GREENWASHING PRACTICES IN THE SUSTAINABILITY REPORTS OF PUBLIC COMPANIES AND THEIR IMPLICATIONS FROM CAPITAL MARKET LAW PERSPECTIVE

Abstract

The practice of greenwashing in sustainability reports of public companies has become a crucial issue alongside the increasing attention of investors to Environmental, Social, and Governance (ESG) aspects. This study aims to analyze violations of investor rights in greenwashing practices and their legal implications form the perspective of Indonesian capital market law. This research employs a normative legal method with a statutory approach by examining relevant laws and legal literature. The results indicate that sustainability reports can be classified as material information that must be disclosed accurately, clearly, and not misleading, as regulated under Law Number 8 of 1995 concerning Capital Markets. Therefore, greenwashing practices involving inaccurate or exaggerated ESG information constitute a violation of the disclosure and may be categorized as misleading information that harms investors. Law enforcement by Otoritas Jasa Keuangan (OJK) dan Bursa Efek Indonesia (BEI) plays an important role through preventive and repressive mechanisms. However, its effectiveness still faces challenges in addressing increasingly complex greenwashing practices. Compared to jurisdictions in Indonesia, it still requires strengthening. Therefore, improving transparency and supervision is necessary to protect investors and maintain the integrity of the capital market.