The Directorate General of State Assets Management (DJKN) under the Indonesian Ministry of Finance is responsible for the formulation and implementation of policies and management of State-Owned Asset (SOA). These assets include land, buildings, vehicles, and other movable and immovable properties owned by the state, which are crucial for supporting government operations and public services. However, with the rising global focus on sustainability and climate change, there is an increasing need to incorporate sustainability principles into the management of these assets to align with both national goals and global trends.

SOA Management Dynamics

SOA management faces several challenges, including maintaining proper asset life cycle, ensuring optimal utilization, and managing the vast geographic distribution of assets across Indonesia. As environmental concerns become more pronounced, managing these assets with a sustainable approach becomes a critical issue. DJKN, as the distinguished asset manager, is also transitioning from asset manager to a revenue generator (Akbar, 2021). An example of this transition is by optimizing SOA through mechanisms such as leasing, which has become a significant contributor to non-tax state revenue (PNBP).

However, DJKN's ability to monitor and control asset utilization is limited by regulatory constraints and the lack of authority to impose sanctions on idle or underutilized assets (Sari, 2022). For instance, many SOA remain idle or underutilized, contributing to inefficiencies. Improving regulations, delegating authority, and adopting technology-driven solutions, such as a marketplace for potential SOA leases, offer opportunities for DJKN to enhance transparency, efficiency, and revenue generation while addressing sustainability and underutilization challenges.

Moreover, Indonesia's commitment to reducing greenhouse gas (GHG) emissions under international agreements, such as the Paris Climate Accord, implies that the public sector must play a role in this effort. As Indonesia recently reaffirmed its climate targets, aiming for a 29% reduction in GHG emissions by 2030 unconditionally, and 41% with international support, the public sector's contribution is crucial (World Resources Institute, 2021). SOAs, which are responsible for significant energy consumption and GHG emissions, require more sustainable management practices to align with these ambitious national goals.

Integrating ESG into SOA Management

Environmental, Social, and Governance (ESG) principles represent a growing focus on sustainability, social responsibility, and ethical governance across industries. ESG criteria are increasingly used by organizations to ensure their operations not only generate economic value but also positively impact the environment, society, and governance structures.

Incorporating ESG principles into SOA management offers a framework for promoting sustainability while optimizing asset performance. ESG integration into SOA management could address key issues such as energy efficiency, waste management, and social impacts. This approach would align DJKN's management practices with global standards, ensuring that SOA contribute to Indonesia’s sustainability goals.

Sustainability Scoring Tool

One model that could be adapted for SOA management, especially for the land and buildings, is the Sustainability Scoring Tool developed for real estate investments in Europe (Oktabec & Wills, 2024). This tool evaluates the sustainability performance of real estate properties during the acquisition process, ensuring that properties meet specific ecological, social, and governance standards. In the Indonesian context, a similar scoring tool could be developed to evaluate and monitor SOA, ensuring they meet sustainability criteria throughout their lifecycle.

The tool could assess various aspects of SOA, focusing on ecological, economic, and social dimensions. In terms of ecology, it would evaluate factors such as energy consumption, carbon footprint, water usage, and waste management. From an economic perspective, the tool would measure operational costs, long-term value preservation, and financial efficiency. Additionally, the social aspect would encompass accessibility, community impact, and compliance with social responsibility regulations, ensuring a comprehensive evaluation of SOA' sustainability and societal contributions.

The scoring mechanism of the Sustainability Scoring Tool works by assigning specific criteria to different sustainability dimensions, with weighted scores allocated to each category based on their importance. For instance, within the ecological dimension, criteria like energy efficiency, carbon emissions, and water management are evaluated and given a score based on how well the property or asset meets predefined benchmarks.

These individual/category scores are then aggregated to provide an overall sustainability score for the property or asset, allowing stakeholders to make informed decisions based on the asset’s alignment with sustainability goals. This systematic and quantitative approach ensures that all relevant factors are considered, promoting balanced and informed decision-making throughout the lifecycle of the asset.

This sustainability tool would also align SOA management with national regulations and international frameworks, such as the EU Taxonomy Regulation, which requires economic activities to meet specific environmental sustainability criteria.

Benefits of Sustainable SOA Management

Integrating sustainability into SOA management presents numerous advantages for both operational efficiency and broader national objectives. One key benefit is the potential to reduce long-term costs. By improving energy efficiency and minimizing waste, sustainable SOA management practices can significantly lower operational expenses, providing a cost-effective approach to managing SOA over time.

Another advantage is the enhancement of asset value. Sustainable management practices help preserve and even increase the long-term value of SOA, ensuring they remain productive and relevant despite evolving regulatory demands. This not only protects the assets but also positions them to generate better returns in the future.

Lastly, sustainable SOA management aligns with Indonesia’s national goals, particularly the commitment to reducing greenhouse gas emissions and promoting social welfare. By adopting sustainable practices, SOA management can actively support these national objectives, contributing to a more resilient and equitable future for the country.

Integrating Sustainability Scoring Tool into Current SOA Evaluation Process

DJKN has already implemented the evaluation of SOA as part of its efforts to optimize asset management. DJKN introduced a systematic evaluation process that assesses SOA performance based on six key indicators: public interest, social benefits, user satisfaction, potential future usage, financial feasibility, and technical conditions (Bestari, 2021). The evaluation aims to identify underutilized or idle assets and maximize their potential through more efficient use, ultimately enhancing public services and increasing non-tax state revenue.

Inspired by international practices like the Sustainability Scoring Tool explained above, DJKN's evaluation framework could be further refined to integrate sustainability criteria, covering ecological, economic, and social dimensions. This would ensure that SOA are managed not only for operational efficiency but also for long-term sustainability, contributing to Indonesia's broader environmental and social goals.

Conclusion

The future of SOA management lies in adopting sustainable practices that address environmental, social, and economic challenges. By incorporating ESG criteria into asset management, DJKN can optimize SOA performance while supporting Indonesia’s national sustainability goals. Adopting a scoring tool for sustainability, like those used internationally, can provide a structured framework for ensuring that SOA contributes to a more sustainable future.

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Writer: Qori Kharismawan, Staff at Direktorat PKN DJKN (Currently on Leave)

References

Akbar, Lucky. 2021. "Membangun Paradigma Asset Manager dalam Pemanfaatan Barang Milik Negara." Birokrat Menulis. Accessed at https://birokratmenulis.org/membangun-paradigma-asset-manager-dalam-pemanfaatan-barang-milik-negara/.

Bestari, Arinda Rintan. 2021. "Portofolio Aset Dalam Rangka Mewujudkan Efektivitas Pengelolaan Kekayaan Negara." Direktorat Jenderal Kekayaan Negara, December 15, 2021. https://www.djkn.kemenkeu.go.id/kanwil-kalselteng/baca-artikel/14490/Portofolio-Aset-Dalam-Rangka-Mewujudkan-Efektivitas-Pengelolaan-Kekayaan-Negara.html.

Oktabec, Katharina, and Nadine Wills. 2024. "Sustainability Scoring Tool for Real Estate According to German and European Valuation Principles in the Purchasing Process." Journal of Property Investment & Finance. https://doi.org/10.1108/jpif-10-2023-0098.

Sari, Ayutia Nurita. 2022. "Pengelolaan Aset Negara, Tantangan dan Peluang yang Perlu Diketahui." Direktorat Jenderal Kekayaan Negara, June 6, 2022. Accessed at https://www.djkn.kemenkeu.go.id/kanwil-suluttenggomalut/baca-artikel/15088/Pengelolaan-Aset-Negara-Tantangan-dan-Peluang-yang-Perlu-Diketahui.html.

World Resources Institute. 2021. "Statement: Indonesia Submits New 2030 Climate Targets and First Long-Term Climate Strategy." World Resources Institute, July 23, 2021. https://www.wri.org/news/statement-indonesia-submits-new-2030-climate-targets-and-first-long-term-climate-strategy.