Sustainable Investing: Putting the Planet and People First

Sustainable investing—often called “green investing” or “responsible investing”—is an approach that goes beyond pure financial returns to incorporate a company’s environmental, social, and governance (ESG) performance.

What Does ESG Mean?

1. Environmental: How a company manages its impact on the natural world—think greenhouse-gas emissions and waste reduction—with the right resource conservation.

2. Social: A firm’s relationships with its employees, customers and communities—covering everything from labor practices and diversity to community engagement.

3. Governance: The strength of a company’s internal controls, transparency, and accountability to shareholders and other stakeholders.

Image Source: Freepik

Why ESG Matters to Issuers and Investors

For public companies, strong ESG credentials can translate into a better reputation and greater resilience. Firms that proactively address environmental regulations and societal expectations often find themselves better positioned to anticipate emerging risks and capitalize on new market demands.

From an investor’s perspective, building a portfolio with ESG-rated companies can offer several advantages:

1. Long-Term Value Creation: Companies that manage ESG risks effectively are more likely to sustain growth over time.

2. Diversification Benefits: ESG strategies can uncover opportunities in sectors or regions less represented in traditional indexes.

3. Competitive Returns: Sustainable portfolios may deliver returns on par with—or even exceeding—those of conventional benchmarks.

Spotlight: IDX ESG Leaders (IDXESGL)

To promote sustainability in Indonesia’s capital markets, the Indonesia Stock Exchange (IDX) publishes thematic ESG indices—most notably the IDX ESG Leaders Index (IDXESGL).

This index tracks the price performance of the 30 listed companies with the highest ESG scores, as assessed by Sustainalytics. In addition to ESG ratings, selection criteria include the absence of major controversies, sufficient trading liquidity, and solid financial performance.

By steering capital toward these top-scoring issuers, IDXESGL not only rewards responsible corporate behavior but also gives investors a clear, transparent way to back companies that balance profit with purpose.

IDXESGL Constituent List

Effective May 2, 2025–October 31, 2025, sorted by largest to smallest weight on the index (BBCA → BBRI → … → MIKA → BNGA):

BBCA	BBRI	BMRI	GOTO	TLKM	BBNI
JSMR	EMTK	PGAS*	PGEO	UNVR	MTEL*
AKRA	ERAA	MAPI	EXCL*	TOWR	SCMA
MAPA*	CMRY	SMGR*	ACES	PWON	CTRA
BSDE	MNCN	AVIA	SIDO	MIKA	BNGA

*New constituent

Outgoing constituent: AUTO, BMTR, BRPT, MPMX, TBIG

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Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).