Decarbonization Strategies for Businesses through ESG Solutions

As the global momentum for sustainability accelerates, Indonesia’s business sector is under increasing pressure to reduce its carbon footprint. Decarbonization is not just an option, but a pressing necessity for long-term success.  

With environmental, social, and governance (ESG) principles now integral to corporate strategies, businesses in Indonesia must urgently leverage ESG solutions to navigate the complexities of decarbonization. 

Why Decarbonization Matters for Businesses 

Decarbonization systematically reduces carbon emissions across industries, supply chains, and operations. It involves adopting cleaner energy sources, improving energy efficiency, and leveraging carbon offset strategies. 

The goal is to achieve a net-zero carbon footprint by minimizing or offsetting unavoidable emissions through the use of carbon credits and carbon capture, utilization, and storage (CCUS) technologies. 

Why Indonesian Businesses Must Act on Decarbonization 

Indonesia is also one of the world’s top carbon emitters, mainly due to its reliance on coal and deforestation. Failing to decarbonize can result in regulatory fines, reputational damage, and financial losses. Here’s why businesses must act: 

• Regulations: The government aims to reduce emissions by 29% by 2030, implementing carbon taxes and market-based mechanisms. 
• Investor Interest: ESG-focused investors tend to favor companies with sustainable practices. 
• Consumer Preference: Eco-friendly brands attract more customers. 
• Cost Efficiency: Renewable energy and efficiency measures lower expenses. 
• Global Trade: Meeting ESG standards is essential for international partnerships. 

Companies that adopt decarbonization strategies today will remain competitive in the future. 

READ MORE:

• Why Investing in ESG Matters for Your Business
• ESG Integration in the Extractive Industry
• Carbon Trading in Indonesia: Key Projects and Investment Insights

Examples of Decarbonization 

Decarbonization happens in two ways: reducing carbon emissions and removing carbon from the atmosphere. Both are essential for achieving a low-carbon future. 

Reducing Carbon Emissions 

Businesses can cut down their CO₂ output through several strategies: 

• Renewable Energy: Switching to solar, wind, or hydroelectric power reduces dependence on fossil fuels. 
• Energy Efficiency: Energy-saving lighting, intelligent systems, and efficient appliances lower energy consumption. 
• Sustainable Transportation: Encouraging the use of electric vehicles, carpooling, biking, or remote work helps reduce travel emissions. 
• Waste Reduction & Recycling: Minimizing waste and utilizing recyclable materials reduces emissions from production and disposal. 
• Green Supply Chains: Partnering with eco-friendly suppliers and optimizing logistics can help reduce transportation-related emissions. 
• Carbon Credits: Investing in carbon offsets, which are reductions in emissions of carbon dioxide or other greenhouse gases made to compensate for emissions elsewhere, helps mitigate emissions that are difficult to eliminate. 
• Process Optimization: Upgrading to cleaner and more efficient production methods lowers overall carbon output. 

Removing Carbon from the Atmosphere 

Beyond reducing emissions, businesses can also help remove existing CO₂ using natural and technological solutions. 

Nature-Based Solutions 

• Reforestation: Planting and restoring forests naturally capture CO₂. 
• Wetland Restoration: Peatlands, mangroves, and other wetlands efficiently absorb and store carbon. 
• Soil Carbon Sequestration: Sustainable farming methods enhance the soil’s capacity to store carbon dioxide (CO₂). 
• Agroforestry: Growing trees alongside crops absorbs carbon and enhances biodiversity. 
• Blue Carbon: Protecting seagrass beds and marine ecosystems helps capture CO₂ from the air. 

Technology-Based Solutions 

• Direct Air Capture (DAC): Machines extract CO₂ from the air for underground storage or reuse. 
• Bioenergy with Carbon Capture (BECCS): Burning biomass for energy while capturing the CO₂ prevents emissions. 
• Enhanced Weathering: Spreading unique minerals that absorb CO₂ and convert it into stable solid forms. 
• Carbon Capture, Utilization & Storage (CCUS): Capturing CO₂ from industries and storing it or converting it into materials like concrete. 

Common Challenges in Business Decarbonization 

Transitioning to a low-carbon economy comes with several challenges, including high costs, limited expertise, and resistance to change. Here are some key obstacles businesses face: 

• High Initial Costs & Limited Resources: Many businesses struggle with the upfront investment needed for decarbonization. 
• Lack of Expertise: Many companies lack the knowledge necessary to achieve net-zero emissions. 
• Low Awareness Among Stakeholders: Consumers, suppliers, and employees may not fully understand or prioritize sustainability. 
• Resistance to Change: Adopting greener practices can encounter pushback from within the company. 

Challenges in Carbon Accounting 

Accurately measuring emissions is essential for decarbonization, but businesses often face: 

• Unfamiliarity with Carbon Accounting: Many companies are new to tracking and reporting emissions. 
• Inconsistent Methodologies: Different businesses employ varying approaches, making comparisons challenging. 
• Incomplete Emission Tracking: Many companies overlook Scope 3 emissions, which often make up 90% of their carbon footprint. 
• Difficulty Explaining Results: Businesses may struggle to interpret or justify their carbon data internally. 

Practical Steps to Achieve Decarbonization 

Reducing carbon emissions requires a structured approach. Businesses in Indonesia can follow these practical steps to effectively integrate decarbonization into their operations. 

Gain Leadership Support & Align Stakeholders 

Securing executive buy-in is crucial for integrating decarbonization into business strategy. A dedicated team—comprising sustainability, finance, legal, and operations—should drive initiatives and ensure organization-wide alignment. 

Assess Your Carbon Footprint 

Conduct a detailed emissions assessment to understand your carbon impact. Identify key sources across Scope 1, 2, and 3 emissions and set a baseline for tracking progress. 

Set Clear Energy & Emission Reduction Targets 

Establish ambitious yet achievable goals, such as reducing carbon emissions by 30% over the next five years, aligning with the Paris Agreement and industry benchmarks. Prioritize reducing Scope 1 and 2 emissions while gradually addressing the more complex Scope 3 emissions. 

Engage Stakeholders 

Collaboration is not just a key but the cornerstone of successful decarbonization. Working closely with employees, suppliers, customers, and local communities is essential. Transparent communication not only encourages innovation and strengthens partnerships but also ensures regulatory compliance, making stakeholder engagement a vital part of the decarbonization journey. 

Create a Decarbonization Roadmap 

Develop a strategic plan outlining specific actions and energy solutions. Start with impactful projects that deliver measurable progress and build momentum. 

Implement & Optimize Energy Solutions 

Adopt a combination of energy efficiency measures, renewable energy, and clean electrification—partner with sustainability experts like InCorp to integrate the most effective solutions for long-term success. 

Benefits of Decarbonization for Business 

Decarbonization presents a significant opportunity for businesses to cut costs by transitioning to renewable energy, thereby enhancing financial stability in a market that favors clean energy. Lower operational expenses and reduced reliance on fossil fuels create substantial long-term savings, providing a bright financial outlook for businesses. 

Sustainability also enhances a brand’s reputation and fosters customer loyalty. Nearly 45% of consumers prefer companies that measure and reduce their carbon footprint, making decarbonization an innovative marketing advantage. 

Additionally, it boosts employee morale, attracts talent, and meets investor expectations. Proactively reducing emissions helps businesses avoid carbon taxes, comply with regulations, and mitigate climate risks, ensuring long-term success. 

Start Your Decarbonization Journey with InCorp 

Decarbonization is no longer optional—it is necessary for businesses in Indonesia seeking to remain competitive and future-proof their operations. Achieving decarbonization requires expert guidance and strategic planning.  

Partnering with InCorp (an Ascentium Company) provides businesses in Indonesia with specialist support to achieve their sustainability goals with ESG Advisory services. Here’s why: 

• Expert ESG Guidance: Get tailored sustainability strategies and compliance support to meet Indonesia’s carbon regulations. 
• Comprehensive Carbon Management: Utilize practical carbon footprint assessments and action plans to measure, reduce, and offset greenhouse gas emissions. 
• Business Growth and Competitiveness: Utilize sustainable practices to enhance brand reputation, attract investors, and future-proof your business. 

Complete the form below to take the first step toward a low-carbon future.