Hatching a Sustainable Business: Japfa’s Journey Towards Impact
Case Study Overview
This case explores Japfa’s journey to embed impact across its business operations and develop a unique competitive edge. It illustrates how Japfa’s senior leadership team kick-started its efforts to institutionalise sustainability across the organisation in 2016, building on the company’s core mission and values, established since its founding in 1971 by Ferry Teguh Santosa. It maps how their journey evolved from measuring sustainability to meet regulatory requirements, to impact creation. Although “impact” was not explicit in the company’s lexicon, Japfa’s commitment to creating impact was reflected in its clear intentions to benefit its stakeholders and community, backed by its willingness to track results. It is a good example of how an Asian company can develop a pathway towards impact without using the language of impact. In this way, the case offers a perspective on how the culture and values of well-established Asian companies are more aligned with the contemporary notions of impact than is commonly appreciated.
As a publicly listed company, Japfa took steps to carefully balance commercial interests with its transformation towards impact. In particular, the case captures how Japfa’s senior leadership built a strong business case to make investments in sustainability initiatives, got stakeholders on board, and developed a systematic and science-based approach to measuring and embedding sustainability in its business operations. The case demonstrates how these initiatives eventually created commercial value for Japfa, enabling the company to tap into new and innovative sources of funding.
The case deep-dives into the life cycle assessment (LCA) and highlights Japfa’s clear ambition to be accountable for impact, through measurement of positive and negative impact. The case examines how the LCA informed the key performance indicators (KPIs) for the sustainability linked bond (SLB) issued by PT Japfa Tbk, a subsidiary of Japfa, in 2021. It examines the lessons learnt from raising the SLB, which was listed on the Singapore Stock Exchange in 2022, and drew participation from global investors, particularly from Europe. It also studies Japfa’s ongoing efforts to leverage its sustainability initiatives to secure capital at discounted rates through preferential sustainability-linked-loans (SLLs). Finally, it explores how Japfa is evolving its sustainability strategy and undertaking new initiatives (for instance, the LCA in Vietnam) to expand the scope of sustainability across its different markets and product segments.
Teaching Objectives
- How to build a compelling business case internally to drive sustainability across the organisation, especially in the face of uncertainty.
- How to develop a shared understanding of impact and culture across a multinational organisation.
- How to set up and use a data backed approach to institutionalise sustainability in the organisation and recognise challenges associated with it.
- How to take calibrated risks and make informed decisions through a systematic and patient science-based, data driven approach.
- How Asian corporations engage with a wider set of stakeholders, especially given the history of active involvement in community development and engagement with a wider set of stakeholders. As such, the idea of impact and social responsibility are not new per se, especially in Asia, although its formalisation may be recent.
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This case study was produced by the Centre for Impact Investing and Practices (CIIP), in collaboration with Artha Global. It is developed as a basis for class discussion. It is not intended to serve as an endorsement, source of primary data, or illustration of either effective or ineffective management. This case includes some copyrighted materials kindly shared by Japfa Ltd. for use as case exhibits. The authors gratefully acknowledge Japfa Ltd.’s permission to use these within this case study.
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