How Do Oil Companies in Emerging Country Manage Carbon Emissions to Improve Sustainability Reporting? A Case Study of PT Pertamina

Panjaitan, Togar Wiliater Soaloon and Panjaitan, Thyophoida W S and Purba, Bernando (2025) How Do Oil Companies in Emerging Country Manage Carbon Emissions to Improve Sustainability Reporting? A Case Study of PT Pertamina. [UNSPECIFIED]

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Abstract

This study examines PT Pertaminas management of decarbonization initiatives and the improvement of its Environmental, Social, and Governance (ESG) performance. By examining scientific literature and sustainability disclosures, this study evaluates corporate carbon management strategies. It focuses on three main areas: direct emissions from operations (Scope One), indirect emissions from energy purchases (Scope Two), and indirect emissions from the entire value chain, including product usage (Scope Three). PT Pertamina exceeded its 2023 emissions reduction target by 124%, decarbonizing 1.13 million tons of CO₂e and earning the highest global ESG rating among integrated oil and gas companies, according to Sustainalytics. The sale of B35 biodiesel has further reduced emissions by 28 million tons annually, underscoring its leadership in green energy development. However, critical challenges remain, including reliance on palm oil-based biofuels, which raise concerns over deforestation and biodiversity loss, and the high capital and policy barriers facing carbon capture, utilization, and storage technologies. Despite improved ESG ratings, high Scope Three emissions highlight the need for a more profound systemic transformation beyond operational improvements. Thus, while PT Pertamina’s achievements contribute to Indonesia’s 2060 net-zero goal, long-term sustainability requires transparent reporting, technological innovation, and a fundamental shift in business models. This case offers key insights into the opportunities and limitations of decarbonization strategies within emerging economy contexts.

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