CSR directive to favor firms

The Jakarta Post , Jakarta | Thu, 12/10/2009 1:19 PM | Business

A planned regulation on CSR is likely to side with businesses, with the government’s earlier intention to cap minimum CSR funding and manage its implementation being wiped from the draft.

Maria Radyati, a lecturer from Trisakti University who is also a member of a team drafting an implementing regulation for Article 74 of the 2007 Corporate Law, on Wednesday said there would not be a cap on the minimum corporate social responsibility (CSR) allocations of companies since “this would be disastrous.”

“When the law was enacted, companies already had unscrupulous people standing on their doorsteps, citing the law and asking for CSR funding.

“If the implementing regulations were to mention a figure or a percentage for CSR funding, these people would have even more power to do those things,” Maria said Wednesday during a telephone interview.

The law stipulates that companies whose operations deal with natural resources are obliged to implement CSR and environment protection programs.

It also says spending on the programs should be properly and appropriately calculated and budgeted as company costs.

Two years after the enactment of the law, the government and the private sector have not yet come to an agreement on what the implementing regulations should include.

The government initially intended to require companies to spend 5 percent of their profits on CSR programs.

Maria further said there had been plans to make it compulsory for companies to hand over funding for CSR programs to local authorities, but this had been eliminated from the draft — a move that would please companies.

“We are still negotiating with the government… Because we are the ones who know what people in our surrounding communities need,” Indonesian Employers Association (Apindo) chairman Sofjan Wanandi said on the sidelines of a seminar on CSR in Jakarta.

Maria, who is also the program coordinator of an MBA program on CSR in Trisakti, agreed.

“Some companies may wash their hands of their CSR programs by saying local governments are responsible for implementing programs.

And when the government fails to implement them, local communities will start protesting about
companies’ lack of concern for social and environmental issues,” she said.

Wednesday’s seminar heard a presentation from a confederation of Norwegian enterprises (NHO) on how CSR programs are implemented in Norway.

NHO assistant director Vidar Lindefjeld said companies should focus on making their businesses corruption-free and sustainable, and on upholding basic human rights, employee welfare and environmental concerns.

“At the end of the day, the market will choose companies that are doing well ... over those who do a lot of community development programs but which are corrupt or employ child labor,” Vidar said. (adh)