This article is originally published on Alveo.co.id
Sustainability is a concept widely adopted by companies with the aim of meeting the needs and aspirations of the current generation without compromising the ability of future generations to meet their own needs (Brundtland Commission, 1987).
Stakeholders, including shareholders, increasingly expect the implementation of long-term sustainability principles within their companies. These principles can be realized through the adoption of a green economy, an economic concept and system that prioritizes sustainable and environmentally friendly economic growth.
The global economic community now demands that companies and businesses embrace these concepts. It is believed that doing so will enable businesses to achieve outstanding performance while minimizing negative impacts on the environment and society. Consequently, the availability of natural resources is expected to be sustained in the long run.
Furthermore, companies have a crucial role in incorporating sustainability principles into their operations through the practice of Corporate Social Responsibility (CSR). These CSR initiatives have evolved into effective means for companies to fulfill their responsibilities towards the environment and the communities in which they operate.
Organizations are encouraged to support environmentally friendly business activities and make a positive contribution to the community and the environment. This is achieved by considering three aspects known as ESG: environment, social, and governance. ESG serves as an important indicator for all stakeholders to assess a company’s ability to manage business growth, environmental impact, social responsibility, and corporate governance.
Sustainability, CSR, and ESG are all interconnected. Sustainable companies apply the ESG framework and carry out CSR activities concurrently to achieve sustainability goals. By adhering to these principles, organizations can leverage long-term sustainable and fruitful growth.
Regulators also utilize these three elements as regulations to promote the implementation of responsible business practices. One such regulation is the OJK Regulation (POJK) Number 51/POJK.03/2017 on the Implementation of Sustainable Finance for Financial Services Institutions, Issuers, and Public Companies. This regulation is widely adopted by numerous companies in Indonesia to report on their economic and sustainability performance. (ALV)