Social Responsibility In Indonesia Research Articles

ENVIRONMENTAL REGULATION IN CORPORATE CSR PRACTICES IN INDONESIA

This article explores the influence of environmental legislation on corporate social responsibility in Indonesia. It aims to clarify the regulatory framework surrounding corporate social responsibility, assess how failure to adhere to environmental laws affects corporate reputation and performance, and identify the difficulties companies encounter while implementing corporate social responsibility. The research adopts a normative legal perspective, involving a thorough examination of pertinent laws and regulations, including the 1945 Constitution, Law Number 40 of 2007 concerning Limited Liability Companies, and Government Regulation Number 47 of 2012. Data gathered through desk research and descriptive legal analysis provides a detailed understanding of the relationship between legal frameworks and corporate social responsibility practices in Indonesia. The findings indicate that the corporate social responsibility regulatory framework encourages companies to meet environmental legal requirements, positively impacting corporate reputation. Conversely, non-compliance can damage reputation and public perception, consequently affecting financial outcomes. Companies also face various obstacles in implementing corporate social responsibility, such as insufficient regulatory support and limited resources. Recommendations for companies include enhancing education on corporate social responsibility and fostering collaboration with stakeholders to develop sustainable business practices. These insights are valuable not only for Indonesia but also for other nations examining the link between environmental legislation and corporate social responsibility.

Implications Related To Regulation On Corporate Social Responsibility In Indonesia (Study on Law No. 40 of 2007 on Limited Liability Company and Law No. 25 of 2007 on capital investment)

Good corporate governance has 5 main principles: openness, accountability, accountability, independence, and equality. Although Law Number 40 of 2007 concerning Limited Liability Companies does not explicitly regulate it, the values of the principle are contained in it. One important principle is accountability, which includes corporate social responsibility (CSR). CSR is the company's commitment to contribute to sustainable economic development by paying attention to economic, social, and environmental aspects. Law No. 40 of 2007 and Law No. 25 of 2007 require the implementation of CSR for companies, but there are vagueness and differences in the definition and scope regulated. This raises problems related to discrimination and potential violations of private property rights of companies. In general, CSR arrangements in Indonesia are still not detailed and clear, especially related to intersections with regional interests and social responsibility to the community. Clarity of arrangements is needed so that CSR can be implemented properly and provide benefits to companies, local governments, and surrounding communities. The problem in this study is the implications caused related to the Regulation on Corporate Social Responsibility in Indonesia and how the form of social responsibility and the form of Corporate responsibility in Indonesia related to the Regulation on Corporate Social Responsibility in Indonesia. This type of research is Normative legal research. The method of approach uses legislative and conceptual approaches. Data sources come from primary and secondary legal subers. The results of this study show that the implications arising related to the regulation on Corporate Social Responsibility in Indonesia, in the UUPT regulation on Corporate Social Responsibility are unclear and overlap with other related laws and regulations. Not all companies related to natural resources carry out social and environmental responsibility, because there is still a perception that the allocation of Corporate Social Responsibility is not mandatory, and in its implementation there is no good control from the government, and there are no firm sanctions for companies that do not channel Corporate Social Responsibility. The form of social responsibility and the form of Corporate responsibility in Indonesia related to the Regulation on Corporate Social Responsibility in Indonesia can vary, depending on the needs and priorities of the company and the surrounding community. Corporate Accountability that implements CSR is needed to hold stakeholders accountable. The form of accountability can be: CSR report: a report that explains the CSR activities that have been carried out by the company, the impact that has been achieved, and the obstacles faced. CSR audit: an independent audit to ensure that CSR activities have been carried out in accordance with established standards and policies. Dialogue with stakeholders: open dialogue with stakeholders to obtain input and suggestions related to CSR implementation.

The Influence of Business Ethics, Organizational Governance, and Corporate Social Responsibility on the Financial Performance of Companies Listed on the Indonesia Stock Exchange

Sustainability issue nowadays requires companies in Indonesia to act strategically and not only focus on financial performance, but also social and environmental aspects. Corporate social responsibility is seen as an obligate and one way to comply with the business ethics value as generally required by society. However, the differences in the company’s stakeholders’ needs could cause variation of corporate governance system, which sometimes does not follow the ethics value. This research aims to look over the effect of ethics (generally) to corporate governance practices and implementation of corporate social responsibility in Indonesia, also towards the company’s financial performance. The sample of this research is the companies listed in the IDX80 index of Bursa Efek Indonesia. The data collection technique used is the purposive sampling method and data collected will be analyzed using linear regression method. This research proved that ethics affecting the corporate governance system and corporate social responsibility practices, but there’s no prove that corporate governance system and corporate social responsibility affect the corporate financial performance.

DISPARITIES CSR IMPLEMENTATION IN DEVELOPING COUNTRIES: CSR PRACTICES IN STATE-OWNED COMPANIES AT THE INDONESIAN STOCK EXCHANGE

Corporations have yet to maximally realize their social responsibility in Indonesia. This study seeks to understand companies' reporting of their corporate social responsibility (CSR) programs, as well as investigate the optimal forms and strategies for CRS. Primary and secondary data were collected; the former through interviews with ten corporate actors (CEOs and CSR directors), and the latter through a reading of corporations' annual reports for 2019. Analysis shows that an economic rationale, oriented towards calculating the costs and benefits of programs, is one major reason for CSR falling short of its potential. Further exacerbating the issue, lax government regulations have given corporations significant space in interpreting the best practices. To ensure optimal CSR implementation, an integrated support system may be used, one capable of pressuring corporations through the threat of litigation. Such an integrated support system model would enable government development programs to be integrated with CSR, and to be realized synergistically and sustainably. This article is limited to the perspectives of external stakeholders (governmental, non-governmental, and community actors), and thus further research is necessary to uncover internal perspectives and achieve a more comprehensive understanding.

Community Development Model by Corporate Social Responsibility in Indonesia: A Systematic Literature Review

Community empowerment is one form of implementation of corporate social responsibility (CSR) carried out by companies. In its implementation, there are various models and strategies that can be used to support implementation. In Indonesia, the study of community empowerment by companies has become a new tradition in the development of CSR models. In the last decade, various models of community empowerment by companies have developed resulting from research related to CSR, especially those that examine community empowerment. This research is a systematic literature review to analyze the model of community empowerment by companies that are reviewed based on dissertation research sources published in the 2013-2020 period by Sebelas Maret University. There are 9 dissertation studies that were analyzed to find a synthesis of community empowerment models in corporate social responsibility programs. The majority of the studies were conducted in case studies with a qualitative approach. The findings of this study are that the model of community empowerment by companies in Indonesia is developed based on the “local context” and “actor relations” that exist within the scope of the community empowerment program.

Implementation Of Corporate Social Responsibility In Indonesia In The Perspective Of Legal Theory

Corporate Social Responsibility has been regulated in Law No. 25 of 2007 on investment and Law No. 40 of 2007 on limited liability companies, but in practice it still causes many problems. The first problem is that the regulation does not regulate in detail the implementation of CSR. The second problem is the lack of clarity of the rules and mechanisms for monitoring the implementation of CSR itself. The results of this study indicate that the approach of reflexive legal theory can answer these problems, CSR can be required by the government to every corporation because CSR grows and develops in accordance with the development of business and market reactions, then the rules and mechanisms of supervision by requiring corporations to make reports to the public called social reporting (Social Reporting).

Corporate Social Responsibility in Indonesia: A Transformation of Local Wisdom Perspectives

This paper seeks to explore the motivation of management to conduct corporate social responsibility (CSR) activities and disclose it in financial reports from their understanding of local wisdom, using Indonesian companies as a case study. The methodology was carried out through several steps: 1) Survey method by sending questionnaires to selected companies; 2) Content analysis method to determine the scores of CSR disclosures based on the required disclosure standards; 3) Analyzing the results of the company's financial performance to its CSR activities. The empirical evidence proofing that CSR is the transformation of local wisdom into actions and strategies of the company even has not fully become the company's core program. But there are limitations of this study, including the subjectivity of respondents' views concerning the cost of CSR. In addition, it needs to be further clarified because interview (qualitative) data are still very limited. The paper enhances the altruistic attitude shown by the company's management about CSR implementation from their understanding of the local wisdom as a contribution. Therefore, it can be recommended to be a national CSR movement in terms of sustainable development in Indonesia for the next.

Implementation of Corporate Social Responsibility In Indonesia Based on Ius Positum And Islamic Principles

Corporate Social Responsibility (CSR) is a form of a company's responsibility to the community and the surrounding environment that are affected by the company's activities. CSR is a familiar term when viewed from a legal perspective, including in Islamic law. So far, there has been no alternative concept of CSR that has been extracted from the values contained in the culture and belief system, including Islamic teachings, even though the values built by each culture and belief aim to achieve community welfare. Based on this, this study aims to find out whether the existing Corporate Social Responsibility (CSR) concept follows the principles of Islamic law. Has Islam regulated this? So that the activities carried out by the company are of worship value for business actors. This is normative legal research that refers to primary, secondary and tertiary materials. The result of the study is that CSR is contained in the teachings of Islam; Islam has long been building a system of life-based on social principles and justice. Islam strongly supports CSR because it cannot be denied that business creates many unexpected social problems. As a result, it is the responsibility of the company and the company to fix the problem. This is natural because they need to explore various natural resources for business sustainability. Therefore, they must be responsible for the community and the environment in return.

Does financial performance moderate the effect of CEO characteristics and stakeholder influence on corporate social responsibility in Indonesia?

This study aims to examine the effect of CEO characteristics and stakeholder involvement on CSR disclosure quality, with firm performance as a moderating variable. This study was conducted with the assumption that the analysis of human factors (in this case management) is often forgotten when analyzing CSR reporting. Thus, the upper echelon theory is used as the basis in this study. This study also provides a different measurement of CEO education, where CEO education is not only seen from the background of economic and business education, but also seen from the CSR certification followed by the CEO. The study's findings, based on data from Kompas-100 firms listed on the Indonesia Stock Exchange from 2018 to 2019, show that CEO tenure, CEO education, and stakeholder involvement all have a significant positive influence on CSR disclosure quality. However, CEO compensation has no effect on CSR disclosure quality. Furthermore, the firm's financial performance was proven to moderate the positive influence between CEO tenure and CEO education on the quality of the firm's CSR disclosure, but failed to moderate the effect of CEO compensation and stakeholder involvement on the quality of the firm's CSR disclosure.

Corporate Social Responsibility in Indonesia. Quixotic Dream or Confident Expectation?

During the past decade there has emerged, in North America and Western Europe in particular, a fairly powerful movement to improve the social and environmental performance of large corporations and their affiliates and suppliers in developing countries. By examining the case of Indonesia, this paper looks at how effective this approach has been. Two central questions are addressed. First, do corporate social responsibility (CSR) and accompanying voluntary initiatives have the capacity to change the day-to-day behaviour of TNCs? Second, at this stage of its development, and in the context of crisis, is corporate social responsibility relevant to Indonesia?The discussion on codes of conduct presents both civil society and TNC perspectives on the implementation, achievements and limitations of such initiatives, codes are fundamentally flawed for several reasons: they may serve to place corporations outside of the national regulatory system and bypass the tripartite negotiation system that was one of the major labour reforms of recent years; the process and outcomes of monitoring are usually confidential; monitors usually only see one or two plants chosen by the client; monitoring is often done by accounting firms that have insufficient technical knowledge to deal with the often complex health and safety problems in production plants; sanctions for non-compliance are weak or non-existent; codes are usually designed in the head office, and rarely in consultation with trade unions or others; codes with lower technical specificity are often found in enterprises that are female dominated; codes only apply to a small proportion of a nation’s workers; and corporations often insist that affiliates and sub-contractors improve conditions but provide limited if any resources to support such change.When viewed in the context of culture, economic and political development, and turmoil in Indonesia, the author concludes that CSR remains an ideal. The current transformation is bringing instability, fear and violence. In such a context, it is hard to consider something as abstract as CSR. It is timely, however, to begin to put into place the institutions, educational foundations and management training which are needed for business and political reform, and from which CSR may be a spin-off. Any broader application of CSR needs to stem from an indigenous belief in the necessity of such an institution and not represent a mere shrug to another Western fashion. There is clearly a tension between those in the developing countries who see this as yet another imposition of Western values, no matter how attractive, and those in the developed nations who, put cynically perhaps, wish to consume with a conscience.While it is fair to say that CSR makes a positive contribution to the human rights of those working in TNCs, it is also fair to say that it only makes a difference to those few corporations targeted by consumers or who are already thinking ethically and responsibly. Other industries are not so well inclined. Such anomalies, and the somewhat piecemeal approach of the CSR movement, should alert global citizens to the need for a more systematic approach.That being said, the after-shock of the Indonesian economic crisis has required a re-evaluation of both economic and investment policy, and the way business is run in Indonesia. The previous short-term thinking may have to make way for the type of longer-term pragmatic and visionary thinking required by genuine CSR and supported by Islamic business principles. A lot will depend on how deep the reform process goes. There is a danger, however, that CSR and voluntary initiatives may be a diversion from the real issues of law reform and multilevel political and social development. While CSR may benefit a small minority of Indonesia's workers and those whose lives intersect with TNCs, the development of and adherence to a fair system of law and institutional reform would benefit all. Without such changes, CSR is likely to remain cosmetic.

DOES CORPORATE SOCIAL RESPONSIBILITY AFFECT EARNINGS MANAGEMENT? EVIDENCE FROM THE INDONESIAN BANKING INDUSTRY

This paper aims at examining the effect of corporate social responsibility on earnings management in the Indonesian banking industry. Using Indonesian publicly listed banking firms in the years of 2013–2015 as the sample, we generate 94 firm-year observations as the final sample. The results show that corporate social responsibility positively affects earnings management, suggesting that the higher the corporate social responsibility score, the greater earnings management. Further, the study investigates the effects of corporate social responsibility on absolute earnings management, positive earnings management, and negative earnings management. The results robustly demonstrate the positive effects of corporate social responsibility on earnings management. Thus, this study implies that investors need to be cautious of banks that engage in higher corporate social responsibility because they are more likely to exhibit greater earnings management. While most of the previous studies in this issue focus on developed countries as their research settings, this study provides empirical evidence on the relationship between corporate social responsibility in Indonesia as an emerging market.

Legal Analysis Contradictory Regulations on the Granting of Sanctions on Environmental Social Responsibility in Indonesia

Indonesia mentions the term Corporate Social Responsibility with Environmental Social Responsibility. Then this was abstracted into the positive law of Indonesia so that contributing voluntary activities for human transformation became an obligation. These obligations are set forth in the Corporate Social Responsibility, as well as this becomes a differentiator from other countries. In the development of regulations regarding Environmental, Social Responsibility experiencing a variety of problems including the absence of synchronization of law, the view that Environmental Social Responsibility is an obligation, then has an effect on the provision of sanctions given to companies that do not carry out Social Responsibility. This research proposes that a regulation be renewed on social environmental responsibility so that harmonization in the rule of law occurs and can maximize law enforcement and sanctions in Social Responsibility.

Firm Size, Firm Age, and Firm Growth on Corporate Social Responsibility in Indonesia: The Case of Real Estate Companies

This research is aimed to identify the firm's Corporate Social Responsibility, stock index, and firm growth. The corporate social responsiveness of the company is measured by analyzing the annual report of the company. There are 30 samples of 49 population of property and real estate companies in this research. All the companies are listed in Indonesia Stock Exchange in the period 2012 - 2016. The researcher uses multiple linear regression analysis. The result shows that firm size, firm age and firm growth have simultaneous significant effects to the Corporate Social Responsibility disclosure. Partially, the firm size has significant effect towards Corporate Social Responsibility disclosure. This shows the more extensive disclosure of Corporate Social Responsibility. Because large companies have a lot of entities highlighted by the market and the public in general. By disclosing more information in the Corporate Social Responsibility disclosure the public accountability can be realized. Older companies better understand what information should be disclosed in the disclosure. The firm growth has no significant effect on Corporate Social Responsibility disclosure.

Reinventing Social Responsibility in Indonesia: Impact of Increased Inter Household Transfers in Economy

Penelitian ini bertujuan untuk mengidentifikasi dampak peningkatan transfer antar rumah tangga yang merpuakan bagian dari implementasi janji pemerintah melalui semangat Nawa Cita-Revolusi Mental terhadap beberapa aspek ekonomi. Alat analisis yang digunakan adalah model computable general equilibrium (CGE) dan berdasarkan data sistem neraca sosial ekonomi (SNSE) Indonesia tahun 2008. Analisis dampak yang terwujud diasumsikan bersifat jangka panjang. Hasil analisis menunjukan bahwa peningkatan transfer antar rumah tangga berdampak terhadap peningkaan pendapatan rumah tangga, peningkatan penerimaan pemerintah, penurunan tingkat harga, dan peningkatan pemerataan distribusi pendapatan. Lebih lanjut, peningkatan transfer antar rumah tangga juga berpengaruh terhadap struktur ekonomi, terutama konsumsi rumah tangga dan investasi. Kontribusi konsumsi rumah tangga diperkirakan menjadi turun, sedangkan investasi meningkat. Temuan ini mengindikasikan bahwa peningkatan transfer rumah tangga memiliki banyak manfaat, baik dari aspek sosial maupun ekonomi.

Investigative Studies on Environmental Disclosure and the Costs of R&D as a Compliance with Government Policy on Corporate Social Responsibility in Indonesia

The research objective is to provide empirical evidence on companies’ responsi­bility to achieve sustainable development, not only for Indonesia but for the world. This study investigated the allocation of research and development costs as other government regulations issued related to the environment i.e., in 2004, 2007, and 2012. Samples observations as many as 246 companies in 11 years. This study separately examined the enforcement of laws related to the environ­ment three times (2004, 2007, and 2012). The test results show that the disclo­sure of environmental information by food and beverage companies in Indonesia increased significantly after the legislation was issued. This finding suggests that since the Indonesian government ratified the Kyoto Protocol in 2004, Indonesian companies are more transparent in terms of informing the public about the envi­ronmental conservation activities that they do. The study also found that there is a positive relationship between the allocation of research and development costs associated with the reduction of the com­pany’s carbon emissions during the year of observation. Significant relationships were also found in 2007 when the government issued Law No. 40 of 2007. How­ever, in 2012 we did not find a significant relationship. This study concluded that the legal instruments that require companies to reduce carbon emissions is ur­gently needed in developing countries like Indonesia. This policy will also deter­mine the success of Indonesia in realizing the commitments to reduce carbon emissions.

An Analysis on the Behaviour of Corporate Social Responsibility towards Profitability of Islamic Banks: Asean and Europe

This study aims to investigate the stability of profitability of Islamic banks resulted from the behaviour of corporate social responsibility in the short term as well as long term taking Indonesia as representative for Asean perspective and Turkey for Europe perspective. The study employs Vector Autoregression (VAR) and followed by Vector Error Correction Models (VECM) if there is co-integration. The IRF (Impulse Response Function) denotes different findings whilst Variance Decomposition emphasizes the most affected profitability variables resulted from the behaviour of corporate social responsibility. IRF result shows only return on asset of Islamic bank in Turkey found to have stability whether in the short terms or long terms. The other variables concluded to have similar pattern for Turkey and Indonesia as they tend to decline even very sharp in the long terms except return on equity for Indonesia has positive response where it tends to increase regardless of the changes in the behaviour or shock of corporate social responsibility. The behaviour of corporate social responsibility in Indonesia mostly influenced return on asset while it influences greatly towards return on equity for Islamic banks in Turkey. The application of corporate social responsibility varies depending on the policy of respective banks that linked to normative and perception of the bank and appears to be more important in disclosing of non-financial information in the annual report. The findings reveal that quite a few challenges lie ahead in shaping proper behaviour of corporate social responsibility that affect profitability of Islamic banks in Indonesia and Turkey. This needs to be taken on promptly by management teams of Islamic banks especially in Indonesia that focus on corporate social responsibility for Muslim society. While profitability variables in Turkey would affect the proper function of corporate social responsibility that aimed for social benefit. This paper is one of few studies which employ VAR/VECM model to investigate and forecast the shock or behaviour of corporate social responsibility towards profitability of Islamic banks in a country who adopt dual banking systems.

Beyond decoupling: unions and the leveraging of corporate social responsibility in Indonesia

Beyond decoupling: unions and the leveraging of corporate social responsibility in Indonesia

Evolving Practices of Corporate Social Responsibility in Indonesia’s Pulp and Paper Industry

This research focuses on how corporate social responsibility practices (CSR) have evolved over time in one of big companies in Indonesia’s pulp and paper industry. One of the challenges faced by big companies working in renewable industry is to assure that every of its supply chain truly comply with the principles of environment protection. It underlines the transformation of CSR practices particularly community development since the establishment to the position which the company has been growing rapidly. As most companies in emerging economy context especially emphasize only for maximizing profits as business reason, this company shows different direction by also practicing community development programs in quite massive ways and producing better impact to the society. Through in-depth case study, we argue that the company has been successfully created organizational trajectory to support their CSR practices since their establishment up to 2008. This research contributes in some ways as follows. First, by analyzing path-trajectory of CSR practices, it will enrich our understanding on how a big company as part of its global network develops its CSR practices, particularly in emerging economies context. Second, it provides the clearer evidences, milestones, and challenges of the importance of creating so-called CSR practices reflected local needs where the company exists. Third, in the end, it proposes further inquiry whether the company should continue make, buy or decide to collaborate in future CSR practices while the growth of its activities becomes mature and or changed rapidly.

Exploring potential power of corporate social responsibility toward sustainability development: analysis of state-owned company social responsibility in Indonesia

The implementation of corporate social responsibility (CSR) in Indonesia is mostly forced to follow government rules. Government also enacted some regulations that all state-owned companies (SOCs) allocate some of their profits in CSR programs. This paper attempts to analyse the effectiveness of CSR programs run by SOCs, and to assess the contributions of those programs in addressing social and environmental issues – which have been a government agenda. The findings of this paper reveal that government have fostered SOCs to prioritise strengthening economic programs for small-medium enterprises (SMEs). In the other sites, government has minimum attention to encourage SOCs to empower potential rural areas’ economic development as well as to overcome their social issues. The results of this paper are to provide information as guidance for government and SOCs to align each social mission through social responsibility programs in creating sustainable development.

The Mandatory Corporate Social Responsibility in Indonesia: Problems and Implications

The adoption of the 2007 Indonesian Law No. 40 has created significant debate over the nature of Corporate Social Responsibility (CSR), namely, whether it is voluntary or mandatory. On the one hand, the adoption of such a law represents a legal recognition of the existence of CSR, and this clarification on the legal nature of a concept is necessary for understanding the obligation and responsibility. On the other hand, it has created much confusion surrounding its substance and procedures. This article tries to analyze the development and consequences of CSR under 2007 Indonesian Law No. 40, through the discussion of mandatory versus voluntary dichotomy. It is argued in this article that the mandatory nature of CSR is legitimate and therefore encouraged; however, in practice, this is problematic, as it not only requires a precise concept of interpretation of CSR and identification of the duty bearer and beneficiaries, but also an effective implementation mechanism and a means of verifying the impact.