Impact of Climate Change: Profitability Perspective

Abstract

The purpose of this study is to examine the impact of climate change on the plantation sector, service sector, banking sector, and trade or manufacturing sector from a profitability perspective through net profit margin. The research method is descriptive and qualitative, analyzing 6 companies in 4 sectors over the period of 2019-2023, with a total of 30 samples. The findings show that climate change does not affect the telecommunications sector as it is able to stabilize sales, thus impacting profitability. The banking sector is insignificantly affected by climate change due to its ability to minimize risks when granting loans to creditors effectively. However, climate change significantly impacts the palm oil plantation and trade sectors, especially fertilizer trade, due to supply chain disruptions and price increases caused by environmental effects. This leads to decreased productivity from the pressure of raw material price fluctuations, market demand, and rising operational costs. One way to mitigate this is through adaptation strategies, including the implementation of green technologies and operational efficiency to sustain profitability. Both internal and external factors contribute to the company’s ability to generate proportional profits with increased revenue, achieving an optimal net profit margin and supporting the realization of a Gold Indonesia in 2045.