Sustainability based business contract reform for corporate environmental protection
Keywords:
Sustainable contract, Corporate liability, Environmental protectionAbstract
The increase of high-risk industrial activities in Indonesia presents serious challenges for environmental protection. Pollution cases such as radioactive exposure in several areas demonstrate the weakness of contractual arrangements related to risk mitigation, waste management, and safety supervision. This situation underscores the need for business contract reform aligned with sustainability principles and environmental protection. This study aims to analyze the urgency of sustainability-based business contract reform and to formulate a contractual regulatory model capable of strengthening corporate responsibility in safeguarding the environment. The research employs a normative juridical method through the analysis of legislation, principles of contract law, and relevant academic articles. The findings show that current business contracts generally lack adequate sustainability clauses, such as mandatory environmental audits, operational safety standards, mechanisms for handling hazardous waste, and strict sanctions for violations. These gaps increase corporate vulnerability to environmental negligence and weaken accountability in risk management. The study emphasizes that business contracts can serve as an effective legal instrument to prevent pollution when designed with a sustainability orientation, including the integration of environmental performance clauses, risk allocation, and monitoring obligations. Sustainability-based contract reform carries important implications for enhancing corporate compliance and reducing environmental pollution risks. Moreover, this approach may strengthen Indonesia’s business legal framework in alignment with global ESG standards.
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