how they can raise concerns without fear
of retaliation; and Have reported, and will continue to report, all actual or potential breaches
of the Code that they become aware of.

The Code declaration is made online along with the 6 mandatory learning modules rolled out
in 2017 which include Anti-Bribery, Living The Code, Third Party Compliance, Fair
Competition, Use of IT and Protecting Unilever’s Information. All online users must enroll
and complete the modules. By mid-Dec 2017, 99% of manager level and up had completed
the first four learnings, including Anti-Bribery.

Monitoring and Reporting

Company-wide compliance with the Code is part of the foundation of good corporate
governance in the Company, and as such we believe that it is fundamental to the
sustainability of the business. Responsibility for ensuring that the Code principles are
understood and embedded at every level of the organization lies with the Board of Directors,
who lead a program of regular communication campaigns, dissemination events and
compliance monitoring. The compliance reports are reviewed by the Audit Committee and
the Unilever Leadership Executive. Breaches or suspected breaches of the Code must be
reported in accordance with specified procedures (see under the ‘Whistleblower System’,
below). Employees have the option to report in confidence and both the Code and the
Integrity Pledge specify that no employee will suffer as a consequence of doing so.
Moreover, the Board will not criticise management for any loss of business that is proven to
have resulted from adherence to the Code and/or any other mandatory policies and
instructions.

Every Unilever Indonesia employee, and our business partners, has access to several different
whistleblower channels they can use to report breaches or suspected or potential breaches of
the Code of Business Principles and Code Policies, or any other ethics violations or illegal
behaviour. Employees are encouraged to bring any breaches to the attention of their line
manager in the first instance. If they are unwilling or unable to do this, however, they can
report to the Business Integrity Officer(‘BI Officer’) the Business Integrity Committee (‘BI
Committee’), known as the Blue Umbrella. They also have the option of reporting through
Unilever’s global Code Support hotline and website. They also have the option of reporting
through Unilever’s global Code Support Line. The Company guarantees that all
whistleblower reports are dealt with in strict confidence.

In conclusion, Unilever has been really good in applying their corporate governance, with
their efforts to involves all part of the companies. Though they have some suggestions from
OJk that they have to improve several things. The good side is they strive to uphold the
principles of GCG and quite succeed as the assessment by an independent institution, namely
the Indonesian Institute for Corporate Directorship (IICD) for the ASEAN Corporate
Governance Scorecard parameters. In 2017, for the performance of 2016 Unilever achieved a
score of 93.02 (2016: 53.85) on the ACGS, with the predicate of “very good”, which shows
that the Company’s GCG practices reflect international standards.

However OJK suggested these suggestion towards the implementation of GCG by Unilever,
here are some of the suggestions:
1. Public companies have anti- corruption and anti-
fraud policies.

Unilever explained that the policies are the part of the company’s code of conduct and
they are upholding highest global standard, zero tolerance against bribery and
corruption.

2. Public companies have a policy on the selection and improvement of vendors.

Unilever explained that they expects their partners to comply with their values, also
they developed methods to involves the people to work positively. Unilever also
explained that they have Sustainable Supplier Policy and Business Partner Policy

Sources:
Annual Report 2017 PT Unilever Indonesia
https://www.unilever.co.id/en/
https://en.wikipedia.org/wiki/Unilever
 Good Corporate Governance

Corporate Governance of
PT.Unilever Indonesia

Anjerri B1034171018

Accounting(International Class)

Faculty of Economics and Business

Universitas Tanjungpura