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Global investors warn Indonesia that jobs bill puts forests at risk

by Reuters
Monday, 5 October 2020 12:20 GMT

FILE PHOTO: An excavator is seen in a destroyed forest at a peatland area in Kuala Tripa district in Nagan Raya, Indonesia's Aceh province, December 20, 2011. REUTERS/Roni Bintang

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In a letter, 35 investors said reforms to business regulation to boost the economy could weaken environmental standards

(Adds bill being passed)

By Matthew Green

LONDON, Oct 5 (Reuters) - Global investors managing $4.1 trillion in assets have warned Indonesia's government that a contentious job creation bill passed by parliament on Monday could pose new risks to the country's tropical forests.

In a letter seen by Reuters, 35 investors expressed their concerns, including Aviva Investors, Legal & General Investment Management, the Church of England Pensions Board, Netherlands-based asset manager Robeco and Japan's largest asset manager, Sumitomo Mitsui Trust Asset Management.

"While we recognize the necessity for reform of business law in Indonesia we have concerns about the negative impact of certain environmental protection measures affected by the Omnibus Bill on Job Creation," Peter van der Werf, senior engagement specialist at Robeco, said in a statement.

With President Joko Widodo's coalition controlling 74% of seats, parliament passed the bill that the government says is needed to improve the investment climate and streamline regulations in Southeast Asia's biggest economy.

A coalition of 15 activist groups, including trade unions, have condemned the bill and called for a strike.

The investors said they feared the legislation could hamper efforts to protect Indonesia's forests, which would in turn undermine global action to tackle biodiversity loss and slow climate change.

"While the proposed regulatory changes aim to increase foreign investment, they risk contravening international best practice standards intended to prevent unintended harmful consequences from business activities that could deter investors from Indonesian markets," said the letter, sent hours before the bill was passed.

With concerns over environmental breakdown rising up the investor agenda, some asset managers have begun to take a more public stance in urging governments in developing countries to protect the natural world.

In a similar intervention in July, 29 investors managing $4.6 trillion wrote to Brazilian embassies to demand meetings to call on right-wing President Jair Bolsonaro's government to stop soaring deforestation in the Amazon rainforest.

(Reporting by Matthew Green; Editing by Ed Osmond)

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