- Indonesia has a 35% increase in companies whose board level oversees climate issues.
- 77% of investment managers consider it their responsibility to hold companies accountable on climate change and inequality.
- Meanwhile, 88% of 25 to 40-year-olds say their job is more fulfilling when they can positively impact social and environmental issues.
Jakarta, 16 November 2022 – Corporate governance for accountable climate action sees an upward trend, showing how companies are getting more serious with the global agenda of saving Earth. This reality was delivered in a panel discussion during the Indonesia Net Zero Summit 2022: Industrial Decarbonization at All Cost, an event hosted by KADIN Net Zero Hub on November 11, 2022, in Bali. This discussion became an opportunity for both national and multinational companies to look inward and reflect on the roles of leadership and corporate governance in driving climate action.
Data from CDP shows that Indonesia has a 35% increase in companies whose board level oversees climate issues, a positive trend that aligns perfectly with the country’s increasing number of companies who are committing to the Science Based Targets initiative (SBTi). This data is important as creating changes in companies in an effort to decarbonize the industry requires one to look inwards first, as stated by John Leung, Director of CDP for Southeast Asia & Oceania, who was the chairperson of the panel.
Panelists present at the discussion session that raised the topic “Corporate Climate Governance” were Connie Ang (Chief Executive Officer of Danone Indonesia), Sihol P. Aritonang (President Director of PT Riau Andalan Pulp and Paper), Shahril Azuar Jimin (Chief Sustainability Officer of Maybank), and Anne Patricia Sutanto (Vice President Director of PT Pan Brothers Tbk.).
Starting Climate Action from Within
Looking inward when initiating a corporate climate action entails looking at one’s internal policies, the company’s vision for sustainability, and how said vision affects corporate culture. This will all ripple to all areas of business and its people, be it employees or customers.
For Danone Indonesia’s Chief Executive Officer, Connie Ang, her company’s core value stands true to their climate governance’s spirit as well: One planet, one health. The multinational company has, at a global level, a Chief Sustainability Officer as well as a Sustainability Unit. Meanwhile, regionally it has a dedicated committee for One Planet One Health.
“Whenever you take from the planet, you give back and leave it in a better place or at least equal, which is exactly carbon zero,” Connie Ang elaborated on their One Planet value.
Similarly, APRIL Group also has within its corporate governance a committee that oversees their climate response, comprising experts around climate and social issues. Governed by four components, which are climate positive, circularity, community, and nature, Sihol P. Aritonang, President Director of PT Riau Andalan Pulp and Paper, stated, “At the heart of our climate governance is nature-based solution.” The paper and pulp manufacturing company also recently released its APRIL2030 Commitment, which guides their activities and policies.
Climate Action is Not Just About the Environment, but also the People
Where APRIL emphasizes nature and the environment in its governance, PT Pan Brothers Tbk. puts a heavy focus on people as the garment-producing company operates in a labor-intensive industry. They take a mindset approach and reflect on why they need to influence their supply chain and business processes, as they believe it all comes down to people and why people want to do what they do in a positive way. Ultimately, it’s also to let the whole world see Indonesia’s responsible climate efforts.
“We want to highlight that there is a sustainable textile and garment coming from Indonesia, and it’s not only about the environment, but also the people,” said Anne Patricia Sutanto, Vice President Director of PT Pan Brothers Tbk.
Comparatively different from the other companies in the panel, Maybank as a bank only has about 0.5% of direct emissions, claimed Shahril Azuar Jimin. Most of the emissions banks have to be responsible for are their “Financed Emissions”, which are indirect emissions attributable to financial institutions from financing or providing capital to the original emitter. Holding a huge responsibility in funding the transition to a low-carbon economy, financial institutions can limit the impacts of climate change by reallocating or decarbonizing their portfolios.
For Maybank, it is not just about setting in place a governance structure, but also developing and implementing transition strategies. Accountability at board level, from integrating climate considerations into organization structure to exchanging dialogue and information-sharing such as attending the Indonesia Net Zero Summit, are important to steer companies into taking accountable climate actions. The Chief Sustainability Officer also emphasized the importance of the “Social” aspect in ESG (Environment, Social, Governance).
“If we do end up limiting global warming to 1.5 degree celsius by 2100 but people are living in hunger, that won’t mean anything,” he asserted.
Increasing Push to Hold Companies Accountable for Climate Action
The demands for climate-conscious and responsible companies are growing. 77% of investment managers consider it their responsibility to hold companies accountable on climate change and inequality, according to a survey by Natixis Investment Managers. Meanwhile, a study by Cone Communications found that 88% of 25 to 40-year-olds say their job is more fulfilling when they can positively impact social and environmental issues.
APRIL Group believes in the importance of operating in complete spectrum, with Sihol P. Aritonang stating that the push for better governance is coming from two directions: externally, through demands for more disclosure and global imperatives around climate action, and internally, driven by shareholders and executives who must take part in tackling climate issues by responding and building sustainable business.
“It’s imperative that you’re able to build capacity within the organization to be able to cope with the ever-growing expectations of the stakeholders in terms of engaging in climate action,” reminded Sihol.
“We’re all getting pressured; we are held accountable, so it’s good,” Danone Indonesia’s CEO, Connie Ang, agreed on the growing push for accountable climate actions that companies have been receiving across the industries. In fact, young people are the ones who put pressure on businesses like Danone to be responsible, especially with environmentally-driven values such as the one Danone has, “One Planet, One Health”, which has become the company’s DNA at this point.
On the contrary, PT Pan Brothers Tbk. felt that no one particularly pressured them. “But we pressure ourselves,” the Vice President Director stated, reemphasizing the ambition of making a change starting from within. Companies’ responses to these pressures must go beyond promises and commitments, extending to real, accountable actions.
“A lot more actions are needed rather than talks,” Shahril Azuar Jimin noted.
With a push to change coming from inside and outside the company, the urgency of taking an accountable climate action arises. Transitioning towards a net zero future is not just to save the economy, but also the planet and its people. The fourth panel of the Indonesia Net Zero Summit 2022 shows that corporate governance is important in making sure that every climate action is managed well, so that not one person or company is left behind in this collective transition.
Alongside Danone Indonesia, APRIL Group, PT Pan Brothers Tbk., and Maybank, over 30 other panelists from both national and multinational companies, as well as about 1.000 guests coming from 30 nations and representing over 20 different sectors, also gathered at Bali Nusa Dua Convention Center for the summit, making it a new starting point to mobilize the national industry collectively and collaboratively at large.