ANALYZING POTENTIAL IMPLEMENTATION OF SUSTAINABILITY LINKED LOAN IN PT UNITED TRACTORS TBK
Since the signing of the Paris Agreement in 2015, climate change has emerged as a critical global issue, compelling companies to embrace sustainable practices. PT United Tractors Tbk (UT), which has a significant reliance on coal, faces substantial challenges due to the declining coal market a...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/85943 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Since the signing of the Paris Agreement in 2015, climate change has emerged as a
critical global issue, compelling companies to embrace sustainable practices. PT
United Tractors Tbk (UT), which has a significant reliance on coal, faces substantial
challenges due to the declining coal market and the growing focus on
Environmental, Social, and Governance (ESG) principles. This research
investigates UT's strategic transition towards diversification into the minerals and
renewable energy sectors, and evaluates the potential of Sustainability Linked Loan
(SLL) in facilitating this transition. The study aims to assess UT's preparedness for
implementing SLL by analyzing its business strategy, ESG initiatives, and financial
performance. A qualitative approach is employed, involving semi-structured
interviews with UT management and the analysis of secondary data such as UT's
annual and sustainability reports, along with other publicly available data
The findings indicate that UT is dedicated to attaining a 50-50 revenue distribution
between coal and non-coal businesses by 2030. SLL present a feasible funding
option, offering financial flexibility and incentivizing ESG improvements through
interest rate reductions. The study concludes that UT's strong commitment to
sustainability and proactive management position it well to secure SLL, thereby
enhancing its capability to balance its portfolio and achieve long-term
sustainability. Recommendations include enhancing ESG measurement systems,
securing SLL agreements, and continuously monitoring ESG achievements to
maximize benefits. This research contributes to the understanding of ESG
application in the transition from coal dependency, illustrating SLL as a strategic
financial instrument to enhance corporate sustainability and providing practical
insights into implementing SLL to support sustainable business practices.
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