The Effectiveness of PROPER in Promoting Social Innovation and Sustainable Environmental Management in Indonesia

Abstract

This study aims to analyze the effectiveness of Indonesia’s Environmental Performance Rating Program (PROPER) in fostering social innovation and sustainable environmental governance that contribute to achieving the Sustainable Development Goals (SDGs). Using a qualitative descriptive approach, data were collected through in-depth interviews with Community Development Officers from gold-rated candidate companies in the oil and gas sector, complemented by document analysis of national reports, sustainability disclosures, and PROPER guidelines. Thematic analysis was applied to identify key institutional and organizational patterns shaping corporate sustainability behavior. The findings reveal that PROPER’s effectiveness operates through dual mechanisms: institutional pressure (coercive and normative) that triggers compliance and transformation, and signaling mechanisms that enhance reputational legitimacy and internal incentives for innovation. These mechanisms create a self-reinforcing loop that drives companies beyond compliance toward shared value creation. The study highlights PROPER’s strategic role as an information-based regulatory instrument that integrates transparency, accountability, and collaboration across stakeholders. Its evolution demonstrates how regulatory frameworks can catalyze institutional learning and embed sustainability within corporate strategies. This research contributes original insights into how environmental disclosure programs in developing countries can transform governance systems and accelerate progress toward national and global sustainability goals.