PLN leads ASEAN in energy sector sustainability governance

In 2023, Indonesia’s PLN decreased its ESG risk rating by 8 points, reduced greenhouse gas emissions by 9.7m tonnes, and added 296mW of renewable energy.

If there is any electric utility player in Southeast Asia that already has the monopoly of electricity distribution and still focuses on the numbers of its environmental impact and sustainability initiatives — it must be PT PLN (Persero) of Indonesia.

Reducing its Environmental, Social, and Governance (ESG) risk rating by eight points, from 38.5 in 2022 to 30.3 in 2023, is only the starting point of its successful and impressive initiatives, according to PLN President Director Darmawan Prasodjo.

 Whilst the road to achieving sector-wide ESG goals may be long, PLN’s significant reduction in ESG risk over the past year already places it at the forefront, boasting the lowest rating in the ASEAN (Association of Southeast Asian Nations) electricity utility sector.

There may be a long road for the sector to meet sustainable development goals, but that reduction in ESG risk in itself the past year is an achievement that already puts it ahead with the lowest in the ASEAN electricity utility sector.

“We are grateful for PLN’s strong commitment to actualising ESG, resulting in a significant eight-point decrease in ESG risk rating from 2022,” said Prasodjo of the latest Sustainalytics report. “Of course, this achievement does not make us complacent; instead, it ignites the spirit of all PLN personnel to strive for continuous improvement.”

Apart from suiting up to conducting sustainable business, this push by state-owned PLN is also aligned with the Indonesian government’s efforts to achieve a just energy transition towards Net Zero Emissions (NZE) by 2060 and to realise sustainable development goals.

Prasodjo outlined several key contributors to PLN’s ESG risk reduction, including climate change risk governance, greenhouse gas (GHG) emissions reporting, water governance programmes, talent development, cyber security programmes (ISO 27001), and tax disclosure.

Decarbonisation success

PLN is definitely keeping tabs on its numbers to measure the success of its sustainability journey. For decarbonisation, PLN reduced Greenhouse Gas (GHG) emissions by 9.7 million tonnes of CO2e in 2023 compared to “business as usual.”

Also, PLN, through the Gas and Steam Power Plant (PLTGU) Muara Karang Block 3, began trading Emission Reduction Certificates (SPE) in October 2023 with a trading quota of 900,000 tonnes of CO2e, establishing it the largest trader in the carbon market.

Throughout last year, PLN added 296 megaWatts (mW) of renewable energy-based power plants whilst utilising one million tonnes of biomass for coal-fired power plants, reflecting a reduction of 1.05 million tonnes of CO2e emissions.

On top of all that, PLN continued to develop the electric vehicle ecosystem by supplying electricity to 1,081 electric vehicle charging stations last year.

At present, PLN-operated charging stations have reached 624 units distributed across 427 locations throughout the archipelago.

ESG transparency

As a demonstration of transparency in ESG risk management, PLN has released the Task Force on Climate-related Financial Disclosure Report, the ESG Performance Report, and completed the Climate Change and Water Security questionnaire for the Climate Disclosure Project (CDP).

PLN has also implemented Risk Rating mechanisms for power plants and substations and released policies on crucial issues such as climate change, biodiversity, environmentally friendly procurement, social policies for suppliers and contractors, workplace respect policies, and others.

“We affirm that PLN is ready to fulfill its noble duty of providing a better living environment for future generations,” Prasodjo said.

He revealed that PLN has also established a Sustainability Committee to continually improve the company’s ESG performance. This committee will focus on accelerating the three main workstreams supporting sustainability: ESG, Energy Transition, and Enablers.

Prasodjo reiterated PLN’s commitment to continuing all these efforts to achieve a better ESG risk rating this year. The target is for PLN to hit below 30 points to be classified as “medium” under the Sustainalytics by the end of 2024.

“We take ESG very seriously to ensure the company can survive and flourish. In the process, we undergo transformation because PLN is a company oriented towards the future,” he said.