The achievement of this goal is of concern for countries of the world through the net-zero emissions (NZE) target by 2060, which was agreed upon in the 2016 Paris Agreement. The commitment of these countries is demonstrated in their Nationally Determined Contributions (NDCs). In Indonesia’s enhanced NDC, it committed to reducing emissions cumulatively by 31.89 percent, or by 915 million tons of CO₂ equivalent.

However, the regulations do not provide details on how the distribution of reduction targets to stakeholders will be carried out. This is important to measure the level of support from the central government, local governments and the corporate sector in reducing emissions.

The ESG model data approach can be used to accurately predict the achievement of NZE 2060 based on government policies related to sustainability implementation, both in government agencies and the corporate sector.

Compared to the past decade, many companies now publish sustainability reports. Sustainability reports describe how a company is responsive to social, environmental, and governance (ESG) aspects in its business operations. Unlike financial reporting, the spectrum of sustainability reports is very broad because it concerns social and environmental aspects with different interests and needs among companies.

In Indonesia, the government has enforced regulations regarding the obligation of companies to disclose sustainability reports. This obligation is reflected in Financial Services Authority (OJK) Regulation No. 51/2017 and OJK Circular Letter No. 16/2021.

The two regulations define which companies fall into the regulatory scope and how companies draw up sustainability reports. However, this regulation is limited to publicly listed companies, issuers and financial services companies, which are in the realm of the OJK’s supervision.

The corporate sector’s support for the sustainable development agenda can be seen from the disclosure of sustainability information by corporations. The sustainability report of state-owned oil and gas company Pertamina already has a road map for reducing emissions with a target of a 30 percent cut by 2030. Until the 2021 reporting period, Pertamina is targeting a cumulative emission reduction of 26.5 percent, or 6.58 million tonnes of CO2 equivalent, referring to the business-as-usual scenario.

As of 2021, Pertamina's cumulative reduction was 6.77 million tonnes of CO₂ equivalent. The greenhouse gas (GHG) emission reduction performance has become one of Pertamina's key performance indicators (KPIs) for management at the holding and sub-holding levels. Initiation of new operations to reduce GHG emissions from business-as-usual operations include optimizing the use of gas as fuel to reduce flare emissions (Refinery Unit IV) and utilizing flared gas.

Measurement of environmental, social and governance (ESG) factors in corporations can assist the government in mapping and evaluating low-carbon development programs that have been determined in the government's strategic plan. As an internal auditor, the Development and Finance Supervisory Agency (BPKP) can carry out cross-sectoral oversight of sustainability programs in related industrial sectors such as the forestry sector, energy sector, transportation sector, mining sector and agricultural sector.

Therefore, it is necessary to have an integrated supervisory framework to support the success of decarbonization programs or other sustainability programs. One of the monitoring activities that can be carried out is to oversee the achievement of national programs related to climate change resilience through the development of an ESG monitoring framework for the NZE. The development of this framework aims to measure the implementation of a green economy in government institutions, regional governments or the corporate sector in Indonesia.

In line with the development of sustainability reports, which are currently required in several corporate sectors, the BPKP's supervisory plan can focus on assessing the quality of sustainability implementation in state-owned enterprises (SOEs) using the ESG factor approach. Through ESG supervision, the BPKP can measure the contribution of SOEs ton achieving the sustainable development agenda. The ESG factor is a process of measuring sustainability in three main aspects. The achievement of ESG targets relates to the qualitative fulfillment of certain performance indicators. To ensure that these targets are achieved reliably and fairly, ESG information needs to be guaranteed in the form of audits, reviews, monitoring and other assurance services. The BPKP's role in assessing ESG performance in SOEs is also related to the BPKP's function in the aspect of monitoring the utilization of state assets in SOEs.

The large number of ESG reporting standards and frameworks used by corporations makes it difficult to compare the application of ESG in SOEs. The quality of ESG implementation among SOEs in several different sectors is often unrelated. Even though many independent institutions provide ESG factor rating services, such as Sustainalytics, which measures the level of ESG risk in a corporation, the ESG value does not yet explain the impact of applying ESG in corporations on financial performance and the level of corporate contribution to sustainable development.

This is related to the measurement of ESG, which requires many indicators that are interconnected with environmental, social and governance factors. The complexity of the ESG rating process occurs because many standards are voluntary.

ESG monitoring by the BPKP can be directed to address the imbalance in ESG measurement practices. Specifically, the BPKP can provide recommendations or early responses on whether the NZE 2060 target is realistic under current conditions.

The ESG model data approach can be used as a tool for monitoring sustainability. Data modeling is an activity that aims to describe the structure of information stored in a database. The perspective of data modeling can be used to identify technical problems and the efficiency of data storage in future conclusions based on data possibilities and conditions in the present.

To produce a reliable data model, a database of ESG implementation is needed in several industrial sectors through a series of evaluations and other forms of supervision.

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The writers are auditors at the government’s Development and Finance Supervisory Agency (BPKP). The views expressed are personal.