Challenges Faced by Indonesian Companies in Implementing ESG

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Adi Ahdiat 22/07/2024 12:49 WIB

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According to a survey by Mandiri Institute, many Indonesian companies face challenges in meeting ESG performance indicators.

Challenges Faced by Indonesian Companies in Implementing ESG (2023)

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Challenges Faced by Indonesian Companies in Implementing ESG (2023)

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According to a survey by Mandiri Institute, many Indonesian companies consider environmental, social, and governance (ESG) factors important.

ESG is a standard of business practices that sustainably considers environmental, social, and governance aspects.

Of the 162 listed companies surveyed, 95% implement ESG because it has become a corporate value.

However, many still face challenges in practice. The majority, or 64% of respondents, feel constrained in meeting ESG performance indicators.

More than half of the respondents also felt constrained by costs (60%), a lack of understanding of ESG (57%), and a lack of support from the government/regulators to implement ESG (55%).

Other challenges faced include a lack of data, developing performance assessment methods, determining performance targets, a lack of guidance or support from shareholders, and so on, as shown in the graph.

The Ministry of Finance, together with the United Nations Development Programme (UNDP), has published a reference document on ESG implementation titled "Environmental, Social, and Governance Framework" (LST) since November 2022.

The document states that there are 10 ESG standards that need to be met to achieve sustainable development goals, namely:

1. Pollution prevention and waste management;
2. Biodiversity conservation;
3. Natural resource management and energy efficiency;
4. Climate change mitigation and adaptation and disaster risk;
5. Employment and working conditions;
6. Diversity, equity, inclusion, and access;
7. Social interests;
8. Cultural heritage;
9. Leadership and governance; and
10. Risk and control.

The document also provides guidance on ESG implementation for project managers and businesses.

"The framework and its user guide are comprehensive and pragmatic. Besides being conceptual, both are equipped with how to implement them in the field. I am confident that both can be easily used by stakeholders," said Minister of Finance Sri Mulyani, as quoted from the document.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Challenges Faced by Indonesian Companies in Implementing ESG

Challenges Faced by Indonesian Companies in Implementing ESG

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