Challenges for Sustainability Index: Is Being ‘Green’ Economically Viable for Indonesian Mining Companies?

20 Pages Posted: 13 Apr 2010

See all articles by Granita R. Layungasri

Granita R. Layungasri

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP)

Date Written: January 29, 2010

Abstract

Starting June 2009, Indonesia Stock Exchange in cooperation with environmental NGO, Yayasan KEHATI, formed a sustainability index named SRI-KEHATI. The Index is based on Sustainable and Responsible Investment’s standard of assessment. SRI-KEHATI enlisted only companies that being considered gave excellent performance both in stock market and sustainable development. Sustainable index itself has been recognized as a reliable benchmark for the Sustainable and Responsible Investment worldwide. However, SRI-KEHATI has brought up controversy as it enlisted three mining companies on its index; PT Aneka Tambang Tbk, PT Timah Tbk, and PT Bukit Asam Tbk. This research is questioned whether any economically viable for the mining companies could be gained in stock market by being enlisted on sustainability index. This paper shall introduce the implementation sustainability index and up bring the examination of the benefits of being listed on the sustainability index vis a vis the market capitalization of the mining companies. The objective of the paper is to find any influence of the sustainability index to the mining companies’ position in stock market along with the increasing of the companies’ corporate social and environmental responsibility. Some economy tools will be used to examine the profitability of the three mining companies before and after being enlisted on SRI-KEHATI index. Interview with each company’s corporate secretary also being conducted in Indonesian language to extract the company’s own perspective on the issue itself.

Keywords: Sustainable and Responsible Investment, Sustainable Index, Mining Companies, Indonesia, SRI-KEHATI, profitability

JEL Classification: O16, L70

Suggested Citation

Layungasri, Granita Ramadhani, Challenges for Sustainability Index: Is Being ‘Green’ Economically Viable for Indonesian Mining Companies? (January 29, 2010). Available at SSRN: https://ssrn.com/abstract=1589120 or http://dx.doi.org/10.2139/ssrn.1589120

Granita Ramadhani Layungasri (Contact Author)

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP) ( email )

Nethergate
Dundee, Scotland DD1 4HN
United Kingdom

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