Indonesia as a developing country carries out development in various fields. One of the development priorities in Indonesia is economic development. Economic development requires the participation of all stakeholders (stakeholders). One of the important pillars in economic development is the activities carried out by national and foreign companies conducting their business activities in Indonesia. The activities carried out by the company have both positive and negative impacts. The positive impact that occurs is the availability of much-needed capital to encourage the country's economic growth and also to create jobs that are much needed by the community. While the negative impact is the depletion of natural resources, the impact of environmental damage and the creation of social inequality in society. Therefore, in order to create a harmonious relationship between the community and the company, cooperation is needed, where the community receives the benefits of the company's presence in their area to manage and utilize natural resources.
Discourse on social and environmental responsibility (corporate social responsibility) increasingly emerged after this concept was stipulated normatively in Article 74 of Law Number 40 of 2007 concerning Limited Liability Companies. Previously, similar provisions were also contained in Article 15 of Law Number 25 of 2007 concerning Investment. The Limited Liability Company Law replaces the term corporate social responsibility with the term “social and environmental responsibility”. The Investment Law prefers to continue to use the term "corporate social responsibility". Required companies are companies that carry out their business activities in the field of and/or related to natural resources. Companies that neglect this obligation will be subject to sanctions.
Development in Indonesia is based on local characteristics and the development needs of archipelagic communities, and is planned in a systematic, integrated and sustainable manner. In order to accelerate the improvement of community welfare and equitable development between regions in Indonesia as an archipelagic region, one approach in implementing development in Indonesia is an approach based on the concept of island clusters, island sea areas, and plural gates with growth centers that function as public service center, trade center and traffic flow of goods and services.
In Indonesia in recent years, with the pressure of globalization, the demands on companies to carry out Corporate Social Responsibility (CSR) or known as CSR are getting bigger. CSR is explicitly regulated in Article 15 letter (b) of Law 25 of 2007 concerning Investment, which states: Every investment is obliged to carry out corporate social responsibility, otherwise it can be subject to sanctions ranging from written warnings, activity restrictions, freezing of business activities. and/or investment facilities, or revocation of business activities and/or investment facilities.
Furthermore, it is regulated in Law Number 40 of 2007 concerning Limited Liability Companies with Government Regulation Number 47 of 2012, in addition to the Law above, CSR has been regulated in detail in Law Number 19 of 2003 concerning State-Owned Enterprises. This law was then further elaborated by the Regulation of the Minister of State for State-Owned Enterprises No. 4 of 2007 which regulates from the amount of funds to the procedures for implementing CSR. In the Limited Liability Company Law, a special chapter on Corporate Social and Environmental Responsibility is regulated in Chapter V Article 74 of the Limited Liability Company Law, which regulates, among other things:
· Paragraph (1) Companies that carry out their business activities in the field of and/or related to natural resources are required to carry out Social and Environmental Responsibility;
· Paragraph (2) Social and Environmental Responsibility as referred to in paragraph (1) is the obligation of the Company which is budgeted and calculated as the Company's expenses, the implementation of which is carried out with due regard to propriety and fairness;
· Paragraph (3) Companies that do not carry out the obligations as referred to in paragraph (1) are subject to sanctions in accordance with the provisions of the legislation;
· Paragraph (4) Further provisions regarding Social and Environmental Responsibility are regulated by a Government Regulation.
Substantially the content of CSR material is regulated in Article 74 paragraph (1) of the Company Law, stating "companies that carry out their business activities in the field of/or related to natural resources are obliged to carry out Social and Environmental Responsibilities". This is motivated by the mandate of the 1945 Constitution concerning the national economy and social welfare to be regulated by the State. In addition, the government wishes to prevent and reduce damage to the environment and the surrounding community. By stipulating it in a law, CSR becomes a legal and mandatory responsibility.
The company has an obligation to carry out its Social and Environmental Responsibility/CSR. The company is no longer an entity that is only concerned with itself or seeking profit (taking profit). CSR as an idea where companies are no longer faced with responsibilities that are based on a single bottom line, namely the value of the company (corporate value) which is reflected in its finances (financial), but corporate responsibility must be based on social and environmental. It is a fact of how the resistance of the local community in various places and times has surfaced against companies that are considered not to pay attention to social, economic and environmental aspects. Many companies have been protested, have their operating licenses revoked, and even damaged by the community around the company's location due to environmental damage, due to the company only drinking and exploiting natural resources in the area, without paying attention to environmental factors. Besides, the company's lack of attention and responsibility towards the workforce and the welfare of the surrounding community.
There are two things that can encourage companies to implement CSR, namely from outside the company (external drivers) and from within the company (internal drivers). Including the category of external drivers, for example the existence of regulations, laws and the mandatory environmental impact analysis (Amdal). The government through the Ministry of Environment (KLH) has implemented a proper audit (a program to assess company performance improvement). The impetus from within the company mainly comes from the behavior of management and company owners (stakeholders), including the level of concern for the company's responsibility to build the surrounding community (cumminity development responsibility).
There are four benefits obtained for companies by implementing CSR, First, the company's existence can grow and be sustainable and get a positive image from the wider community. Second, it is easier for companies to gain access to capital (capital). Third, the company can maintain quality human resources. Fourth, companies can improve decision making on critical matters (critical decision making) and simplify risk management.
Tensions that often occur between a company and the community or community in which the company is located generally arise because of the neglect of commitment and implementation of social and environmental responsibilities. Often the interests of the company are at odds with the interests of society. In fact, companies and communities have mutual dependence which has implications for two forms. First, inside-out linkages, that the company has an impact on society through its normal business operations. Second, outside-in-linkages, where external social conditions also affect the company. For the community, good CSR practices will increase the added value of having a company in an area, because it will absorb labor, increasing the social quality of the area. Local workers who are absorbed will get protection of their rights as workers. If there are indigenous peoples/local communities, CSR practices will respect the existence of these local traditions and cultures.
Effective CSR requires an active civil society role. There are at least three areas where the community can show its role:
a. Campaign against companies that carry out business practices that are not in line with CSR principles through various lobbying and advocacy activities.
b. Develop competence to increase capacity and build institutions related to CSR
c. Develop multi-stakeholder initiatives that involve various elements from the community, companies, and government to promote and improve the quality of CSR implementation.
At this time CSR can be considered as an investment in the future for the company. The interest of capital owners in investing in companies that have implemented CSR is greater than those that have not implemented CSR. Through the CSR program, effective communication and harmonious relationships can be built between the company and the surrounding community
The purpose of development is to create prosperity for the community and maintain or preserve natural resources so that they are beneficial for present and future generations. Development in Indonesia should be based on local characteristics and the development needs of archipelagic communities, and be planned in a systematic, integrated and sustainable manner. The potential of natural resources owned by the territory of Indonesia provides investment opportunities for both foreign investors (PMA) and domestic investors (PMDN), experiencing fluctuating developments.
Based on Law Number 40 of 2007 concerning Limited Liability Companies, it is obligatory for companies engaged in the field of natural resources and/or to carry out social and environmental responsibilities. The implementation of CSR should be adjusted to the capabilities of each company and the needs of the local community. The CSR program aims to improve the empowerment of the surrounding community and environmental management as a form of responsibility for sustainable development activities
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