ASSESSMENT OF ESG IMPLEMENTATION TO IMPROVE BUSINESS SUSTAINABILITY: CASE STUDY OF A PUBLIC LISTED TOBACCO COMPANY IN INDONESIA, PT HM SAMPOERNA TBK.

• Main Author: Muthiah
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/84042
• Institution: Institut Teknologi Bandung

Environmental, Social, and Governance (“ESG”) is a set of standards to measure the sustainability of a company and one of the decision-making tools for investment that has been widely recognized in the past few years. In Indonesia, publicly listed companies must implement sustainability principles in their operations and report them annually through Sustainability Reports. These provisions were mandated through the Financial Services Authority (OJK) regulation in 2017, which started to be implemented for 2021 reports. Looking beyond a mere mandatory requirement, this research aims to analyze the opportunity to leverage Sustainability Initiatives as a part of the strategy to ensure business sustainability. As a study case, the analysis focuses on a publicly listed company in Indonesia in the tobacco industry sector, PT HM Sampoerna Tbk., an affiliate of a leading global tobacco company, Philip Morris International. In the highly regulated tobacco industry, which is prone to controversy, sustainability can be the key to a sustainable business strategy integrated throughout the company’s operations. The analysis is conducted through the company’s sustainability strategy and implementation measurement as well as the identification of relevant challenges to formulate the appropriate strategy to fill the gaps and enhance the company’s business performance. The research utilizes several theories and concepts as analysis tools, such as PESTEL (Political, Economic, Social, Technological, Environmental/Ecological, Legal) and SWOT (Strengths, Weaknesses, Opportunities, and Threats) to conduct internal and external analysis, VRIO (Value, Rarity, Imitability, Organization) to identify internal resources and competitive advantage, Triple Bottom Line theory, McKinsey’s concept of Five Ways that ESG Creates Values, OJK Reporting Guideline in the abovementioned regulation to assess reporting and implementation, and Gap Analysis to fill room for improvement with corresponding strategy as business solutions.