With shifts underway in Indonesia, sustainability is no longer considered as an option, but a business imperative.
Andryanto EN, IR PR specialist, says the conversation around Environmental, Social, and Governance (ESG) has moved far beyond the realm of idealism or corporate lip service. According to him, ESG is now central to the way markets operate, how investors allocate capital, and how societies define responsible enterprise.
He enumerates five defining ESG trends are reshaping the business and investment environment in the archipelago:
1. Regulatory Pressure is Mounting—Transparency is No Longer Voluntary
The Indonesia Stock Exchange (IDX) has formalised ESG reporting into its SPE-IDXnet system, requiring listed companies to file the E020 form as part of their annual disclosure. This change represents more than just compliance, signaling the beginning of an era where ESG performance is scrutinised with the same intensity as financial health.
By the end of 2024, an impressive 94% of IDX-listed companies had published sustainability reports. This is no longer a symbolic exercise—it reflects a strategic shift in how businesses are measured and valued.
2. Sustainable Financing is Becoming the Norm
Capital is migrating toward companies that show real commitment to ESG. Major Indonesian banks, including BRI, BNI, and Mandiri, are ramping up their green lending portfolios, making sustainability a prerequisite for favorable financing.
Global investors like BlackRock and Temasek are also sharpening their ESG filters. For firms still tethered to fossil fuels or opaque governance, this represents not just a challenge but an existential risk.
3. The Energy Transition is Accelerating—And Industry is Responding
Indonesia’s 2060 Net Zero Emission (NZE) target is no longer distant. The transition begins now. Flagship initiatives such as the Bali Green Hydrogen Project are positioning the country as a regional leader in clean energy production.
Meanwhile, industrial actors are innovating. Pertamina is set to produce ISCC-certified Sustainable Aviation Fuel (SAF) by Q1 2025, turning waste oil into jet fuel. In construction, WIKA Beton is leading the way with low-carbon precast concrete and Environmental Product Declaration (EPD) certification—proof that sustainable innovation is not just possible, but profitable.
4. Supply Chain Due Diligence is Going Digital
Global regulations—particularly from the EU and US—are requiring full visibility into supply chains, especially around deforestation and labor practices. This puts pressure on Indonesian exporters to demonstrate compliance from source to shelf.
Emerging technologies are stepping in. Blockchain is already being deployed in palm oil and mining sectors to validate traceable, ethical sourcing. Artificial intelligence is also becoming indispensable, enabling real-time carbon footprint analysis and proactive emissions management.
5. Tax and Incentive Policies Are Shifting Toward ESG
The Indonesian government is becoming increasingly aggressive in offering tax incentives tied to sustainability. Circular economy models, renewable energy projects, and clean-tech investments are now eligible for meaningful fiscal benefits.
In the electric vehicle (EV) space, the impact is already visible. With subsidies in place, companies like Gojek and Grab are electrifying their fleets—backed by domestic battery manufacturers—turning ESG compliance into a competitive advantage.
