EVALUATING THE IMPACT OF ESG INTEGRATION ON THE FINANCIAL PERFORMANCE OF PERTAMINA GEOTHERMAL ENERGY: A SUSTAINABLE GROWTH PERSPECTIVE

• Main Author: Ravida Ayu Padantya, Tasya
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/83981
• Institution: Institut Teknologi Bandung

The requirement for standard ESG reporting has made the integration of Environmental, Social, and Governance (ESG) principles a core component of the strategy of energy companies around the globe. With an emphasis on revenue, profitability, and return on investment, this thesis assesses the financial performance of Pertamina Geothermal Energy Tbk (PGEO) in relation to ESG principles. In addition, the research evaluates PGEO's carbon credit-related financial estimates based on author conjecture and investigates a number of the company's ESG activities, such as community involvement, sustainability policies, and governance enhancements. The results show that PGEO's financial performance has benefited from its ESG integration. But despite its impressive ESG track record and aggressive expansion goals, the market price and underlying value differ significantly. PGEO's IPO price was Rp1,280 as of May 2024. Valuation evaluations place its intrinsic worth at Rp1,221 under the Green Bond scenario and Rp1,069 utilizing the 10-year bond rate. This implies that the company's underlying financial worth may be less than its present market valuation. The results of this thesis promise to provide light on a future course in an era where the energy industry is positioned at a crucial crossroads, combining the demand for dependable energy supplies with the need of reducing environmental consequences. The gap between market pricing and fundamental valuations underscores the importance of thorough evaluation and smart investment decisions that prioritize long-term sustainability and financial health.