The Agroindustry Corporate Performance of Beyond Compliance on

the Environmental Protection and Management

Anwar Hamdani, Mulyanto Mulyanto, and I. Gusti Putu Diva Awatara

STIE Adi Unggul Bhirawa

anwar_aub@yahoo.co.id

Keywords: Company Performance, Environmental Management System, Start Up, Shareholders.

Abstract: Every company in Indonesia is currently in demand to meet the requirements or exceed the provisions of

requirements on environmental protection and management in accordance with Law No. 32 of 2009. Many

companies increasingly raising awareness in the protection and management of the environment due to the

demands and needs of the company for the importance of protection and Environmental management for the

sustainability of the company's current and future business activities. This study aims to increase the number

of agroindustry companies that can help increase the growth of new entrepreneurs (start-up) with various

resources owned by agroindustry companies. This type of research is survey. This research was conducted

at Agroindustry Company in Central Java. The population in this study are all managers from top managers,

middle managers and lower managers of agroindustry sector in Central Java and Yogyakarta Special Region

based on company performance rating (PROPER) rating report from 2014 - 2015 period of 200 respondents.

The sampling technique used in this research is random proportional stratified random sampling

(proportionate stratified random sampling). The results of this study indicate that more agroindustry

companies are trying to exceed compliance in the Protection and Management of the environment and

increase the growth of new entrepreneurs (start-up) through community development programs and CSR.

1 INTRODUCTION

Every company in Indonesia is currently in demand

to meet the requirements or exceed the provisions of

requirements on environmental protection and

management in accordance with Law No. 32 of

2009. Many companies increasingly raising

awareness in the protection and management of the

environment due to the demands and needs of the

company for the importance of protection and

Environmental management for the sustainability of

the company's current and future business activities.

Increased corporate attention and concentration

on environmental aspects is the focus of the

company in order to minimize the risks that can be

generated from climate change impacts and pressure

to pay more attention to the environment. Company

pressure to improve environmental performance is

an important priority in order to achieve sustainable

development by raising awareness of the

community, the company, the role of mass media

and organizations that have environmental concerns

and regulatory improvements that can realize the

company beyond compliance in environmental

management (Than and Kevin, 2015).

Corporate compliance in environmental

protection and management may also be undertaken

under the normative pressure of various Government

regulations and policies that may encourage

agroindustry enterprises to apply environmental

practices in the company's business activities.

Normative pressure will give the agroindustry

companies internally stronger and committed to

exceed compliance in environmental protection and

management. Employees will be familiar and play

an important role in resolving environmental issues

at the company (Sarkis et al., 2010).

Recent decades of increased agroindustrial

development led to environmental degradation in the

form of global warming, air pollution and B3 waste

(Zailani et al., 2012). This condition causes

environmental problems (Hsu et al., 2013). The

same time, an increase in environmental issues from

various stakeholders includes: environmental

regulation, environmentally friendly product demand

and high expectations from investors and

Hamdani, A., Mulyanto, M. and Awatara, I.

The Agroindustry Corporate Performance of Beyond Compliance on the Environmental Protection and Management.

In Proceedings of the 1st International Conference on Educational Sciences (ICES 2017) - Volume 2, pages 279-282

ISBN: 978-989-758-314-8

279

shareholders for improved environmental

performance.

Companies can also increase profits or create

new markets by implementing Eco design, Eco-sales

and marketing, creating new market share with

environmental issues. Even innovations are made

not only to benefit from efficiency, but also to be

passion for improving the quality of the

environment, regardless of the amount of the

investment loss or the difficult obstacles

2 METHODS

This study is a survey. This research was conducted

at Agroindustry company in Central Java. Sampling

used in this study proportional random sampling

(proportionate stratified random sampling) sampling

is taken based on the level or level of management

of Agroindustry sector companies in Central Java

who follow PROPER program Ministry of

Environment at each level of top management,

management Medium and line management. The

sample used in this study as many as 200 people.

Data collection using questionnaires, interviews,

observation and documentation.

This research uses the technique of structural

equation modelling (SEM) analysis with the reason

that this research approach is integrated with the

outcome of the collaboration is the level of

performance of agroindustry companies that can

exceed the obedience in the protection and

environmental management as an effort to create the

added value of the company if done not only

partially and simultaneous, but thoroughly,

integrated and sustainable.

3 RESULT AND DISCUSSION

3.1 The Description of Proper Rating

Agroindustry Corporate

The rating of proper agroindustry companies in

Central Java for the past three years can be presented

in the figure below. The period of 2013 - 2014 from

48 agroindustry companies in Central Java which

have blue and green Proper rating of 30 companies

(62%) and have black and red Proper rating of 18

companies (38%). Of the 30 companies the blue and

green proper rating consists of 29 companies (97%)

blue ratings and 1 (3%) green rating companies.

These results indicate that agroindustry companies

ranked blue and green more than the black and red

properties. These results also indicate the number of

agroindustry companies in Central Java with ratings

exceeding compliance during the period 2013 -

2014, which is only one (3%) green or gold rating

The period of 2014- 2015 from 48 agroindustry

companies in Central Java which have a blue and

green Proper rating of 25 companies (52%) and have

a black and red Proper rating of 23 companies

(48%). Of the 25 companies the blue and green

proper rating is entirely 25 companies (52) blue

ratings while the green rating is absent. These results

indicate that agroindustry companies ranked blue

and green more than the black and red properties.

These results also indicate the number of

agroindustry companies in Central Java during the

period 2014 - 2015 with ratings exceeding beyond

compliance. When compared to the period of 2013 -

2014 which has a green rating of 1 company then the

period of 2014 - 2015 has decreased companies that

have ratings exceeded the compliance.

The period of 2015- 2016 from 48 agroindustrial

companies in Central Java which have a blue and

green Proper rating of 36 companies (75%) and

rating of 12 black and red companies (25%). Of the

36 blue and green proper rating companies, 33

companies (92%) have blue ratings while 3 firms

(8%) have green ratings. These results indicate that

agroindustry companies ranked blue and green more

than the black and red properties. These results also

indicate the number of agroindustry companies in

Central Java during the period 2015- 2016 that

ranked beyond the compliance of 3 companies (8%).

Compared to the period of 2013 - 2014 and 2014 -

2015, the period 2015 - 2016 has increased for

companies with ratings exceeding compliance,

although the number is still relatively small

compared to the number of agroindustry companies

in Central Java and nationally.

These results indicate that as a large agroindustry

company in Central Java having a Blue proper rating

means that most agroindustrial companies can only

meet compliance with environmental management

and protection. From the results of this study also

shows that companies that have the potential to

beyond compliance to be green or gold because for

the last three consecutive periods have a minimal

blue proper rating of 24 companies (50%) of the

total agroindustry company in Central Java

Following the Proper program of 48 companies. The

types of industries of 24 companies that potentially

exceed the observance to green or gold are as

follows:

Agroindustry companies that have the potential

to exceed the compliance of green or gold consists

of sugar industry of 7 companies (29%); Food as

many as 4 companies (17%); snack as many as 3

companies (13%); cigarette industry and bottled

ICES 2017 - 1st International Conference on Educational Sciences

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water as much as 2 companies (8%) and wood

processing, cattle fodder, milk, creamer, flour and

herbal processing industries as much as 1 company

(4%). These results indicate that the agroindustry

company that has the most potential to exceed

compliance is the sugar industry, followed by the

food, snack, cigarette industry and bottled water.

3.2 Corporate Social Responsibility

Program

Corporate social responsibility program of

agroindustry can be done by implementing corporate

social responsibility cycle starting from:

determination of corporate social responsibility

policy of agroindustry company, social mapping or

baseline study, social responsibility program

planning Companies in the form of strategic plans

and operating plans or work plans, implementation

of CSR programs (the inception of social and

economic institutions), program monitoring,

program evaluation and program sustainability. The

implementation cycle of corporate social

responsibility can be seen in Figure 1 below:

Figure 1: CSR Implementation Cycle.

Based on Figure 1 shows that the implementation

of social responsibility in agroindustry companies

can be done by the steps: determination of CSR

policy of agroindustry company, social mapping,

CSR program planning in the form of strategic plan

and work plan, CSR implementation (the birth of

economic or social institution).

3.3 Hypothesis Testing

The result of complete structural equation modelling

analysis in this research can be explained in detail in

the table below:

Table 1: The Result of Analysis.

Original

Sample

(O)

Sample

Mean

(M)

Standard

Deviation

(STDEV)

Standard

Error

(STERR)

T Statistics

(|O/STERR|)

Cor

orate culture → Environmental

erformance .5602 .1781 .4755 .4755 2.5473

Corporate culture → Environmental management .6806 .2317 .5843 .5843 2.3091

Cost im

lementation → Environmental

erformance .5390 .0644 .1325 .1325 2.2944

Cost im

lementation → Environmental mana

ement .7563 .0463 .3075 .3075 3.4843

Operation ability → Environmental performance .5092 .0466 .1503 .1503 2.0612

eration abilit

→ Environmental mana

ement .6027 .0604 .2712 .2712 3.7474

Marketin

abilit

→ Environmental

erformance .4680 .2860 .2231 .2231 3.0974

Marketing ability → Environmental management .4685 .0171 .1783 .1783 2.3841

Corporate commitment → Environmental

erformance

.6923 .5800 .5299 .5299 3.3064

Corporate commitment → Environmental

mana

ement

.5642 .3255 .5367 .5367 3.3060

Environmental management → Environmental

erformance

.8626 .0280 .1111 .1111 2.5630

Corporate orientation → Environmental

erformance

.6350 .0581 .1167 .1167 2.2996

Corporate orientation → Environmental

mana

ement

.6174 .1639 .2143 .2143 3.0146

Source: primer data (2017)

The results of the analysis in this study indicate

that: corporate culture has a positive impact on

environmental management and environmental

performance of agroindustry companies; Cost

The Agroindustry Corporate Performance of Beyond Compliance on the Environmental Protection and Management

281

implementation has a positive impact on

environmental management and environmental

performance of agroindustry companies; Operational

capability has a positive impact on environmental

management and environmental performance of

agroindustry companies; Marketing ability has a

positive impact on environmental management and

environmental performance of agroindustry

companies; The company's commitment has a

positive impact on environmental management and

environmental performance of agroindustry

companies; Environmental management has a

positive impact on the environmental performance

of agroindustry companies and the orientation of the

company has a positive impact on the management

and performance of agroindustry companies

exceeded the obedience in the protection and

management of the environment.

4 CONCLUSIONS

Acceleration to realize the performance of

agroindustry companies exceeding the compliance in

the protection and environmental management can

be done by optimizing the company's derivative

products, especially waste or by-products of the

company's main products to be utilized for more

value-added by collaborating with new

entrepreneurs (start-up) in utilizing the company's

waste. More and more agroindustry companies are

working to exceed compliance in Environmental

Protection and Management and promote the growth

of new entrepreneurs (start-up) through community

development programs and CSR.

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Sarkis, J., Gonzalez-Torre, P., Adenso-Diaz, B., 2010.

Stakeholder Pressure and The Adoption of

Environmental Practices: The Mediating Effect of

Training. Journal Operations Management. 28 (2),

163 – 176.

Thanh, N.P., Kevin, B., 2015. The comprehensiveness of

environmental management systems: The Influence of

Institutional Pressures and The Impact on

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Zailani S., K. Jeramayan., G. Vengadasan and R

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