Green Investment or Greenwashing? Foreign Investment in Indonesia’s Renewable Energy Sector

Abstract

This article critically examines the legal implications of greenwashing and the lack of
Environmental, Social, and Governance (ESG) accountability in foreign-funded
renewable energy investments in Indonesia. While green investment is promoted as
part of the global transition toward sustainability, many projects in Indonesia have
raised concerns due to aggressive land acquisition, lack of community consent, and
misleading ESG reporting. This research applies a socio-legal juridical method by
combining normative legal analysis with empirical data obtained from interviews and
field documentation in East Java and South Sulawesi. The findings reveal significant
regulatory gaps that allow companies to misuse ESG narratives for image-building
purposes while neglecting environmental and social responsibilities. The study also
highlights the absence of strong enforcement mechanisms and community access to
justice, which creates a legal vacuum and facilitates systemic greenwashing.
Therefore, this paper proposes regulatory reform and the adoption of binding ESG
standards to strengthen transparency, legal accountability, and community rights in
Indonesia’s renewable energy sector.