"The era of profit-only business is over. Modern stakeholders demand accountability. ESG is no longer an option—it is the price of admission to stay in the market, and Indonesian consumers are becoming increasingly adept at distinguishing real action from mere gimmicks."
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Beware of Greenwashing
The term Environmental, Social, and Governance (ESG) has become a mandatory buzzword in every corporate annual report. ESG refers to how a company operates in relation to the environment (E), its communities and employees (S), and its leadership and transparency (G).
Unfortunately, the popularity of ESG has also given rise to Greenwashing—the practice of companies attempting to appear environmentally friendly without making fundamental changes. They spend more time and money advertising themselves as "green" than actually being green.
However, the good news is that in Indonesia, several business sectors are moving far beyond greenwashing. They realize that investing in ESG is a long-term business strategy that enhances brand value, attracts ESG-conscious foreign investors, and ensures operational longevity.
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Part I: Traits of Truly Sustainable Businesses
How can you distinguish a company that genuinely implements ESG from one that is just a gimmick? Serious companies exhibit the following traits:
•• Clear Commitments (Measurable and Auditable): They set measurable targets, such as net-zero emission goals by a specific year, rather than vague promises to "do better."
•• R&D Investment: They invest heavily in Research and Development (R&D) to find more efficient and eco-friendly technologies, such as replacing hazardous raw materials.
•• Supply Chain Transparency: They are open about where their raw materials come from and how they ensure fair labor practices (S) and upstream environmental impacts (E).
Part II: Case Studies of Indonesian Business Sectors Leading ESG – The following sectors in Indonesia are demonstrating a strong commitment to the pillars of ESG:
1. Financial Sector (G: Governance & S: Social)
Banks and financial institutions are now driven by the OJK (Financial Services Authority) to implement Sustainable Finance. The commitment isn't just internal; it’s about how they disburse loans. They have begun limiting funding for environmentally damaging projects (e.g., illegal mining) and offering low-interest credit for eco-friendly MSMEs or renewable energy projects.
2. Energy Sector (E: Environmental)
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Although Indonesia still relies on coal, many major energy players are diversifying their portfolios. They are making significant investments in Solar Power (PLTS) and Wind Power (PLTB). Serious companies also dare to close or restructure high-emission business units to achieve future carbon-neutral targets.
3. F&B and Agriculture (S: Social & E: Environmental)
In this sector, ESG is visible through commitments to fair trade and regenerative agriculture. They ensure fair prices for farmers (S), reduce pesticide use, and focus on restoring soil quality instead of exploiting it. This is evident in coffee, tea, and chocolate brands focusing on single-origin sourcing and direct partnerships with farmers.
4. Manufacturing Sector (E: Environmental)
Leading manufacturing companies have adopted Circular Economy principles. This means they don’t just produce; they design products to be easily recycled or reconditioned. Massive investments are made in water and energy recycling technologies and reducing waste to near-zero levels.
5. Property and Construction (E: Environmental)
Building development is shifting toward Green Buildings. Serious property developers build with environmental certifications, use local materials to reduce transportation carbon footprints, and design energy-efficient structures that maximize natural light and ventilation.
WRAP-UP! – Driving Market Transparency
Indonesia's business journey toward sustainability is a marathon, not a sprint. Transparency from companies in these sectors is vital.
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As consumers, our task is to be critical: support and invest in companies that demonstrate real, measurable, and proven ESG commitments. By doing so, we help push the market to prioritize shared value above mere profit.
Which Indonesian company do you find most inspiring in its ESG implementation? Let's share their success story!
"Amidst the sustainability hype, not every company is honest. These local case studies prove that sustainability is a long-term business strategy, not just a marketing gimmick."
