Key View
- In this weekly article, we outline the implications of Indonesia’s upcoming operation against illegal mining, which we believe will yield only a modest upside to government revenue and will not result in a significant increase in environmental protections.
- We also examine the aftermath of unusually destructive floods in Pakistan, which highlight the country’s ongoing struggles to develop meaningful flood resilience over the next five years.
- We are also monitoring plans by the Mainland Chinese government to tighten emission caps in some industries from 2027, the latest US-EU talks about extraterritorial sustainability regulations, and Morocco’s plan to raise a tax on insurance premiums to fund climate resilience.
Indonesia: Crackdown On Illegal Mining A Modest Upside For Revenue, Not For Sustainability
On September 1 2025, Indonesian officials are due to launch an enforcement operation against up to 1,063 mining sites that the government has identified as illegal. The government plans to transfer seized illegal sites to state ownership, indicating that revenue recovery, rather than environmental protection, is the main driver of the policy.
The operation appears to be part of President Prabowo Subianto’s nominally aggressive approach to corruption. However, we do not expect the operation to meaningfully reduce corruption or other illicit activities related to mining. In March 2025, the Indonesian government launched a similar move against illegal palm oil production, during which it also seized and nationalised illegal farming sites. In subsequent months, analysis by the Indonesian Forum for Environment (WALHI), an NGO, alleged that the move disproportionately targeted smallholders, local communities and indigenous peoples, while assets of some large corporates were largely spared.
This highlights persistently weak environmental governance in Indonesia, enabled by weak state institutions, regulatory red tape and corruption. This trend will likely hinder the planned operation against illegal mining and broader reform efforts, even as the government seeks to move Indonesia’s mining industry up in global value chains, where a stronger environmental and governance track record would prove beneficial in the long term.
Corruption-related polarisation will also continue to affect most aspects of public policy and occasionally result in protests driven by corruption-related allegations. This includes the current wave of unrest that started on August 25 2025 over reports of high housing allowances given to Indonesian members of parliament.
ESG Country Weekly Digest: Indonesia’s Anti-Illegal Mining Operation Will Face Obstacles
Indonesia is ramping up efforts to tackle illegal mining, a significant environmental and social governance (ESG) challenge. The government has initiated a crackdown to protect the nation’s rich biodiversity and ensure the responsible extraction of resources. Illegal mining has long been a problem, damaging ecosystems and disregarding labor rights. Addressing this issue aligns with broader ESG goals, promoting sustainable economic practices and improving community welfare.
However, the crackdown faces several obstacles. Many illegal mining operations are deeply ingrained in remote areas, where access and oversight are limited. These regions often have strong local economic reliance on mining, making enforcement efforts complex. Furthermore, corruption and lack of resources hinder the effectiveness of legal actions. Ensuring proper monitoring and enforcement will require substantial investment and collaboration with local authorities and communities.
Despite these challenges, Indonesia’s initiative is crucial for sustainable development. Effective management of natural resources can boost the nation’s international ESG standing and attract responsible investments. Ensuring transparency, regulatory coherence, and community involvement will be key to overcoming hurdles and achieving long-term success. By focusing on ESG principles, Indonesia can pave the way for a more sustainable future.
