Looking at corporate social responsibility

Looking at corporate social responsibility

Dan Kingsley, Jakarta

Private enterprise funded development programs are becoming
more widespread in the business world as more and more
enterprises are becoming concerned with the social implications
of their activities.

This concern is reflected in voluntary business initiatives
that some international firms have made to varying degrees of
success in the Indonesian extraction industry. These may comprise
employee and volunteer programs, training and education
activities for local communities, micro credit schemes, supplying
schools and small businesses with equipment.

The Corporate Social Responsibility (CSR) programs in
Indonesia are run out of corporate headquarters with department
names such as "community development", "business development",
community relations" or just the basic "public relations".

Although well intentioned, these operations usually have a
greater impact as public relations vehicles benefiting the
corporation than they do as implementers of projects that have
measurable development benefits to the communities affected by
their corporate operations.

Although the well-intentioned purpose of the operations in to
assist the local communities surrounding the extraction
operations, the programs are usually implemented from the office,
and by nature of this are not usually successful. It is my
contention that if the programs initiated are public-private
initiatives they would be much more effective, both in securing
sustainable objectives through government "buy in" and through a
genuine community-corporate collaboration.

It is certain that private sector funded CSR operations may
have some benefit in assisting social development, but I am sure
that all stakeholders will agree that the benefits relative to
the costs are very minimal. This is certainly well known to the
financial controllers who calculate the per capita cost of such
programs.

Having been involved with both public and private sector
funded projects, I have seen no correlation between the funds
spent on the specific project and the level of successful
sustainable development. The greatest successes have always been
those that have the intimate participation of both the local
community and the local corporate operations- especially the
employees.

This inefficiency would not be permitted if the goal were
revenue; something the NGO's, corporations and government
understand. Given that impact is very difficult to quantify,
these two stakeholders tend to work separately, with a great deal
of disconnect from the communities they are tasked with
assisting.

The first major problem is the lack of commitment from the
Indonesian government to impose rule of law to ensure development
in the communities. Given that effective implementation of CSR
programs requires the machinery of an effective democratic
government and civil society, this is something that the
corporations cannot count on in the short term.

It is still premature to expect this from the current
government given the lack of good governance and the structural
changes required to develop accountable civil programs.
Indonesian government stakeholders can only be expected to
support CSR programs in Indonesia when the tools of civil society
become stronger and legislatively sound.

The second is the lack of interaction with each other or with
the community. Very little impact in terms of sustainable
development can be achieved if politicians, corporate boards,
special interest funded NGO's and shareholders are interacting
together and alone, without the proper input for the affected
communities.

Public-private sector interaction is vital for success, and
it must come at the very beginning of program design and
implementation. Each community has different needs, social and
economic, and without understanding them individually, effective
development will not result.

Corporate community involvement is specific to each
individual enterprise, but through partnership between company
employees and the community, with financial support from the
corporations, programs are often successful.

There is a two-pronged approach to successful implementation
of community development programs: partnerships involving the
corporation and community actors, and employee driven initiatives
carried out by the corporation. The key is to implement these
programs such that they are market driven with accountability and
that they rely on some sort of return on investment made by the
community and the corporation. Those returns may be in the form
of improved education and healthcare that affects all
stakeholders including the government, or may be in the form of
improved local private sector enterprise that will benefit the
local communities economy and the corporate operations' supply
chain.

Based on the input I have received from the extraction
industry and some of the local communities affected by that
industry, it seems that a simple formula exists for initiating
sustainable community development that can have a positive
impact. In most cases it is a matter of focusing on the simple
tasks, but through sincere involvement from the corporate
management side.

It also requires corporate commitment to development of
important market systems such as micro finance and distribution
institutions, and it requires the direct participation of the
employees in the community. This last factor is important in any
development activity, as the employees are the stakeholders that
have the most interaction with the community, and share the same
basic cultural and social understanding of how to develop the
local economy. The community will attend to its social needs once
the local economy can be integrated into local operations and is
able to survive on its own through basic market forces.

Productive results can come from effectively implemented CSR
projects, and can have great benefits to corporations in terms of
leveraging costs of risk management, however it is important to
keep it simple.

The writer is managing Director of Trade Management and
Development Services Ltd. and is involved in projects within
Indonesia and other SE Asian countries. He can be reached at
dkingsley@tmiconsulting.com