Sustainability paradigm must become the focus of the business world
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Paradigma keberlanjutan harus menjadi fokus dunia usaha
4 July 2024
By Edo Rusyanto
Jakarta, ID – The business world is being urged to shift its focus. Instead of solely chasing business growth, it is now important for them to concentrate on sustainability. This includes focusing on environmental, social, and governance (ESG) aspects.
There are abundant opportunities to secure global investment in the area of ESG. This is made possible by the Principles for Responsible Investment (PRI), supported by the United Nations (UN). As of 2021, the total assets managed under PRI reached US$121.3 trillion, which is double the amount from 2016.
According to National Development Planning (PPN) Minister/National Development Planning Agency (Bappenas) Head Suharso Monoarfa, the business world must change its focus. Instead of solely pursuing economic growth, they must now focus on sustainability.
“I think the business world must change its focus from pursuing economic growth to prioritising sustainability. This includes environmental, social, and governance aspects,” he said during Green Economy Expo 2024 at Jakarta Convention Centre in Jakarta on Wednesday (3/7/2024).
Based on Global Investor Survey 2023, 75% of investors have implemented ESG aspects, which prioritise sustainable development, investment, and business practices that align with ESG criteria.
This paradigm shift is aimed at supporting the global effort to mitigate the effects of climate change, which is primarily caused by increased greenhouse gas emissions.
“These ESG factors align with the sustainable development goals (SDGs) that have been initiated by the UN since 2015 to eradicate world hunger, safeguard the earth, and promote well-being,” Suharso said as quoted by Antara.
Furthermore, there are abundant opportunities to secure global investment in the area of ESG. This is made possible by the Principles for Responsible Investment (PRI), supported by the United Nations (UN). As of 2021, the total assets managed under PRI reached US$121.3 trillion, which is double the amount from 2016.
“Based on the data from PricewaterhouseCoopers (PwC), there are many investors interested in funding sectors such as energy, agriculture, forestry, and land utilisation. This is due to the pressing need to address climate change and other global environmental issues,” the PPN Minister stated.
According to Suharso, a green economy implementing sustainability aspects will drive the transition towards sustainable growth. This can be achieved through renewable energy transition, circular economy and bioeconomy implementation, sustainable forest management, and increased workforce in the green economy sector.
“The green economy is an innovative approach that transforms developmental challenges into fair advancements for our environment. It is anticipated that green economic growth will enhance the wise and sustainable use of natural resources. This is to ensure that basic needs are met to support public welfare,” the PPN Minister revealed.
Sustainability study
Meanwhile, Finance Minister Sri Mulyani Indrawati recently welcomed Stanford Doerr School of Sustainability Scholar-in-Residence Jeffrey Ball to discuss sustainability issues.
The School of Sustainability is a new major established by Stanford to discuss sustainability issues and climate change, challenges faced by both developed and developing countries.
“Jeff expressed that my extensive experience with global institutions, coupled with my role as Indonesia’s Finance Minister, will bring a relevant, vital, and engaging viewpoint to discussions on sustainability issues,” Sri Mulyani stated on her official Instagram account, @smindrawati, on Tuesday (2/7/2024).
The Finance Minister stated that Stanford’s School of Sustainability aims to create a platform, which will bring together the world’s leading thinkers, policymakers, academics, and business professionals. The goal is to facilitate the exchange of ideas and viewpoints on addressing climate change and sustainability issues. This includes discussions on policies, governance, financing, and other crucial aspects.
“We are exploring how this global platform can inclusively foster ideas and dialogues that are based on experiences and insights from around the world that are both relevant and significant. The expectation is that these discussions will lead to breakthroughs that enhance cooperation and progress in the sustainability agenda,” Sri Mulyani said as quoted by Antara.
On a separate occasion, Finance Deputy Minister Suahasil Nazara said that the Indonesian government was committed to tackling climate change issues This commitment is demonstrated through the management of its state budget (APBN) that is guided by principles of just and affordable transition.
This management is reflected on three parts of the budget, namely revenue, expenditure, and financing.
Additionally, state revenue has been allocated to provide incentives and disincentives for economic activities, which include efforts towards mitigating climate change and reducing carbon emissions.
In terms of expenditure, the government’s commitment is evident in the budget allocation for addressing climate change. Back in 2016, the government implemented a policy on climate budget tagging based on the financial requirement for effective climate management.
Meanwhile, in terms of financing, Indonesia is actively development financing instruments to support green economy, such as green sukuk, SDGc bonds, and blue bonds. Additionally, Indonesia has become a pioneer that combines green financing and sukuk.
