What is ESG in Indonesia (ESG Adalah)

In recent years, Indonesia has made significant progress in integrating environmental, social, and governance (ESG) considerations into its business practices. The government has established a number of policies and initiatives aimed at promoting sustainable development, including:

Sustainable Development Goals (SDGs) and
National Action Plan for Sustainable Finance.

In addition, there is growing interest among investors in ESG factors, particularly with the launch of the Indonesia Stock Exchange's (IDX) ESG index in 2018. This index tracks the performance of companies that have demonstrated strong ESG practices and has helped to promote greater ESG disclosure and reporting by Indonesian companies.

As the ESG landscape continues to evolve in Indonesia, newer trends are emerging. One significant trend is the focus on climate change and reducing carbon emissions. The Indonesian government has set ambitious targets to reduce its greenhouse gas emissions, and businesses are increasingly investing in renewable energy and sustainability initiatives to support these goals. Another emerging trend is the focus on social impact and community engagement. Indonesian businesses are recognising the importance of engaging with local communities and addressing social issues such as poverty and inequality. This includes investing in education and healthcare projects, as well as supporting local small and medium-sized enterprises (SMEs). Finally, there is a growing focus on governance issues, particularly around corruption and transparency. Indonesia has made significant progress in addressing corruption in recent years, but there is still much work to be done. Businesses that demonstrate strong governance practices and transparency are likely to be more attractive to investors and other stakeholders.

To adapt and prepare for the new ESG Adalah trends in Indonesia, businesses need to focus on several key areas. Firstly, they need to embed ESG considerations into their business strategy and operations. This requires a top-down commitment to ESG, with senior leaders taking responsibility for driving change. Secondly, companies need to invest in the right technologies and tools to manage ESG risks and opportunities effectively. This includes investing in data analytics and digital platforms to track and analyse ESG performance and identify areas for improvement. Finally, businesses need to engage with their stakeholders to understand their expectations and concerns around ESG issues. This includes customers, employees, investors, and local communities. By engaging with stakeholders, companies can build trust and maintain social license to operate.

Some of Indonesia largest companies are incorporating ESG throughout their operations. Astra International is a diversified conglomerate with businesses in the automotive, financial services, and infrastructure industries, among others. The company has set targets to reduce its carbon footprint and increase its use of renewable energy, as well as promoting sustainable practices in its operations and supply chain. Astra International also focuses on community development and empowerment, particularly in education and healthcare. The company's sustainability efforts have been recognized with numerous awards, including being named the Most Sustainable Company in Indonesia by Sustainable Brand Index in 2021.Bank Mandiri is one of the largest banks in Indonesia and has made significant strides in integrating ESG practices into its operations. The bank has set targets to reduce its carbon footprint and increase its renewable energy usage. Bank Mandiri also focuses on financial inclusion and literacy, particularly among underprivileged communities, and has implemented social and environmental risk management practices. The bank's sustainability efforts have been recognized with numerous awards, including being named the Best Sustainable Bank in Indonesia by World Finance in 2020.

ESG considerations are becoming increasingly important for businesses in Indonesia. The government and the IDX are all promoting sustainable development and greater ESG disclosure and reporting by Indonesian companies. By embedding ESG considerations into their strategy, investing in the right technologies, and engaging with stakeholders, businesses can ensure long-term sustainability and success.

ESG Impact can help your business with: