According to a survey by the Katadata Insight Center (KIC), the majority of Indonesian investment respondents have already invested in companies prioritizing Environmental, Social, and Governance (ESG) practices.
ESG represents business practice standards that consider environmental sustainability, social responsibility, and good corporate governance.
Several indices have been developed to set standards and measure corporate ESG compliance, such as the S&P Dow Jones Sustainability World Index, the SGX ESG Transparency Index, and the IDX ESG Leaders.
According to the Ministry of Finance, some aspects assessed in ESG are as follows:
1. *Environmental* (Environmental Sustainability)
* Use of environmentally friendly energy
* Commitment to reducing greenhouse gas emissions
* Pollution control
* Waste and waste management
* Conservation of natural resources, etc.
2. *Social* (Social Sustainability)
* Recognition of diversity and inclusivity
* Gender equality
* Respect for human rights (including land acquisition/project implementation)
* Fair wages and working conditions, etc.
3. *Governance* (Governance Sustainability)
* Transparency
* Financial management that meets accounting standards
* Regulatory compliance
* Non-involvement in illegal activities
* No conflict of interest in the selection of board members/commissioners, etc.
Based on the KIC survey of 595 Indonesian investment actors, 66.1% hold shares in companies prioritizing ESG.
Another 18.8% of respondents did not know whether the companies they invested in prioritized ESG or not.
Meanwhile, 15.1% of respondents stated that the companies they invested in did not prioritize ESG.
This survey indicates that the majority of respondents consider investment in companies prioritizing ESG as important.
However, 72.4% of respondents plan to maintain their investments even if the chosen companies are proven not to implement ESG. Only 21.2% of respondents plan to immediately sell their shares in such a scenario.
The KIC conducted the online survey among 3,105 respondents across Indonesia. Of these, 595 were investment actors surveyed regarding ESG.
All respondents met the criteria of being over 17 years old, users of financial/banking products, and decision-makers in the use of financial/banking products.
(Also Read: Green Investment is Increasingly Popular)