Corporate Sustainable Development Model: Employee Perceptions from Gold Mining and Aluminum Smelting Companies in Indonesia

Abstract

At a corporate level, implementing sustainable development implies undertaking corporate activities which contribute to realizing a development that meets the needs of the present without compromising the ability of future generations to meet their own needs, as defined by the World Commission and Environmental and Development (1987). This research seeks to understand perceptions of employees about corporate sustainable development in social, economic and environmental areas. Additionally, it intends to understand a set of critical factors that underlies employee’s orientation toward environmental sustainability. Two cases are scrutinized for these purposes: a gold mining company (in West Java, Indonesia) and an aluminum smelting company (in North Sumatra, Indonesia). Mining and smelting represent industrial operations which are highly exposed to, and define, a range of critical issues associated with sustainable development. Moreover, mining and smelting is expected to signify a varying context along the value chain of extractive industries. For these two selected cases, 60 and 80 managerial level employees are surveyed, respectively. Sustainable development model in this study is analyzed through a partial least squares approach of the Structural Equation Model (PLS-SEM). In general, the findings suggest a statistically significant difference in causal relation of the two samples of the structural model in concern, which is indicative of the role of corporate context to explain the variation. In more specific, the study found that the relation between employee behavior and attitude toward the environment is less significant in the case of gold mining; this is in contrast to the case of aluminum smelting which found a significant effect. Meanwhile, the relation between regulation and employee’s attitude toward the environment in the case of aluminum smelting suggests no statistical significance.

Keywords: Corporate Sustainable Development, Environmental Sustainability Orientation, partial least square, gold mining, aluminum smelting, Indonesia.