Jakarta. The Indonesian mining sector has seen improving scores in their adoption of environmental, social, and governance (ESG) principles, but there is still a long way ahead to sustainability.

According to the Bumi Global Karbon (BGK) Foundation, the average ESG score in Indonesia’s capital market has risen from 30 percent in 2021 to 46 percent in 2023. The mining sector is witnessing even more significant growth, from 36 percent to 63.78 percent over the same period. Despite the impressive growth, BGK’s Founder Achmad Deni Daruri said that the mining industry was still far from massively implementing the ESG principles.

“The corporate culture often becomes the major challenge. Many companies have not made ESG principles the center of their business strategies,” Deni recently told Jakarta Globe’s sister publication Investor Daily.

Other challenges include human capital and financing constraints. The government’s lack of incentives to help companies invest in ESGs has also become another roadblock. According to Deni, ESG will give companies a huge competitive edge.

“ESG is not only a social responsibility, but it is also a huge opportunity to improve [the company’s] reputation, operational efficiency, and competitiveness,” he said.

The adoption of ESG will also enable companies to have better access to financing as investors are now increasingly paying attention to sustainability portfolios. Its adoption also drives businesses to embrace more responsible and efficient practices.

Barito Pacific Group’s Petrindo Jaya Kreasi is one of the mining companies that has shown commitment to implementing sustainability practices. The company continues to improve its sustainability practices, even ensuring they align with the Global Reporting Initiative (GRI) standards. Petrindo Jaya Kreasi is also aware of how important it is to report their ESG journey transparently in their sustainability report in line with GRI standards. This allows Petrindo to boost transparency, manage risks effectively, and create sustainability opportunities. This commitment shows the company’s hard work in implementing sustainable business practices.

Deni also listed ways for mining companies to improve their ESG adoption. 

First, an organization needs to integrate its ESG principles with its long-term goals, which align with the company’s culture and processes. Second, the company must involve stakeholders, by actively engaging in dialogues with employees, people, and investors. Companies must also take their inputs into account before making a decision. Third, companies must have a clear policy and procedure to draft a comprehensive ESG roadmap over specific periods such as for the next five years. This will result in clear responsibility management and reporting mechanisms. Lastly, companies must ensure transparent reporting using GRI standards to improve their accountability.