Serving both stockholders and stakeholders<\/p>\n
Vincent Lingga, The Jakarta Post, Jakarta<\/p>\n
While many, if not most, large companies in Indonesia are still
\nstruggling even just to comply with current laws, an increasing
\nnumber of business leaders in developing and developed countries
\nhave been promoting the principles of corporate social
\nresponsibility (CSR).<\/p>\n
CSR has many definitions. Some call it simply: socially
\nresponsible investing. Others promote the concept as good
\ncorporate governance. But the essence is the same -- it is no
\nlonger sufficient for companies to comply with the laws if they
\nare really serious about sustainable development in the long
\nterm, which will contribute to poverty alleviation.<\/p>\n
The basic tenets of the CSR concept are by and large similar
\nto the nine principles in the areas of human rights, labor and
\nenvironment, which the United Nations has been promoting through
\nits Global Compact Initiative.<\/p>\n
Panelists at the 4th Asian Forum on Corporate Social
\nResponsibility in Jakarta, which ended on Friday agreed that
\ncompanies should go beyond simply making profit, beyond complying
\nwith the laws and beyond philanthropy.<\/p>\n
The buzz-words at the two day conference -- organized by the
\nManila-based Ramon V. del Rosario\/Asian Institute of Management
\nCenter for Corporate Responsibility -- were \"socially
\nresponsible\", \"ethically right\" and \"environment friendly
\nbusiness practices\".<\/p>\n
But how can companies live up to these CSR principles in the
\nreal business world and still serve the interests of their
\nshareholders by making a profit. Any way one looks at it, a
\nbusiness is not sustainable without profit.<\/p>\n
The business environment in developing countries, where laws
\nare mostly inadequate, the governments are corrupt and law
\nenforcement is weak, is often not conducive to the implementation
\nof CSR.<\/p>\n
Most speakers, who are corporate chief executive officers,
\nstressed community development through the transfer of business
\nskills to rural people, the urban poor or small and micro-
\nenterprises as the most effective, sustainable way of
\nimplementing CSR.<\/p>\n
Donating to a worthy cause, though appreciated, is considered
\nless effective than consistent efforts to empower the local
\ncommunity to provide for itself.<\/p>\n
Bryan Dyer, Managing Director for Operations at PT PP London
\nSumatra Indonesia, a plantation company listed on the Jakarta
\nstock exchange, emphasized the need for companies to issue not
\nsimply a financial report, but a development balance sheet that
\naccounts for financial (economic) performance and achievements in
\nsocial and environmental development.<\/p>\n
Other panelists from such large companies as Shell Group,
\nUnilever, Gujarat Ambuja Cements Ltd. and Jakob Oetama, Chairman
\nof Indonesia's Kompas-Gramedia Group, presented CSR practices in
\nprojects designed to transfer business, technical and social
\ncompetencies to people. Companies, which cannot do CSR projects
\nby themselves, manage the jobs in partnership with professional
\norganizations or institutions.<\/p>\n
Put another way, CSR is about capacity-building for
\nsustainable livelihoods. It therefore respects cultural
\ndifferences and seeks to find the business opportunities in
\nbuilding the skills of employees, the community and the
\ngovernment. Building competence is the main objective, not merely
\nthrowing money around, as most state companies in Indonesia have
\nbeen doing through their small and micro-enterprise development
\nprograms.<\/p>\n
But capacity-building requires perseverance and even patience
\nbecause social and business competence grows similar to a healthy
\neconomy, not by leaps and bounds, but by percentages. The main
\nhallmarks of this process is that it utilizes, as much as
\npossible, local labor, local contractors, suppliers, even when
\nsubcontracting the jobs elsewhere could be easier and less
\nexpensive.<\/p>\n
The economic rationale is that good behavior is good business
\nbecause having prosperous businesses side by side with slums or
\npoor communities fosters resentment and eventually resistance.
\nThis means that a company's best defense is its reputation in the
\nsociety<\/p>\n
There are, indeed, real limits imposed upon businesses by the
\nshort-term nature of the market. But research has shown that
\nsustainable value creation follows from steady, quiet investment
\nover a period of time rather than chasing every quarter's figures
\nfor publicity.<\/p>\n
CSR case studies presented at the conference also showed how
\nsocial responsibility can become an integral part of the wealth
\ncreation process and still, with proper management, is able to
\nenhance business competitiveness.<\/p>\n
CSR then is often about how company directors resolve the
\ndilemma of conflicting stakeholder demands that requires delicate
\njudgment. Sometimes, especially in developing countries, it is
\nabout leadership and educating shareholders on the imperative of
\nCSR because it is the shareholders who can decide to integrate
\nCSR programs into the business mission and strategies for the
\nmanagement board to implement.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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