Indonesia's coal reserves now reach 35 billion tons with resources of 134 billion tons. If used wisely and sustainably, these resources are estimated to last up to 500 years for domestic needs.

Even with a partial export scheme, national coal reserves are projected to still be utilized for the next 200 years. This was conveyed by the General Chairperson of the Indonesian Mining Association (IMA), Rachmat Makkasau, in the Seminar "Energy for Prosperity: The Economic Growth Impacts of Coal Mining" organized by the Energy and Mining Editor Society (E2S) in March 2024.

With such abundant potential reserves, it is not an exaggeration to say that coal is still one of the mainstays of energy in Indonesia, especially in the electricity sector.

Moreover, even though the world is moving towards a renewable energy transition, demand for coal, both for domestic needs and exports, is expected to remain high in the coming years. Stability of supply and affordability are the main reasons why coal still plays a crucial role in maintaining national energy security.

However, behind its significant contribution to the economy and energy security, the coal mining sector is faced with various complex challenges, especially related to the Environmental, Social, and Governance (ESG) aspects. These challenges include the environmental impacts of mining activities, demands for transparency in operations, and the expectations of local communities to obtain sustainable benefits.

In the EY Mining & Metals Business Risks and Opportunities Survey Data 2024, it was concluded that ESG issues as well as reputation and public recognition or better known as license to operate (LTO) were identified as the main business risks for the mining sector worldwide in the coming years.

The report involved 150 executives at the global mining industry to be surveyed in June-July 2023.

In detail, 64 percent of respondents placed the impact on local communities as the highest priority, followed by waste management at 55 percent, and water resource management at 51 percent.

This shows that sustainable mining practices are not just an option, but a necessity. Negative impacts such as environmental degradation, poor waste management, and lack of empowerment of local communities can have long-term consequences, both in terms of the environment and social stability.

In this context, the implementation of Good Mining Practice (GMP) becomes crucial. GMP focuses not only on operational efficiency, but also ensures that mining activities are in line with environmental protection, community welfare, and compliance with applicable regulations.

GMP emphasizes the importance of corporate social responsibility, transparent governance practices, and continuous innovation in managing natural resources. MMS Group Indonesia (MMSGI) understands the urgency of implementing ESG as a standard in mining activities.

MMSGI not only responds to the challenges of the mining industry, but also sets new standards in sustainable mining practices. This is realized through various innovations, community empowerment programs, and a commitment to good corporate governance.

Through the implementation of ESG, we want to ensure that our presence brings benefits to all parties, especially the communities around the mining area," said General Manager of Mining Support PT Multi Harapan Utama (MHU), Wijayono Sarosa, in a written interview with Kompas.com, Monday (17/12/2024).

Responsible for society and the environment

MMSGI's commitment to implementing ESG is outlined in its operational policies, annual sustainability reporting, and the involvement of all subsidiaries, including MHU.

However, before anything is implemented, MMSGI carries out mapping of basic needs, risk assessments, and core pillars of sustainable development, starting from social, economic, environmental, legal, and governance.

View Photos The reforestation program in the IKN area carried out by PT MHU is marked by the construction of a Miniature Tropical Rainforest on 97 hectares of land consisting of a tropical rainforest area, Gallery House, forest park, and other supporting areas. (Doc MHU)

“Based on the commitment to realize Good Corporate Citizenship, MMSGI strives to integrate the ESG concept into all of its business and operational strategies.

As a holding group , MMSGI is currently focused on strengthening the governance pillar . Meanwhile, the environment and social are the responsibility of the operating company ," he explained.

For the social aspect, MHU has a strategy to expand the scope of education, health, and community economic programs. On the environmental side, it continues to strengthen reforestation and waste management initiatives.

Adhering to the vision and mission of MMSGI, MHU's commitment to balancing energy needs and environmental sustainability is captured through the tagline it carries, namely "Syncnergy for the Future".

"As a result, various programs related to local culture and wisdom, welfare and livelihood, and the environment began to be mapped. Not to forget, community complaints were also heard and collected. Openness, involvement, partnership, and community empowerment were also built," added Wijayono.

The party also issued a Community Development and Empowerment Master Plan (RIPPM) as a guideline for the program being implemented. This guideline serves as a fence for the company so that commitments can be realized properly while mitigating risks in accordance with the direction and policies of the parent company and the government, while considering the results of the Development Planning Meeting (Musrenbang) and the blueprint of the Community Development and Empowerment Recipient (PPM) program in the East Kalimantan (Kaltim) region.

Creating meaningful and rewarding programs

With the references and guidelines made, a number of programs have been implemented. Former mining lands in Kutai Kartanegara Regency and Samarinda City, for example, have been reforested as an effort to reduce carbon emissions to revive the ecosystem that was lost.

Thanks to the program, the Busang Arboretum Area in Loa Ipuh Darat Village, Tenggarong District, Samarinda City, East Kalimantan has become a multifunctional natural area since 2018. Various types of trees can be found here. There are also animals, from Kalimantan slow lorises to sambar deer breeding.

The Busang Arboretum area in Loa Ipuh Darat Village, Tenggarong District, Samarinda City, East Kalimantan has become a multifunctional natural area since 2018.

Other programs include the construction of clean water facilities (Water Treatment Plant) based on green energy , and the development of the Lung Anai Cultural Village which has successfully raised its economic potential by utilizing cocoa processing into ready-to-eat chocolate as a form of empowerment of the Dayak Kenyah community in the buffer zone of the Indonesian Capital City (IKN).

View Photos Minister of Villages and Development of Disadvantaged Regions Yandri Susanto (center) with MHU Director Margareta (third from left) during a visit to Rumah Cokelat in Lung Anai Village, Saturday (8/12/2024). (MHU Doc)

Then, in the education sector, there is a bachelor's degree scholarship program, an equivalent education program for packages A, B, and C, as well as the economic independence of the Payang Sejahtera Village-Owned Enterprise (BUMDes) Sungai Payang Village which targets residents in the operational circle area.

Other programs are Food for Greening, Empowerment of BUMDes Sumber Purnama, Loh Sumber Village, Development of Local Wood Crafts Industry, and handling stunting.

Wijayono said that his party prioritized at least 11 of the 17 points in the existing Sustainable Development Goals (SDGs) pillars. These points are SDG 1 (No Poverty), SDG 2 (Zero Hunger), SDG 3 (Healthy Lives and Well-Being), SDG 4 (Quality Education), SDG 5 (Gender Well-Being), SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), and SDG 8 (Decent Work and Economic Growth).

Then, SDG 9 (Industry, Innovation, and Infrastructure), SDG 10 (Reduced Inequality), and SDG 17 (Partnerships to Achieve the Goals).

"By prioritizing community empowerment programs, we are committed to the programs that we prioritize in ring areas 1, 2, and 3 in the operational area," he explained.

Not only that, the company he manages also purchased carbon units in the first trading of IDX Carbon in September 2023 to offset MHU office emissions on site.

Structured and has success parameters

Since the beginning of its commitment to implementing ESG principles, MMSGI has been serious about it. All programs that have been implemented have been measured in detail regarding their social and environmental impacts. For this purpose, MMSGI uses the Social Return on Investment (SROI) methodology.

Then, there is also the implementation of the Sustainable Livelihood Approach (SLA) method to measure the impact of the program on the quality of life of communities around the mine.

Meanwhile, SROI is used by MMSGI to assess social benefits in monetary terms, providing a clear picture of the impact of social investments. Meanwhile, SLA helps ensure that sustainability aspects—economic, social, and environmental—can be measured holistically.

“Both methods are effective in assessing program success, identifying room for improvement, and ensuring long-term sustainability,” he said.

For your information, all ESG-related efforts by MMSGI are reported periodically and voluntarily and are assessed (ESG Score) by the world-class rating agency, S&P Global.

The assessment was attempted by MMSGI over the last three years as a company commitment to implementing sustainability principles in all its businesses to realize a Good Corporate Citizen.

In a publication made in April 2024, MMSGI stated that support for BUMDes Payang Sejahtera received a score of 4.27 using the SROI method. Then, for the Koetai Harapan Utama carpentry group, the SROI value was 5.23, and for the Ternak Lestari group, the SROI value was 5.03. The SROI value can be interpreted that every Rp 1 spent by the company has a social return rate of Rp 4-5. This shows that the program being run is classified as very good and economically beneficial. This is also an indicator of the sustainability of corporate social responsibility (CSR) activities independently.

“The SROI value of up to five times through community empowerment programs, such as education, job training, and local infrastructure development, proves that our good efforts have an impact,” added Wijay. For them, creating sustainable income or sustainable livelihood is an important foundation in community empowerment efforts.

Land acquisition moments often provide instant or temporary benefits, he said. While the challenge is how these benefits can be maximized to create a long-term, sustainable impact for the community.

"Well (this is where) the SROI-based approach plays a vital role in measuring the value of change generated by a particular program or intervention. SROI not only calculates financial returns, but also broader social and environmental impacts," he explained.

Thus, programs designed with SROI principles have great potential to create sustainable change, ensuring that the benefits felt by the community are not only temporary, but are able to become a resource that continues to drive the local economy.

"The most important thing in this whole process is to ensure that every effort to increase income or livelihoods is truly focused on sustainability. (So), not just providing short-term benefits, but also creating an ecosystem that supports communities to develop independently in the future," he said.

He gave an example in Jembayan Tengah Village, Loa Kulu, Kutai Kartanegara which is known as a goat village, which has succeeded in increasing the economic income of residents in the village through cultivation.

"MHU initially helped by providing 12 PE and Etawa breed goats. Then providing assistance and coaching in raising livestock. Seeing the development, MHU disbursed another 24 goat seeds," he explained.

The struggle, he said, lasted for two years until it finally paid off. The livestock in Central Jembayan was successful. The goat broodstock grew to 128, and the number continues to grow.

MHU monitoring based on the SROI study, the goats that were successfully sold reached 200, and the goats kept by residents were around 250. "This means that the social investment rolled out by MHU has succeeded in achieving a 'profit' jump that has increased sharply, or more than tenfold, calculated within a period of five years since it was first rolled out in 2018," he explained. It is no wonder that in 2024, MMSGI received various awards from various institutions related to the ESG or CSR programs carried out.

Among them, the TOP CSR Awards 2024 in the 5-star Excellence category and the CSR Awards 2024 as the Most Impactful Program Prosperity. These awards are given to companies that have well-implemented and sustainable CSR and ESG programs. "The implementation of ESG makes our business more sustainable, measurable and transparent. We (also) actively work with stakeholders to create mutually beneficial relationships," he said.

New standards for the mining industry

Not stopping through structured programs and references that have been made, MMSGI wants to have a greater impact to spread the spirit of sustainability. This is seen through active involvement as a member of the Indonesian Mining Experts Association (Perhapi).

Through the Perhapi 2024 forum, MMSGI through its subsidiary, PT MHU, plays an active role in discussions on GMP standards, such as Work at Height (WAH) and coal mining standardization within the scope of the Mining Safety Management System (SMKP).

"SMKP is a framework that must be implemented by all mining companies in Indonesia as regulated by the Ministry of Energy and Mineral Resources (ESDM). SMKP is designed to ensure that every operational activity in the mining sector is carried out with a focus on occupational safety and effective risk management," he explained. As part of the implementation of SMKP, not only MHU, all companies engaged in the mining industry are required to identify hazards, prepare safe work procedures, and set measurable work safety targets routinely.

All related documents, including policies, implementation reports, and achievement of safety indicators, must also be reported to the government every three months. This creates transparency while ensuring that safety standards are constantly monitored and improved.

"SMKP does not only focus on specific aspects, such as work at height , but covers all operational aspects that have the potential to cause risks, from heavy equipment management to environmental protection. Thus, this system becomes a common foundation for all mining companies to create a solid safety culture, in line with the principles of sustainability and social responsibility.

Through the implementation of SMKP, mining companies are committed to not only fulfilling regulatory obligations, but also protecting employees, the environment, and the communities around their operational areas. Through this active participation, MHU not only ensures compliance with regulations, but also contributes to improving occupational safety standards in the Indonesian mining sector.

"(In the forum), we share best practices, especially in social aspects that have a real impact on the surrounding community," added Wijayono. For information, Perhapi 2024 was attended by the Directorate General (Dirjen) of Minerals and Coal of the Ministry of Energy and Mineral Resources, Tri Winarno, and various speakers from mining associations.

"The implementation of ESG must also consider several factors, including natural or environmental conditions, infrastructure conditions, financial conditions, and also human resource conditions. So, ESG program planning must be able to summarize all factors in order to get measurable results so that it has an impact according to the best practices target ," he explained.

By sharing best practices and innovations, MHU hopes to be a driver of positive change in creating a safer, more efficient and more sustainable mining industry.

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