Corporate governance in realizing sustainable plantation in Indonesia

Abstract

Oil palm plantations have significant revenue for Indonesia where most of the palm plantation are State-Owned Enterprises (SOEs). Good Corporate Governance (GCG) principle in plantation business management is sought to create added value for stakeholders, especially for the environment. The problem discussed in this paper is how corporate governance achieves sustainable plantation. This is normative juridical research supported by a literature review. The results show that palm plantation management cannot be separated from the situation and responsibility to the environment. The application of GCG principles as a guideline in management of SOE plantation has been regulated to create a sustainable business. Furthermore, in balancing the influence of business, the social and environmental responsibilities, there is a management regulation concerning its roles for the community which is known as Corporate Social Responsibility (CSR). Ideally, plantation companies should not only reach the maximum profit in exploiting and marketing natural resources. They should also consider the best interests of society and the environmental impact of their business activities. In conclusion, Plantation SOEs must strive to minimize the impact on the environment. The internalization of GCG in environmentally oriented plantation SOEs creates sustainable plantation businesses.