Energy Security and Costs Pose Challenges for Coal ESG Implementation

Implementing Environmental, Social, and Governance (ESG) principles and energy transition in the coal sector is considered far more complex than in other industries. Besides meeting emission reduction and environmental protection demands, the coal industry also bears the responsibility of maintaining national energy security while grappling with rising operational costs. APBI Deputy Chairman for ESG & Good Mining Practice, Ignatius Wurwanto, described the situation as a ‘trilemma’ in coal sector ESG implementation. He stated that the coal industry must address three challenges simultaneously: first, maintaining energy security to ensure current and future energy needs; second, implementing sustainable environmental management to prevent climate change impacts. Wurwanto noted that ESG implementation in mining cannot be compared to other industries due to significantly greater operational and regulatory complexities. Coal companies must comply with various technical, environmental, occupational safety, and community development regulations, all of which require substantial costs. ‘Many still view ESG as a program or compliance exercise, when it should instead be risk- and opportunity-based,’ he said. However, among nearly 960 coal mining companies in Indonesia, understanding of ESG remains highly varied. To drive ESG implementation, APBI uses the Good Mining Practice (GMP) approach, strengthening operational practices such as conservation, environmental protection, mining safety, and technical standardisation. Regulatory uncertainty, meanwhile, is also cited as a serious challenge for ESG implementation in the coal industry.