Integration Of Esg Principles In Indonesia's Positive Legal System Through Financial Report Fraud Prevention Strategies With Regulatory Reform And The Piercing The Corporate Veil Doctrine

Abstract

This research aims to analyze legal strategies to prevent fraud in corporate financial statements, identify normative provisions in corporate law related to audit transparency in the era of Environmental, Social, and Governance (ESG), and examine the implications of ESG implementation for strengthening corporate governance and legal accountability in Indonesia. The study employs a normative juridical method, using statute, conceptual, and case approaches. The findings reveal that preventing fraud in financial reporting is not solely determined by the effectiveness of internal and external audits but also by the integration of ESG principles within the corporate legal system. Provisions under Law Number 40 of 2007 on Limited Liability Companies, Law Number 8 of 1995 on Capital Markets, and Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector affirm the normative obligation of information disclosure and the legal responsibility of corporate organs. The application of ESG principles expands the concept of good corporate governance as both a social and legal control mechanism over corporate conduct. The Supreme Court Decision Number 1262 K/Pdt/1989 reinforces the application of the piercing the corporate veil doctrine to hold corporate executives personally liable for misuse of the corporate entity. Therefore, ESG implementation serves not only as an ethical framework but also as a preventive legal instrument that strengthens transparency, accountability, and justice within corporate governance.