WILL ESG FUNDS IN INDONESIA GROW?: A SURVEY OF LITERATURE AND CURRENT PRACTICES

• Main Author: Elvani Situmorang, Maria
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85896
• Institution: Institut Teknologi Bandung

The growth of ESG (Environmental, Social, and Governance) funds in Indonesia has been significant over the past five years, yet Assets Under Management (AUM) remain relatively low compared to conventional funds. This research explores the evolution of ESG funds in Indonesia, identifies current trends, and proposes strategies to increase AUM using a mixed-method approach that combines market data analysis with qualitative insights from public documents and industry reports. Despite growing awareness and interest in ESG investments, several barriers hinder widespread adoption. These include limited understanding of ESG principles among investors, limited regulatory frameworks, and insufficient promotion and information of ESG funds by stakeholders. Millennials and Gen Z show high environmental awareness, influenced by experiences such as air pollution, leading to a preference for sustainable products. However, many investors are unaware of ESG funds, exacerbated by the lack of centralized information. From the asset managers' perspective, there is a trend of increasing ESG fund products and AUM, but confusion remains on incorporating ESG factors into investment processes due to differing standards and frameworks. The increasing trend of ESG investing and funds requires strict regulations and clear guidance to avoid misleading marketing and ensure true sustainability. Positive factors include increased investor awareness, fintech innovations, and regulatory support, while challenges such as limited track records, greenwashing, lack of standardization, and competition must be addressed. To address these challenges, the study proposes enhancing investor education, strengthening regulatory policies, and leveraging fintech innovations to increase transparency and accessibility of ESG information. This research contributes to sustainable finance by providing a comprehensive analysis of ESG funds in Indonesia and offering practical recommendations to foster their growth. The findings are particularly relevant for policymakers, financial institutions, and investors promoting sustainable investment practices in emerging markets