Toward a More Responsible Critical Minerals Supply Chain Supporting Indonesia’s Energy Transition

Indonesia's energy transition relies heavily on the responsible development of its critical minerals supply chain, with nickel as a key component for clean energy technologies. This policy brief examines the current landscape of ESG standards and regulations governing Indonesia's nickel industry. It highlights the sector's rapid growth, driven by global demand for batteries and renewable energy, and underscores the opportunities for economic development and industrial advancement. 

However, the expansion of nickel mining and processing has brought significant socio-environmental challenges, including high carbon emissions, workplace accidents, and rising social conflicts. The brief maps Indonesia's regulatory framework against international ESG standards, identifying gaps in areas such as biodiversity protection, human rights due diligence, community engagement, and sustainability reporting. It draws on global best practices from countries like Canada, Australia, Chile, and the Philippines to illustrate effective approaches to responsible mining. 

Key recommendations include strengthening environmental safeguards through mandatory ecosystem assessments and improved waste management, promoting human rights and free, prior, and informed consent protocols, and expanding climate governance with requirements for decarbonization plans and anti-corruption policies. The brief also calls for enhanced benefit-sharing mechanisms to ensure local communities receive tangible, long-term benefits, and for the mobilization of sustainable finance to support ESG-compliant projects. 

By aligning Indonesia's policies more closely with international standards and improving enforcement, the country can maximize the benefits of its mineral resources while minimizing negative impacts. The publication aims to inform policy-makers, industry stakeholders, and civil society about the urgent need for stronger ESG compliance, transparent governance, and inclusive development in Indonesia’s nickel sector—ultimately supporting a sustainable energy transition.