ESG Global Vision

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Environmental policy

Planned

Countrywide

This law is intended to help Indonesia meet its obligations under the Paris Agreement.

This law will regulate the carbon trade, provide payments to businesses based on performance in reducing greenhouse gas emissions, and impose a levy on carbon emissions.

Environmental policy

Planned

Countrywide – goods and services

This tax would be imposed on entities or individuals purchasing goods/services containing/resulting in carbon/carbon emissions.

The five main sectors will be energy and transportation, agriculture, forestry and peat lands, industry, and waste treatment. There is no current timescale for its implementation.

Non-financial reports

Voluntary standards

All companies

These guidelines detail how companies should monitor and report the effectiveness of the mitigation and adaptation actions that they undertake in their ongoing business  controlling their emissions and contributions towards climate change.

The mitigation actions must be carried out by way of measurement, reporting and a verification process. Businesses will be responsible for measuring their climate change effects and for  obtaining their baseline emissions level and for subsequent emission reductions. The report must be verified by the government, and implemented accordingly. In addition, the implementation of such plans must be reported in writing in the company’s annual report. 

Non-financial reports

Voluntary standards

All companies

The Environmental Law, as amended, provides the foundational laws to be applied to every company  to protect the environment, including but not limited to:

1. Environmental sustainability.
2. Prohibition against pollution of the environment.
3. Prohibition on disposal of toxic waste into the environment.
4. Prohibition on land clearing by burning.

Non-financial reports

Voluntary standards

Mining companies

Mining companies must apply proper mining principles concerning technology, safety, the environment, land reclamation and post-mining activities (mine closure). They must also submit periodic reports on the above activities and obligations.  

Non-financial reports

Voluntary standards

Mining companies

The decree requires that each province in Indonesia, especially those with mining businesses in the relevant provincial administrative jurisdiction, draws up blueprint guidelines for community development and empowerment to decrease poverty and increase the income of communities around mining regions.

Financial reporting

Voluntary standards

All companies

PR 98/2021 is an overarching regulation for controlling climate change and reducing greenhouse gas emissions through (i) mitigation and adaptation actions and (ii) carbon pricing and carbon trading arrangements. The details regarding the implementation need to be supplemented by future regulations, which are currently being reviewed by the relevant working committee.

PR/98/2021 provides that:

1. companies must take certain mitigation and adaptation actions in their ongoing businesses including but not limited to solid and liquid waste management and carbon efficiency of power generation and transportation;
2. companies must comply with limits for greenhouse gas emissions set by relevant ministries in future regulations;
3. the government can implement schemes relating to the money value of carbon through carbon trading, economic incentives and carbon levies; and

4. the government must establish a National Registration System for Climate Change Control to support carbon trading

Non-financial reporting

Voluntary standards

All companies engaged in business related to natural resources.

This law regulates how these companies are required to fund social and environmental initiatives.

Specifically, Chapter V of Article 74 of this law requires companies engaged in business related to natural resources to allocate funding for social and environmental purposes for the benefit of the company itself, the local community and society in general. The details of such funding and implemented measures must be disclosed in a company’s annual report.

Non-financial reporting

Voluntary standards

Financial services companies.

The road map is intended to create sustainable finance for all financial services players under the Financial Services Authority or Otoritas Jasa Keuangan, "OJK", to include banks, capital market players and financial institutions.

To achieve the above purposes, the OJK will prepare, amongst others:

1. Regulations/policies to increase the sustainable financial services portfolio by providing incentives to productive and consumptive sectors, e.g., green taxonomy
2. Development of an integrated information system on sustainable finance.
3. Sustainability reports becoming mandatory for transparency purposes and awards.
4. Green lending model on supporting national energy resilience plan.