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Sustainable Investment: Assessing ESG Standards of Issuers

Sustainable investment is not only about dividends or capital gains, but also about certain aspects. The Indonesia Stock Exchange (IDX) supports that through a set of standards to measure three main criteria of sustainable aspects: Environmental, Social, and Governance (ESG).

  1. Environmental: Take a look at the impact of business operations on the environment and how the company's role in maintaining it.

  2. Social: Consider the company's relationship and reputation with its stakeholders (suppliers, consumers, employees, society, communities and other related parties).

  3. Governance: Review the company's internal governance principles.

ESG sustainable investment

Indices Related to Sustainable Investment

One of the IDX's initiatives in manifesting capital market sustainability is to launch several ESG-related indices:

  1. IDX ESG Leaders (IDXESGL): Measures the stock performance of 30 companies with the highest ESG ratings, good liquidity and financial performance, and without significant controversy. ESG score and controversy analysis developed by Sustainalytics.

  2. Sustainable and Responsible Investment (SRI-KEHATI): Measures the stock performance of 25 companies that have excellent performance in running a sustainable business. It developed in collaboration with KEHATI Foundation.

  3. ESG Sector Leaders IDX KEHATI (ESGSKEHATI): Measures the stock performance of 55 companies that have ESG scores above the sector average with good liquidity and financial performance.

  4. ESG Quality 45 IDX KEHATI (ESGQKEHATI): Measures the stock performance of 45 companies with the highest ESG ranking, also good liquidity and financial performance.

ESG Benefits According to IDX

For investors:

  1. Build business resilience and create long-term value.

  2. Generates more competitive returns.

  3. Easily integrated into a portfolio for diversification benefits.

For the company:

  1. Preserve reputation.

  2. Manage risk and take long-term opportunities that have not previously been considered.

  3. Align conditions with investor demand.

  4. Prepare for changes in rules and regulations.


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).

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