Circular Economy and Carbon Emission Reduction Strategies within The ESG Framework: A Case Study of PTPN IV PalmCo

Putrie Cynthia Ichwan; Amrie Firmansyah

doi:10.59261/jbt.v7i3.711

Authors

Putrie Cynthia Ichwan Universitas Trisakti
Amrie Firmansyah Universitas Pembangunan Nasional Veteran Jakarta

DOI:

https://doi.org/10.59261/jbt.v7i3.711

Keywords:

Carbon Emission Reduction, Circular Economy, ESG, PTPN IV PalmCo, Sustainable Palm Oil

Abstract

Background: Indonesia's palm oil industry faces growing sustainability pressure, including compliance with the European Union Deforestation Regulation (EUDR). Following its December 2023 merger, PT Perkebunan Nusantara IV PalmCo is integrating ESG principles into its operations.

Objective: This study aims to analyze the implementation of circular economy and carbon emission reduction strategies as part of the ESG framework at PTPN IV PalmCo.

Methods: Using a descriptive qualitative case study with secondary data from company reports, verified media, and official documents (2023–2025), this research finds that PalmCo has implemented a circular economy by converting palm oil waste into renewable energy through 11 biogas facilities, targeting 32 facilities by 2029 and over 80% renewable energy utilization.

Results: The carbon emission reduction strategy, implemented through both nature-based and technology-based approaches, has resulted in carbon sequestration of 873,395 tons CO₂e/year and emission reductions of 191,107 tons CO₂e/year, while also achieving the first Greenhouse Gas (GHG) Emission Reduction Certificate in the plantation industry. Both initiatives are strongly integrated into the ESG framework, as evidenced by PalmCo’s #2 global ranking in the S&P Corporate Sustainability Assessment (CSA) 2024 and its receipt of two Diamond Awards at the ESG Initiative Awards 2025.

Conclusion: This research contributes to ESG literature in the plantation sector by demonstrating, through Legitimacy Theory, that PalmCo is transitioning from symbolic to substantive legitimacy, evidenced by verified emission reductions and the integration of ESG indicators into management KPIs. These findings offer a theoretical contribution to ESG implementation in state-owned plantation enterprises.

References

Albuquerque, M. M., Martinez-burgos, W. J., Sartor, G. D. B., Alberto, L., Letti, J., Carvalho, C. De, Soccol, C. R., Bianchi, A., & Medeiros, P. (2024). Advances and Perspectives in Biohydrogen Production from Palm Oil Mill Effluent. Fermentation, 10(141), 1–32. https://doi.org/10.3390/fermentation10030141

Alodat, A. Y., Salleh, Z., Hashim, H. A., & Sulong, F. (2024). Investigating the mediating role of sustainability disclosure in the relationship between corporate governance and firm performance in Jordan. Management of Environmental Quality: An International Journal, 35(7), 1691-1720. https://doi.org/10.1108/MEQ-07-2021-0182

Andriani, R., Adriat, R., & Gajah, J. (2019). Konsentrasi Karbon Monoksida ( CO ) di Kota Pontianak. Prisma Fisika, 7(2), 143–148.

Arisht, S. N., Mahmod, S. S., Abdul, P. M., Indera Lutfi, A. A., Takriff, M. S., Lay, C. H., Silvamany, H., Sittijunda, S., & Jahim, J. M. (2022). Enhancing biohydrogen gas production in anaerobic system via comparative chemical pre-treatment on palm oil mill effluent (POME). Environmental Management, 1(1). https://doi.org/10.1016/j.jenvman.2022.115892

Arista, N. I. D., Natalia, C. E., Sinaga, I. L., Lestari, W., Undari, D., Andryan, R., Putri, A. H., & Alimatul, M. (2024). The potential of circular economy in the oil palm plantation to industry. Journal of Sustainability, Society, and Eco-Welfare, 1(2), 94–110. https://doi.org/10.61511/jssew.v1i2.2024.311

Babkin, A., Shkarupeta, E., Tashenova, L., Malevskaia-malevich, E., & Shchegoleva, T. (2023). cluster ecosystems in a circular economy. Journal of Open Innovation: Technology, Market, and Complexity, 9(2), 100071. https://doi.org/10.1016/j.joitmc.2023.100071

Banu, S., & Vimala, V. (2024). Integration of ESG principles : An initiative for transformation from Linear Economy to Circular Economy. SSRN Electronic Journal, 1(2), 183–196. https://doi.org/http://dx.doi.org/10.2139/ssrn.4895267

Bessou, C., Chase, L. D., Henson, I. E., Abdul-Manan, A. F., i Canals, L. M., Agus, F., ... & Chin, M. (2014). Pilot application of PalmGHG, the Roundtable on Sustainable Palm Oil greenhouse gas calculator for oil palm products. Journal of Cleaner Production, 73, 136-145.

Breslin, S., & Nesadurai, H. E. S. (2023). Economic statecraft , geoeconomics and regional political economies. The Pacific Review, 36(5), 927–948. https://doi.org/10.1080/09512748.2023.2200030

Carlson, K. M., Curran, L. M., Asner, G. P., Pittman, A. M., Trigg, S. N., & Adeney, J. M. (2012). Carbon emissions from forest conversion by Kalimantan oil palm plantations. Nature Climate Change, 2(10), 1–5. https://doi.org/10.1038/nclimate1702

Creswell, J. W., & Poth, C. N. (2016). Qualitative inquiry and research design: Choosing among five approaches. Sage publications.

Dewi, S., Kuncahyoa, B., & Mardiana, R. (2025). Scenario for Sustainable Food Plantation Forest Management in the Former Peatland Development Area of Central Kalimantan, Indonesia. Journal of Natural Resources & Environment Management/Jurnal Pengelolaan Sumberdaya Alam Dan Lingkungan, 15(3). https://doi.org/10.29244/jpsl.9.1

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835–2857. https://doi.org/https://doi.org/10.1287/mnsc.2014.1984

Ellen MacArthur Foundation. (2013). Towards the circular economy Vol. 1: An economic and business rationale for an accelerated transition. Ellen MacArthur Foundation.

Friede, G., Busch, T., & Basen, A. (2023). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4). https://doi.org/https://doi.org/10.1080/20430795.2015.1118917

Food and Agriculture Organization (FAO). (2023). The state of food and agriculture 2023. FAO. https://doi.org/10.4060/cc7724en

Geissdoerfer, M., Savaget, P., Bocken, N., & Hultink, E. J. (2017). The Circular Economy – A new sustainability paradigm? Journal of Cleaner Production, 143(1), 757–768. https://www.sciencedirect.com/science/article/abs/pii/S0959652616321023

Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66(1). https://doi.org/https://doi.org/10.1016/j.jcorpfin.2021.101889

Haryanto, A., Hasanudin, U., Triyono, S., & Iryani, D. A. (2023). Potensi listrik dari biogas POME pada pabrik kelapa sawit skala kecil dan menengah di Sumatera. Jurnal Teknik Pertanian Lampung, 12(4), 455–468. https://doi.org/https://doi.org/10.23960/jtep-l.v12i4.455-468

Hassan, S. M. (2025). Circular Economy and ESG : Building Sustainable Business Models in the Manufacturing Sector. Journal of Business and Econometrics Studies, 2(1), 1–12.

Husnullail, M., Risnita, Jailani, S., & Asbui. (2024). Teknik pemeriksaan keabsahan data dalam riset ilmiah. Journal Genta Mulia, 15(2), 70–78.

Ji, C. M., Eong, P. P., Ti, T. B., Seng, C. E., & Lin, C. K. (2013). Biogas from palm oil mill effluent (POME): Opportunities and challenges from Malaysia’s perspective. Renewable and Sustainable Energy Reviews, 26(1), 717–726. https://doi.org/https://doi.org/10.1016/j.rser.2013.06.008

Johnston, M. (2014). Secondary Data Analysis: A Method of which the Time Has Come. Qualitative and Quantitative Methods in Libraries, 3(1), 619–626.

Kandpal, V., Jaswal, A., & Gonzalez, S. E. (2024). Sustainable Energy Transition, Circular Economy, and ESG Practices. Springer Nature.

Kirchherr, J., Yang, N. N., Schulze-spüntrup, F., Heerink, M. J., & Hartley, K. (2023). Resources , Conservation & Recycling Conceptualizing the Circular Economy ( Revisited ): An Analysis of 221 Definitions. Resources, Conservation & Recycling, 194(1), 1–32. https://doi.org/10.1016/j.resconrec.2023.107001

Kotsantonis, S., Pinney, C., & Serafeim, G. (2016). ESG integration in investment management: Myths and realities. Journal of Applied Corporate Finance, 28(2), 10-16.

Lambert, V., & Lambert, C. (2012). Editorial : Qualitative Descriptive Research : An Acceptable Design. Pacific Rim International Journal of Nursing Research, 16(4), 255–256.

Lawrence, J. M. (2025). Impact of environmental, social, and governance (ESG) and the circular economy (CE) on financial decision‐making. Fintech for ESG and the Circular Economy, 119-148.

Lieder, M., & Rashid, A. (2016). Towards circular economy implementation: a comprehensive review in context of manufacturing industry. Journal of cleaner production, 115, 36-51.

Lisi, I. E. (2018). Determinants and performance effects of social performance measurement systems. Journal of Business Ethics, 152(1), 225-251. https://doi.org/10.1007/s10551-016-3287-3

Madaki, Y. S., & Seng, L. (2013). Palm oil mill effluent (POME) from Malaysia palm oil mills: waste or resource. International Journal of Science, Environment and Technology, 2(6), 1138-1155.

Mayring, P. (2021). Qualitative Content Analysis: A Step-by-Step Guide. Sage Publication.

Meijaard, E., Brooks, T., Carlson, K. M., Slade, E. M., & Ulloa, J. G. (2020). The environmental impacts of palm oil in context. Nature Plants, 6(12), 1418. https://doi.org/10.1038/s41477-020-00813-w

Miles, M., Huberman, M., & Saldana, J. (2014). Qualitative Data Analysis: A Method Sourcebook. Sage Publication.

Miller, M. A., & Taylor, D. (2024). A transboundary agenda for nature-based solutions across sectors , scales and disciplines : Insights from carbon projects in Southeast Asia. Ambio, 53(4), 534–551. https://doi.org/10.1007/s13280-023-01961-x

Patil, R. A., Ghisellini, P., & Ramakrishna, S. (2021). Towards Sustainable Business Strategies for a Circular Economy: Environmental, Social and Governance (ESG) Performance and Evaluation. Springer Singapore. https://doi.org/10.1007/978-981-15-8510-4_26

Pranolo, S. H. (2023). Application of Nanocrystal Cellulose Based on Empty Palm Oil Fruit Bunch as Glucose Biosensing. Journal of Chemical Engineering, 23(3), 360–369. https://doi.org/10.22146/ajche.83422

Provensi, T., Marcon, M. L., Sehnem, S., & Campos, L. M. (2025). Exploring ESG and circular economy in Brazilian companies: the role of stakeholder engagement. Benchmarking: An International Journal, 33(1). https://doi.org/10.1108/BIJ-01-2023-0030

Rendón-camargo, D., Boom-cárcamo, E., & Buelvas-gutiérrez, L. (2026). Utilization of Oil Palm Residual Biomass Within the Framework of Industrial Symbiosis : A Systematic Review of the Economic Sectors Involved in Its Valorization. Biomass, 6(1), 1–23. https://doi.org/https://doi.org/10.3390/biomass6010010

Schaltegger, S., Lüdeke-Freund, F., & Hansen, E. G. (2016). Business Models for Sustainability. A Co-Evolutionary Analysis of Sustainable Entrepreneurship, Innovation and Transformation. Organization & Environment, 29(3), 264–289. https://doi.org/10.1177/1086026616633272

Seddon, N., Chausson, A., Berry, P., Girardin, C. A. J., Smith, A., Turner, B., Berry, P., Caj, G., Smith, A., Turner, B., & Seddon, N. (2020). Understanding the value and limits of nature-based solutions to climate change and other global challenges. Philosophical TransactionsB, 375(1), 1–12. https://doi.org/10.1098/rstb.2019.0120/163723/rstb.2019.0120.pdf

Setiatin, T. (2025). Sustainable Accounting and Environmental , Social , and Governance ( ESG ) Reporting : Challenges and Implementation in Indonesian Companies. International Journal of Science and Society, 7(1), 756–770. https://doi.org/https://doi.org/10.54783/ijsoc.v7i1.1453

Setiawan, A. F., Haryanto, A., Hasanudin, U., Triyono, S., & Agustina, D. (2025). Biogas Production from Palm Oil Mill Effluent and the Prospect of Co- digestion with Empty Fruit Bunches – A Comprehensive Review. Jurnal Teknik Pertanian Lampung, 14(5), 1976–2005.

Soleha, N., & Rosiana, R. (2021). Journal of Applied Business , Taxation and Economics Research ( JABTER ) Exploring Sustainability Reports in The Indonesian Palm Oil Industry. Journal of Applied Business, Taxation and Economics Research, 1(1), 77–94. https://doi.org/10.54408/jabter.v1i1.23

Suksaroj, C., Jearat, K., Cherypiew, N., Rattanapan, C., & Tachapattaworakul, T. (2023). Promoting Circular Economy in the Palm Oil Industry through Biogas Codigestion of Palm Oil Mill Effluent and Empty Fruit Bunch Pressed Wastewater. Water, 15(2153), 1–18. https://doi.org/https://doi.org/ 10.3390/w15122153

Wahyuningrum, I. F., Djajdikerta, H. G., Trireksani, T., & Budihardjo, M. (2026). Environmental disclosure in Indonesia: a study of manufacturing and mining companies. Asian Journal of Accounting Research, 11(2), 1–5. https://doi.org/10.1108/AJAR-11-2023-0367

Whelan, T., Atz, U., Van Holt, T., & Clark, C. (2021). ESG and financial performance: Uncovering the relationship by aggregating evidence from 1,000 plus studies published between 2015–2020. New York: NYU STERN Center for sustainable business, 520-536.

Wright, C. (2024). Corporations and climate change : An overview. NgeWires Climate Cha, 1(2), 1–15. https://doi.org/10.1002/wcc.919

Yin, R. K. (2018). Case study research and applications (Vol. 6). Thousand Oaks, CA: Sage.