Implementation of ESG (Environmental, Social, and Governance) Policies in Danantara Investments: Social and Environmental Impacts in Indonesia

Abstract

This study critically examines the implementation of Environmental, Social, and Governance (ESG) policies by Danantara, a prominent investment entity operating in environmentally sensitive regions of Indonesia. While Danantara has publicly committed to sustainability through ESG frameworks aligned with global standards such as GRI and TCFD, empirical findings reveal a substantial gap between corporate narratives and field-level realities. Environmentally, the company’s operations have contributed to deforestation, biodiversity loss, and ecological disruption, particularly in tropical forest zones. Socially, the lack of meaningful engagement with Indigenous and local communities has resulted in land tenure conflicts, marginalization, and erosion of cultural identity. The governance component of ESG, which should ensure transparency and accountability, remains the weakest, with limited evidence of grievance mechanisms or participatory decision-making. ESG, in this context, functions more as a legitimizing tool for attracting green investment than as a genuine framework for ethical transformation. This research argues that without substantive reforms and inclusive governance, ESG risks becoming a performative exercise rather than a catalyst for equitable sustainability. The study underscores the need for ESG models that are deeply rooted in local socio-ecological contexts and calls for collaborative, rights-based approaches to investment governance in forested regions of the Global South.