ESG Investing
ESG investing refers to an investment activity that not only considers financial metrics but also to consider ESG factors as the basis of the decision making. These factors are very important to be considered in our investment decision, to measure the risk factors, sustainability, and potential growth of a company.
A Company’s financial performance is closely tied to the ESG risks it faces, as a company does not operate Independently. Therefore, a company cannot expect to operate sustainably in the long term without practicing good corporate governance and to take into account the impact of its daily operations towards the environment and the society.
Information regarding ESG aspects of Indonesian Publicly Listed Companies can be obtained through their Sustainability Report, that may be issued as a separate report or integrated in the company’s annual report.
ESG Investing in Indonesia
The Indonesia Stock Exchange understands the importance of ESG Investing values in the long run to support the growth of sustainable financing in Indonesia Capital Market. The exchange has issued a regulation to support and incentivized green bond issuance in Indonesia through Rule Number I-B
Index
On top of that, The Indonesia Stock Exchange has also issued four ESG based Indices.
IDXESGL (ESG Leaders)
An index that measures price performance of 15-30 stocks that have good Environmental, Social, and Governance (ESG) and do not have significant controversies, selected from stocks with high trading liquidity which also have good financial performance. ESG scoring and controversy analysis are conducted by Sustainalytics..
SRI-KEHATI
An index that measures the stock price performance of 25 listed companies, selected by KEHATI Foundation, that have good performance in encouraging sustainable businesses, as well as having an awareness of the environment, social, and good corporate governance or called Sustainable and Responsible Investment (SRI). SRI-KEHATI is a jointly developed index with the Indonesian Biodiversity Foundation (KEHATI Foundation).
ESG SECTOR LEADERS IDX KEHATI
An index that offers broad market exposure and diversification by choosing representative in each industry with best ESG score. Stocks with above average ESG score are selected to represent the industry and grouped by IDX Industry Classification.
This index is jointly developed with the Indonesian Biodiversity Foundation (KEHATI Foundation).
ESG QUALITY 45 IDX KEHATI
An index that measures the stock price performance of 45 stocks that consider the quality of financial and ESG aspects with relatively large market capitalization and high liquidity.
This index is jointly developed with the Indonesian Biodiversity Foundation (KEHATI Foundation).
To learn more about companies that were indexed to these two indices, can be accessed through this link
Index Constituents
Exchange Traded Fund (ETF)
There are also several ESG based ETFs that are listed on Indonesia Stock Exchange, to learn more about such ETFs, the information can be accessed through this link:
ESG ETFs
ESG Mutual Funds
Indonesia Capital Market has facilitated the issuance of several ESG based mutual funds, information regarding the ESF mutual funds can be accessed through this link:
ESG Mutual Funds