Indonesia to Announce Companies Non-Compliant with Human Rights Standards

Indonesia's Ministry of Human Rights is nearing the completion of a new Presidential Regulation designed to assess and enforce business compliance with human rights standards. This upcoming regulation will introduce a public announcement mechanism for companies that fail to meet their human rights due diligence reporting obligations.

Sofia Alatas, the acting Director General of Human Rights Instruments and Strengthening, explained that companies designated as mandatory reporters but who do not submit their due diligence reports will be publicly named. She anticipates this will create significant reputational pressure, particularly on large corporations with extensive workforces and business networks. "Companies will surely be afraid once they are announced, especially those with mandatory reporting status, over 2,000 employees. Their partners are quite large, their workforce is substantial, and their supply chains are extensive," Alatas stated.

The new regulation will replace the existing Presidential Regulation No. 60 of 2023 on the National Strategy for Business and Human Rights, which did not legally mandate corporations to implement human rights principles. The government aims to enact the new decree this year. Unlike its predecessor, which focused on ministerial and institutional actions, the draft regulation directly targets businesses through mandatory human rights due diligence reporting.

This move is partly informed by data from the National Commission on Human Rights (Komnas HAM), which consistently ranks alleged corporate violations among the top reported issues annually. Under the draft, companies with 2,000 or more employees must report their human rights due diligence every two years. Smaller companies can report voluntarily, though they may be reclassified as mandatory reporters if significant issues arise, potentially influenced by media reports.

Companies will be assessed based on several indicators and categorized as basic, intermediate, or advanced. Those not meeting all indicators will receive guidance before re-evaluation. Non-compliant mandatory reporters will be immediately identified as such. The government is currently seeking input from various parties before submitting the draft for harmonization.

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Companies will surely be afraid once they are announced, especially those with mandatory reporting status, over 2,000 employees. Their partners are quite large, their workforce is substantial, and their supply chains are extensive.