Home Blog 5 Ways To Integrate ESG Investing into Business Growth Business Licenses | Company Registration 5 Ways To Integrate ESG Investing into Business Growth InCorp Editorial Team 4 June 2025 6 minutes reading time Table of Contents ESG Plays a Significant Role for Businesses Maximizing ESG Benefits for The Long Run What Type of Business Needs to Take ESG Seriously? The Five Ways ESG Can Benefit Your Business How to Integrate ESG into Business Plan ESG investing aligns investment portfolios with values and supports companies in making a positive impact. By integrating ESG factors into investment decisions, investors can promote sustainability and drive positive change in invested companies. ESG Plays a Significant Role for Businesses ESG (Environmental, Social, and Governance) refers to the non-financial factors companies use to measure their impact on society and the environment. These factors include carbon emissions, employee diversity and inclusion, supply chain management, and ethical business practices. There are several reasons why ESG will play a significant role for businesses from now to the future. First and foremost, consumers are becoming more environmentally and socially conscious and increasingly demanding that companies be transparent about their ESG practices. It means that companies that prioritize ESG are more likely to attract and retain customers. In addition, investors are paying more attention to ESG factors when making investment decisions. Many institutional investors now have ESG criteria to evaluate companies. Therefore, business entities must score well on the set criteria to be more attractive in the eyes of investors. Maximizing ESG Benefits for The Long Run Some studies have shown that companies with strong ESG performance outperform their peers in the long run. In addition, organizations that give importance to ESG factors could have a more vital ability to handle risks. For example, a company with strong environmental practices may be less vulnerable to supply chain disruptions caused by climate-related events. Aside from that, employees are increasingly looking for companies prioritizing ESG factors. With ESG as one of the priorities, companies are more likely to attract and retain employees passionate about sustainability and social responsibility. The priority can also drive innovation within companies by investing in developing more sustainable products or processes, leading to competitive advantages and cost savings. Read more: Understanding The Environmental Sustainability in Business What Type of Business Needs to Take ESG Seriously? Previously, sustainability was limited to addressing environmental issues exclusively, but nowadays, it encompasses a broader spectrum of concerns, including social and governance matters. As a result, corporations are under increased scrutiny from citizens, governments, regulators, and the media, demanding action on social inequality, corruption, tax avoidance, and climate change. Companies must now confront these challenges head-on and in full public view. Visualizing ESG Risk by Industry The emergence of ESG practices significantly influences various sectors, such as automotive, construction, healthcare, mining, insurance, oil and gas, power, retail, and tourism. The subsequent section will provide specific instances of these impacts. Due to the high environmental impact, businesses in the energy sector shall consider transitioning to green energy. Aside from this, community relations are strained due to the increasing pressure of climate change. The governance aspect pushes businesses to be more transparent in their dealings. Companies in the healthcare sector shall consider chemical usage in their transactions. There is a severe concern regarding product safety and proper marketing. Regarding governance, there is a high importance placed on data privacy of patience. The Five Ways ESG Can Benefit Your Business ESG initiatives can create value for businesses in five ways. 1. Expand into New Markets A strong ESG proposition can help companies tap into new markets and drive consumer preference. For example, companies with vital social engagement activities in the mining industry achieved higher valuations than their competitors. Research shows that consumers are willing to pay more for green products. In addition, nearly half of the companies surveyed identified business and growth opportunities as the reason for starting their sustainability programs. 2. Reduce Costs ESG can reduce costs substantially by combating rising operating expenses, such as raw-material costs and the actual cost of water or carbon. Research has found that this can affect operating profits by as much as 60 percent. As a result, FedEx aims to convert its entire fleet to electric or hybrid engines, which has already reduced fuel consumption by more than 50 million gallons. 3. Reduce Regulatory Pressure and Increase Government Support A stronger ESG proposition can help companies achieve strategic freedom and ease regulatory pressure, reducing the risk of adverse government action and engendering government support. 4. Retain Employees and Increase Productivity A strong ESG proposition can help companies attract and retain quality employees, increase employee motivation and productivity, and positively impact shareholder returns. When companies engage in philanthropy, a positive correlation exists between creating a social impact and increasing job satisfaction. 5. Increase Company’s Resilience A solid commitment to ESG practices can enhance a company’s ability to weather unexpected events and mitigate potential risks. Irrespective of their business model or geographic location, all companies can adopt these five links. How to Integrate ESG into Business Plan 1. Understand ESG Factors Companies’ first step is comprehensively understanding the regulatory landscape and stakeholder expectations. It will help to identify material ESG risks and opportunities and integrate them into their business strategy. 2. Set ESG Goals Companies should establish measurable ESG goals aligned with their overall business objectives. These goals should be regularly reviewed, tracked, and reported to stakeholders to demonstrate the company’s progress. 3. Integrate ESG into Decision-Making Processes Companies should integrate ESG factors into their decision-making processes across all business functions. It incorporates ESG considerations into investment, risk, and supply chain management. 4. Develop a Communication Strategy Companies should develop a communication strategy articulating their ESG goals, progress, and impact on stakeholders, including investors, customers, employees, and the wider community. It will help to build trust and transparency and enhance the company’s reputation. 5. Embed ESG into Corporate Culture Companies should embed ESG considerations into their corporate culture by educating employees and incentivizing ESG performance. It will help to ensure that ESG factors are considered in all business decisions and actions and create a culture of sustainability and responsible business practices. As the importance of ESG continues to grow globally, InCorp Indonesia (An Ascentium Company) recognizes the need to provide guidance and support to companies seeking to integrate sustainable practices into their operations. InCorp Indonesia (An Ascentium Company) offers advisory services on ESG matters to assist in managing ESG risks, improving ESG performance, and ultimately contributing to a more sustainable future. Read Full Bio Verified by Hotdo Nauli Senior Legal & Delivery Manager at InCorp Indonesia Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). Frequently Asked Questions How is the process of liquidating a PMA company in Indonesia, and how long does it take? The procedures for (voluntarily) liquidation typically involve the following steps: Conduct a general shareholder meeting to approve the liquidation and the liquidator’s nomination Notify the Ministry of Law and Human Rights as well as the creditors of the liquidation and the distribution plan for the assets by newspaper notice All business licenses and tax numbers should be canceled or revoked; the tax office will conduct a tax audit to revoke the tax number Make sure creditors are paid and that any liquidation funds are distributed to shareholders (if any) Conduct a general meeting of shareholders to approve the liquidator’s discharge and acquittal Notify the Ministry of Law and Human Rights of the liquidation’s outcome. After receiving the notification, the Ministry of Law and Human Rights will deregister the company’s status as a legal entity and remove its name from the Company Registry Release the liquidation’s outcome in a newspaper Completing the liquidation process can take around two years. How A PMA company can be eligible to conduct import activities? What licenses and procedures are necessary while engaging in import-related activities? A PMA company in Indonesia must obtain an NIB, which also functions as: Importer Identification Number (Angka Pengenal Impor or API) Producer Importer Identification Number (Angka Pengenal Impor Produsen or API-P), which is required for the import of machinery and equipment, goods, and materials used in production. General Importer Identification Number (Angka Pengenal Impor Umum or API-U), which is required for the import of specific goods for trading purposes, is grouped under one section in the Customs Classification System. Customs Identification Number (Nomor Identitas Kepabeanan or NIK), It functions as an identifying document for the applicable Customs and Excise authorities during the customs clearance process. Some goods may face limitations or restrictions on importation in Indonesia, potentially requiring additional approval from the Ministry of Trade. Recommendations from technical ministries like Industry or Agriculture may influence these approvals. Are there investment facilities provided for foreign investors in Indonesia? A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances. Import facilities Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production. Tax holiday The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status. Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy. Tax allowance For companies in certain designated areas or regions, the government may provide the following tax concessions: Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration. Accelerated depreciation and/or amortisation deductions An extension of tax losses carried forward for a maximum of ten years A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents The applicant eligible has to meet high-level-criteria for the above tax facilities: High investment value or for export purposes High manpower absorption High level of local content Investment allowance The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project. Super deduction This facility could be granted to certain businesses, such as: 60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame. Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities. Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia. What are the shareholder rights in a PMA company? Shareholders of a PMA Company in Indonesia have various rights, including voting rights in general meetings, entitlement to dividends and liquidation proceeds, and access to information. They must approve significant matters through general meetings of shareholders with specified quorums, such as: Amending articles of association Changing share capital Appointing or dismissing directors and commissioners Approving major transactions, dividends, and financial statements Company reorganization Get in touch with us. 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