IDENTIFYING ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) IMPLEMENTATION TOWARDS GROWTH AND SUSTAINABILITY: A CASE STUDY AT ASSISTED MICRO, SMALL, AND MEDIUM ENTERPRISE (MSME) BY BANK INDONESIA

• Main Author: Jati Putri, Aisyah
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/74718
• Institution: Institut Teknologi Bandung

With the requirement of Environmental, Social, Governance (ESG) implementation within every organization as well as enterprises become necessary since already stated in the provision POJK No. 51/POJK.03/2017. Micro, Small and Medium Enterprise (MSME) have significant portion and contribution to Indonesia Economy which already grew in 2019 equal to 65.571.134 units or total share of 99,99% as well as reached 96,92% of employment. As one of the financial institutions in Indonesia which also has important role in determining the direction of Indonesia Economy, Bank Indonesia currently already assist 1.143 MSMEs within several sectors. Previously known that approximately 59,1% of total assisted MSMEs are dominantly still not adapting the environmentally friendly practice into their business. Whereas Environmental is one of the elements on ESG itself. Through the ESG implementation particularly for enterprises, it offers added-value for the business itself. Not only added-value, ESG implementation could also lead to the growth and sustainability which also become important for the enterprises. Through implementing the ESG elements, MSMEs could grow their business rapidly above average within other business in the same sector or even upscale their business. Not only from the growth, the business survival also can be obtained within non-ideal circumstances or emergence of potential competitors. Considering the conditions above, the research aims to provide portrait/mapping the condition of assisted MSMEs based on ESG elements. Through the literature review, author enrich the rubrication measurement tool of assisted MSMEs with the ESG standard that already used internationally i.e. Sustainable Accounting Standards Board (SASB) and Climate Disclosure Standards Board (CDSB). The Environmental element will consist of air, water, energy consumption, waste management, raw material, ecological impacts. While Social element will cover for employeer, community and consumer. Last is for Governance element will involves the financial compliance, product compliance and corporate governance. The research respondents dominantly come from Processing Industry sector for about 90,3% from the total respondents. According to the result, all of the ESG elements have significant impact on Growth and Sustainability. The result also shown that there is one sub-indicator which comes from Social element regarding pension insurance which has high influence to the assisted MSMEs business but most of the respondent haven’t concerned about it yet. There are other items with high influence to the business but still need to be improved which are leave for employee, health facilities guarantees, diversity and stakeholder support. Other than that, since the dominant of respondent are coming from Processing Industry, the subindicator regarding guarantee for consumer health and safety need to be considered. Through the research known that there are still 7,53% of total MSMEs Entrepreneurs which haven’t considered about this. In other words, the result of this research could be the recommendations both for Bank Indonesia and assisted MSMEs which requires special concern for ESG elements if the enterprises want to achieve growing and sustainable business ahead.