The global push for sustainability is being driven by international commitments, such as the Paris Agreement and the United Nations' Sustainable Development Goals (SDGs). As part of this global effort, Indonesia is aligning its environmental, social, and governance (ESG) goals with these frameworks, particularly within its manufacturing sector. One key initiative in this alignment is the implementation of Green Industry Standards, which are designed to foster sustainable industrial practices. This article explores how these standards support Indonesia's broader ESG goals and contribute to a more sustainable manufacturing landscape.
Global and National ESG Commitments
The Paris Agreement, adopted at the 21st Conference of the Parties (COP21) in 2015, serves as a legally binding international treaty aimed at mitigating and adapting to climate change. With the goal of limiting global temperature rise to well below 2°C—preferably to 1.5°C—by the end of the century, the Agreement requires all participating countries to set and update their climate action plans. Indonesia, a committed participant in the Paris Agreement, has embraced these global objectives by ratifying the treaty through Law No. 16/2016. In its Nationally Determined Contributions (NDCs), Indonesia has pledged to reduce greenhouse gas emissions, with an unconditional target of 31.89% and a conditional target of 43.20% by 2030.
In parallel, Indonesia has committed to the global SDGs outlined in the 2030 Agenda for Sustainable Development. The country's own SDG framework, aligned with global targets, emphasizes sustainable economic growth, environmental preservation, and social equity. Presidential Regulation No. 111/2022 further accelerates these efforts by promoting the achievement of SDGs at both national and regional levels.
The Role of Green Industry Standards in Supporting ESG Goals in Indonesia
A critical tool in achieving these national and global sustainability targets is the Green Industry Standards, which play a significant role in Indonesia's manufacturing sector. As per Law No. 3/2024 and its amendments, Indonesia has adopted the Green Industry concept, which emphasizes efficiency and sustainability in industrial resource use. This approach aligns industrial development with environmental preservation and social responsibility, key pillars of the ESG framework.
In the context of ESG, Green Industry Standards contribute to the "Environmental" aspect by encouraging sustainable production processes, resource management, and waste reduction. They also have social benefits, as they promote better working conditions and community engagement through environmentally responsible practices. Green Industry certification is awarded to companies that meet these stringent standards, ensuring they align their operations with the country's broader ESG objectives.
Green Industry Certification and Its Benefits
The Green Industry Standard, issued by the Ministry of Industry, covers various aspects crucial for sustainable industrial operations, such as raw materials, energy use, production processes, and waste management. Government Regulation No. 28/2021 mandates that manufacturing companies comply with these standards, which have been made compulsory for 17 industry types, including cement, ceramics, pulp and paper, and textiles.
To achieve Green Industry certification, companies must undergo an evaluation process conducted by accredited certification bodies, which assess their compliance with sustainability criteria. These bodies, designated by the Ministry of Industry, play an essential role in maintaining the integrity and credibility of the certification process. Companies that fail to meet the standards or misuse the Green Industry logo may face administrative sanctions, including fines, warnings, or suspension of business licenses.
The benefits of obtaining Green Industry certification extend beyond regulatory compliance. Certified companies can access both fiscal and non-fiscal incentives from the government, which can include tax benefits, financial assistance, and preferential treatment in government procurement. Additionally, they are permitted to use the Green Industry logo on their products, packaging, and promotional materials, which can enhance their marketability and reputation, particularly in international markets where sustainability is increasingly a competitive advantage.
Accredited Green Certification Bodies in Indonesia
Several accredited certification bodies are authorized to evaluate and certify companies in various sectors. One prominent example is the Balai Besar Standardisasi dan Pelayanan Jasa Industri Agro (BBSPJIA), which is responsible for certifying industries such as powdered milk processing, palm oil, and sugar production.
The role of these bodies is critical in ensuring that Green Industry standards are implemented correctly across Indonesia's manufacturing sectors. They provide oversight, guidance, and expertise to help companies improve their sustainability practices, ultimately contributing to Indonesia’s environmental and social goals under the broader ESG framework.
Conclusion
The implementation of Green Industry Standards plays a pivotal role in advancing Indonesia’s ESG goals, particularly within the manufacturing sector. By encouraging more efficient and environmentally friendly industrial practices, these standards help companies reduce their environmental impact while simultaneously improving their competitive edge in global markets. Furthermore, as government support and incentives continue to grow, Green Industry certification will become increasingly important for companies aiming to align their operations with the country’s long-term sustainability objectives.
As Indonesia continues to strengthen its Green Industry standards and ESG-related regulations, the manufacturing sector will be expected to adopt more sustainable practices. The integration of these principles into business models not only helps Indonesia meet its climate goals but also enhances the global competitiveness of its industries, making it a win-win situation for businesses, communities, and the environment.
