INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Mahatma Hadhi, Kenny Poltak and Atika Rizka, ABNR Counsellors at Law
2.7 ESG Guidelines and Regulations As yet, Indonesia has not introduced specific envi - ronmental, social and governance (ESG) guidelines tailored exclusively for the mineral sector. However, several regulatory frameworks impose obligations that align with ESG principles. Under Government Regulation No. 47 of 2012 on Social and Environmental Responsibility of Limited Liability Companies (“GR 47/2012”), companies whose activities relate to or impact natural resources are required to implement corporate social responsi - bility (CSR) programmes. GR 47/2012 establishes a general obligation to carry out CSR but does not define the scope, standards or reporting requirements for such programmes. Additionally, all mining companies must comply with MEMR Decree 1827 K/30/MEM/2018 on Guidelines for the Implementation of Good Mining Practice. While this decree does not explicitly reference ESG, it incor - porates principles relating to environmental protec - tion, occupational health and safety, and community development. 2.8 Illegal Mining Illegal mining is still a significant issue in Indonesia, and it has notable impacts on legal industrial mineral production. Recent government assessments indi - cate that there are a total of 1,063 illegal mining sites across Indonesia, resulting in estimated State losses of IDR330 trillion due to tax evasion, royalty avoidance and unregulated extraction. This practice is highly disruptive as it could cause sup - ply chain distortions and environmental damage, as well as loss of State revenue. The government has recently stated its commitment to increase crackdowns on illegal mining by conduct - ing raids and suspending or revoking mining permits linked to illegal operations. Under Article 159 of the Mining Law, illegal mining activities are subject to criminal sanctions of five years’ imprisonment and fines in the amount of IDR100 billion.
2.9 Good and Bad Examples of Community Relations/Consultation Impacting Mining Projects A good example of environmental and community relations would involve a comprehensive AMDAL and community development and empowerment pro - grammes. This can be achieved through transparency and early engagement of local communities, continu - ous communication throughout the project life cycle, as well as long-term capacity building. Although there are currently no national standards, compliance with internationally recognised ESG standards and prac - tices would go a long way to reduce social conflict and improve trust and co-operation from local com - munities. Conflict often arises due to waste and tailings man - agement that affects neighbouring communities. Most cases occur not necessarily due to poor community relations, but rather due to poor engineering stand - ards and inadequate oversight in implementing waste and tailings management. Smaller mining companies, which often have limited resources, are particularly vulnerable to these shortcomings. 3. Climate Change, Energy Transition and Sustainable Development in Mining 3.1 Climate Change Effects Stricter Requirements and Increased Transparency in Mining Companies Indonesia introduced an amendment to the Mining Law in 2025. This amendment, coupled with previous amendments in 2020 and 2023, introduces a stricter environmental framework that pushes for responsi - ble mining practices such as an environmental audit requirement. Mining companies are now obligated to rehabilitate mining sites post-extraction at a 100% completion rate. Companies must also invest in emis - sions reduction and renewable energy adoption. Addi - tionally, a number of publicly listed mining companies voluntarily disclose emissions data in sustainability reports. Such disclosure hints at increasing acknowl - edgement of the importance of responsible mining practices.
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