Abstract
Abstract Environmental Performance Rating for Business Program (PROPER) is a compliance tool, which has been developed by Indonesian Ministry of State for Environment (MOE) since in 1994. The main purpose of PROPER is to improve compliance status of companies through public disclosure. The difference between PROPER and other environmental audit program is that PROPER emphasizes on the output of company's environmental management. The rating in PROPER was categorized in five different colors, i.e. black, red, blue, green and gold. Briefly, black and red give to the non-compliance category; blue was given to the companies, which is complied with the minimal requirement of regulation; while green and gold are awarded for companies, which show "beyond compliance" category. Based on the results of PROPER audit in 1995-1997, it showed that. PROPER was effective to improve the company compliance percentage to 9.4% from 213 industries at various sectors of industries including manufactures, mining, energy, oil and gas and agriculture sectors. This paper will only focus on the upstream oil and gas sectors involved in PROPER program. As a result, in 2002 PROPER for upsteam oil and gas sectors showed that five upsteam oil and gas companies were rated blue colour (compliance category) and one company was rated red colour (non compliance category). While, the PROPER's result in 2003 showed that 11 upsteam oil and gas companies (73.3%) were shown as compliance category (blue rating) among 15 companies audited, while the rest (26.7%) were categorized as non-compliance companies (red rating). In PROPER's 2004 outcome, the finding showed that 36 upstream oil and gas industries were awarded as compliance companies (blue color) exhibiting 72% among 50 industries audited. While, 14 upstream oil and gas companies were categorized as non-compliance companies (28%). The major incompliance aspects stressed upon the mismanagement of hazardous and toxic wastes. In this finding, no green rating was found in the upstream oil and gas sectors. We found that PROPER is an effective compliance tool to improve environmental performace of upstream oil and gas companies. The program results in the increase of regulatory compliance awareness mainly due to its incentive reputation encouragement for companies.
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