ENVIRONMENTAL TAX AS A DRIVER OF GREEN INNOVATION: PERCEPTIONS OF MSMES IN ARU ISLANDS REGENCY AND IMPLICATIONS FOR SUSTAINABILITY REPORTING

Abstrak

This study aims to analyze the perceptions of Micro, Small, and Medium Enterprises (MSMEs) in Aru Islands Regency regarding the potential application of environmental tax as a driver of green innovation and its implications for sustainability reporting practices. The research approach used is qualitative with a case study method. Data were collected through in-depth interviews and focus group discussions (FGD) with five MSME owners from various sectors. The results show that MSMEs' perceptions of environmental tax are divided; some view it as an additional financial burden, while others begin to see it as a stimulus to innovate and adopt more environmentally friendly business practices, especially to maintain competitiveness. The green innovations adopted are still simple, such as waste management, energy efficiency, and the selection of sustainable raw materials. This study also found that awareness of sustainability reporting is still very low. However, pressure from stakeholders, such as consumers and local governments, as well as fiscal incentives, can be a catalyst for MSMEs to start adopting simple sustainability reporting. The implications of this study are the importance of a gradual and educational approach to socialization and implementation of environmental taxes, accompanied by technical assistance for MSMEs to facilitate the transition to a green economy and increase accountability through sustainability reporting.