The exterior of the Indonesia Stock Exchange building, IDX, in the Senayan business district in Jakarta, Indonesia.
INVESTORS have begun to take notice of the sustainability actions of companies in Indonesia. Among the initiatives is the rollout of green financing, which has become the backbone of banking institutions in their path to sustainability.
In addition, many Indonesian corporations are joining the geothermal business, which has also caught the eye of investors. Other sectors that are equally interesting are property, services and energy companies undergoing transition. Within the Asean sphere, the sustainability efforts of these Indonesian corporations are no longer merely supplementary to reports; they have entered an essential phase of safeguarding their businesses and preserving the planet and the social environment.
The various sustainability initiatives outlined in their ESG programmes have become a new way for companies to assess risk. However, in practice, leadership quality is also put to the test, as the implementation of sustainability principles cannot succeed without commitment from leaders.
For this reason, to regional investors, Indonesia has emerged as a laboratory for the transition toward sustainability. From banking and property development to telecommunications, energy and manufacturing, companies are collectively testing whether sustainability implementation can move in tandem with profit and valuation.
Green financing: The gateway to banking
Indonesia’s major banks are strengthening their commitment to sustainable financing. Bank Rakyat Indonesia (BRI) has emerged as the largest player, with 806.4 trillion rupiah (RM200.1bil) in sustainable loans, dominated by social lending for micro, small and medium enterprises (MSME).
Meanwhile, Bank Central Asia (BCA) has recorded significant growth in green credit and MSME lending. It also introduced environmental education initiatives such as waste recycling programmes at the BCA Expo. Bank Mandiri and Bank BNI are also expanding their green portfolios —Mandiri with 159 trillion rupiah (RM39.4bil) in green financing, and BNI through the issuance of sustainability bonds and an increase in sustainability-linked loans to encourage energy efficiency and emission reduction across various industries.
Growth in sustainable credit is not limited to large banks but is also seen in banks like Bank Syariah Indonesia (BSI), which recorded 73.6 trillion rupiah (RM18.3bil) in sustainable financing.
According to the Indonesian Financial Services Authority, total green loans in the Indonesian banking sector reached nearly 2,000 trillion rupiah (RM496bil) by the end of 2024, with the majority coming from the four largest banks.
This trend reflects a stronger integration of ESG principles into banking finance strategies, simultaneously supporting national needs for energy transition funding and low-carbon development.
Beyond expanding the disbursement of green and social credit, banks are beginning to link non-credit activities to their sustainability agendas.
This ranges from BNI’s environmentally friendly events with zero waste and emission offset concepts, to BCA’s waste management educational initiatives.
These initiatives affirm that sustainability is no longer merely a matter of regulatory compliance but has become part of business identity and the banking sector’s long-term effort to support Indonesia’s net zero emissions 2060 target.
Indonesian banks have presented a wide range of green financing products to both domestic and Asean investors, from green loans and sustainability-linked loans to various other transition financing schemes. Today, ESG in the banking sector is no longer just about fulfilling reporting requirements; it has become embedded in the very spirit of financing as a core business.
Property: Pakuwon and premium for green buildings
PT Pakuwon Jati Tbk has integrated ESG principles as a long-term business strategy rather than a mere compliance exercise for reporting.
This approach has received recognition from Sustainalytics, which assigned the company a low-risk score of 19.42, indicating that Pakuwon’s ESG exposure is relatively well-managed.
With all of its office towers achieving gold standard green building certifications and investments in a 1,655 kWp rooftop solar power plant, Pakuwon is reinforcing its position as a developer that prioritises energy efficiency, emission reduction and mitigation of environmental risks relevant to the property sector, such as reduced groundwater extraction and pollution.
From an investor’s perspective, this ESG strategy opens new opportunities for demand. Multinational tenants are increasingly demanding green certified buildings, making Pakuwon’s green building portfolio a competitive advantage that drives recurring income growth.
Moreover, strong ESG implementation enhances the perception of lower long-term risk, a factor that global institutional investors are paying closer attention to.
While the financial benefits may not be immediately visible, ESG integration can lead to an uplift in property valuation amid evolving emission reduction trends, green building regulations and environmentally conscious consumer preferences.
From a market standpoint, analysts view Pakuwon’s stock as attractive. Marketing sales prospects are supported by value-added tax (VAT) incentives and potential interest-rate cuts, while recurring income from malls, hotels and office properties continues to grow.
With a stock price that is considered a bargain and support from strategic projects such as its superblock development in the new capital, strengthening ESG performance adds weight to Pakuwon’s long-term growth narrative.
For investors, Pakuwon offers an appealing combination of strong fundamentals, a solid project pipeline and increasingly robust ESG positioning, although effective implementation requires long-term commitment and substantial government incentives are currently still lacking.
Telecommunications: XL Axiata and ESG-driven efficiency
The solid performance of telco XL Axiata—profit up 14.57% and revenue growing by double digits in 2023—demonstrates that ESG implementation is not only a sustainability commitment, but also a driver of efficiency and profitability in Indonesia’s telecommunications industry.
The integration of ESG principles across operations, from power transformation and service digitalisation to app-based marketing efficiency and fibre network expansion, has helped reduce operating costs while improving the quality of data service.
Decarbonisation efforts, such as the use of solar panels and lithium batteries at base transceiver stations (BTS) and a target of 45% emission reduction by 2030, strengthen the company’s competitiveness amid global demands for low-carbon technology. On the social front, initiatives like Sisternet and Pesantren Digital show how ESG programmes expand digital inclusion, enhance community capacity and reinforce the company’s role as a provider of sustainable digital solutions.
Simultaneously, XL Axiata’s 4P (People, Prosperity, Process, Planet) roadmap presents a clear sustainability structure and incentives for investors seeking a portfolio with strong governance and measurable social-environmental impact.
The combination of ESG transformation and business strategies, such as fixed mobile convergence expansion, network collaboration with Link Net, growth in quality customers and industry consolidation (including a potential merger with Fren), opens significant opportunities for investors.
Analysts assess that the telecommunications sector is heading toward healthier competition, an increase in average revenue per user and improved returns, especially from the data business. Investment recommendations in this sector are gaining traction because ESG implementation is not just a reputational added value, but also a key factor that reinforces the long-term growth prospects and resilience of the Indonesian telecommunications industry.
Entertainment: MD Entertainment and investor-friendly local IP
PT MD Entertainment Tbk solidifies its position as a major player in Indonesia’s entertainment industry through a lineup of blockbuster films, global expansion and strong financial growth.
With revenue increasing 13.2% and net profit rising 26.3% in mid-2024, MD Entertainment has shown its ability to sustain momentum through relevant content strategies (particularly horror and drama) and global collaborations, such as its partnership with Lionsgate for the distribution of Dancing Village: The Curse Begins.
A solid cash position and a strong content pipeline form the foundation for inorganic expansion and the development of cross-platform distribution, including television and over-the-top (OTT).
Amid this growth, ESG has become a core component of MD Entertainment’s long-term strategy.
The company implements strict governance, complies with all industry regulations and actively carries out social and environmental responsibility programmes.
During production, MD Entertainment adopts inclusive practices by involving local communities as extras and support staff, as seen in the making of KKN di Desa Penari. This approach generates direct social impact, stimulates local economies and reduces social risks often associated with large-scale productions. MD Entertainment’s ESG commitment is reflected in its ESG risk score of 17.97 from BEI–Sustainalytics, placing the company among the top 10 issuers with the lowest ESG risk in Indonesia.
Strong ESG implementation creates a cascading effect on investor interest and investment opportunities.
MD Entertainment’s inclusion in several prestigious indices, ranging from IDX SMC Composite and Economic 30 to MSCI Indonesia Small Cap, has increased its visibility among global institutional investors.
A share price rally of 27.6% within a week and MD Entertainment’s appearance on the foreign net-buy list indicate that the market views the company as a unique combination of strong fundamentals, a solid content portfolio, global expansion and sustainable governance. Analysts remain optimistic, with recommended target prices reaching 5,500 rupiah (RM1.36) per share. In an entertainment landscape increasingly driven by demand for local and digital content, MD Entertainment’s solid ESG commitment makes it not only a successful content producer but also a strong candidate for sustainability focused investment portfolios.
Resources and manufacturing: Cleaning up carbon footprint
The strongest ESG pressure is felt in the “old economy” sectors of mining, energy and manufacturing. These are the areas where investors are most vigilant about transition risks.
Mind ID and Antam: Managing global expectations
As a mining holding company, Mind ID and its members, including PT Aneka Tambang Tbk (Antam), face intense scrutiny over their environmental and social footprints. Coverage of Antam’s decarbonisation efforts highlights its initiatives to reduce emission intensity, strengthen land rehabilitation and manage supply chains amid downstreaming demands.
The sector, long associated with high emissions, is now transforming into a battleground for sustainability innovation. Antam, Bukit Asam and Inalum have begun to embed ESG principles into their core operations.
Antam, for example, has increased the use of renewable energy at its precious metals processing and refining unit to around 94% through the purchase of Renewable Energy Certificates (REC) from Indonesia Commodity and Derivatives Exchange (ICDX), one of the highest levels of clean energy adoption in the industry.
This step not only reduces the company’s carbon footprint but also strengthens long-term efficiency and competitiveness.
This transformation is further driven by the parent company, Mind ID, which targets net zero emissions, with the achievement of a 21.4% reduction (equivalent to 6.6 million tons of carbon dioxide, CO2) in 2023.
Similar efforts are seen at PT Bukit Asam, which operates electric bucket wheel excavators to suppress emissions from coal handling facilities, and Inalum, which has achieved 99% renewable energy usage thanks to its hydroelectric power plant on the Asahan River. Mining companies are no longer just talking about production, but also about environmental impact, community empowerment and transparent governance.
These two principles, according to Antam, form the foundation of value creation and sustainability.
These shifts open up significant business opportunities for investors focused on sustainable investing. Global demand for “green minerals” essential for energy transition, such as nickel, bauxite and copper, supports higher valuations for companies that consistently implement ESG practices. Investors gain two advantages: access to a strategic long-term sector and reduced environmental risk.
With decarbonisation measures becoming increasingly tangible, Indonesia’s mining sector is moving into a more attractive position for green portfolios, while reinforcing that sustainability has become the new standard for the extractive industry. For Asean investors, Antam and Mind ID serve as a barometer of how far Indonesia’s mining sector can transition without sacrificing competitiveness.
Avian: Low-emission paint, lower costs
In the manufacturing sector, PT Avia Avian Tbk stands out for its strategy of producing low-emission paints and improving energy efficiency. The company has achieved a reduction of thousands of tonnes of greenhouse gas emissions through process optimisation and the use of cleaner energy sources.
This momentum is strengthened by Avian’s inclusion in ESG-labelled indices on the Indonesia Stock Exchange (IDX). As a result, environmental performance and cost efficiency go hand-in-hand: emission intensity declines, energy consumption is better controlled and production margins remain stable.
For investors, the combination of green products, cost efficiency and recognition from ESG indices signals that the company is capable of turning regulatory pressure into competitive advantage.
Operationally, Avian has installed more than 2,000 solar panels and launched a series of other energy-efficiency initiatives, transforming the company’s ESG commitment into measurable action. Avian also implements the Avian Carbon Reduction Initiative, which includes converting diesel forklifts to electric units, optimising cooling systems, improving heat-transfer efficiency and reducing natural gas consumption, successfully cutting more than 11,000 tonnes of CO2 equivalent (CO2e) since 2021.
Beyond reducing its carbon footprint, these initiatives also saved hundreds of thousands of kilowatt-hours of electricity and consistently lowered energy costs. The ESG impact does not stop at the operational side. The adoption of global standards such as ISO 14001, ISO 50001 and ISO 45001, digital portal-based emission monitoring and independent verification have positioned Avian as one of the lowest-risk chemical companies, according to Sustainalytics. Avian’s standing is further strengthened by its inclusion in IDX ESG Leaders (an ESG index of IDX), the Ministry of Environment’s Proper Hijau and most prestigious of all, FTSE Russell.
Avian’s entry into global indices enhances its credibility among institutional investors, as it demonstrates transparency, strong governance and consistent emission reductions.
For Avian, ESG is not a cost burden but a strategy to reduce business risk volatility and expand market opportunities, especially as eco-friendly paints become the standard for green property projects.
The results are financially proven. In the first half of 2025, Avian posted a revenue of 3.88 trillion rupiah (RM963mil), up 7.3% year-on-year, with a solid gross margin of 43.1%, an earnings before interest, tax and amortisation (EBITDA) margin of 25.6% and a net profit margin of 20.1%. This stable, high-margin profile shows that ESG investments do not erode profit. Rather, they reinforce it through energy efficiency and brand credibility. For capital market investors, Avian is now viewed as a sustainability-based defensive stock: lower emissions, reduced energy costs, enhanced reputation, low ESG risk and easier access to financing.
With its inclusion in FTSE Russell and domestic ESG indices, Avian shares are likely to enter the radar of more global fund managers who apply green-investment principles. The combination of strong fundamentals, ESG-driven efficiency and international recognition makes Avian one of the most attractive paint manufacturers for investors seeking stable returns and long-term exposure to sustainable businesses.
Medco: Geothermal and green electricity exports
In the energy sector, PT Medco Energi Internasional Tbk stands out through its geothermal portfolio and renewable energy projects, offering a classic Indonesian “transition play”. Geothermal projects and plans to export green electricity to neighbouring countries open long-term, contract-based revenue opportunities while addressing demands for emission reduction.
Through its subsidiaries Medco Power and Medco Cahaya Geothermal (MCG), the company operates the Ijen Geothermal Power Plant in Bondowoso, which uses two-phase binary technology. It is a modern geothermal system that utilises both steam and brine and allows full reinjection without releasing CO2 into the atmosphere. With a first-phase capacity of 35 MW and a 30-year power purchase agreement with state electricity company PLN, this facility supplies clean energy to tens of thousands of households while avoiding 230,000 tonnes of CO2 emissions annually.
Beyond producing green electricity, the Ijen facility has also introduced community empowerment programmes, particularly for local women of the Family Welfare Movement, who are facilitating the development of ginger and pandan tea products. This is an example of integrating environmental and social pillars within ESG practice.
Medco’s commitment to clean energy does not stop at Ijen. Besides evaluating a second phase expansion of the Ijen power plant to increase its capacity to 55 MW, the company also operates the 330 MW Sarulla Geothermal Power Plant and is exploring two other projects in Sumatra.
In solar energy, Medco recently commissioned a 25 MWp solar plant in East Bali, which generates 50 GWh of green electricity annually and avoids over 800,000 tonnes of CO2 over its operational lifetime.
Medco is also preparing a 600 MW solar mega project on Bulan Island for export to Singapore. This strong push into renewables is part of its roadmap to achieve net zero emissions for Scopes 1 and 2 by 2050 and Scope 3 by 2060. Since 2019, it has reduced its CO2e emission, far exceeding its 2025 goals.
Although its 1H 2025 profits have declined due to plummeting oil prices and losses in its mining subsidiaries, Medco’s clean energy portfolio demonstrates resilience.
Renewable power sales grew 21% year-on-year to 497 GWh, offsetting operational disruptions in other plants. Contributions from the Ijen power plant and the East Bali solar plant provide stable, long-term contract-based revenues through PLN, reducing its exposure to fossil fuel price volatility.
For investors, Medco’s ESG strategy offers three main opportunities: diversified revenue through growing clean energy demand, potential valuation gains as the company transitions to low-carbon energy and appeal to global institutional investors using ESG criteria in portfolio allocation.
With a pipeline of large-scale geothermal and solar projects, Medco is one of Indonesia’s energy issuers on the clearest path toward a green-energy future, providing long-term exposure for investors targeting growth in the renewable sector.
