After read my girlfriend’s blog-post on her experience participating in a copper mining company’s Corporate Social Responsibilty (“CSR“) program, I was encouraged to start writing again (yeah, my blog posting statistic so far is very bad, i.e. once in a month). In this ocassion, I don’t want to share my experience on participating in a CSR program nor my travelling story but an opinion from legal point of view regarding the CSR.
As we known, CSR has been regulated since 2007 under Law Number 40 of 2007 on Limited Liability Company (“Company Law“). Actually, Company Law regulates CSR in only 1 (one) article, i.e. Article 74. Another one (Article 1 point 3) is only stated on its definition, i.e:
“The commitment from Company to participate in the sustainable economic development, in order to increase the quality of life and environment, which will be valuable for the Company itself, the local community, and the society in general.”
Article 74 Company Law regulates that the Company having its business activities in the field of and/or related to natural resources, shall be obliged to perform its Social and Environmental Responsibility (or generaly known as CSR). As for, the Social and Environmental Responsibility as referred to shall constitutes the obligation of the Company which is budgeted and calculated as the cost of the Company, implementation of which shall be performed with due observance to the appropriateness and fairness. Furthermore, the Company which fails to perform such obligation shall be imposed with sanction in accordance with the provision of regulation.
From the abovementioned provision, we can understand that the Company is given an obligation to conduct the CSR with due observance to the appropriateness and fairness but since there is no ‘real’ sanction that can be imposed (based on Company Law) therefore not many companies which having its business activities in the field of and/or related to natural resources have conducted CSR.
In addition to Company Law, there is also a law which regulates CSR. Article 15 point b Law Number 25 of 2007 on Investment (“Investment Law“) states that every investor is required to implement the company’s social liability. The provision on sanction is actually regulated (unlike the Company Law) under Article 34 jo. Article 15 point b. Such provision states that any company or individual set forth in Article 5 that fail to fulfil their obligation pursuant to Article 15 may receive administrative sanction in form of:
a. Written warning;
b. Business restriction;
c. Suspension of business and/or investment facility; or
d. Revocation of business license and/or investment facility.
However, based on the statistic prepared by the Ministry of Environment of Republic of Indonesia trough its program named ‘PROPER’ (Program Penilaian Peringkat Kinerja Perusahaan dalam Pengelolaan Lingkungan Hidup) Year 2011, there were 995 (nine hundred and ninty five) companies registered. From such total number, only 5 (five) companies which were given ‘Gold’ predicate, 106 (a hundred and six) which were given ‘Green’ predicate, 552 (five hundred and two) for ‘Blue’ predicate, 283 (two hundred and eigthy three) for ‘Red’ predicate and 49 (forty nine) for ‘Black’ predicate.
In such PROPER program, Gold and Green shall be given to the company which conducted environmental management beyond compliance and also CSR. Meanwhile, Blue is for the company which fulfilled the required compliance. Red and Black shall be given to the Company which failed to comply or even caused environmental damage.
From such sample, it can be argued that there were only small number of companies which have already conducted CSR with due observance to the appropriateness and fairness.
For around 5 (five) years, there has been no implementing regulation on CSR. However, in 2012, the Government of Republic of Indonesia eventually enacted the implementing regulation on CSR in Government Regulation Number 47 of 2012 on Corporate Social Responsibility (“CSR GR“). Nevertheless, there is also no ‘real’ sanction regulated under this Government Regulation.
Speaking on the law enforcement, may be it because of the government institutions which monitoring the CSR program are not specific. Ministry of Social Affairs, State Ministry of Enironment and Investment Coordinating Board or even Financial Service Authority may have their own interest to monitor.
The Company having its business activities in the field of and/or related to natural resources shall usually has its business activities on remote area (not in town area) such as in forest, river, hill and so on. It can be argued that the monitoring participation from Local Government shall be required. If it is the case then the Local Government shall need a basis in the form of Regional Regulation and its implementing regulation.
Much less, based on Article 15 Paragraph (1) Law Number 12 of 2011 on Legal Drafting (“Legal Drafting Law“), in addition to the Law, Regional Regulation (both Provincial and Regency) are the only laws and regulations structure which may consist any criminal sanction. The criminal sanction can be strong addition to the administrative sanction so that I can wish that the Company shall be more willing to conduct the CSR.
However, I can just hope that the Company such as mining company, oil and gas, plantation or any other Company that may cause any environmental damage shall conduct the CSR program at its best. The Company conducts its business activity on the same planet with the social citizen in the neighbourhood and also the environment itself. So, please heal the world and maintain our sustainable Earth!