AC Ventures and PwC Indonesia Publish ESG Guidelines for Startups

AC Ventures and PricewaterhouseCoopers (PwC) published the Indonesian General Guidelines for Corporate Governance (PUGKI) which are aimed at start-up companies in Indonesia.

As conveyed through his official broadcast, investors are known to easily switch to environmental, social and governance or ESG metrics. According to PwC data in 2022, as many as 80% of investors are wary of greenwashing. Meanwhile, PwC's latest data in 2023 shows that 70% of consumers tend to choose sustainable products.

In the midst of rapidly changing business dynamics, startups are now required to have a deep understanding of corporate governance, especially related to sustainability issues. Startups need to explore new approaches without forgetting the traditional governance models that have existed so far.

"Startups in Indonesia, including our portfolio, always show a strong entrepreneurial spirit. Several problems and case examples provide valuable lessons and emphasize the importance of prevention. AC Ventures and PwC Indonesia share knowledge to guide the founder in building a strong foundation, making targeted decisions, and avoiding common risks related to corporate governance," said Michael Soerijadji, Founder & Managing Partner of AC Ventures.

Guide and recommendations

As a refresher, corporate governance refers to the structures and processes for directing and managing businesses to achieve progress and accountability. The ultimate goal is to create corporate value and shareholder wealth in a sustainable manner.

This guideline contains a framework consisting of Front Line, Risk & Compliance, and Internal Audit, with an in-depth explanation of the roles and responsibilities of the Board of Directors (BOD), determining strategy, and company compliance. Here are some points that we summarize:

1. Financial and Sustainability Reports

Finance is an aspect of the sustainability of a business. In this guide, PUGKI advises startups to maintain a two-year fund reserve wisely, towards profitability, as well as managing the cash flow and investments they receive.

In addition, this guideline emphasizes the importance of careful financial reporting for startups to encourage accuracy and regularity in financial disclosures on basic elements, such as asset valuation.

Then, PUGKI recommends startups to disclose systems and processes to ensure interim financial reports that are not audited by external auditors can be accurate and complete. Startups also need to display the right information for investors to make informed investment decisions. This point is contained in point 6.2.1.

2. Shareholder Rights

This agreement allows the startup to monitor the company's performance, and actively participate in significant decision making, such as transaction approval. Thus, startups can have adequate, accurate and timely information on subsidiaries.

Another important aspect contained in PUGKI is share ownership. In the guidelines written in 7.1.2.2, directors need to ensure that there is a shareholder agreement or other agreement if the investment in a subsidiary is significant, but still below the majority. For example, ownership between 20%-50% shares.

3. Protection of Stakeholders

Regarding environmental responsibility as the basis for the publication of these guidelines, PUGKI also provides guidelines for startup actors to participate in preventing, reducing and managing negative impacts on all aspects of corporate operations.

Contained in point 8.3.1.4, this aspect includes the use of raw materials, energy, water use, use of renewable resources, use and rehabilitation of biodiversity, waste management, as well as reducing the impact of greenhouse gases and carbon emissions

In full, PUGKI can be downloaded via the link this.

Another sustainability report

Previously, East Ventures had launched "Sustainability Report 2022" which not only contains the impact that has been successfully created with the ecosystem, but also contains the ESG framework and practices.

His party also formed an Investment Committee to strengthen ESG leadership with global and regional experience in multi-industry. This committee functions to oversee compliance, policies, investments and ESG standards.

East Ventures claims that its ecosystem has achieved 16 goals out of 17 goals set by the UN related to the Sustainability Development Goals (SDG). In the e-commerce sector, portfolios that have met this goal include Aruna, TreeDots, and WarungPintar.