Implementing a Green Business Model in the Indonesian Garment Industry

Abstract

The increase in carbon emissions contributes to the growth of green business trends, as popularized by several climate change discourses. Ever since the Paris Agreement was established in 2015, Indonesia has declared its commitment to reducing carbon emissions. The Minister of Finance has also been elected as a co-chair of the 2021–2023 Coalition of Finance Ministers for Climate Action. As a result, the Indonesian government has begun reinforcing its green economy agenda by optimizing the green business, one of which is through the garment industry. The Law no. 3 of 2014 on the Green Industry Standard and the Ministry of Industry Regulations no. 13 of 2019 on the Green Industry Standard for textile industry and products support this notion. Consecutively, the Indonesian garment industry and textile exports show progressive annual growth as follows; 3,8% in 2017, 8,8% in 2018 and 15,3% in 2019. In spite of the following regulations, not many garment industries have implemented a green business model, as unveiled in the 2018s National Textile Dialogue. The number of Green Industry Award recipients from 2010 to 2018 still does not compare to the total number of garment factories in Indonesia. As a labor-intensive industry with competitive price, the garment industry still has a long way before green business manages to successfully penetrate through. This study aims to implement of a green business model in the Indonesian garment industry. A throughout interview was conducted with six company leaders in the related fields in Boyolali, Klaten and Yogyakarta, one of which is part of considerably the biggest garment factory in Indonesia. The novelty of this research is mainly in the methodology used. This study uses a qualitative approach with Interpretative Phenomenological Analysis (IPA), which examines how participants build the meaning of green business in the social and personal world. So far, it is rare for green business research in the garment industry to analyze using IPA. The research reveals that the green business implementation requires high costs. Regardless, when implemented thoroughly, green business increases the level of efficiency and productivity within the factory. All company leaders agreed that sustainability becomes the main goal of green businesses. The role of the government remains important in the green business implementation, especially in raw material procurement, license simplification and green business subsidies.