ASEAN’s role in corporate social responsibility

    ABC Club
    By ABC Club
    Among the three pillars that will form the ASEAN Community in 2015, the sociocultural pillar is often regarded as “less sexy” compared to the political-security or economic pillars. It was, therefore, reassuring to read the inaugural speech of the new ASEAN Secretary-General, Le Luong Minh, who said, “Our integration would be incomplete without the good work done and to be done in the social and cultural pillar.”

    Certainly, the fifth “Roundtable Discussion Forum on Southeast Asian Foreign Economic Policies” found the topic of corporate social responsibility (CSR) — a topic listed in ASEAN’s Sociocultural Community Blueprint — anything but unsexy. With presentations from Maria R. Nindita Radyati (Center for Entrepreneurship, Change and the Third Sector, Trisakti University) and Asep Mulyana from the National Commission on Human Rights (Komnas HAM), the discussion covered such meaty issues as businesses and human rights, empowering communities, avoiding a dependency culture and the delicate balance of safeguarding local communities while avoiding protectionist policies that could scare off foreign investment.

    One major recommendation that emerged from the discussion was the need for an integrated CSR mechanism. ASEAN itself was aware of this with its blueprint calling for the development of a model public policy on CSR or a legal instrument for reference by 2010. It is, therefore, unfortunate that three years on, CSR is still in Le Luong Minh’s “to be done” category.

    In Indonesia, Komnas HAM statistics show that 1,009 of the 5,422 human rights cases it handled in the period January-November 2012 were complaints against businesses in areas such as land and labor disputes, forced evictions and environmental damage.

    Only the police registered higher with 1,635 complaints. Such a trend, if applied across the 10 ASEAN member states, is worrying given that the region is fast becoming a hotbed for foreign investment by multinational companies. While this interest is undoubtedly welcome, it also poses several dangers. Noting the attention her country was attracting from investors, Myanmar’s Aung San Suu Kyi stated, “We would like [to have] investors who are sensitive to such [human rights and environmental] issues.”

    However, the discussion noted the difficulties in demanding foreign companies apply CSR programs as a pre-investment requirement. It may be regarded as protectionism and an additional cost for businesses already taking a risk by investing in ASEAN.

    Another difficulty was identifying which companies would be required to comply with CSR. Usually, only the extractive industries are thought to require CSR compliance but Indonesia’s Law No. 40/2007 on limited companies stipulates that all companies that have an impact on the environment comply with CSR. Arguably, since all companies make some impact on the environment, it was suggested that every company comply with CSR.

    A further difficulty was the question of what constituted a CSR program. Too often in Indonesia, CSR typically consists of little more than businesses throwing money at individual beneficiaries in local communities. Instead of empowering communities, it simply creates a dependency culture, reinforcing an inferiority complex among the rural poor, and turning companies into cash-cows.

    Given the aforementioned difficulties, it becomes clear why ASEAN needs to develop a model public policy on CSR or a legal instrument for reference.

    An ASEAN regional guideline or framework on CSR would help clear up not only the difficulties identified above but also other uncertainties surrounding CSR for the 10 ASEAN member states.

    In particular, ASEAN should ensure that the implementation of CSR across the region is coherent, sustainable and coordinated. One way would be to incorporate the roundtable discussion’s call for a holistic CSR approach.

    A holistic CSR would go beyond simple compliance with the law and would involve changing the philosophies, policies, strategies and standard operating procedures of a company. A holistic CSR would ensure CSR no longer stood for corporate social responsibility but “citizen social responsibility” so that every individual employee played a role, not just the business as a whole.

    Greater emphasis within ASEAN should also be placed on developing community enterprises rather than individual beneficiaries. This would not only increase a community’s well-being, prosperity and cohesion but also bring immense benefits for businesses.

    To demonstrate, one aspect of developing a community enterprise would be the promotion of community ownership that builds a community’s dignity. This would go some way toward addressing the dependency culture among the impoverished, thereby benefiting businesses that would no longer have to serve as cash-cows for them.

    So, as ASEAN Secretary-General Minh starts his term in office and deals with a myriad of challenges facing the region, he and ASEAN would be mindful not to ignore their own words: “Our integration would be incomplete without the good work done and to be done in the social and cultural pillar.”

    The writer works at The Habibie Center in Jakarta. The “Roundtable Discussion Forum on Southeast Asian Foreign Economic Policies” is coorganized with the Trade Knowledge Network (TKN) Southeast Asia, International Institute for Sustainable Development (IISD), Oxfam International and the Indonesian Chamber of Commerce and Industry (Kadin).
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