PLN Develops Sustainable Funding Program To Strengthen ESG Aspects

ESG illustration (photo: dock. Unsplash)

PT PLN (Persero) strengthens environmental, social and governance aspects (environment, social, governance/ESG) as a form of company sustainability. One of them is by developing a funding program attached to the ESG directly.

Vice President of ESG & safeguard PLN Imam Mutaqien said ESG is a major issue at all levels of companies, holding, subholding, upper, middle and basic management.

"So it's not only coaching how much the rating is, but how can this ESG be attached to each function, structure, enter the KPI (Key Performance Indicator) of employees, units. We make ESG as a means of achieving company goals," he said, quoting Antara.

Imam revealed that PLN will develop funding related to ESG in the criteria for its requirements. Currently, PLN does not yet have funding attached to ESG directly.

"But we are developing it, it's called sustainable linked loan," he said.

He gave an example in the ESG there is KPI to reduce emissions. If it is achieved, the interest will be there, if the penalty is not achieved.

"With us improving ESG's performance and we publishing and telling investors that we are doing that, they (investors) are increasingly interested in coming to discuss with us. At the end of last year, there was a USD 600 million green loan that PLN had published with several bank syndicates," said Imam.

Imam explained that since the establishment of the ESG & safeguard Division, many banks have invited PLN to present ESG. According to him, practically not something new at PLN in terms of energy efficiency, social responsibility (CSR), and mangrove processing. However, so far these things tend to be measurable.

"When there is KPI, the work must be measured. Not only once, and next year it will be finished, it will not be sustainable. That's why we are making sustain now," said Imam.

PLN has determined 12 KPI ESG, which are continuously monitored every month. In order to achieve the KPI, there is an ESG breakthrough.

"We are trying to map the KPI based on an assessment from a rating institution, it turns out that we can increase it to increase our ESG rating. Most of this is an indicator or Proper assessment," said Imam.

Another speaker, Professor of the Faculty of Economics and Business, Padjajaran University, Prof M.Fani Cahyandito said that companies that do not do ESG will be considered underdeveloped companies. The reason is, currently investors have paid attention to ESG. Many studies link ESG and financial performance.

"Investors are increasingly aware that companies that are stable, can operate, productive employees are companies that pay attention to the welfare of their employees. It is also more stable for companies that pay attention to the community. This is a company that is seen as having more continuation than those that do not have an ESG," said Fani.

Meanwhile, Acting Secretary General of the Ministry of Energy and Mineral Resources Dadan Kusdiana said ESG has become the standard for the whole world to realize sustainable development. Although he acknowledged that the implementation of ESG in Indonesia is still low.

"The implementation of ESG in companies can increase investment. ESG needs to be in line with the energy transition," he said.