Indonesia's Battery Ambition: Can Industrial Growth and ESG Leadership Go Hand in Hand?

July 14, 2026

Indonesia's Battery Ambition: Can Industrial Growth and ESG Leadership Go Hand in Hand? 

Why this dialogue:  In June, the CCMAG dialogue series turned its attention to Indonesia, the world's largest nickel producer and a key player in the global battery value chain. As the country accelerates its transformation from the world's largest nickel producer into a global battery manufacturing hub, it is becoming a critical test case for whether rapid industrialisation can be combined with internationally credible ESG performance, supply chain transparency and market competitiveness. The lessons emerging from Indonesia are increasingly relevant for resource-rich countries seeking to capture more value from the energy transition. 

By Creta Gambillara & Kaisa Toroskainen 

Setting the scene: How the country is evolving from a mineral producer to the home of emerging battery ecosystems 

Indonesia's downstreaming strategy is reshaping the country’s role in the global battery industry by promoting domestic processing and higher-value manufacturing through strategic industrial parks and battery projects. Rather than exporting raw nickel, the country is building an integrated value chain spanning refining, precursor materials, cathodes, battery cells and packs. At the same time, the government is managing nickel production to support downstream investment, strengthening ESG enforcement, and improving governance through digital traceability tools such as SIMBARA and new oversight mechanisms to improve transparency in mineral exports (PT Danantara Sumberdaya Indonesia (DSI)). While Indonesia's downstream strategy has attracted unprecedented investment and accelerated industrialisation, it has also attracted increasing scrutiny regarding biodiversity, greenhouse gas emissions, community impacts and governance. Addressing these issues will be essential to maintaining access to international markets and investor confidence. 

Bridging national regulation and international expectations 

A recent benchmarking by the World Resources Institute (WRI) Indonesia compared 117 Indonesian ESG regulations against leading international standards. It found that environmental regulations are relatively mature, particularly in areas such as water, emissions and waste management. The assessment found gaps in social topics, including community engagement, Indigenous Peoples, cultural heritage and stakeholder consultation, where international frameworks typically require more structured processes, documentation and evidence than current national regulations.   

Building on this work, the Indonesian Nickel Miners Association (APNI) is developing an Indonesian ESG standard for the nickel sector tailored to local realities while remaining internationally credible. One of the Indonesian nickel sector's greatest challenges is its diversity. Mining operations span six provinces with very different cultural, social and environmental contexts, while around 70% of mining companies have only a limited understanding of ESG requirements. That is why “Capacity building is a priority, particularly as many smaller mining companies are only beginning their ESG journey. Incentives, alongside regulation, will also be important to encourage wider adoption.”  Meidy Katrin Lengkey, Secretary General, APNI. 

Turning ambition into practice 

The Indonesia Weda Bay Industrial Park (IWIP), which the GBA team recently had the opportunity to visit, illustrates how one industrial park is attempting to embed responsible sourcing, biodiversity protection, community engagement, transparent reporting and low-carbon development within a large-scale battery materials ecosystem. As international customers increasingly demand evidence of responsible production and companies navigate a growing number of overlapping ESG standards and certification schemes, IWIP has adopted a broad ESG strategy that combines governance, transparency, environmental stewardship, community development and decarbonisation. Its initiatives include sustainability reporting, ecosystem restoration, renewable energy deployment and investments in local education, healthcare and infrastructure. As Frank Li, Head of ESG Office at Tsingshan Holding Group, stated: 

"As the ESG landscape becomes increasingly complex, the challenge is no longer whether companies are committed to responsible production, but how they can demonstrate it efficiently and credibly across multiple standards and customer requirements. Initiatives like the Battery Passport have an important role to play in harmonizing expectations, reducing reporting complexity and strengthening trust throughout the battery value chain." 

In June 2026, the Global Battery Alliance together with other international initiatives, participated in a site visit to IWIP, engaging in discussions on the industrial park's ESG strategy, continuous improvements, and opportunities for collaboration.

Collaboration is emerging as competitive advantage 

Initiatives like Tesla’s Nickel Efforts for Sustainable Transition (NEST) and GIZ's Nickel Impact Programme Indonesia (NIPI) operating at the IWIP site demonstrate how sustainability is increasingly being advanced through practical, multi-stakeholder partnerships.  

Both programs illustrate collaborative approaches to improving the sustainability of Indonesia's nickel sector. NEST focuses on biodiversity conservation through high conservation value forest protection, mine rehabilitation and water stewardship (assessing over 150,000 hectares and protected more than 500 hectares of conservation habitat in 3 years), while NIPI - working directly with local communities - addresses the environmental and social impacts of industrial development around Weda Bay.  

As Nikolaus McLachlan, Portfolio Lead Responsible Mining at GIZ International Services at GIZ observed, “Indonesia's rapid expansion as a global nickel producer presents significant economic opportunities, but long-term success depends on managing the social and environmental challenges that come with this growth. There is a growing commitment from the government, industry, civil society, academia, and international partners to address these challenges, and the next step is stronger collaboration between these key players on tangible improvement. Through the Nickel Impact Programme Indonesia, GIZ is committed to supporting this collective effort as a trusted partner and facilitator for diverse stakeholders.” 

Indonesia's journey demonstrates that industrial growth and ESG credibility do not have to compete. “When all actors across the value chain work together, they become mutually reinforcing and ultimately strengthen both the resilience and competitiveness of the global battery value chain.”  Mark Mistry, Director Public Policy and Sustainability at the Nickel Institute.  

Looking ahead 

As international expectations increasingly shift from policy commitments toward verifiable evidence, the next phase of Indonesia's sustainability journey will depend not only on improving ESG performance, but also on demonstrating it consistently across increasingly complex global supply chains. The next challenge for the country will be translating ambitious sustainability commitments into consistent implementation across mining, refining and battery production. This will require stronger supply chain transparency, harmonised ESG data, traceability, and closer collaboration between the whole battery ecosystem.  

This is where globally interoperable tools such as the GBA Battery Passport can add value. Rather than creating another standard standalone, the Battery Passport is designed to provide a common framework for exchanging verified ESG and traceability information across battery value chains. It could support benchmarking of emerging national standards such as APNI's framework against international expectations, reduce reporting duplication across multiple assurance systems, strengthen supply chain transparency, and generate practical data to inform capacity-building efforts.