Corporate Social Responsibility (CSR) by Companies in Indonesia

Indonesian Positive Law-

Social and environmental responsibility is a term used in the provisions of laws and regulations in Indonesia in terms of what is commonly referred to as corporate social responsibility (CSR).

In this description it is stated regarding:

Definition of Corporate Social Responsibility (CSR)

Social and environmental responsibility has the meaning as stated in Article 1 number 3 of Law Number 40 of 2007 concerning Limited Liability Companies is the company’s commitment to participate in sustainable economic development in order to improve the quality of life and the environment that is beneficial, both for the company itself, the local community, and the community in general.

Legal Basis of Corporate Social Responsibility (CSR)

The Company’s obligation to carry out social and environmental responsibility, among others, is regulated in the provisions of the following laws and regulations:

1. Article 74 of Law Number 40 of 2007 concerning Limited Liability Companies, which states that companies that carry out their business activities in the field and / or related to natural resources are obliged to carry out social and environmental responsibilities.
2. Article 4 of Government Regulation Number 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies, which states that social and environmental responsibility is carried out by the board of directors based on the company’s annual work plan after obtaining the approval of the board of commissioners or GMS in accordance with the company’s articles of association, unless otherwise specified in the laws and regulations.
3. Article 15 of Law Number 25 of 2007 concerning Investment, which states that every investor is obliged to carry out corporate social responsibility. The social responsibility in question is as mentioned in the explanation of the article, which is the responsibility attached to each investor company to continue to create a harmonious, balanced relationship, and in accordance with the environment, values, norms, and culture of the community
4. Article 11 paragraph (3) letter p of Law Number 22 of 2001 concerning Oil and Gas, which states that the cooperation contract as referred to in paragraph (1) must contain at least the main provisions, namely, the development of surrounding communities and the guarantee of the rights of indigenous peoples.
5. Article 108 paragraph (1) of Law Number 4 of 2009 concerning Mineral and Coal Mining, which states that holders of mining business licenses and special mining business permits are required to compile community development and empowerment programs.
6. Article 108 of Government Regulation Number 23 of 2010 concerning the Implementation of Mineral and Coal Mining Business Activities, which states that every holder of a mining business license for production operations and a mining business license specifically for production operations is required to submit a report on the realization of community development and empowerment programs every six months to the minister, governor, regent/mayor in accordance with their authority.
7. Article 65 paragraph (2) letter b of Law Number 21 of 2014 concerning Geothermal, which states that in the implementation of geothermal, the community has the right to benefit from geothermal business activities through the company’s obligation to fulfill corporate social responsibility and/or the development of the surrounding community.
8. Article 36 paragraph (1) letter c of Law Number 13 of 2011 concerning the Handling of the Poor, which states that one of the sources of funding in handling the poor is funds set aside from the company.
9. Article 36 paragraph (2) of Law Number 13 of 2011 concerning the Handling of the Poor, which states that the funds set aside from the company as referred to in paragraph (1) point c are used as much as possible for community development.
10. Article 41 paragraph (3) of Law Number 13 of 2011 concerning the Handling of the Poor, states that business actors participate in providing community development funds as a manifestation of social responsibility for handling the poor.

Based on the legal basis for the implementation of social and environmental responsibility as mentioned above, it can be concluded that social and environmental responsibility is an obligation for any limited liability company whose business activities are related to natural resources, to improve the welfare of the surrounding community through development and empowerment, as well as the company’s internal social society.

Corporate Social Responsibility (CSR) Mechanism in the Company

The mechanism of social and environmental responsibility in the internal business is regulated in Article 4 of Government Regulation Number 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies, as follows:

1. Implemented by the board of directors based on the company’s annual work plan.
2. Obtain the approval of the board of commissioners or the general meeting of shareholders.

Annual Work Plan

The annual work plan is prepared and contains a plan of activities and budgets needed in the implementation of sosail and environmental responsibilities, taking into account the appropriateness and fairness and is calculated as the company’s costs.

Annual Report

The implementation of social and environmental responsibility is contained in the company’s annual report and is accounted for to the general meeting of shareholders.

Amount of Corporate Social Responsibility (CSR) Budget

The amount or value or nominal budgeted by the company is not expressly determined in the provisions of laws and regulations. This tends to the company’s moral responsibility in developing and empowering the social community and the surrounding environment.

Use of Corporate Social Responsibility (CSR) Budget

The use of the company’s social and environmental responsibility budget based on the provisions of laws and regulations is entirely in the context of community development and development.

Guidance and development carried out by the company based on the provisions of Article 3 paragraph (2) of Government Regulation Number 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies can be carried out within the company’s environment and outside the company’s environment.

Based on the provisions of Article 36 paragraph (1) letter c of Law Number 13 of 2011 concerning the Handling of the Poor, which states that one of the sources of funding in handling the poor is funds set aside from the company.

The Company can use the social and environmental responsibility budget in the context of development and empowerment in sectors such as education, infrastructure health, and socio-cultural communities. (RenTo)(230722)