Muhammad Hafizh Alfath, Harimukti Wandebori, Widhyawan Prawiraatmadja
Institut Teknologi Bandung, Indonesia
Since the Paris Agreement in 2015, climate change has become an important global issue, prompting companies to adopt sustainable practices. PT United Tractors Tbk (UT), which relies heavily on coal, faces challenges due to the declining coal market and increasing emphasis on Environmental, Social and Governance (ESG) principles. This research explores UT's strategic transition to diversify into the minerals and renewable energy sectors and assesses the potential of Sustainability Linked Loans (SLL) to support this transition. The research aims to evaluate UT's readiness to implement SLL by examining its business strategy, ESG initiatives, and financial performance. A qualitative approach was used, involving semi-structured interviews with UT management and analysis of annual reports. Findings show that UT is committed to achieving a 50-50 revenue balance between coal and non-coal businesses by 2030. SLL offers a viable funding solution, providing financial flexibility and incentivizing ESG improvements through interest rate discounts. The study concludes that UT's strong commitment to sustainability and proactive management puts it in a good position to obtain SLL, enhancing its ability to balance its portfolio and achieve long-term sustainability. Recommendations include improving ESG measurement systems, securing SLL agreements, and continuously monitoring ESG achievements to maximize benefits.
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