Determining the Quality of Industrial Relations through ESG Practices in the Palm Oil Industry

Abstract

This study aims to examine the effect of the social dimension of Environmental, Social, and Governance (ESG), proxied by Employment, Training, and Supplier Social, on the quality of industrial relations in the palm oil industry.

This research employs a quantitative approach with panel data regression. The sample consists of palm oil companies listed on the Indonesia Stock Exchange during 2022–2024. The Random Effects Model (REM) with Estimated Generalized Least Squares (EGLS) is applied to address heteroscedasticity. The study is grounded in stakeholder theory and social exchange theory.

The results show that Supplier Social has a positive and significant effect on industrial relations, while Employment and Training do not have significant effects. However, all variables simultaneously influence industrial relations.

The study is limited by a small sample size and short observation period, which may affect generalizability. Future studies are recommended to include broader sectors and additional variables.

Companies should strengthen ESG practices in supply chains to improve industrial relations and ensure sustainable labor practices.

This study shifts ESG research from financial performance to industrial relations using disaggregated ESG variables in the palm oil industry context.