Indonesia is an emerging market with a vibrant capital market and has begun to set its sights on sustainable finance. Indonesian companies and the financial market regulator Otoritas Jasa Keuangan (OJK) have made significant progress in recent years to enhance sustainability practices, which has resulted in a consistent improvement in the S&P Global ESG Scores of some Indonesian companies over the past few years.
The Indonesia Stock Exchange (IDX) has recently partnered with S&P Dow Jones Indices (S&P DJI) to develop the S&P/IDX Indonesia ESG Tilted Index. This paper will illustrate that, via the back-tested performance of the S&P/IDX Indonesia ESG Tilted Index, Indonesian companies that tilted toward higher environmental, social and governance (ESG) scores outperformed a broad market index over most time periods since index inception.
Furthermore, the development of a number of Indonesian ESG-oriented equity indices by several index providers, including the IDX, could provide an incentive for local companies to follow best practices in reporting and disclosure requirements. Access to capital via mutual funds and exchange-traded products indexed or benchmarked to sustainability-oriented indices is just one possible incentive for companies to implement better ESG practices.
Growth of ESG Data and Reporting Metrics in Indonesia
As of Dec. 31, 2025, over 130 Indonesian companies had an S&P Global ESG Score, up from fewer than 50 in 2019. The S&P Global ESG Score measures a company’s performance on and management of material ESG risks, opportunities and impacts informed by a combination of company disclosures, media and stakeholder analysis, modeling approaches and in-depth company engagement via the S&P Global Corporate Sustainability Assessment (CSA).
Over the past several years, S&P Global has increased its capacity in Indonesia to score more companies, and there are more companies actively responding to engagement via the CSA. S&P Global ESG Scores—and the CSA research process that underpins them—form the basis of a robust ecosystem that can help drive corporate disclosures and raise the bar on sustainability standards over time.
There is now a rich data set of ESG-scored companies in Indonesia that can be used to measure and analyze the direction or trend of ESG scoring in a broad market index such as the S&P Indonesia LargeMidCap. In March 2019, the 40 constituent companies of this index had a weighted average S&P Global ESG Score of 31.99. As of Dec. 31, 2025, the weighted average score for this index had improved to over 45.
