Legal Certainty Analysis of Notarial Deeds Containing ESG (Environmental, Social, and Governance) Clauses in Business Agreements

Abstract

Background: Indonesia’s fragmented Environmental, Social, and Governance (ESG) regulatory framework raises questions regarding the enforceability and legal certainty of ESG clauses incorporated into notarial deeds. Objective: This study analyzes the legal status of ESG clauses under Indonesian contract law and examines the role and limitations of notaries in ensuring their legal certainty. Methods: This study employs normative legal research using statutory, conceptual, analytical, and functional-comparative approaches to the design of sustainability clauses. Primary legal materials include the Indonesian Civil Code, the Notary Office Law, the Company Law, environmental and investment legislation, and sustainable finance regulations; secondary materials comprise more than twenty national and international journal articles. Results: The study finds that an ESG clause is not a new type of contract but rather an element of contractual performance that is valid when it satisfies the requirements of Article 1320 of the Indonesian Civil Code, does not violate mandatory law, morality, or public order, and is sufficiently determinate. Under Article 1338, a voluntary ESG commitment becomes an enforceable contractual obligation once agreed upon by the parties. The authenticity of a notarial deed strengthens evidentiary certainty but cannot cure substantive invalidity. Notaries perform a preventive role by reviewing the parties’ authority, identifying applicable mandatory norms, providing legal counseling related to the deed, formulating measurable performance indicators and verification mechanisms, and specifying the consequences of breach. Conclusion: This study proposes a Layered Legal Certainty Model for ESG Clauses comprising normative, drafting, and evidentiary certainty. A notary is not an ESG auditor but must conduct reasonable legal scrutiny and refer matters requiring technical verification to qualified independent experts.