Page 144 - SUSTAINABILITY ISSUES & COVID-19

losses from the SOEs’ social and environmental programs namely Program Bina Lingkungan (PBL) Badan Usaha Milik
Negara Peduli. Further, in a project called BUMN Membangun Desa, the goals were mostly not achieved since 2012.
Then the project switched to another programs, but still did not find the objectives (Tempo.co, 2015).

In achieving sustainability performance, a company should necessarily have leadership for sustainability who possess
extraordinary competencies (Metcalf & Benn, 2013). This leader is an emerging trend in the corporations worldwide
nowadays, namely Chief Sustainability Officer or CSO (Strand, 2013; Miller and Serafeim, 2014; Peters et al., 2018) or
also found to have different names but still related to sustainability (Miller and Serafeim, 2014) such as sustainability
officer (SO). The presence of the SO is also emerge in the ISOE. SO appointment is important as it can impact on the
firm’s sustainability performance (Homroy & Slechten, 2017; Peters & Romi, 2015).

Previous studies on the association of SO and firm sustainability performance provide mix result. Homroy & Slechten
(2017) report a positive association between the presences of specific environmental experience board member and
environmental performance. Similarly, Peters & Romi (2015) conclude that the presence of environmental committee in
the Board and the CSO has positive relation with sustainability performance in the form of disclosure of GHG emission.
Contrarily, Rodrigue, Magnan, & Cho (2013) state that there is no association between environmental committees in the
Board and companies’ environmental performance. Likewise, Kanashiro and Rivera (2017) find that the presence of a
CSO has negative association with environmental performance.

To measure sustainability performance of Indonesian’s companies there is a sustainability reporting index (SRI)
framework namely SRI Kehati which is the first and the only sustainability index in Indonesia. This sustainability
reporting index framework is essential for investors who want to invest in companies with high social responsibility
performances (Firmialy & Nainggolan, 2019).

Based on the problems, phenomenon and mix result of previous studies, the research question is whether the ISOE
which employ the Sustainability Officer is more likely to be included in SRI Kehati index? So, the objective of the research
is to analyze the likelihood of the SOE which employ the Sustainability Officer to be included in SRI Kehati index.

2. LITERATURE REVIEW

Corporate responsibility is used interchangeably with corporate sustainability and Corporate Social Responsibility
which is a commitment of a company to operate in an economically, socially and environmentally sustainable manner
(Klettner, Clarke, & Boersma, 2014). Currently, companies are changing and transforming their traditional role in society
into a proactive role in which their efforts have meaningful social and environmental consequences (Diez-Cañamero,
Bishara, Otegi-Olaso, Minguez, & Fernández, 2020). One of the driver is increasing number of private investors who are
looking for opportunities and investment reassurance for their funds to be invested in companies that show superior
environmental and social performance (Mills, Cocklin, Fayers, & Holmes, 2001). To ensure that a company is responsible
socially, it is important to show the principles of corporate social responsibility in measurable variables which (Olmedo,
Torres, & Izquierdo, 2010), which such information can be gain through Socially Responsible Investment Index.

Socially Responsible Investment (SRI), is an ethical investment containing financial and social criteria so that the
investor can select companies that fit their values and beliefs (Das and Rao 2013). For many investors SRI involves the
selection of holdings of company shares from a subset of publicly listed companies that are seen as meeting ‘‘socially
responsible’’ criteria (Mill, 2006). Adam and Shavit (2008): (Olmedo et al., 2010) if a firm is publicly ranked according to
SRI index parameters, then investment made by the firm to improve its performance in the area of social responsibility
will generate a pay off in terms of an improvement in the firm’s public image and reputation.

The interest of investors in Socially Responsible Investment (SRI) has grown substantially over last decade (Aggarwal,
2013). SRI enjoyed a rapid expansion during 1980s in the USA and emerged simultaneously in Great Britain. However, it
was not until the 1990s that SRI began to acquire importance in continental Europe (Olmedo et al., 2010). An awareness
of SRI also exists in Indonesia which manifest by the creation of an index called the Sri Kehati Index (SKI) (Zulkafli,

International Conference on Sustainability 143
(5 Sustainability Practitioner Conference)
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