There is a steep upward trajectory of ESG principles globally and this was accelerated during the pandemic, with 79% of APAC investors significantly or moderately increasing ESG investments by Q3 2020 based on PwC report. Further report by Morningstar stated that capital flows into ESG funds continue to increase with total assets invested in Asia-domiciled funds at US$36.3 billion at the end of June 2021. Indonesia is among the global pioneers for thematic bonds under the Financial Services Authorities (OJK) Sustainable Finance Roadmap. In Indonesia, there has been a significant escalation in ESG investing. Since it was first launched in 2014, the number of products and funds managed by ESG-themed mutual funds has risen drastically. According to OJK December 2020 data, there are 14 ESG mutual funds with IDR3.062 trillion worth of assets under management.
IDX reporting requirements and OJK Regulation No. 51/POJK.03/2017, as well as Indonesia’s confirmed Carbon Tax price and the EU’s Carbon Border Adjustment Mechanism, will add further stimulant to sustainable business practices and ESG-aligned products and services. Indonesia aims to reach net-zero emissions by 2060 and businesses will have an opportunity to generate revenue from carbon credits as the price of carbon increases. In another occasion, Basuki Tjahaja Purnama, President Commissioner of PT Pertamina (Persero) stated that Pertamina’s commitment to supporting the use of environmentally friendly energy was demonstrated by the establishment of the Power & New Renewable Energy (NRE) Sub-holding, which is the future of Pertamina. Pertamina is striving to support the Indonesian government in reducing carbon emissions by 29% by 2030.