Adaptions to Indonesian expectations
Tarje I. Wanvik
“Anything can be located anywhere”
“Every firm, every economic function is – quite literally, grounded in specific locations”
Motivation Access to (cheap) semi skilled / skilled labour
Access to cheap unskilled labour
Access to Indonesian / South East Asian consumer market Access to natural resources
Profitable regulatory framework
“Localised” risks identified 0 % 20 % 40 % 60 % 80 % 100 % 120 %
Corruption
Bureaucracy
Political instability
Economic instability
Regulatory issues
Safety issues
Environmental issues
Workers rights' issues
Competition issues
Other
“Localised” risks identified 0 % 20 % 40 % 60 % 80 % 100 % 120 %
Corruption
Bureaucracy
Political instability
Economic instability
Regulatory issues
Safety issues
Environmental issues
Workers rights' issues
Competition issues
Other
Talking points
� The CSR law – Law 40/2007 and its implications
� Attitudes towards CSR among Norwegian companies in Indonesia
� Stakeholder identification � Actual Corporate Social Responsibility
activities � Concluding remarks
Responsibility triangle
Do as the stakeholders requires
Ethical
Economic
Legal
Be legal
Be profitable
Be ethical
Do as the stakeholders desire
Do as the stakeholders requires
Do as the stakeholders expect
Philanthropic
Be a good corporate citizen
Carroll (2004)
Law 40 / 2007, article 74 1. Limited liability companies in natural resource sectors (or
connected with natural resources) are obliged to implement Corporate Social and Environmental Responsibility.
2. Corporate Social and Environmental Responsibility, represents a responsibility of a limited liability company that is budgeted for and calculated as an expense of that company,
3. Limited liability companies that do not implement their obligation will incur sanctions in accordance with the provisions of legislative regulation.
4. Further provisions will be laid down in a Government Regulation (Peraturan Pemerintah).
“Sleepwalking” Law
� No regulation yet, but… � Long tradition of social expectations � Tender processes � Standard Operational Procedures � Licence to Operate
“Sleepwalking Law”
� No regulation yet � Long tradition of social expectations � Tender processes � Standard Operational Procedures � Licence to Operate
“Sleepwalking Law”
� No regulation yet � Long tradition of social expectations � Tender processes � Standard Operational Procedures � Licence to Operate
“We do CSR projects, and we like to see our name on the project. This is documented in our tenders, and that is very important. CSR is part of the tender selection of the government” (CEO, Company A)
“Sleepwalking Law”
� No regulation yet � Long tradition of social expectations � Tender processes � Standard Operational Procedures � Licence to Operate
“Sleepwalking Law”
� No regulation yet � Long tradition of social expectations � Tender processes � Standard Operational Procedures � Licence to Operate
“The Mayor constantly refers to our company as the best operator in the area” (CSR adviser Company B)
Blinded by the right
� The recognisable Norwegian � Looking good � Doing good � Being good
Blinded by the right
� The recognisable Other � Looking poor � Doing poor � Being poor
”CSR? Isn’t that only a result of the naïve Norwegian regime of goodness” (Employee, Company B)
“A presentation of CSR components and other social and environmental issues is superfluous, because the bigger narrative about the “Norwegian way of doing things”, also involves strong social and environmental implications” (CEO, Company B)
Stakeholder identification
� Who are our primary stakeholders � Strong state � Corruption issues � Weak NGOs � Lack of experience of negative attention
Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %
Owners Workers
Shareholders Subsidiaries
Under-subsidiaries Indonesian media
International media Norwegian media
Local NGOs International NGOs
Norwegian NGOs Local government
Regional government National government
Norwegian authorities, including Customers
Indonesian consumer market International consumermarket Norwegian consumer market
Other
Primary stakeholders All stakeholders
Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %
Owners Workers
Shareholders Subsidiaries
Under-subsidiaries Indonesian media
International media Norwegian media
Local NGOs International NGOs
Norwegian NGOs Local government
Regional government National government
Norwegian authorities, including Customers
Indonesian consumer market International consumermarket Norwegian consumer market
Other
Primary stakeholders All stakeholders
Government
“It is not easy to do business in Indonesia now. Before, Suharto and his inner circles were the only real stakeholders. Today, there are so many more stakeholders, and they are not easy to please. But you need their signature”. (Publish What You Pay Indonesia)
“Local government bodies are very worried about community impact. Unrest is the last thing they want. There is a strong pressure that we conduct various levels of socialisation” (CEO, Company F)
“We have very little contact with the Indonesian authorities, and quite frankly we try to avoid it as much as possible” (CEO, Company H)
Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %
Owners Workers
Shareholders Subsidiaries
Under-subsidiaries Indonesian media
International media Norwegian media
Local NGOs International NGOs
Norwegian NGOs Local government
Regional government National government
Norwegian authorities, including Customers
Indonesian consumer market International consumermarket Norwegian consumer market
Other
Primary stakeholders All stakeholders
NGOs
“NGOs have a profit seeking motive, and serve as catalysts of generating problems. We do our (CSR) work primarily through local government” (CEO, Company G)
Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %
Owners Workers
Shareholders Subsidiaries
Under-subsidiaries Indonesian media
International media Norwegian media
Local NGOs International NGOs
Norwegian NGOs Local government
Regional government National government
Norwegian authorities, including Customers
Indonesian consumer market International consumermarket Norwegian consumer market
Other
Primary stakeholders All stakeholders
Subsidiaries
Consumer markets
Actual CSR activities Do your company engage in CSR activities?
Yes No
CSR Activities 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 %
Rights promotion
Labour union facilitation
Environmental projects
Educational projects
Health projects
Other social projects
Other
“It is only the local people and the local communities that are the target groups of our CSR work. Local government is not a target”. “Concerning stakeholders, we are looking for the ones that are the needy. In our area, these are children, local fisher and farmer communities and small-scale business” (CEO, Company B)
“Sub district head and local government give positive feedback on projects, and refers to our company as “best practice” in meeting with both the local communities and other stakeholders in the area” (CSR adviser, Company B)
Stakeholder management
Company B
BP Migas
Local government
Local community
National government
Local Government
Local community
Local Government
Local community
Stakeholder management
Company B
BP Migas
Local government
Local community
National government
Local Government
Local community
Local Government
Local community
Common interest
Stakeholder management
Company B
BP Migas
Local government
Local community
National government
Local Government
Local community
Local Government
Local community
Common denominator
Triangulation Company B
Local Community Local community
National Government
Local Government BP Migas
Stakeholder management
Company C
Workers
Local community
Local community
Common interest
“ Our workers are by far the most important stakeholder of this company, together with the surrounding communities. Our proactive relation to our workers and their communities gives us leverage in the re-occurring demonstrations towards this industrial estate. Protests have made us proactive” (CEO, Company C)
(“The Paradoxes in Communicating Corporate Social Responsibility,” Sandra Waddock and Bradley K. Googins in “The Handbook of Communication and Corporate Social Responsibiliy” – Øivind Ihnen, Jennifer L. Bartlett and Steve May [eds.], 2011)
Stages of Corporate Citizenship
Elementary Engaged Innovative Integrated Transforming
B C A E G H D I F
“ A culture of “the charitable corporation” definitely seems to exist in Indonesia today. If you are rich or influential, you are expected to give (back) more to the local community than others” (CEO, Company C)
Passive Altruism
Active Self- interest
Integrated
Elementary
Carefully selected programs in order to contribute in the most efficient way for the benefactors
Carefully selected programs in line with core activities in order to manage relevant stakeholders
Randomly selected projects or partners to avoid attention, often international NGOs.
Randomly selected projects in order to please close stakeholders
Passive Altruism
Active Self- interest
Integrated
Elementary
Carefully selected programs in order to contribute in the most efficient way for the benefactors
Carefully selected programs in line with core activities in order to manage relevant stakeholders
Randomly selected projects or partners to avoid attention, often international NGOs.
Randomly selected projects in order to please close stakeholders
F
B
E
D
H G
A C
I
Responsibility triangle revisited
Do as stakeholders expect Ethical
Economic
Legal
Be legal
Be profitable
Be ethical
Do as stakeholders demand
Do as stakeholders require
Do as stakeholders desire Philanthropic
Be a good corporate citizen
Based on Carroll (2004)
Thank you for your attention! Tarje I. Wanvik [email protected] +62 (0)812 8659 0724 (Indonesia) +47 97070987 (Norway)
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