Page 143 - SUSTAINABILITY ISSUES & COVID-19

& Rivera, 2017). Proponents of these positions claim that CSOs can play a significant role for modern companies by
incorporating sustainability activities, a firm-wide policy, and governance practices within the enterprise and the
executive suite (Peters & Romi, 2015).

Such sustainability specialist officer can be found in every level of organization structure (Kanashiro & Rivera, 2017).
Moreover, some of researchers called this position as Sustainability Officer or SO (Ghani, Sharma, & Stagliano, 2013;
Ivada & Fauzi, 2020). SO is perceived to be part of sustainability-oriented corporate governance mechanism (Peters and
Romi, 2015) and a component of sustainability governance structure (Eapen, 2017). SO is a person or a team whom
authority is to manage the sustainability practice throughout the organization (Eapen, 2017; Miller & Serafeim, 2014).
Their roles, which are to conduct sustainability-oriented strategies are varied (Ghani et al., 2013) depend on their level
in the corporate hierarchy (Kanashiro & Rivera, 2017) and the firm’s sustainability stages (Miller and Serafeim, 2014).
While the advantages of employing a SO have not always been instantly noticeable, we can see a substantial change
over the next two to four years, which reinforces the idea that investors will become more interested in firms that have
sustainability in their strategy (Cavazos-Garza & Krueger, 2014).

Sustainability officer is not only found in companies in developed countries, but also in emerging economy like
Indonesia. Some of the Indonesian companies which employ SO in their governance structure are state-owned
enterprise which has a great contribution to Indonesian economy.

The purpose of the Indonesia State-owned Enterprise (ISOE)based on Law number 19 the year 2003 is to generate
profit economically and, at the same time providing social welfare. The ISOE’s total asset of in 2014 was 4,591,535,256
million Rupiahs and rose considerably to 6,468,899,057 million Rupiahs in 2016 (Badan Pusat Statistik, 2017) which
were equivalent to 56.9% of Indonesia’s GDP (Kim, 2018). In 2017 public ISOEs had 1,839 trillion Rupiahs market value
of outstanding shares in the Indonesian Stock Exchange. That amount was equal to approximately 26% of the total
market capitalization for the year 2017. In the first quarter of 2017, ISOEs provided 31.451,4 million Rupiahs of their
profit to income realization for the Indonesian state budget of income and expenditure 2017 or Anggaran Pendapatan
dan Belanja Negara (APBN). This amount is equal to around 4.4% of total income realization in the first quarter of 2017
APBN. ISOEs also become important actors in the government infrastructure and development strategy. In 2016, to
fasten 245 national strategic projects, ISOEs took part in around 30% of the project financing through investment
schemes (OECD, 2018).

However, ISOEs face many challenges in the form of social and environmental problems. Actions to overcome such
problems have been made to emphasize the importance of the environmental performance of ISOE. One of them
is by setting up a policy called industri hijau or green industry in 2012. The green industry is a policy to enhance all
companies operate in Indonesia to apply sustainability in their production process so that efficiency and effectivity
can be achieved (www.kemenperin.go.id). However, the sustainability related issues remain to occur in the ISOE. PT.
Semen Indonesia have to deal with social conflict with the people living in the area surrounding the cement mine. The
mining operation also causing an environmental damage (Sulmaihati, 2019). PTPN IV have to face social conflict and
environmental problem. The company was sued by some farmers due to a land dispute (detiknews, 2018). In 2019,
there was a problem concerning environmental pollution due to insufficient waste management (Kurniawan, 2019).
Pertamina encounters an oil spill problem due to leakage offshore oil drilling (elsam, 2019). Bernaulus Saragih, an
environmental economics expert stated that it is caused by weak supervision (Gora, 2018).

Another effort to enhance social performance is called Program Kemitraan dan Bina Lingkungan (PKBL). The ISOE has
an obligation to conduct PKBL or Partnerships and Community Development Program based on the ISOE ministerial
decree (Peraturan Menteri BUMN Nomor: PER-07/MBU/05/2015, 2015) as well as to conduct social activities such
as providing assistance for the natural disasters’ victims; carrying out educational project in the form of training,
school infrastructure; enhancing health improvement; building religious facilities, conducting nature conservation
(environmental) and poverty alleviation based on the company law and ISOE regulation (Salinan Peraturan Menteri
BUMN Republik Indonesia Nomor Per-02/MBU/7/2017, n.d.; Undang-undang RI Nomor 32 Tahun 2009, 2009). However,
the implementations of such regulations face some challenges. The Indonesian Audit Board (IAB) indicates the state

142 International Conference on Sustainability
(5 Sustainability Practitioner Conference)
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