Jakarta, The PRAKARSA – Policy research and advocacy institution. The implementation of Environmental, Social, and Governance (ESG) in business activities is not just a matter of disclosure, but must also be in accordance with established standards. In addition, a complaint mechanism is very important to ensure that no party is harmed.
The PRAKARSA recently attended training on ESG Standards and Corporate Grievance Mechanisms organized by Salforest in Bangkok on 3-4 October 2024. The training was attended by The PRAKARSA, SAPE, Salforest and Oxfam in Indonesia.
This training is part of the agenda Fair for All (F4All), which aims to promote fair global trade and value chains for all parties. It is important for Civil Society Organizations (CSOs) to understand this issue in order to strengthen value chains and create fairer global trade.
Sarine, Director of Salforest who also acts as a trainer, delivered a discussion on the various standards that exist for ESG.
Various sustainability reporting standards applied by companies include GRI Standards, Integrated Reporting Framework, and SASB Standards. In addition, there are also other standards that need to be considered, such as CDP, SDGs, and TCFD.
Currently, there are new developments in reporting standards, one of which is the IFRS Sustainability Disclosure Standards (IFRS S1 & S2). The aim is to require entities to disclose information about risks and opportunities related to sustainability, which is useful for users of financial statements in making decisions regarding the provision of resources.
Risk assessments not only consider single materiality, but also multiple materiality; risks need to be analyzed not only from the perspective of the company, but also its impact on society and the surrounding environment. Examples of material issues in the climate pillar include greenhouse gas emissions, energy use and efficiency, climate risk and adaptation, renewable energy, and waste management and water conservation. Furthermore, this training also discusses the mechanisms Human Rights Due Diligence (HRDD) that must be implemented by the company. In the human rights due diligence process, it is important for the company to carry out Human Rights Risk/Impact Assessment (HRIA).
Another thing that is also very important to know is about the reporting mechanism standards according to the UNGP principles. There are several criteria that need to be followed such as legitimacy, easy to access, predictable, fair, transparent, in accordance with human rights, continuous learning, and dialogue and engagement.
In the future, The PRAKARSA will continue to look at business practices and promote how businesses should be more responsible for the environment and surrounding communities and disclose their policies to the public. Not only “business as usual".