Environmental Social Governance Integration for Infrastructure Development in Public Private Partnership Toll Road Sector

This study examines the integration of ESG (Environmental, Social, and Governance) principles into Public-Private Partnership (PPP) Scheme for Indonesian infrastructure development. Employing a qualitative method with content analysis, the study reveals that the Ministry of Finance has established an ESG framework for PPP, with implementation already in Toll Roads sector. In the PPP toll road sector, Ministry of Public Works and Public Housing Regulations address ESG considerations, and a monitoring and evaluation system called “Penilaian Jalan Tol Berkelanjutan (JTB)” has been introduced since 2022 to assess ESG performance. Ten ESG-compliant rest areas along the Trans Jawa toll road network have been identified, and Jasa Marga is recognized as the best-performing State-Owned Enterprise (SOE) in managing these toll road rest areas. The study underscores that ESG integration in PPP projects can attract financial access, investments, and government support, ultimately promoting sustainability and enhancing PPP governance. By integrating ESG principles in PPP it can play a pivotal role in advancing sustainability and contributing to the achievement of Sustainable Development Goals (SDGs).


Introduction/background and context of the study
Indonesia's rapid development and growing infrastructure sector have prompted a recognition of the importance of Environmental, Social, and Governance (ESG) principles in achieving sustainable development [1].The government's commitment to ESG integration is evident through the launch of an ESG framework by the Ministry of Finance in 2022, signaling a strategic shift towards responsible governance and sustainability across all sectors [2].This integration is crucial as it ensures that infrastructure projects not only yield positive socioeconomic outcomes but also minimize negative impacts on the environment, society, and governance [3].
The adoption of ESG principles is particularly pertinent in Indonesia's infrastructure landscape, given its rapid urbanization and economic growth [4].Toll road development plays a pivotal role in enhancing economic connectivity and improving overall quality of life [5].However, to ensure a sustainable and equitable future, this progress must align with environmental protection, social 1324 (2024) 012054 IOP Publishing doi:10.1088/1755-1315/1324/1/012054 2 inclusivity, and transparent governance practices.
The journey towards ESG integration in infrastructure development involves multiple stakeholders, including government bodies, private sector operators, and civil society organizations [6].The government, through regulatory agencies like the Ministry of Finance, sets the ESG agenda and provides guidance [7].Private sector operators of toll roads play a crucial role in implementing ESG practices during the design, construction, and operation phases [8].This paper's primary objective is to assess the integration of ESG principles in infrastructure development using PPP scheme.This could be part of achieving SDG in infrastructure development, especially enhancing quality of life [9].It seeks to understand the government's steps in implementing ESG principles and identify challenges and successes in the sectors adoption.The study evaluates ESG integration comprehensively and aims to identify areas needing improvement by analyzing existing practices, policies, and regulations related to ESG within the sector.Furthermore, the research aims to investigate how state-owned enterprises (BUMN) acting as toll road operators implement ESG principles in their day-to-day operations.This is intended to shed light on how private sector entities, specifically SOE involved in toll road management, contribute to the application of ESG principles.The outcomes of this research are expected to provide insights into how ESG integration in infrastructure development has been carried out by the government and how the private sector, such as BUMNs, plays a role in implementing these principles in their daily operations.Moreover, this research is anticipated to contribute to the broader discussion on sustainable infrastructure development and its alignment with global Sustainable Development Goals (SDGs).

Method
The qualitative method applies on ESG Integration in infrastructure development in Toll Road Sector using PPP scheme.Indonesia was chosen as the case study as Indonesia has been the leading development country in using PPP scheme for its toll road development and also for the comprehensive data and information accessible by the authors Secondary data is used by retrieving data from the academic research journal, government regulations, ESG framework and articles news.Using content analysis techniques, this study will Explore the broader implications of ESG integration for sustainable development in Indonesia's toll road infrastructure sector.

Findings and Analysis
The ESG Framework, initiated by the Ministry of Finance, serves as a strategic move to mainstream ESG principles into government facility support for infrastructure financing.Its objectives encompass several key points, of which firstly, it aims to enhance the quality of infrastructure projects that receive financial backing from the Ministry by implementing ESG standards [10].Secondly, the framework seeks to maximize the positive impacts in environmental, social, and governance realms while preventing any adverse effects on society and the environment.In cases where negative impacts are inevitable, the framework strives to minimize, mitigate, and manage them effectively.Additionally, it aims to build the capacity of various stakeholders, including the Ministry of Finance, Facility Implementers, Government Contracting Agencies, and Business Entities, in handling ESG risks while fostering active engagement from stakeholders through complaint handling mechanisms.Finally, the framework provides comprehensive guidance for the preparation of an ESG Manual, ensuring a systematic approach to ESG integration in infrastructure projects.
The Ministry of Finance in Indonesia has established an ESG Framework for infrastructure development, particularly in PPP projects.This framework is formed by various legal and policy foundations, including laws and regulations related to environmental conservation, human rights, cultural preservation.In the ESG Framework development, the Ministry of Finance refers to several legal and policy foundations related to the provision of infrastructure in Indonesia that supports and/or encourage the implementation of ESG principles in PPP, of which can be found in Table 1.In Table 1, ESG framework was formed by referring to several legal and policy foundations related to infrastructure provision in Indonesia that support or encourage the implementation of ESG principles, especially in infrastructure development.There are 9 laws which range of job creation, conservation of natural resources, human rights, protection and management of the environment, cultural reserve, water source, cultural improvement, waste management, as well as provision of land for development and public service This Framework also refers to 8 government regulations and 15 technical ministry regulation.such as controlling environmental damage and/or pollution related to forest and land fires or spatial planning.3 presidential regulations which covers PPP, SDG and Carbon Economic Value and 3 policies foundation from Bappenas, Ministry of Finance and OJK.The development of the ESG Framework in infrastructure projects and business operations is also guided by 7 (seven) key references that encompass regulations governing ESG principles. of these references provides specific standards to guide the implementation of ESG principles by project managers and business entities.The adoption of these references in creating the ESG Framework also considers the prevailing regulatory environment and incorporates existing environmental and social standards established by Facility Implementers.
There is a strong and multifaceted commitment from the government to promote and integrate ESG principles in infrastructure development and business operations.Numerous laws, regulations, and policy foundations collectively underscore the prioritization of sustainability and responsible governance.This comprehensive framework reflects proactive efforts to align PPP infrastructure projects with ESG standards, addressing environmental and social concerns while showcasing Indonesia's dedication to global sustainability initiatives, including the SDGs and the Carbon Economic Value agenda.
The PPP toll road sector in Indonesia has effectively integrated ESG principles, emphasizing monitoring and evaluation.This integration spans from project preparation, where feasibility studies align with environmental reports (AMDAL), to continuous monitoring and evaluation.The Ministry of Public Works and Housing conducts nationwide quality assessments for Toll Roads and Toll Road Rest Areas (TIP), guided by specific regulations.Ministerial Regulation Number 16/PRT/M/2014 [11] sets Minimum Toll Road Service Standards, and Ministerial Regulation Number 28 of 2021 pertains to Rest Places and Services (TIP) along Toll Roads [12] .
This study finds that in monitoring and evaluation aspect of ESG implementation within toll road sector that The Indonesian Ministry of Public Works and Housing (PUPR) conducted an assessment of Sustainable Toll Roads in 2022 and 2023, themed "Toll For All."These initiatives aimed to create ecofriendly and user-friendly toll road infrastructure, emphasizing sustainability and improved service for travelers [13].The assessment of toll roads in Indonesia focused on several notable aspects aimed at enhancing sustainability and user experience.One key aspect was the establishment of environmental and greenery such as nurseries along toll roads, where composting activities efficiently managed toll road pruning waste, resulting in the production of solid and liquid organic fertilizers.This innovative approach not only reduced the costs associated with organic waste management but also created economic value through the production and distribution of fertilizers.The design in toll road rest areas must fulfill basic needs, both aesthetically and functionally.While designs can vary, their primary function should remain intact.For safety aspects, in cases of limited space at exit lanes in rest areas, clear markers like colored lights are necessary.This ensures that drivers exiting the rest area are visible.
The second aspect is gender responsiveness (Gender-Friendly).The rest areas in every Indonesian toll road also put significant concerns on gender equality and responsiveness.Gender responsiveness means that the facilities and services should cater to the needs and equality of all individuals, including men, women, the elderly, children, and persons with disabilities.Gender responsiveness involves creating an inclusive environment that considers the diverse needs of all genders, promotes safety, and provides equal opportunities and access to public spaces and facilities.
The third aspect is harmony with local economy.Some interstate toll roads have made the travelers abandon the old interstate road.While the toll roads have reduced the traveling time tremendously, the travelers had become the source of income for many micro businesses along the old road for many decades.There are many small restaurants, food stalls, traditional snack stalls along the old road who would lose their income significantly after the toll road were open.To avoid this, there has been a policy that the local small entrepreneurs are prioritized to open business in the toll road rest areas.Thus, traditional food and local snacks are still very common to find along the interstate toll road which involve local vendors.
All aforementioned explanation is the comprehensive approach taken by the Indonesian government in assessing and enhancing the sustainability and user-friendliness of toll road infrastructure [14].The initiatives discussed range from environmental conservation and waste management to gender-responsive facilities and the harmony with local economy, all aimed at creating a more sustainable and inclusive toll road network.

4.
Discussions Indonesia's steadfast commitment to its Environmental, Social, and Governance (ESG) Framework, primarily led by the Ministry of Finance, signifies a significant stride toward infusing sustainability principles into government-supported infrastructure projects, particularly those executed through Public-Private Partnerships (PPPs).This commitment is deeply rooted in a robust legal and policy foundation that serves as the backbone of the nation's dedication to responsible governance.At its core, the ESG Framework provides a comprehensive blueprint for guiding infrastructure projects toward holistic sustainability [15].It is deeply embedded within Indonesia's legal and policy landscape, with numerous laws and regulations related to environmental conservation, human rights, and cultural preservation providing a solid foundation for the implementation of ESG principles.It is important to note that sustainability is not merely a suggestion; it is an obligatory framework for project execution, reinforcing Indonesia's unwavering dedication to ESG principles.The government's unyielding commitment to ESG principles is evident in the multitude of laws, regulations, and policy foundations that emphasize sustainability and responsible governance.The integration of ESG principles into the PPP toll road sector is a testament to Indonesia's commitment.Monitoring and evaluation mechanisms, notably the "Toll For All" assessment initiative in 2022 and 2023, are employed to ensure that toll road infrastructure aligns with eco-friendliness and userfriendliness.This includes groundbreaking approaches like establishing nurseries for waste management and crafting gender-responsive facilities, catering to diverse individual needs.Safety, too, is a focal point, with measures like colored lights enhancing driver visibility.This commitment extends to global sustainability initiatives, including the Sustainable Development Goals (SDGs) and the Carbon Economic Value agenda, positioning Indonesia as a responsible global player.
This study, which examines the integration of Environmental, Social, and Governance (ESG) principles into Public-Private Partnership (PPP) infrastructure projects, holds significant relevance for the achievement of the United Nations Sustainable Development Goals (SDGs).This ensures that facilities cater to the diverse needs of all genders, directly supporting Goal 5 on gender equality.The paper highlights the importance of gender-responsive facilities in toll road rest areas.Goal 8 -Decent Work and Economic Growth: The integration of local small entrepreneurs in toll road rest areas promotes economic growth and supports local communities.This aligns with Goal 8, which emphasizes decent work and economic development.Goal 9 -Industry, Innovation, and Infrastructure: Our paper underscores the importance of sustainable and innovative infrastructure development, particularly in the toll road sector.Aligning ESG principles with infrastructure projects contributes to Goal 9 by fostering industry growth and innovative solutions.Goal 11 -Sustainable Cities and Communities: Indonesia's rapid urbanization and infrastructure development, as highlighted in this study, significantly impact the quality of life in cities.We emphasize the necessity of aligning this development with environmental protection and social inclusivity, directly supporting Goal 11.Goal In summary, our research demonstrates that the integration of ESG principles in Indonesian infrastructure development, specifically within the PPP toll road sector, aligns with various SDGs.It highlights the importance of responsible governance, sustainability, and inclusive development in infrastructure projects.Our findings can serve as a valuable resource for policymakers, businesses, and organizations working toward these goals within the context of infrastructure development.

5.
Conclusions This paper highlights Indonesia's strong dedication to integrating ESG (Environmental, Social, and Governance) principles into government-backed infrastructure projects, particularly through Public-Private Partnerships (PPPs).This commitment is based on a solid legal and policy foundation, making sustainability an essential part of project execution.The government's determination to ESG principles is evident in the numerous laws and regulations prioritizing sustainability and responsible governance.This dedication aligns with global sustainability goals like the United Nations' Sustainable Development Goals (SDGs).The integration of ESG principles in PPP toll road projects showcases Indonesia's commitment to these ideals and employs innovative methods to ensure eco-friendly, user-friendly, and safe infrastructure.
This study makes a significant contribution to several of the United Nations Sustainable Development Goals (SDGs): Goal 5 -Gender Equality: The emphasis on gender-responsive facilities within toll road rest areas promotes gender equality, ensuring that the needs of all genders are met, directly supporting this goal.Goal 8 -Decent Work and Economic Growth: The integration of local small entrepreneurs in toll road rest areas stimulates economic growth and provides support to local communities, aligning with the goal of promoting decent work and economic development.Goal 9 -Industry, Innovation, and Infrastructure: This research highlights the importance of sustainable and innovative infrastructure development, thereby contributing to industry growth and fostering innovative solutions.Goal 11 -Sustainable Cities and Communities: The alignment of rapid urbanization and infrastructure development with environmental protection and social inclusivity supports the creation of sustainable cities and communities, a key aspect of this goal.
Goal 13 -Climate Action: By promoting sustainability and eco-friendliness through initiatives like waste management, this study contributes to climate action and addresses environmental concerns.Goal 17 -Partnerships for the Goals: The examination of ESG integration in Public-Private Partnerships underscores the significance of collaborative efforts, emphasizing the importance of partnerships in achieving sustainable development.
This research demonstrates how the integration of ESG principles into Indonesian infrastructure development, particularly within the PPP toll road sector, aligns with various SDGs.It emphasizes responsible governance, sustainability, and inclusive development in infrastructure projects, offering valuable insights and resources for policymakers, businesses, and organizations working towards these goals in infrastructure development.This paper contributes to the broader global agenda of sustainability, responsible governance, and inclusive development, thereby aligning with the UN's SDGs and promoting a more sustainable and equitable future.

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Climate Action: our paper addresses the environmental aspect of ESG integration by promoting sustainability and eco-friendliness.Initiatives such as nurseries for waste management and composting activities contribute to climate action, aligning with Goal 13.Goal 17 -Partnerships for the Goals: This study's examination of ESG integration in Public-Private Partnerships underscores the importance of collaborative efforts.Goal 17 emphasizes the significance of partnerships in achieving sustainable development, making our findings particularly relevant.

Table 1 .
Legal and Policy Foundation for ESG

framework No Type of Law/ Regulation/ References Legal Foundation/Policy Foundation
Minister of Public Works and Housing Regulation No.29/PRT/M/2006 on Guidelines for Building Technical Requirements 2. Minister of Environment Regulation No. 21/2008 on Emission Quality Standards for Immovable Sources for Business and/or Thermal Power Generation Activities 3. Minister of Environment Regulation No. 13/2009 on Immovable Emission Quality Standards for Oil and Gas Businesses and/or Activities 4. Minister of Finance Regulation No.100/PMK.010/2009on Infrastructure 2. Government Regulation No. 4/2001 on Control of Environmental Damage and/or Pollution Related to Forest and/or Land Fires 3. Implementation of Law No. 28/2022 on Buildings 4. Government Regulation No. 81/2012 on Management of Household Waste and Similar Household Waste 5. Government Regulation No. 101/2014 on Management of Hazardous and Toxic Wastes 6.Government Regulation No. 16/2021 on Regulation on Implementing Regulations of Law Number 28 of 2002 concerning Buildings 7. Government Regulation No. 21/2021 on Implementation of Spatial Planning 8. Government Regulation No. 22/2021 on Implementation of Environmental Protection and Management 3. 3 Presidential Regulations 1. Presidential Regulation No. 38/2015 on Public Private Partnership 2. Presidential Regulation No. 59/2017 on Implementation of the Achievement of Sustainable Development Goals 3. Presidential Regulation No. 98/2021 on Implementation of Carbon Economic Value for Achieving Nationally Determined Contribution Targets and Control of Greenhouse Gas Emissions in [1] Litvinenko, V., Bowbriсk, I., Naumov, I., & Zaitseva, Z., 2022.Global guidelines and requirements for professional competencies of natural resource extraction engineers: Implications for ESG principles and sustainable development goals.Journal of Cleaner Production, 338, 130530.