Sustainability Practice on SMEs in Indonesia

The COVID-19 pandemic severely disrupted MSMEs in Indonesia, posing financial and operational challenges while underscoring the critical importance of sustainability practices in this dominant economic sector. This study explores how the pandemic affected MSMEs' sustainability practices in Indonesia, surveying over 1,000 firms. It examines the impact of revenue decline and factors like firm age, profitability, and gender on these practices. The study reveals that a significant majority of these firms have maintained sustainable practices, including waste management, energy efficiency, natural ventilation, and the incorporation of green spaces during the pandemic crisis. Interestingly, revenue declines during the pandemic did not affect these practices, suggesting other drivers influence sustainability in these firm. Statistical analysis highlights that younger MSMEs in the sample exhibit a stronger commitment to sustainability practices. Obtaining environmental permits has also been identified as a key driver, ensuring regulatory compliance and enhancing resource management. While these MSMEs play a vital role in economic growth and resilience, their sustainability efforts are further strengthened by regulatory frameworks and local procurement initiatives. Moreover, the study finds no significant impact of gender on sustainability leadership, emphasizing that Indonesian MSMEs focus on strategic and environmental goals rather than demographic factors. This highlights the value of inclusive leadership in driving sustainability efforts across the sector.