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FORMOSA NEWS - Cirebon - Green Rules: How Environmental Spending Boosts Indonesian Mining Profits While Clean Tech Investments Face Short-Term Obstacles. A new study published in 2026 reveals how environmental costs and green investments shape the profitability of Indonesian mining companies navigate the energy transition. The research, conducted by Rendi Herdiyanto, Moh Yudi Mahadianto, and Mardi from Universitas Swadaya Gunung Jati, analyzed data from 2021 to 2024 to determine how emerging climate regulations affect corporate finance. The findings show that while active environmental management significantly improves company profitability, heavy initial spending on green technology creates short-term financial pressure, and current carbon tax discourses have yet to impact bottom lines.
Background: Mining in the Era of Climate Action
Indonesia's mineral and coal mining sector serves as a primary driver of national economic development and a major contributor to foreign exchange. However, extractive industries face a continuous dilemma between economic contribution and environmental degradation. Global climate goals under the Paris Agreement and Indonesia’s national target of Net Zero Emissions by 2060 have placed massive external pressures on these entities. Mining operations must navigate a shifting landscape of strict compliance, changing social expectations, and volatile financial performance. Following the post-commodity boom era, major listed issuers experienced notable corrections in their Return on Assets (ROA). For instance, the audited financial statements of PT Bukit Asam Tbk (PTBA) showed an ROA drop from 28.17% in 2022 to 16.23% in 2023, despite a 13% increase in coal sales volume. This anomaly indicates that operational escalation and sustainability compliance costs are reshaping the corporate financial framework, making an analysis of green parameters essential for future planning.
Methodology: Tracking Financials on the Indonesia Stock Exchange
The researchers applied a descriptive quantitative approach to evaluate the causal relationships between environmental policy variables and corporate profitability. The secondary data source comprised formal annual reports and sustainability reports published on the Indonesia Stock Exchange (IDX) website and individual corporate platforms. Using a purposive sampling technique, the study focused on 10 major mineral and coal mining companies listed on the IDX over a four-year observation period from 2021 to 2024, resulting in 40 distinct observational data points. The sampled entities included prominent industry actors:
Key Findings: The Divergent Impact of Green Priorities
The multiple linear regression analysis yielded varied strategic insights regarding how sustainability initiatives influence company returns:
The findings offer critical insights for policymakers, industrial managers, and market investors navigating the green transition. The positive impact of environmental costs validates the Legitimacy Theory framework, proving that corporate transparency and ecological dedication are not merely cost burdens. Instead, environmental spending operates as a social investment that secures the community license to operate, reduces legal risks, strengthens public trust, and stabilizes commercial activities. Conversely, the negative trend seen in green investments highlights a short-term financial trade-off. Transitioning to advanced low-carbon infrastructure requires massive initial capital expenditure. In the immediate term, this raises total asset bases and escalates depreciation expenses without generating an immediate, parallel surge in revenue, thereby lowering the ROA ratio. This creates a strategic dilemma for executives trying to balance immediate investor returns with long-term carbon competitiveness. Furthermore, the lack of statistical impact from the carbon tax stems from its current administrative status. Although regulated under Law Number 7 of 2021 at a rate of IDR 30,000 per ton of CO₂, the mechanism functions primarily as regulatory discourse or shadow pricing. Because technical implementation has faced delays, it has not yet altered real corporate cash flows.
Author Profiles
Rendi Herdiyanto is an academic researcher at Universitas Swadaya Gunung Jati. He specializes in corporate finance, environmental accounting, and accounting analytics within extractive industries.
Moh Yudi Mahadianto holds an advanced academic degree and serves as a faculty member at Universitas Swadaya Gunung Jati, focusing on strategic management accounting and corporate sustainability metrics.
Mardi is a scholar and researcher at Universitas Swadaya Gunung Jati, with expertise in financial accounting standards, taxation policy, and operational regression modeling.
Background: Mining in the Era of Climate Action
Indonesia's mineral and coal mining sector serves as a primary driver of national economic development and a major contributor to foreign exchange. However, extractive industries face a continuous dilemma between economic contribution and environmental degradation. Global climate goals under the Paris Agreement and Indonesia’s national target of Net Zero Emissions by 2060 have placed massive external pressures on these entities. Mining operations must navigate a shifting landscape of strict compliance, changing social expectations, and volatile financial performance. Following the post-commodity boom era, major listed issuers experienced notable corrections in their Return on Assets (ROA). For instance, the audited financial statements of PT Bukit Asam Tbk (PTBA) showed an ROA drop from 28.17% in 2022 to 16.23% in 2023, despite a 13% increase in coal sales volume. This anomaly indicates that operational escalation and sustainability compliance costs are reshaping the corporate financial framework, making an analysis of green parameters essential for future planning.
Methodology: Tracking Financials on the Indonesia Stock Exchange
The researchers applied a descriptive quantitative approach to evaluate the causal relationships between environmental policy variables and corporate profitability. The secondary data source comprised formal annual reports and sustainability reports published on the Indonesia Stock Exchange (IDX) website and individual corporate platforms. Using a purposive sampling technique, the study focused on 10 major mineral and coal mining companies listed on the IDX over a four-year observation period from 2021 to 2024, resulting in 40 distinct observational data points. The sampled entities included prominent industry actors:
- PT Alamtri Resources Indonesia, Tbk.
- PT Aneka Tambang, Tbk.
- PT Bayan Resources, Tbk.
- PT Harum Energy, Tbk.
- PT Vale Indonesia, Tbk.
- PT Indika Energy, Tbk.
- PT Indo Tambangraya Megah, Tbk.
- PT Resource Alam Indonesia, Tbk.
- PT Bukit Asam, Tbk.
- PT Timah Tbk.
Key Findings: The Divergent Impact of Green Priorities
The multiple linear regression analysis yielded varied strategic insights regarding how sustainability initiatives influence company returns:
- Environmental Costs Boost Profitability: Expenditures dedicated to preventing, improving, or overcoming operational environmental impacts (such as land reclamation and waste management) demonstrated a significant positive effect on Return on Assets (ROA).
- Green Investments Generate Short-Term Trade-Offs: Capital allocations toward low-emission technologies, renewable energy, or heavy electrification equipment showed a significant negative relationship with short-term profitability.
- Carbon Taxes Remain Materially Insignificant: The carbon tax policy showed no significant impact on current mining profitability.
The findings offer critical insights for policymakers, industrial managers, and market investors navigating the green transition. The positive impact of environmental costs validates the Legitimacy Theory framework, proving that corporate transparency and ecological dedication are not merely cost burdens. Instead, environmental spending operates as a social investment that secures the community license to operate, reduces legal risks, strengthens public trust, and stabilizes commercial activities. Conversely, the negative trend seen in green investments highlights a short-term financial trade-off. Transitioning to advanced low-carbon infrastructure requires massive initial capital expenditure. In the immediate term, this raises total asset bases and escalates depreciation expenses without generating an immediate, parallel surge in revenue, thereby lowering the ROA ratio. This creates a strategic dilemma for executives trying to balance immediate investor returns with long-term carbon competitiveness. Furthermore, the lack of statistical impact from the carbon tax stems from its current administrative status. Although regulated under Law Number 7 of 2021 at a rate of IDR 30,000 per ton of CO₂, the mechanism functions primarily as regulatory discourse or shadow pricing. Because technical implementation has faced delays, it has not yet altered real corporate cash flows.
Author Profiles
Rendi Herdiyanto is an academic researcher at Universitas Swadaya Gunung Jati. He specializes in corporate finance, environmental accounting, and accounting analytics within extractive industries.
Moh Yudi Mahadianto holds an advanced academic degree and serves as a faculty member at Universitas Swadaya Gunung Jati, focusing on strategic management accounting and corporate sustainability metrics.
Mardi is a scholar and researcher at Universitas Swadaya Gunung Jati, with expertise in financial accounting standards, taxation policy, and operational regression modeling.
Source
Rendi Herdiyanto, Moh Yudi Mahadianto, Mardi: Carbon Tax, Environmental Costs, and Green Investment on the Profitability of Mineral and Coal Companies. Asian Journal of Management Analytics (AJMA). Vol. 5, No. 3, Hal. 447-462
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