Corporate Legal Responsibility for Carbon Emission Disclosure and Environmental Litigation Risk in the Green Economy Era

Abstract

Climate change has transformed corporate environmental responsibility from a voluntary corporate social responsibility practice into an increasingly enforceable legal and governance obligation. This article examines corporate legal responsibility for carbon emission disclosure and the associated environmental litigation risk in Indonesia’s green economy transition. Using normative qualitative legal research, it analyzes statutory and regulatory frameworks, including Law No. 32 of 2009 on Environmental Protection and Management, Law No. 40 of 2007 on Limited Liability Companies, Law No. 16 of 2016 on the Paris Agreement, Law No. 7 of 2021 on Harmonization of Tax Regulations, Presidential Regulation No. 98 of 2021 on Carbon Economic Value, and OJK sustainable finance regulations. The findings reveal that although Indonesia has established a fragmented but expanding legal basis for carbon disclosure and carbon pricing, the absence of uniform mandatory verification standards creates legal uncertainty. Corporations face administrative, civil, and criminal liability, as well as climate-related litigation for non-disclosure, inaccurate disclosure, or greenwashing. Board members may be personally liable under corporate fiduciary duties. The article recommends integrating carbon disclosure into binding corporate reporting standards, strengthening third-party assurance, clarifying directors’ duties, and developing specialized environmental courts or chambers to manage climate litigation. These reforms are essential to align corporate conduct with Indonesia’s net-zero ambitions and reduce systemic litigation risk in the green economy era.