Indonesian Companies Need This Strategy to Face European Regulation and Climate Change
Climate change is more than an environmental issue as it affects economic stability and business operations, requiring companies to implement sustainable business practices. Currently, companies are expected not only to pursue financial profits but also to consider the environmental and social impacts of their activities.
However, only about 30 companies currently hold Benefit Corp (B Corp) certification, which is needed to demonstrate that their business processes—from supply chains to operations—deliver positive impact and added value. The positive impact targeted includes benefits for society, the environment, and company staff. Under the latest standards, companies must meet eight criteria to obtain B Corp certification.
These eight aspects are: foundation requirements; human rights; climate action; fair work; purpose and stakeholder governance; government affairs and collective action; environmental stewardship and circularity; and justice, equity, diversity, and inclusion.
“If companies pay attention to these eight aspects and comply with them, hopefully their business is not only profitable but also sustainable,” said Yudhi Pradhana, Executive Director of B Market Builder Southeast Asia, during a meeting in Jakarta on Tuesday, 17 March.
B Corp certification is conducted by B Lab, a global non-profit organisation. Last year, the standards for obtaining B Corp certification were updated to align with the Corporate Sustainability Reporting Directive (CSRD). The CSRD is a legal instrument issued by the European Union requiring companies to disclose the environmental and social impacts of their activities.
“Currently, the highest ESG (environment, social, and governance) and sustainability regulations are in Europe because they are legal instruments,” said Pradhana. This is why B Corp certification is based on European policy. Nevertheless, B Corp standards do not compete with other sustainability standards. “If they already have ISO 26000 or ISO 14001, their environmental aspects are certainly good,” he said.
Benefits of B Corp Certification
Pradhana explained that this certification could help Indonesian companies wishing to trade in Europe. This is particularly relevant now that Indonesia and the European Union have agreed to the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), eliminating import tariffs between the two nations.
However, according to Pradhana, trade could be hindered if Indonesian companies and businesses lack CSRD compliance. “To enter the European market, are they ready for CSRD?” he asked.
Similarly, when foreign investors, particularly from Europe, wish to invest in Indonesian companies or businesses, CSRD ownership will be one of the requirements they will ask for.
“So it is balanced; if companies only make profit, then this world will certainly end in disaster,” said Pradhana.