PT KAI Group ESG Roadmap 2030 Deep Dive: Achieving Net Zero Emissions 2060 & Decarbonizing Indonesian Railways

Introduction: Transformation Toward Corporate Sustainability

The forward-looking Environmental, Social, and Governance (ESG) work plan of PT Kereta Api Indonesia (Persero) ("KAI") marks a structural shift from mere regulatory compliance to a core instrument of business resilience and long-term value creation. This transformation was institutionalized through revisions to the Company's Vision and Mission in 2025 (Board of Directors Instruction No. INS.U/KL.401/II/1/KA-2025), which established the development of ESG-based resources and technology alongside a sustainable intermodal transportation ecosystem as the corporate primary mandate. KAI's forward-looking planning framework is orchestrated into four interlocking time horizons: short-term operational execution in the 2026–2027 RKAP, fulfillment of 17 target indicators in the 2024–2028 ESG Roadmap, achievement of the 2025–2029 Corporate Long-Term Plan (RJPP) targets and the 2030 Decarbonization Roadmap, up to the long-term transition scenario toward Net Zero Emission (NZE) 2060.

In the environmental dimension (Environmental), KAI's primary focus leading up to 2030 is reducing Scope 1 and Scope 2 Greenhouse Gas (GHG) emissions by 25.76% (166,873 tons CO₂e) against the 2030 Business as Usual (BAU) projection of 647,785 tons CO₂e (with a 2024 baseline of 583,402 tons CO₂e). Approximately four-fifths (80.11% or 133,676 tons CO₂e) of the 2030 decarbonization action plan hinges on the successful transition of locomotive fuel from B35/B40 Biosolar toward Biodiesel B50, for which trials began being prepared alongside the Ministry of Energy and Mineral Resources (ESDM) ahead of mandatory implementation in 2026. Meanwhile, across the social (Social) and governance (Governance) dimensions, forward plans focus on ratifying Contractor Safety Management System (CSMS) procedures, expanding ISO 14001 and ISO 45001 certifications, following up on Human Rights Due Diligence (HRDD) following KAI's accession to the United Nations Global Compact (UNGC), integrating continuous emission monitoring systems (Continuous Emission Monitoring Systems / CEMS) with the Ministry of Environment's SISPEK, and attaining an ESG Rating score target of 55 by 2030 after breaking into the Top Quintile (top 20%) of S&P Global assessments at the end of December 2025.

A critical evaluation of the 2025 baseline data reveals three strategic challenges that KAI must mitigate when executing its future ESG plans. First, the sharp 22.18% drop in Scope 1 emissions in 2025 (from 514,745.39 tons CO₂e to 400,575.88 tons CO₂e) was largely triggered by an operational accounting boundary shift resulting from a cooperation agreement addendum with PT Bukit Asam Tbk (PT BA) effective November 2024, which transferred responsibility for coal freight biosolar fuel procurement from KAI to PT BA, whereas Scope 2 emissions (PLN grid electricity) actually rose by 6.21% due to service expansion. Second, a 350% surge in operational disruptions caused by hydrometeorological disasters (from 88 incidents in 2024 to 396 incidents in 2025) demands accelerated physical infrastructure adaptation expenditures. Third, freight haulage reliance on coal commodities introduces medium-to-long-term financial transition risks should fossil fuel containment policies tighten, making the development of low-carbon logistics services (ISO 14067-certified Green Freight) and urban transit electrification urgent diversification priorities.

1. Strategic Architecture and ESG Planning Horizons of KAI (2026–2060)

The integration of ESG into KAI's business processes is aligned vertically across the Corporate Long-Term Plan (RJPP) 2025–2029, Information Technology Strategic Plan (RSTI) 2025–2029, ESG Roadmap 2024–2028, Decarbonization Roadmap 2025–2060, down to management contracts and annual Board of Directors Key Performance Indicators (KPIs) in the RKAP. Since the organizational restructuring via Board of Directors Regulation No. PER.DZ/KO.104/XI/6/KA-2025 (November 5, 2025) and the issuance of the ESG Implementation Guidelines via Board of Directors Regulation No. PER.DZ/KL.104/XI/1/KA-2025 (November 18, 2025), sustainability governance is no longer positioned merely as a corporate social responsibility function, but sits directly under the Directorate of Strategic Planning and Risk Management (DS) via the Subdivision of Sustainability, operating in synergy with the Board of Directors Sustainability Committee and the Board of Commissioners Risk Management Monitoring Committee (KPMR).

The progression of phases outlined above demonstrates that the period from 2026 through 2030 represents the most critical window for KAI. During this phase, the Company must synchronize operational capacity expansion (marking the second year of RJPP 2025–2029) with the tightening of national carbon governance instruments under Presidential Regulation No. 110 of 2025 concerning the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emission Control.

2. Environmental Plan Analysis: Decarbonization, Energy Transition, and Circularity

As a rail-based mass transit mode, railways possess intrinsic carbon efficiency advantages over road transport: rail passenger transport generates approximately 41 grams of CO₂ per passenger-km (a single trainset can replace around 160 automobiles or 560 motorcycles that collectively emit approximately 192 grams of CO₂ per passenger-km), while a single freight train with a 3,050-ton capacity generates 4,563 kg CO₂e per ton-km compared to 49,462 kg CO₂e per ton-km from 144 trailer trucks. In absolute terms, however, KAI's operations remain dominated by diesel fuel combustion across long-distance passenger and freight locomotives (Scope 1) and PLN grid electricity consumption that is still overwhelmingly supplied by coal-fired power plants (Scope 2).

Critical Evaluation of 2025 Emission Data Dynamics and Implementation Challenges

In evaluating the readiness of forward decarbonisation plans, management and stakeholders need to objectively examine the dynamics of the 2025 GHG inventory recording:

Three crucial findings emerge from the energy and emission performance data above that influence the future design of KAI's ESG plan:

1. Impact of the PT Bukit Asam Fuel Procurement Boundary Shift on Scope 1 and 3 Emissions: The 50.54 million litre decrease in biodiesel consumption in 2025 occurred primarily in Divre III Palembang (falling from 65.33 million litres to 33.51 million litres) and Divre IV Tanjung Karang (falling from 47.42 million litres to 5.85 million litres). This decline stemmed from an addendum to the cooperation agreement between PT KAI and PT BA effective November 2024, under which biodiesel procurement was transferred to PT BA. While this reduced KAI's Scope 1 emissions, combustion continues along the very same rail tracks (with coal freight volume increasing 3.37% to 57.52 million tonnes). Consequently, starting in 2026, KAI is expanding its Scope 3 reporting so that decarbonisation evaluations remain fully accountable.
2. Solar PV Quota Constraints and the Upward Trend in Scope 2 Emissions: Grid electricity emissions from PLN continued to rise (+6.21% in 2025, reaching 88,754 tonnes CO₂e) in tandem with KRL and LRT service expansion. On the other hand, solar PV deployment is constrained by energy quotas established by the state electric utility. Currently, solar PV electricity (2.03 GWh) covers only 2.01% of KAI's electricity demand. Implementation of the joint MoU with PT PLN must focus on achieving a breakthrough regarding solar PV quotas.
3. Effluent Data Recording Gaps and Completion of Water Stations: KAI is developing a Continuous Emission Monitoring Systems (CEMS) dashboard integrated with the Ministry of Environment and Forestry's SISPEK system for recording non-GHG emissions (NOx, SOx) and wastewater effluents, while clearing a pending backlog across 10 Water Station locations.

3. Evaluation of Achievements Against ESG Roadmap Targets 2024–2028

To monitor the execution of its sustainability strategy in a measurable manner, KAI has established 17 key indicators and targets within the 2024–2028 ESG Roadmap:

The mapping above illustrates that policy foundations, governance structures, biofuel adoption, and human capital indicators have surpassed targets. Meanwhile, accelerating physical certifications under ISO 14001, ISO 45001, and Green Building across Daop, Divre, and Balai Yasa facilities represents an absolute priority for the 2026–2028 period.

4. Analysis of the Social Plan: OHS, Supply Chain, Inclusivity, and TJSL Reform

KAI's social strategy is anchored on uncompromising safety, human capital transformation, and meaningful social value creation:

• OHS and CSMS Implementation: KAI recorded 61,919,200 safe work hours and received the Level 4 - Gold WISCA 2025 award. However, 1 fatality involving an outsourced worker occurred. With 20,391 outsourced personnel and 287 suppliers (contract value of Rp13.57 trillion), mandatory formalization of Contractor Safety Management System (CSMS) procedures and supplier risk categorization stand as top priorities for 2026.
• Level Crossing Safety Challenges: The network comprises 3,742 level crossings (44.33% unguarded). Fatalities rose to 110 individuals in 2025. KAI is mitigating this through annual coordination evaluations with road owners (Ministerial Regulation Permenhub 94/2018), the closure of 316 illegal crossings, and safety outreach across 762 locations.
• Human Capital Transformation & Gender Diversity (DEI): Average training hours surged to 151 hours/employee/year (development expenditure climbed 51.76% to Rp68.27 billion), propelling the Human Capital ROI to 1.95. The female talent ratio at BOD-1 reached 18.18% (exceeding the Ministry of BUMN target of 12.50%). Recruitment of persons with disabilities accelerated with 31 new hires in 2025.
• Inclusive Service Innovation & TJSL: Deployment of the Female Seat Map feature on Access by KAI, AI cameras blacklisting harassment perpetrators across the KRL network, and the operation of the PSO-subsidized Rp3,000 Kereta Petani dan Pedagang (Farmers and Traders Train) on Commuter Line Merak. Impact assessments using Social Return on Investment (SROI) demonstrated strong ratios: MiKA Creative Space (3.53x), Waste Station (3.01x), and Fostered Village Branding (2.10x).
• Restructuring of Non-Performing PUMK Financing: The MSME foster-partner loan portfolio (PUMK) of Rp12.82 billion recorded 62% in non-performing/loss collectibility status (Rp7.95 billion across 345 partners). The rehabilitation roadmap comprises intensive collection, rescheduling/reconditioning restructuring, proposed write-offs for deceased partners, and referral scheme harmonization with BRI.

5. Analysis of Sustainability Governance: New Structure, Cybersecurity, and Integrity

KAI's governance is reinforced across five institutional pillars:

1. Shareholding Restructuring (Danantara): The transfer of 99% shares to PT Danantara Asset Management (Persero) and 1% Series A Dwiwarna Share to the Republic of Indonesia via BP BUMN strengthens integrated oversight and corruption prevention.
2. Operationalization of the Sustainability Committee & Climate Remuneration: Quarterly reporting from Department Heads to the Subdivision of Sustainability. Annual Board of Directors remuneration is directly tied to GHG emission reduction KPIs (3% annual target) and ESG Rating improvements (5% YoY target).
3. Global Partnerships: Signing of an MoU with Deutsche Bahn (May 2025) and Active Participant status in the United Nations Global Compact (UNGC) since October 2025, accompanied by the adoption of IFRS S1 and S2 disclosure standards.
4. Anti-Corruption Controls (ISO 37001:2016): The 2nd surveillance audit of the ISO 37001 Anti-Bribery Management System (SMAP) resulted in 0 major findings and 0 proven corruption cases. Anti-corruption training reached 100% of the Board of Directors and Board of Commissioners, with targeted expansion to all operational regional personnel.
5. Cybersecurity & Data Privacy (ISO 27001): Serving 27.29 million Access by KAI users and 11.30 million Face Recognition Boarding Gate users, KAI designated a Data Protection Officer (DPO), operates an IT SOC & CSIRT integrated with BSSN, enforces automated facial biometric data purging after 1 year, achieved a COBIT 2019 IT maturity score of 3.79/5, and recorded zero data breach incidents.

6. Brief Review of Financial Aspects in the ESG Context: Climate Risks and Green Finance

KAI recorded a net profit of Rp2.28 trillion in 2025 and maintained its top idAAA credit rating from PEFINDO. Within the sustainable finance framework (POJK 51/2017 & IFRS S2):

• Quantification of Physical Climate Risks: Hydrometeorological disruptions in Daop 4 Semarang generated passenger-related costs of Rp7.07 billion and freight revenue losses from 266,320 tonnes valued at Rp24.32 billion (total loss of Rp31.39 billion). KAI allocated Rp2.78 billion for track mitigation along the Gubug–Karangjati corridor, delivering a benefit-to-cost ratio of 11.28x, and planted 1.67 million vetiver grass clusters across 166,319 m² of landslide-prone slopes.
• Energy Transition Risks: Coal commodities account for 82.68% (57.52 million tonnes) of KAI's freight haulage. Internal stress testing underscores the imperative for rapid diversification into ISO 14067-certified Green Freight and non-mining container logistics.
• Sustainability Expenditure & Green Opportunities: Realized solar PV investment surged 739% to Rp7.78 billion and environmental management expenditures rose 57% to Rp11.52 billion. Green revenue from LRT Jabodebek increased 35.49% to Rp339.14 billion (projected at Rp372.51 billion in 2026), bolstered by rolling stock investment plans of Rp924.62 billion and a State Equity Participation (PMN) capital injection of Rp3.8 trillion for commuter rail (KRL).

7. Synthesis of Recommendations and Forward Execution Priorities (2026–2030)

1. Safeguarding Technical Readiness for Biodiesel B50 & Scope 3 Transparency: Ensuring locomotive engine reliability during B50 trials and clarifying fuel emissions disclosure for coal freight logistics partners (Scope 3).
2. Overcoming Solar PV Quota Limits Through PLN Synergy: Optimizing the joint MoU with PT PLN to expedite rooftop solar grid connection approvals and achieve the 20% electricity savings target by 2030.
3. Accelerating Physical ISO 14001 and ISO 45001 Certifications & CSMS Enforcement: Expanding certifications across Daop/Divre operational units and enforcing mandatory CSMS implementation for all contractors to achieve zero fatalities.
4. Commercializing ISO 14067-Certified Green Freight: Launching low-carbon certified freight logistics services as a strategic hedge against the long-term structural decline risk in coal haulage.
5. Finalizing the 2027 Climate Financial Methodology & PUMK Rehabilitation: Presenting comprehensive climate risk financial quantification in 2027 reporting and restructuring non-performing PUMK receivables in partnership with BP BUMN and BRI.