Page 71 - The Ethics of ASEAN

The Rise of Corporate Ethics in ASEAN

the definition of development cannot be separated from sustainability and social
responsibility. As such, Pertamina is a stakeholder company under the mandate of the
Indonesian Ministry of State-Owned Enterprises. Recently the Ministry announced its
2030 action plan based on 10 of the 17 UN Sustainable Development Goals. These are (1)
No Poverty, (4) Quality Education, (5) Gender Equality, (7) Affordable and Clean Energy, (8)
Decent Work and Economic Growth, (12) Responsible Consumption and Production, (13)
Climate Action, (14) Life Below Water, (15) Life on Land and (16) Peace, Justice and Strong
Institutions.
Pertamina’s social responsibility includes providing energy cost efficient services
while reducing the impact of greenhouse gasses. In its transition to renewables,
Pertamina is looking into sustainable solutions like geothermal energy, biofuels and
solar energy as well as supporting the transition to electric vehicles in Indonesia. As the
world’s largest archipelago nation, transition to new forms of energy is challenging due to
Indonesia’s size and its thousands of islands. To this end, Indonesia will maintain fossil fuel
production while keeping carbon emissions low.
In addition to “E” of ESG, Pertamina’s “S” engagement for social responsibility will shift
from a core business-based approach to a community development-based approach.
Pertamina has an opportunity to provide community services like waste-water treatment
and waste reduction programs, environmental preservation by sustaining forests,
improving public welfare and community development.
Arya believes that ESG is inseparable from Indonesia’s development. The corporate
ethics of Pertamina can have a measurable development impact for the country by
reducing its negative impact on the environment.

Ethical Takeaways
For all our speakers, the rise of corporate ethics represents a shift from shareholder
capitalism to stakeholder capitalism. Under shareholder ethics, the duty of those
responsible for managing a company is to deliver maximum returns to shareholders in the
form of dividends and an increased share price.
Contrary to the shareholder ethics espoused by the economist Milton Friedman,
stakeholder ethics was formulated in 1984 by American philosopher and professor of
strategy Robert Edward Freeman in his book Strategic Management: A Stakeholder
1
Approach. The stakeholder approach clearly states that managers should be ethical. They
should influence stakeholder behaviour and create policies that encourage people to make
the world a better place. In stakeholder ethics every individual (business owner, executive,
employee, supplier, customer, and even competitor) is an actor whose duty is to contribute
to the common good.
Stakeholder ethics represents an emerging ethic as well as a shift to a more
responsible rules-based ethics, as described by our speakers. They provide a good
understanding of the different perspectives of ASEAN’s change in business ethics.

1 Strategic Management: A Stakeholder Approach (1984) by R. Edward Freeman, Boston: Pitman. ISBN 978-
0273019138.

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