These regulations reflect Indonesia’s efforts to promote sustainable development and responsible business practices. By complying with these legal requirements and embracing ESG principles, companies can contribute to positive social and environmental impacts while enhancing their long-term resilience and competitiveness.

Law No. 25 of 2007 on Investment:

This law encourages and regulates investments in Indonesia. It emphasizes sustainable development and environmental protection by requiring investors to comply with environmental impact assessment (EIA) procedures before commencing certain projects. The law also promotes corporate social responsibility (CSR) initiatives.

Government Regulation No. 47/2012 on Corporate Social Responsibility (CSR):

Enacted in 2012, this regulation mandates large companies to allocate a portion of their annual net profit for CSR activities. While the primary focus is on social responsibility, CSR activities often encompass environmental and governance aspects, thus nudging companies towards holistic ESG practices.

Law No. 32 of 2009 on Environmental Protection and Management:

This law, updated by Government Regulation No. 22 of 2021, sets the legal framework for environmental protection and management in Indonesia. It mandates environmental impact assessments (EIAs) for certain projects, pollution control measures, and corporate environmental responsibility.

OJK Regulation No. 51/POJK.03/2017 on Sustainable Finance:

Issued by the Financial Services Authority (OJK) in 2017, this regulation aims to promote sustainable finance practices among financial institutions. It requires banks to integrate environmental, social, and governance (ESG) factors into their risk management, lending decisions, and investment strategies.

IDX Regulation No. I-A on Implementation of Sustainable Stock Exchange (SSE) Initiative:

The Indonesia Stock Exchange (IDX) adopted the SSE initiative to encourage listed companies to adopt sustainability practices. This regulation, initiated in a collaborative effort with the United Nations, encourages companies to report on ESG metrics, enhancing transparency and accountability to investors.

Law No. 40 of 2007 on Limited Liability Companies (Company Law):

The Company Law governs corporate entities in Indonesia. It requires companies to operate with integrity, transparency, and accountability, reflecting core principles of good governance. Compliance with the Company Law indirectly supports the integration of ESG practices into corporate operations.

Presidential Regulation No. 59 of 2017 on the Implementation of Sustainable Development Goals (SDGs):

This regulation, issued in 2017, outlines Indonesia’s commitment to achieving the United Nations Sustainable Development Goals (SDGs). It encourages collaboration between government, businesses, and civil society to address environmental, social, and economic challenges, thereby promoting ESG integration.