Deconstructing ESG Social Washing: Customary Land Annexation, FPIC Violations, And Sustainable Legal Certainty Frameworks
Abstract
The aggressive expansion of coal mining corporations in the Kutai Barat regency has unveiled a critical regulatory void at the highly contested intersection of customary agrarian rights and modern sustainable finance compliance. This article critically examines the systemic annexation of customary land (Tanah Ulayat) executed without the fundamental requisite of Free, Prior, and Informed Consent (FPIC). These coercive agrarian acquisitions are subsequently masked and legally sanitized as voluntary "communal partnerships" within corporate Environmental, Social, and Governance (ESG) sustainability reports. The primary objective of this study is to deconstruct the precise legal mechanics of ESG "social washing," a sophisticated strategy utilized by public mining corporations to entirely bypass Constitutional Court Decision No. 35/PUU-X/2012 and suppress civil compensation by aggressively exploiting the indigenous communities' absence of formal state-issued land certificates. Furthermore, this research aims to formulate a transformative legal framework that holds these entities accountable. Methodologically, this research employs a normative socio-legal approach, juxtaposing factual, empirical precedents derived from the Sendawar District Court against the stringent financial regulatory frameworks of POJK 51/POJK.03/2017, SEOJK 16, and the Global Reporting Initiative (GRI) standards. The findings definitively reveal a systemic failure by corporate boards to mitigate social risk within Good Corporate Governance (GCG) parameters, where indigenous stakeholders are routinely marginalized into subordinate legal objects rather than recognized as sovereign subjects. Ultimately, this paper formulates a sustainable legal certainty framework that radically reclassifies ESG social washing not merely as an isolated regional agrarian dispute, but as actionable capital market fraud. The conclusion section contains a new novelty from the research: it proposes the direct integration of the Financial Sector Development and Strengthening Law (UU P2SK) to enforce strict administrative sanctions, including mandatory corporate delisting, thereby definitively bridging the current regulatory gap between civil agrarian justice and hard-law financial accountability.
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Interview with Mr. Andreas Harsono, as a Senior Independent Forensic ESG Auditor and Environmental Consultant, on February 10, 2026.
DOI: http://dx.doi.org/10.30659/akta.v13i2.53682
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