Depok, May 15, 2024 – The significance of the “Social” aspect within the Environmental, Social, and Governance (ESG) framework lies in its ability to help companies manage social risks, enhance community engagement, and strengthen public trust and corporate legitimacy. By integrating social considerations into ESG practices, companies can better understand and mitigate the social impacts of their operations, foster stronger relationships with local communities, and improve their reputation as socially responsible entities.

This was emphasized by Professor Sara Bice, Co-Founder and Director of the Institute for Infrastructure and Society (I2S) at the Crawford School of Public Policy, The Australian National University, during a Public Lecture at the Faculty of Administrative Sciences, Universitas Indonesia (FIA UI). The lecture was held in a hybrid format on Tuesday, May 14, 2024, both in-person at M Building, FIA UI and via Zoom meeting. During the session, Professor Bice shared critical insights on the role of the ‘S’ (Social) within the ESG framework.

ESG represents a set of factors used by various stakeholders to evaluate a company’s performance from environmental, social, and governance perspectives. These factors have become increasingly vital in decision-making processes, as a company’s long-term financial performance is inseparable from its impact on the environment, society, and corporate governance.

The Environmental aspect focuses on how a company interacts with the natural environment, the Social aspect addresses how a company affects the communities around it, while Governance pertains to the internal structures and decision-making processes, including transparency in financial reporting, business ethics, regulatory compliance, and the independence of the board of directors from conflicts of interest.

“In an increasingly interconnected world facing contemporary crises such as the COVID-19 pandemic and the climate crisis, the importance of integrating the ‘S’ factor in ESG is more pronounced than ever. I2S emphasizes that incorporating social considerations within ESG is crucial not only for business sustainability and financial resilience but also for building a sustainable future for society as a whole,” said Professor Sara Bice.

As part of the discussion, Professor Bice outlined six key themes to consider when exploring the ‘S’ factor in ESG: Indigenous rights and concerns, socio-economic inclusion, social value, well-being, resilience, and a just transition.

“In the Indonesian context, the presence of ESG is becoming increasingly important due to the country’s complex social and environmental challenges. Therefore, a deeper understanding of the ‘S’ in ESG will guide efforts toward sustainable and inclusive development in Indonesia,” she added.

Through the discussion, which was attended by approximately 100 participants, I2S—through Professor Sara Bice—encouraged stakeholders from the business sector, government, and civil society to prioritize and integrate social aspects into their ESG practices. By adopting a systematic, measurable, and comparable approach, I2S believes that a more robust incorporation of the ‘S’ in ESG will significantly contribute to sustainable development in the future.

Furthermore, Professor Bice highlighted that as one of the world’s leading social science research institutes, I2S aims to reshape the relationship between large-scale projects and communities through the Next Generation Engagement program. With a focus on enhanced community engagement, I2S seeks to address the cumulative impacts of major infrastructure projects, support better social risk management, and influence public policy for the benefit of society.