Urgency and Civil Claims for Violation Of Environmental, Social, and Governance Clauses in Business Contracts

Muhammad Afdhal Askar, Yuni Dhea Utari

Abstract


This research is driven by the aspiration to promote sustainable business practices through the adoption of Environmental, Social, and Governance (ESG) principles. The study aims to examine the significance of ESG clauses in business contracts and the legal recourse available to aggrieved parties in cases of non-compliance. Utilizing a normative juridical approach, this research analyzes legal norms, doctrines, and theories relevant to the subject matter, employing both statutory and conceptual frameworks. Primary legal sources include the Indonesian Civil Code and other relevant legislation, while secondary sources consist of academic literature, journal articles, and previous studies on the topic. Data were collected through library research. The findings indicate that the principle of freedom of contract underpins the inclusion of ESG clauses in business agreements as a preventive measure against risks arising from environmental, social, and governance failures. By virtue of the pacta sunt servanda principle, ESG clauses are contractually binding and must be observed to preclude legal claims from counterparties. Consequently, ESG clauses serve as a risk management tool and a protective legal mechanism in the event of contractual breaches by any party to the business contract.

Keywords


Environmental, Social, and Governance Clauses (ESG); Business Contracts; Freedom of Contract; Civil Claims; Business Sustainability.

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References


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DOI: http://dx.doi.org/10.26532/jph.v13i2.53542

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