How Green Building Benefits Business in Indonesia

As Indonesia continues its development journey, embracing sustainable practices is no longer optional. Sustainability has become an essential aspect to ensure the country’s future progress.

One element of sustainability is the development of green building infrastructure. Green building involves designing and constructing environmentally responsible structures, offering a powerful solution that promises a future where economic growth and environmental well-being go hand in hand.

The Identification of Green Buildings

Green or environmentally friendly buildings are designed to be efficient and eco-friendly. They aim to minimize their environmental impact from planning to operation and maintenance. 

Green buildings optimize natural resources and minimize the overconsumption of building materials. They enhance resource utilization, including energy, water, and materials, all the while mitigating their effects on human health and the environment.

In Indonesia, adopting environmentally friendly building concepts has recently gained momentum, driven by both the government and the private sector. This is because Indonesia is vulnerable to climate change impacts such as floods, droughts, and landslides.

The Growing Importance of Sustainable Development in Indonesia

The National Development Planning Agency (Bappenas) underscores that the efficient execution of Environmental, Social, and Governance (ESG) practices will contribute to the realization of the Nationally Determined Contribution (NDC) by 2030.

In the NDC document, Indonesia targets a 31.89 percent reduction in emissions through domestic efforts and a 43.20 percent reduction with international support by 2030.

In the National Medium-Term Development Plan (RPJMN) 2020-2024, three priority national programs support the NDC: 

• Improving environmental quality
• Enhancing disaster resilience and climate change adaptation
• Promoting low-carbon development

The Importance of Green Buildings for Indonesia’s Future

The demand for office spaces that align with environmental, social, and governance (ESG) principles is on the rise, particularly in the wake of the COVID-19 pandemic.

There is a noticeable preference among multinational corporations for eco-friendly office rentals with green building certifications.

Senior Advisor Research at Knight Frank Indonesia, Syarifah Syaukat, stated that throughout 2023, the total area of green office buildings in Jakarta reached 1 million square meters (m²). This area increased by 15 percent from the green building stock in 2022.

Demand for office buildings with green certification continues to grow, with occupancy rates remaining relatively stable at around 70 percent.

List of Green Buildings in Indonesia

There are several green buildings in Indonesia:

• Istiqlal Mosque
• BCA Tower Jakarta
• Sequis Center
• Sampoerna Strategic Square
• Ministry of Public Works and Public Housing (Kementerian PUPR)
• Loreal Indonesia
• BCA Foresta Building

Benefits of Green Buildings

In its “Global Consumer Insights Pulse Survey” reports for June 2022, February 2023, and June 2023, PwC stated that ESG principles have influenced consumer behavior. The survey findings show consumers are willing to pay 5-10 percent more for environmentally friendly and sustainable products or services.

Fifty percent of respondents trust companies that embrace ESG principles, while 40-50 percent prefer products made from environmentally friendly and sustainable materials. Other than the given data, green buildings offer several benefits for a better life:

Improves Quality of Life

Green buildings can create comfort and health for their occupants by having designs that consider ventilation, lighting, temperature, noise, and indoor air quality.

Saves Water Resources

Green buildings can use rainwater, recycled water, or groundwater to save water usage. This water can be used for sanitation, irrigation, or cooling purposes.

Reduces Operational and Maintenance Costs of Buildings

Green buildings can reduce operational and maintenance costs by saving electricity usage. This can be achieved by utilizing renewable energy, such as solar panels or wind turbines, or using energy-efficient electrical equipment, such as LED lights or inverter ACs.

Reduces Carbon Footprint as A Step Towards Saving the Environment

Green buildings can reduce the building sector’s carbon footprint or greenhouse gas emissions by reducing fossil energy consumption, such as coal or oil.

Buildings Can Be Used for A Long Time

Green buildings can be used for a long time with flexible and adaptive designs that respond to environmental changes. This can be done using building materials that are easy to assemble or modify or modular systems that can be adjusted to the occupants’ needs.

Challenges for Green Building Implementation

Numerous challenges and obstacles must be addressed when implementing green buildings in Indonesia.

Regulations

From a regulatory perspective, Indonesia already has some regulations that encourage the implementation of green buildings. However, existing regulations need to be synchronized or integrated to accommodate the principles of green building.

Land and Building

The second challenge is related to land and buildings. The biggest challenge in this aspect is that most office buildings, especially in the government sector, are old or legacy buildings that have yet to be designed using green building concepts.

Misperception

Many business actors believe that green building development incurs high costs. The costs involved in investing in and maintaining green buildings are considered very high.

Difficult to Sell

Another financial-related challenge is related to building developers. Office building developers will only adopt green building concepts if the application of green building can make the building more expensive and/or the building is not sold.

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InCorp understands the importance of green building practices for a sustainable Indonesia. We go beyond just reports – we help businesses integrate these practices into their core operations.

We can assist with developing comprehensive ESG reports aligning your sustainability efforts with your company’s vision. Our team of ESG consultants specializes in identifying key performance indicators for companies, aligning critical issues with the company’s vision, and implementing relevant policies. 

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