Presentation for Seminar on Indonesia and CSR, held by the University of Oslo, Institute of human rights, and ETI Norway

1. Adaptions to Indonesian expectations
Tarje I. Wanvik

2. “Anything can be located anywhere”

3. “Every firm, every economic function is –
quite literally, grounded in specific locations”

4. 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

5. “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

6. “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

7. Talking points
ž The CSR law – Law 40/2007 and its
implications
ž Attitudes towards CSR among
Norwegian companies in Indonesia
ž Stakeholder identification
ž Actual Corporate Social Responsibility
activities
ž Concluding remarks

8. Responsibility triangle
Be a good corporate Do as the stakeholders
citizen Philanthropic
desire
Be ethical Do as the stakeholders
Ethical
expect
Be legal Do as the stakeholders
Legal
requires
Be profitable Do as the stakeholders
Economic
requires
Carroll (2004)

9. 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).

10. “Sleepwalking” Law
ž No regulation yet, but…
— Long tradition of social expectations
— Tender processes
— Standard Operational Procedures
— Licence to Operate

11. “Sleepwalking Law”
ž No regulation yet
— Long tradition of social expectations
— Tender processes
— Standard Operational Procedures
— Licence to Operate

12. “Sleepwalking Law”
ž No regulation yet
— Long tradition of social expectations
— Tender processes
— Standard Operational Procedures
— Licence to Operate

13. “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)

14. “Sleepwalking Law”
ž No regulation yet
— Long tradition of social expectations
— Tender processes
— Standard Operational Procedures
— Licence to Operate

15. “Sleepwalking Law”
ž No regulation yet
— Long tradition of social expectations
— Tender processes
— Standard Operational Procedures
— Licence to Operate

16. “The Mayor constantly refers to our
company as the best operator in the area”
(CSR adviser Company B)

17. Blinded by the right
ž The recognisable Norwegian
— Looking good
— Doing good
— Being good

18. Blinded by the right
ž The recognisable Other
— Looking poor
— Doing poor
— Being poor

19. ”CSR? Isn’t that only a result of the naïve
Norwegian regime of goodness”
(Employee, Company B)

20. “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)

21. Stakeholder identification
ž Who are our primary stakeholders
— Strong state
— Corruption issues
— Weak NGOs
— Lack of experience of negative attention

22. 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 Primary
Local government stakeholders
Regional government
All
National government
stakeholders
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other

23. Stakeholders identified
0% 20 % 40 % 60 % 80 % 100 %
Owners
Workers
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media Government
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs Primary
Local government stakeholders
Regional government
All
National government
stakeholders
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other

24. “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)

25. “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)

26. “We have very little contact with the
Indonesian authorities, and quite frankly
we try to avoid it as much as possible”
(CEO, Company H)

27. Stakeholders identified
0% 20 % 40 % 60 % 80 % 100 %
Owners
Workers
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media
NGOs
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs Primary
Local government stakeholders
Regional government
All
National government
stakeholders
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other

28. “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)

29. Stakeholders identified
0% 20 % 40 % 60 % 80 % 100 %
Owners
Workers Subsidiaries
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs Primary
Local government stakeholders
Regional government
All
National government
stakeholders
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket Consumer
Norwegian consumer market markets
Other

30. Actual CSR activities
Do your company engage in CSR activities?
Yes
No

31. 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

32. “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)

33. “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)

34. Stakeholder management
Company B
National Local
BP Migas
government Government
Local Local Local
government Government community
Local Local
community community

35. Stakeholder management
Company B Common
interest
National Local
BP Migas
government Government
Local Local Local
government Government community
Local Local
community community

36. Stakeholder management
Company B
National Local
BP Migas
government Government Common
denominator
Local Local Local
government Government community
Local Local
community community

37. Triangulation Company B
Local
Government BP Migas
Local Local
Community
community
National
Government

38. Stakeholder management
Common
Company interest
C
Local
Workers
community
Local
community

39. “ 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)

40. Stages of Corporate Citizenship
Elementary Engaged Innovative Integrated Transforming
B
C
A
E
G
H
D
I
F
(“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)

41. “ 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)

42. Integrated
Carefully selected Carefully selected
programs in order to programs in line with
contribute in the most core activities in order to
efficient way for the manage relevant
benefactors stakeholders
Passive Active Self-
Altruism interest
Randomly selected Randomly selected
projects or partners to projects in order to
avoid attention, often please close
international NGOs. stakeholders
Elementary

43. Integrated
Carefully selected Carefully selected
programs in order to programs in line with
contribute in the most core activities in order to
efficient way for the manage relevant
benefactors stakeholders
B
Passive Active Self-
A
Altruism C interest
Randomly selected Randomly selected
projects or partners to projects in order to
avoid attention, often E please close
international NGOs. stakeholders G
H
I D
F
Elementary

44. Responsibility triangle revisited
Do as stakeholders
Be profitable Economic
demand
Be a good corporate Do as stakeholders
citizen Philanthropic
desire
Do as stakeholders
Be ethical Ethical
expect
Do as stakeholders
Be legal Legal
require
Based on Carroll (2004)

45. Thank you for your attention!
Tarje I. Wanvik
tarje@hotmail.com
+62 (0)812 8659 0724 (Indonesia)
+47 97070987 (Norway)