ANALYZING POTENTIAL IMPLEMENTATION OF SUSTAINABILITY LINKED LOAN IN PT UNITED TRACTORS TBK

• Main Author: Hafizh Alfath, Muhammad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85943
• Institution: Institut Teknologi Bandung

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.