Why is SIA as a Mandatory for Companies?

Social Impact Assessment (SIA) has become one of the mandatory documents in the preparation of land planning documents or the development project. It is supported by the regulation of The Ministry of Environment and Forestry number 5 of 2012 which describes the requirements for screening as well as environmental and social impact assessment (ESIA) in the form of an AMDAL (Analysis Regarding Environmental Impact) or UKL-UPL (Environmental Management Efforts-Environmental Monitoring Efforts) for environmental management and monitoring efforts, SPPL (Environmental Management Statement Letter). It is also regulated by the World Bank or World Bank ESS1 Assessment and Management of Environmental and Social Risks and Impacts.

A good company, not only just looking for profit but also prioritizing the communities that will be affected by the development. The Social Impact Assessment (SIA) is a mandatory stage in the preparation of company documents because carrying out an impact analysis that is likely to occur can minimize risks. Companies can identify actions first before proceeding with development.

It is supported by World Bank Standards which state that Environmental and Social Impact Assessment (ESIA) is the main tool for identifying and assessing risks and beneficial to the investment planning stage and for building risk mitigation measures into design and implementation. Based on the regulation of the government Republic of Indonesia number 2 of 2022 on job creation law state that there are regulations governing the application of risk-based business licensing, Therefore, the use of SIA as an instrument to determine social management objectives is to be achieved. SIA is conducted for companies to estimate or measure social impacts, anticipate risks, sustainability, and equity.

Social Impact Assessment Process (Wolf, 1983):

The fact is that national companies still ignore this stage. Mostly, the companies that follow this stage are foreign companies and companies that want to expand their targets abroad, especially in palm oil and timber products. Because of this product, SIA is a mandatory stage in the RSPO and FSC. Based on the regulation of the government Republic of Indonesia on job creation law in chapter III article 7 of 2022 that there are 3 business scale risk ratings in business activities, namely low, medium, and high. Therefore, this SIA stage should be a mandatory aspect for all business scale risk ratings. By considering the social conditions that exist in the community, it will be of added value to the company in carrying out its projects, such as getting ease of operation because the community has confidence with the company.


Source :

Wolf CP. 1983. Social Impact Assessment: The State of the Art. 391-401. Downloadable from: https://link.springer.com/chapter/10.1007/978-94-009-6795-3_21

[KLHK] Ministry of Environment & Forestry. 2021. Environmental and Social Management Framework (ESMF). Can downloaded from : https://www.menlhk.go.id/site/single_post/4407/environmental-and-social-management-framework-esmf-english-version

[PP] Rules Government Republic of Indonesia. 2022. Create work . Can downloaded from : https://peraturan.bpk.go.id/Home/Details/234926/perpu-no-2-tahun-2022

World Bank. 2018. ESS1 Assessment and Management of Environmental and Social Risks and Impacts. Can downloaded from :


World Bank. 2018. Responsible Agriculture Investment (RAI): Knowledge into Action Notes. Can be downloaded from: