What is ESG?
ESG, or “Environmental, Social, and Governance”, is a set of standards that refers to the three main criteria in measuring sustainability. ESG is often used in business as a key metric in making investment decisions and also serves as a reference for companies reporting the impacts of their business. With issues such as climate change, ethical supply chains, environmental damage, and global welfare becoming more critical, ESG aspects have quickly taken center stage as more investors, regulators, and other stakeholders now aim to conduct business in a way that positively contributes towards solving these issues. Consequently, ESG has become a globally recognized consideration in making investment decisions and is increasingly becoming the focus of companies’ strategic and operational agendas.
Environmental
Businesses examine how their activities affect the environment, and how they can actively play their part as environmental stewards
Social
Businesses consider their reputation and relationship with stakeholders, such as local communities, suppliers, customers, employees, and affiliated parties, and how they can create a positive impact for their conditions and welfare.
Governance
Businesses maintain good governance principles to ensure going concern.
In Indonesia, ESG has quickly taken center stage after the Government of Indonesia declared its commitment to achieve the 17 UN Sustainable Development Goals by 2030. The UN SDGs aim to achieve sustainable development by 2030 by ending poverty, protecting the planet, and ensuring that everyone enjoys peace and prosperity. Through the publication of “Roadmap of SDGs: Indonesia” by the National Planning Agency (Bappenas), the Government of Indonesia has officially solidified its commitment and has also made achieving the 17 SDGs a national priority involving all layers of Indonesian society, including the business and economic sector.
The UN’s latest Agenda states that the action plans to achieve sustainable development by 2030 can be categorized into the following 5Ps:
People
Determination to end poverty and hunger, in all their forms and dimensions, to ensure that all human beings can fulfil their potential in dignity and equality and in a healthy environment.
Planet
Determination to protect the planet from degradation, including through sustainable consumption and production, sustainably managing its natural resources and taking urgent action on climate change, so that it can support the needs of the present and future generations.
Prosperity
Determination to ensure that all human beings can enjoy prosperous and fulfilling lives and that economic, social, and technological progress occurs in harmony with nature.
Peace
Determination to foster peaceful, just, and inclusive societies which are free from fear and violence. There can be no sustainable development without peace and no peace without sustainable development.
Partnership
Determination to mobilize the means required to implement this Agenda through a revitalised Global Partnership for Sustainable Development, based on a spirit of strengthened global solidarity, focused in particular on the needs of the poorest and most vulnerable and with the participation of all countries, all stakeholders and all people.
For more information on the UN SDGs, please visit UNDP Indonesia and SDGs Indonesia Bappenas.