Jakarta, 20 November 2025 – Ahead of the G20 Summit in Johannesburg, South Africa on 22 November, Aksi Ekologi dan Emansipasi Rakyat (AEER) has called for the strengthening of ESG (Environmental, Social and Governance) principles and traceability in the critical minerals supply chain. This call is in line with South Africa’s agenda as host of the 2025 G20 Summit, which places critical minerals as an engine of growth and development in the forum’s discussions.

Indonesia, as one of the key players in the global nickel market, bears a great responsibility to ensure that discussions on critical minerals at the G20 can effectively promote the strengthening of global supply chain governance. The challenges that still frequently arise in this industry, ranging from deforestation, water pollution, social conflicts, occupational safety, and the rights of local communities, must be part of the critical minerals policy architecture discussed at the G20.

The Urgency of Implementing Due Diligence in the Critical Mineral Supply Chain

Strengthening governance is becoming increasingly relevant and urgent given that international due diligence standards such as the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) and Critical Raw Minerals Act (CRMA) require transparent, responsible and accountable practices from all industry players.

In the agenda of transitioning from fossil fuels to renewable energy, the demand for critical minerals will increase rapidly. Critical minerals such as bauxite, cobalt, lithium, and especially nickel for Indonesia, are key raw materials for sustainable energy technologies such as electric vehicles, wind power plants, solar power plants, and battery storage.

However, the increasing global demand for critical minerals has been accompanied by an increase in cases of social injustice and environmental damage. Zhong Huang, Senior Researcher at the Business and Human Rights Resources Centre (BHRRC), said that his institution recorded 835 cases of human rights violations in the critical minerals sector globally between 2014 and 2024. Indonesia is the country with the highest number of human rights violations in the Asia-Pacific region in the transition minerals sector, ranging from land conflicts, environmental impacts, to worker risks. The Ministry of Human Rights, through Mr Rudy Susatyo, expert legal analyst at the Directorate General of Human Rights Services and Compliance, also explained that the Indonesian Ministry of Human Rights recorded 113 business and human rights complaints throughout 2025, with the majority coming from the mining sector.

AEER’s findings confirm that without the implementation of due diligence, human rights violations and environmental damage will continue to occur, including water pollution that reduces fishermen’s income, poor K3L conditions, loss of forests and community food sources due to mining concessions, violations of FPIC (Free Prior Informed Consent) rights, and health impacts on communities around the nickel industry.

‘Mining activities in Indonesia’s Weda Bay Industrial Park or IWIP in Central Halmahera have the potential to threaten access to food, as the Ake Yonelo River Basin, which is still forested, is affected by pollution from mining activities,’ explained Shofie Azzahrah, AEER Green Economy Researcher.

Global Regulatory Developments and Their Implications: Companies Must Reform and Prepare

According to Jasmine Puteri, Senior Supply Chain Advisor at the Rainforest Foundation Norway, the CSDDD will be implemented by the European Union in 2027 for companies in the EU and their supply chains, which in this case also includes Indonesia. If companies in Indonesia do not prepare themselves, they risk being directly affected by this policy.

Due diligence standards require compliance with traceability and transparency standards, as well as proof that the company’s operational activities are not related to human rights violations and environmental damage. Companies must also prepare data on the origin of minerals, carbon footprints, working conditions, and ensure that social and environmental risks have been identified and mitigated.

‘The current level of preparedness among companies is still low due to the high cost of due diligence, limited monitoring capacity, and the complexity of supply chains, which makes the tracking process even more difficult,’ explained Jasmine.

In this context, AEER emphasises the need for Indonesia to immediately adapt to global demands.

‘Indonesian companies connected to the global nickel supply chain to Europe need to meet due diligence standards. The government also needs to ensure adequate policy support so that Indonesian nickel not only remains competitive in the global market, but also guarantees the fulfilment of the rights of indigenous peoples, local residents, and workers in the critical minerals industry,’ said Shofie.

The Need for Multi-Stakeholder Engagement in Implementing ESG Principles

Companies that fail to meet these standards will face risks such as loss of market access, contract rejection, or scrutiny from international investors. Multi-stakeholder engagement is essential to ensure that ESG principles, traceability, and due diligence are fully integrated into the trading system and business practices in the minerals sector. A concrete example can be seen in the case of the Norway Sovereign Wealth Fund withdrawing its investment from Eramet, a French mining company operating at PT Weda Bay Nickel (WBN) in Halmahera, due to WBN’s involvement in environmental damage in the surrounding area. This divestment was possible because of the involvement of civil society in promoting ESG responsibility.

In line with the G20 momentum, Indonesia has a strategic opportunity to ensure that discussions on critical minerals not only serve the interests of developed countries, but also encourage the adoption of stronger due diligence and traceability standards at the global level. By promoting transparency in licensing and public accountability in the supply chain, Indonesia can strengthen the competitiveness of its industry while ensuring that the development of critical minerals goes hand in hand with the protection of human rights and environmental sustainability.

Media Contact:
Michael Raditya Setiawan
+62 822-4976-1486
michael.rs@aeer.or.id