Articles

Factors Influencing Company Value on the Indonesian Stock Exchange: Insights from LQ45 Companies (2019-2023)

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This study examines the variables affecting the firm value (Tobin’s Q) of the Indonesian Stock Exchange’s LQ45 Index between 2019 and 2023. We assess sustainability scores (ESG Score) and some financial performances ratios i.e. return on assets (ROA), return on equity (ROE), and debt to equity ratio, whether each respective of these factors influence the firm value (Tobin’s Q) using quantitative analytical data obtained from the Indonesian Stock Exchange website. 41 of the 45 businesses that meet the study’s requirements are the subject of our analysis, yielding 205 samples in total. Eviews version 11 software was used to do multiple linear regression analysis on the data. All the independent factors (X1, X2, X3, and X4) have statistically significant individual effects on the dependent variable, according to our findings, which are based on the t-test results. The probability values for each of these variables are below 0.05. Furthermore, the F-test indicates that the independent factors taken together significantly affect the dependent variable, with a probability value of 0.000. Based on the determination coefficient test, the adjusted R square value is 63.12% which indicates that the independent variable significantly influences the dependent variable.

Implementing OKR Framework in Solving Safety Culture and Safety Program Issues to Elevate Safety Performance of PT. X-Y Whilst Preserve The ESG Rating of PT.X

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Oil & gas business is still attractive for investors. Today, they look carefully at company’s financial indicators (ROA, ROI, Profitability) and new indicator called “ESG” in making investment decision(Pedersen et al., 2021). PT.X, a developing national energy company with vision becoming world class, currently still rely on fossil energy as the backbone of its business. To finance its operations, PT.X opens up opportunities for investors to invest. To attract investors, PT.X is pursuing better ESG rating each year. In 2023 ESG score of PT. X is 20.7, 1st rank out of 61 O&G companies in the world (Morningstar Sustainalytics version). In competitive energy business post Covid-19 pandemic PT. X aware that they must improve its ESG score continuously. Several strategic goals have been set, one of it is Total Recordable Injury Rate / TRIR, a ratio of number of recordable incidents per total working hours in a year. Target is more challenging each year. TRIR 2024 was set 0.19. This number is much lower than the average TRIR achieved by IOGP members in 2020 that is 0.7. PT. X’s TRIR goal applies to all of its subsidiaries including PT. X-Y located in biggest O&G block East Kalimantan Indonesia. PT. X-Y operates big mature field ultimate with ultimate challenge to maintain oil and gas production from wells that decline naturally. PT. X-Y have planned massive work programs i.e: drilling ± 100 wells/year, ± 4000 wells intervention, and also several offshore platforms construction & installation projects. These activities involve many workers and very high risks. Workers’ safety culture is very important to support the achievement of this goal. Unfortunately, the results of surveys conducted several times by one of reputable university in Indonesia, PT. X-Y safety culture level has decreased from the Proactive to Calculative. To improve PT. X-Y should start by solving organization’s safety cultures’ issues. Also, with limited resources the company’s safety team believed they should focus on improving existing safety program called “TEMAN” rather than introducing new ones. OKR framework is used to manage these difficult objectives because it has superior principles and similarity with PT.X core value AKHLAK, i.e: align and connect team work, focus and commit to priorities, track for accountability. OKR method is successful helping big companies such as Intel, Google, IBM to achieve their stretch goals with minimal side effects / no side effects at all.

Developing a Sustainable Business Model for Early-stage Sustainability and Green Communications Consultancies: A Case Study of Beecomms Indonesia

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This study explores the development of a sustainable and environmentally conscious business model for newly established sustainability and green communications consulting firms, with a particular emphasis on Beecomms Indonesia as a case study. The research aims to examine the enhancement of credibility and long-term viability through sustainable practices, as well as the identification of critical factors for initial operations and efficient approaches. In-depth interviews with internal stakeholders, clients, external experts, competitors, and regulators are employed in the study, which employs qualitative methodologies. The findings underscore the critical importance of a steadfast commitment to sustainability, the utilization of digital technology, the implementation of effective communication strategies, and the necessity of customized services to meet the needs of clients. Furthermore, the research underscores the significance of cultivating ongoing professional development, prioritizing transparency, overcoming budgetary constraints, and establishing robust networks and partnerships. The results provide sensible guidance and actionable recommendations for Beecomms Indonesia and comparable consulting firms to achieve economic success while maintaining sustainability principles, thereby having a beneficial effect on society and the environment.

Implementation of ESG as a Strategy for Business Sustainability in a Public-Listed Tobacco Company in Indonesia

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Environmental, Social, and Governance (ESG) has been introduced to the business communities for the past two decades. It has grown in importance as a framework for measuring a company’s sustainability and as a guide for investment decision-making. In Indonesia, the publicly listed companies at the Indonesia Stock Exchange (IDX) have been required to implement and report ESG practices since 2021 through a regulation issued by the Financial Services Authority (OJK) in 2017. Among those is a tobacco company operating in Indonesia, PT HM Sampoerna Tbk. (Sampoerna/The Company/IDX: HMSP) that has been an affiliate of an international tobacco company, Philip Morris International (PMI), since 2005. The tobacco industry’s ESG implementation is particularly interesting due to the adverse externalities generated by its products, which is stated by WHO as one of the biggest issues for public health. This research focuses on analyzing the company’s ESG initiatives and creating improvement strategies in the context of a company operating in the tobacco industry with the objective of maximizing the role of ESG implementation to ensure business sustainability.

Portfolio Optimization Using Markowitz Model on Sri-Kehati Index

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This thesis investigates the portfolio optimization process using the Markowitz model on the SRI-KEHATI index, an esteemed sustainable investment index. The study aims to explore the potential advantages of incorporating environmental, social, and governance (ESG) factors into portfolio construction. By leveraging historical financial data and reliable ESG metrics, this research develops optimized portfolios that strike a balance between risk and return while adhering to the sustainability criteria of the SRIKEHATI index.

The methodology encompasses the collection of credible ESG data and financial information for the constituents of the SRIKEHATI index. The Markowitz model is subsequently employed to analyze the risk and return characteristics of each asset within the portfolio. Through the application of optimization algorithms, the study seeks to identify the optimal asset allocation that maximizes risk-adjusted returns, taking into account the ESG criteria outlined by the SRI-KEHATI index.

The outcomes of this research provide valuable insights into the effectiveness of portfolio optimization techniques within the realm of sustainable investing. By considering both financial metrics and ESG factors, investors can construct portfolios that align with their sustainability objectives while optimizing risk and return. The findings shed light on the performance of the optimized portfolios and compare them with conventional approaches, thereby demonstrating the potential benefits of integrating ESG considerations into portfolio decision-making.

Additionally, this study examines the practical implications associated with implementing sustainable portfolio strategies based on the SRI-KEHATI index.

Overall, this thesis contributes to the expanding body of knowledge on sustainable investing and portfolio optimization, specifically focusing on the SRI-KEHATI index. It provides valuable insights for investors, asset managers, and policymakers interested in sustainable investment strategies. Furthermore, it offers a framework for incorporating ESG considerations into the portfolio construction process using the Markowitz model, thereby aiding in the development of more robust and sustainable investment portfolios.

How Does ESG Score and Board Structure Affect Financial Performance? Evidence from ESG Sector Leaders IDX Kehati

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The rise of sustainable investing, an investing strategy considering ESG (environmental, social, governance) factor of the company has spread worldwide, including in Indonesia. Recent phenomena of minimum percentage of woman on board in state-owned enterprise policy by Indonesia Ministry of State-Owned Enterprise and the new two ESG themed index which consists of state-owned enterprise has intrigued to assess the relationship between board structure towards financial performance of the companies. One of the index is “ESG Sector Leaders IDX KEHATI“ which  comprises of stocks with an ESG performance assessment above their industrial average value. Using ROA and ROE as the dependent variable and ESG and board structure variables and firm size, asset to equity ratio, and firm age as control variables. It is found that ESG has negative non-significant relationship towards both ROA and ROE. Board independence and board gender diversity has positive significant effect towards both ROA and ROE.