For Indonesia’s fashion micro, small, and medium enterprises (IKM/UMKM), sustainability is increasingly becoming more than an environmental ambition. As global markets introduce evolving expectations around traceability, responsible production, and sustainability disclosure, businesses need to understand not only how to improve their practices, but also how to document and communicate their progress, strengthen their readiness for financing, and connect these efforts with market opportunities.
These challenges formed the focus of the Workshop Tata Kelola Keberlanjutan dan Akses Pendanaan Hijau, held on 12 August 2026 in collaboration with Jakarta Fashion Hub (JFH). The workshop brought together 110 registered participants, both online and offline, from across Indonesia’s fashion sector, including local brands, garment manufacturers, batik businesses, modest fashion enterprises, designers, and tailors.
The workshop brought together perspectives from government, sustainability practitioners, auditors, industry platforms, financial institutions, and multi-stakeholder initiatives to explore how IKM/UMKM can begin navigating the transition toward more sustainable and circular business practices.
Preparing for a Changing Global Market
Opening the workshop, Basrie Kamba, Chair of the Executive Board of Rantai Tekstil Lestari, emphasized that the workshop was intended to provide practical knowledge for fashion IKM/UMKM seeking to understand sustainable production, business resilience, and circular approaches.
Rather than simply following sustainability trends emerging from international markets, Basrie encouraged Indonesian businesses to focus on developing products and collaborations that reflect Indonesia’s own strengths and stories.
For Indonesian fashion businesses, this means strengthening their ability to respond to evolving market expectations while continuing to develop products and narratives rooted in local identity, including helping traditions such as batik remain relevant and reach wider markets.
The importance of strengthening the capacity of micro and small businesses was also highlighted by Bagus Rachman, S.E., M.Ec., Deputy for Medium Enterprises at the Ministry of UMKM of the Republic of Indonesia. He noted the scale of Indonesia’s micro-enterprise sector and emphasized the importance of entrepreneurial capabilities in helping businesses survive, adapt, and grow.
He also highlighted the role of the SAPA UMKM ecosystem, which aims to integrate empowerment services provided by ministries, local governments, and other stakeholders so that UMKM can access support through a more connected system.
Understanding Sustainability Before Meeting Standards
The first session, led by Jessica Hanafi, Founder & Principal of Life Cycle Indonesia, focused on export market requirements and simplified approaches to sustainability reporting.
Jessica emphasized the importance of first understanding what sustainability is intended to protect: human health, ecosystems, and resources.
For the fashion industry, these considerations extend across several areas, including:
- User health and safety
- Resource efficiency
- Textile waste and resource use
- Labour welfare and social aspects
- Integrity and traceability of raw materials and fibres
- Chemical management and responsible production
- Circularity and systems-level approaches
Jessica also highlighted the growing importance of due diligence requirements in international markets. She contrasted voluntary frameworks such as the OECD Due Diligence Guidance with increasingly mandatory regulatory requirements, particularly in the European Union, which can have implications for companies and their supply chains.
For IKM/UMKM, however, the practical message was simpler: sustainability-related activities need to be documented before the information is requested.
Training activities, internal initiatives, policies, employment practices, material use, energy and water consumption, and other sustainability efforts can become part of a company’s supporting documentation. Recording these practices allows businesses to demonstrate their progress rather than having to reconstruct information when a buyer, auditor, or market eventually requires it.
The session concluded with a practical introduction to an Easy Sustainability Reporting platform, showing participants how sustainability information can be recorded gradually according to the scale and capabilities of the business.
The starting point does not need to be complicated: begin by recording, organising, and gradually digitising relevant information.
From Standards to Traceability
Building on the first session, Endra Murprabowo, Senior Auditor at Control Union, focused on how complex sustainability requirements can be translated into practical systems at the business and factory level.
Traceability was described as the ability to track the history of a product and its materials throughout the supply chain. However, traceability goes beyond materials alone. Sustainability assurance can also involve social compliance, environmental practices, chemical management, and the supporting records behind these activities.
The practical importance of traceability was demonstrated through a live Annual Volume Reconciliation exercise. Participants explored how volume data can be checked across supply chain partners and compared with supporting information such as material purchases, production records, invoices, delivery documents, and other transaction records.
Traceability also serves practical business functions beyond verifying sustainability claims. Detailed records can help businesses respond more effectively to quality issues, contamination, recalls, or stock discrepancies by identifying the particular orders, materials, suppliers, or stages of production involved.
For smaller businesses, this does not necessarily mean immediately adopting complex digital systems. It begins with building the habit of keeping consistent and verifiable records.
Creating an Ecosystem for Fashion Businesses
Novy Wang, Marketing Manager at Jakarta Fashion Hub, introduced JFH as a collaborative space initiated by Asia Pacific Rayon (APR) to support fashion businesses at different stages of development.
The facility provides access to resources including coworking space, cutting and sewing facilities, materials and a fabric library, consultation, workshops, events, and other forms of support. JFH also creates opportunities for businesses to connect with relevant partners when they need materials, technical information, facilities, or other resources.
This reflects a broader need within Indonesia’s fashion sector. The transition toward more sustainable practices depends not only on the willingness of individual businesses to change, but also on whether they can access the knowledge, materials, infrastructure, technology, and networks needed to put those ambitions into practice.
Spaces and networks such as JFH can therefore help reduce some of the practical barriers faced by businesses as they develop.
Sustainability and Financing Readiness
In the session on financing, Dyah Zata Dini from Bank Mandiri’s Sustainable Sector Policy team introduced participants to the bank’s approach to sustainable finance.
Bank Mandiri’s sustainability strategy is structured around three main pillars: Sustainable Banking, Sustainable Operation, and Sustainability Beyond Banking. Within Sustainable Banking, the bank has begun integrating ESG considerations into its business processes while developing financial products and services that can support sustainable economic activities.
The discussion also clarified an important distinction. Financing that falls within a bank’s sustainable portfolio does not automatically mean that every business receives a special green financing scheme or preferential financing terms. Bank Mandiri classifies parts of its financing portfolio according to relevant regulatory criteria, while dedicated products such as Green Loans and Sustainability-Linked Loans have their own requirements and may require additional verification.
Financing decisions continue to depend on the fundamentals and risk profile of each prospective borrower. Factors such as business track record, financial capacity, repayment ability, compliance, collateral where relevant, and broader industry conditions remain part of the assessment.
ESG and sustainability practices can become part of this broader picture, particularly as financial institutions increasingly incorporate ESG considerations into their assessment processes. However, sustainability credentials alone do not automatically determine access to financing or lower interest rates.
For IKM/UMKM, the takeaway is that sustainability readiness and business readiness need to develop together. Improving sustainability governance can strengthen how a business understands and documents its operations, but this needs to be accompanied by sound financial and business fundamentals.
From Individual Challenges to Collective Solutions
The workshop concluded with an introduction to the Multi-Stakeholder Platform (MSP) under the Circular Fashion Partnership (CFP) Indonesia, presented by Danu Setia Nugraha from RTL Secretariat.
The initiative forms part of RTL’s collaboration with Global Fashion Agenda (GFA) through the Circular Fashion Partnership Indonesia. The MSP is envisioned as a space that connects needs with opportunities across the textile and fashion ecosystem.
Rather than designing the platform only from an organisational perspective, the session invited participants to share the challenges they encounter in their businesses and identify where stronger connections across the ecosystem may help.
One participant highlighted the challenge of managing production waste. While the business had continued to store its textile leftovers rather than dispose of them, increasing production also meant that the amount of waste continued to accumulate. Finding reliable partners that could collect and process the materials remained difficult.
The discussion immediately demonstrated the potential value of stronger connections: another participant responded that their business works with textile offcuts and could explore receiving and processing some of the material.
Building a More Connected Fashion Ecosystem
The workshop demonstrated that the transition toward sustainable fashion requires more than improvements within individual businesses.
For SMEs, sustainability increasingly intersects with market requirements, documentation, traceability, production systems, access to finance, infrastructure, materials, technology, and market connections. These challenges are interconnected, and addressing one without considering the others can limit the impact of the overall transition.
For Indonesia’s fashion sector, the next challenge is to turn these connections into practical collaboration: strengthening business capabilities, improving documentation and traceability, opening appropriate market opportunities, supporting financing readiness, and developing pathways that allow materials and textile waste to remain in productive use.
The transition to a more circular and sustainable fashion industry cannot happen in isolation.
It happens through collaboration.
RTL remains committed to facilitating these connections and working with stakeholders across the ecosystem toward a more collaborative and circular textile and fashion industry in Indonesia.
About the Partners
Rantai Tekstil Lestari (RTL) is a not-for-profit multi-stakeholder alliance dedicated to advancing sustainability in Indonesia’s textile, apparel, and fashion industry. Established in 2021 by pioneering manufacturers across the textile value chain, RTL brings together industry actors, brands, policymakers, academia, civil society, and communities to support a more responsible, inclusive, and circular textile ecosystem in Indonesia.
Through strategic partnerships, collaborative initiatives, knowledge exchange, and capacity-building activities, RTL works to promote responsible practices, strengthen textile circularity, and contribute to long-term prosperity for people, industry, and the environment.
As the National Lead of the Circular Fashion Partnership (CFP) Indonesia, RTL plays a key role in connecting local stakeholders, facilitating ecosystem engagement, and supporting policy dialogue to help create enabling conditions for circular textile solutions in Indonesia.
Jakarta Fashion Hub (JFH) is a collaborative space initiated by Asia Pacific Rayon (APR) for brands, fashion designers, and fashion enthusiasts who are passionate about Indonesian fashion.
Jakarta Fashion Hub provides facilities including coworking spaces, a mini photo studio, ready-to-buy fabrics, cutting and sewing facilities, and workshop areas. These facilities are designed to help fashion actors connect, collaborate, create, and contribute to the growth of a more sustainable fashion industry in Indonesia.
