Corporate Governance has always been an everlasting actual issue among business man, academic, policy makers and etc. The academic studies toward 1500 public companies in the Unites States in the 1990s found that those who received higher governance rating and stronger shareholder rights also has higher firm valuations, higher profits, higher sales growth and lower capital expenditures. It also shows that good corporate governance delivered a significant positive financial implication of good corporate governance from the company’s perspective[1]. Implementation of good corporate governance is supported by four major foundations namely transparency, accountability, responsibility and independency. Discourses on corporate governance have been widely growing from solely separation between share ownership and control holder in a modern company to any factors that will influence a company’s sustainability.
One of the discourses that lately emerged in the issue of good corporate governance implementation in particular in Indonesia is the awareness of a company to environmental sustainability. For some time there has been debate on how a company should manage the environmental sustainability and what would be the influence of its duty to the growth of business performance and whether there is a link between good corporate governance and environmental issues. Nowadays, the debate over the existence between the implementation of good corporate governance, environmental responsibility and business performance is no longer considered as such a fruitful discourse. Researches carried by Innovest Strategies Value Advisors have proven that the implementation of good corporate governance has a strong correlation in the participation of a company in managing environmental sustainability. Those companies maintaining their environmental risks and impacts are more sustainable, valuable, profitable and competitive.[2]
The discourse has been going changed rather than just debates into the implementation of corporate governance for environmental sustainability. Lately, Credit Lyonnais Securities Asia (CLSA), an award-winning brokerage, investment banking and private equity group in the Asia-Pacific has announced their annual report with the progress of corporate governance among the companies in Asia. Interestingly, they have made a major change in this year’s report namely the inclusion of a corporate governance score on a company’s sensitivity to environmental issues, particularly on climate change. Good Corporate Governance in this report goes beyond solely financial performance. A company with good governance doesn’t only display satisfactory financial data and share the returns equitably with all of its investors, but also the company’s concern on its social and environmental surrounding.
Indonesia is ranked at the bottom three in its sensitivity to the environmental issue together with Philippine and China. Even so, the present government’s anti-corruption drive is yielding some results. In contrast to the Philippines, Indonesia continues to try to improve its corporate governance regime through, for example, revising its national code of best practice and bringing in a new corporate governance code for banks.
These issues should be of great concerned for the government of Indonesia which will host a world conference on global warming and climate change in Bali in December 2007. As a host we do expect success but the point is whether Indonesia has great concern on environmental sustainability by really implementing good corporate governance in all sectors whether Private-Owned Enterprises (POEs) or State-Owned Enterprises (SOEs). Also Indonesia is still considerably not serious in the enforcement of environmental law. It is proven that the number of illegal logging is still high even though some efforts are made by the Indonesian government. Meanwhile the actors of illegal logging are still not prosecuted or have been intervened by some government official. The case of Adelin Lis, an illegal logger suspect who have been acquitted by Medan District Court of all charges is one of these examples. It is clear that from the very beginning, some irregularities could be seen in this case. Adelin is now again being a most wanted person for another charge as he is convicted for some money laundry cases
The Indonesian government shall seriously take concern together with other stakeholders in search of figuring out on how to cope with Indonesia’s environmental problems. The problem will not resolve itself by only screaming jargons on environmental care but also to have to be implemented into strict regulation in all sectors. The implementation of these environmental care regulations needs the participation all parties whether government, policy makers and citizens. The result might not be noticeable in short time but slowly and surely if all guidelines on good corporate governance regarding environmental care are carried out, hopefully we can see a blue and clean sky over Indonesia.
One of the discourses that lately emerged in the issue of good corporate governance implementation in particular in Indonesia is the awareness of a company to environmental sustainability. For some time there has been debate on how a company should manage the environmental sustainability and what would be the influence of its duty to the growth of business performance and whether there is a link between good corporate governance and environmental issues. Nowadays, the debate over the existence between the implementation of good corporate governance, environmental responsibility and business performance is no longer considered as such a fruitful discourse. Researches carried by Innovest Strategies Value Advisors have proven that the implementation of good corporate governance has a strong correlation in the participation of a company in managing environmental sustainability. Those companies maintaining their environmental risks and impacts are more sustainable, valuable, profitable and competitive.[2]
The discourse has been going changed rather than just debates into the implementation of corporate governance for environmental sustainability. Lately, Credit Lyonnais Securities Asia (CLSA), an award-winning brokerage, investment banking and private equity group in the Asia-Pacific has announced their annual report with the progress of corporate governance among the companies in Asia. Interestingly, they have made a major change in this year’s report namely the inclusion of a corporate governance score on a company’s sensitivity to environmental issues, particularly on climate change. Good Corporate Governance in this report goes beyond solely financial performance. A company with good governance doesn’t only display satisfactory financial data and share the returns equitably with all of its investors, but also the company’s concern on its social and environmental surrounding.
Indonesia is ranked at the bottom three in its sensitivity to the environmental issue together with Philippine and China. Even so, the present government’s anti-corruption drive is yielding some results. In contrast to the Philippines, Indonesia continues to try to improve its corporate governance regime through, for example, revising its national code of best practice and bringing in a new corporate governance code for banks.
These issues should be of great concerned for the government of Indonesia which will host a world conference on global warming and climate change in Bali in December 2007. As a host we do expect success but the point is whether Indonesia has great concern on environmental sustainability by really implementing good corporate governance in all sectors whether Private-Owned Enterprises (POEs) or State-Owned Enterprises (SOEs). Also Indonesia is still considerably not serious in the enforcement of environmental law. It is proven that the number of illegal logging is still high even though some efforts are made by the Indonesian government. Meanwhile the actors of illegal logging are still not prosecuted or have been intervened by some government official. The case of Adelin Lis, an illegal logger suspect who have been acquitted by Medan District Court of all charges is one of these examples. It is clear that from the very beginning, some irregularities could be seen in this case. Adelin is now again being a most wanted person for another charge as he is convicted for some money laundry cases
The Indonesian government shall seriously take concern together with other stakeholders in search of figuring out on how to cope with Indonesia’s environmental problems. The problem will not resolve itself by only screaming jargons on environmental care but also to have to be implemented into strict regulation in all sectors. The implementation of these environmental care regulations needs the participation all parties whether government, policy makers and citizens. The result might not be noticeable in short time but slowly and surely if all guidelines on good corporate governance regarding environmental care are carried out, hopefully we can see a blue and clean sky over Indonesia.
[1] FCGI publication, Corporate Governance Vol. 1 taken from Gomper, Paul, Joy lishi, and Andrew Metrick. “Corporate Governnace and Equity Prices.” Quarterly Journal of Economics. Vol. 118 (1). (2003), PP. 107-155.
