ESG Increasingly Considered in Business, Investment and Financing Decisions
The application of environmental, social, and governance (ESG) principles is increasingly becoming a consideration in investment and financing decisions. Financial performance remains the primary factor, but a company’s ability to manage environmental, social, and governance risks is starting to determine its attractiveness to investors. This change means ESG is no longer just about regulatory compliance or sustainability reporting. For companies, implementing ESG can relate to risk management, reputation, business sustainability, and opportunities to obtain long-term funding.
Ongki Kurniawan, a member of the judging panel for the ESG Award 2026 by Kehati, stated that a company’s future success will be increasingly determined by its ability to create economic value while simultaneously having a positive impact on the environment and society. "ESG is no longer just about meeting the expectations of regulators or investors. ESG has become the foundation for companies to build a business that is resilient, trusted, and relevant in the long term," Ongki said in a statement on Saturday (8/8). According to Ongki, companies also need to demonstrate that ESG implementation has a real impact on the environment, society, and responsible governance. Thus, ESG becomes part of the company’s strategy in maintaining business sustainability.
In Indonesia, ESG-based investment is also growing along with the increasing number of instruments and references for investors. The Kehati Foundation, together with the Indonesia Stock Exchange (IDX), launched the SRI-Kehati Index back in 2009. Development continued with the launch of the ESG Sector Leaders IDX Kehati and ESG Quality 45 IDX Kehati in 2021. The presence of these indices provides additional references for investors who wish to incorporate ESG factors into their investment portfolio selection. The growing attention to ESG has the potential to influence the flow of funds in the financial market. Institutional investors such as investment managers, pension funds, and insurance companies can incorporate sustainability factors when determining fund placement.
A similar situation applies in the banking and financing sector. Environmental, social, and governance aspects can become part of the considerations in assessing the risk of a company or project before financing is provided. Therefore, the development of ESG does not only depend on companies needing capital. Investors, banks, insurance companies, pension funds, investment managers, and financing institutions all have a role in directing funds towards business activities that pay attention to sustainability aspects. Amidst these developments, the Kehati Foundation is once again holding the ESG Award 2026 by Kehati in Jakarta. The event, now in its fourth year, gives awards in the scope of Capital Market, Impact Investment, Debt & Project Financing, and Best Facilitator. Kehati hopes that more companies and financial industry players will integrate ESG into their business strategies and investment decisions. The expansion of ESG implementation is expected to strengthen the financial sector’s role in supporting sustainable economic activities while boosting the long-term competitiveness of companies.