ASEAN’s Role in Corporate Social Responsibility in the Region

Grasberg, Freeport Mine in the Indonesian province of Papua. [Credit: Flickr Simon Pearson]

Among the three pillars that will form the ASEAN Community in 2015, the Socio-Cultural pillar has often been regarded as “less sexy” when compared to the Political-Security or Economic pillars. It was therefore reassuring to read the new ASEAN Secretary-General, Le Luong Minh’s inaugural speech 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 Socio-Cultural Community Blueprint – anything but unsexy. With presentations from Maria R. Nindita Radyati (Center for Entrepreneurship, Change and Third Sector, Trisakti University) and Asep Mulyana (Komnas HAM), the Roundtable Discussion covered meaty issues of businesses & human rights, empowering communities, avoiding a dependency culture, and the delicate balance of safeguarding local communities but avoiding protectionist policies that could scare foreign investments.

One major recommendation that emerged from the Roundtable Discussion was the need for an integrated CSR mechanism. ASEAN itself is 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 & labour disputes, forced evictions and environmental damage. Only the police registered higher with 1,635 complaints. Such a trend, if applied across the ten ASEAN Member-States, is worrying given the region is quickly 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 investors who are sensitive to such (human rights and environmental) issues.”

However the Roundtable Discussion noted the difficulties in demanding foreign companies to 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 are 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 commands all companies that have an impact on the environment to comply with CSR. Arguably, since all companies make some impact on the environment, it was suggested that every company require CSR compliance. A further difficulty was on the question of what constituted a CSR program. Too often in Indonesia, CSR typically consisted of nothing more than businesses throwing money at individual beneficiaries in local communities. Instead of empowering communities it simply created a dependency culture, reinforcing an inferiority complex among the rural poor, and turning companies into cash-cows.

Noting 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 ten 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 plays a role; not just the business as whole.

More emphasis in ASEAN should also be placed on helping develop community enterprises rather than individual beneficiaries. This would not only increase a community’s wellbeing, prosperity and cohesion but also bring immense benefits for businesses. To demonstrate, one aspect of developing community enterprise would be the promotion of community ownership that builds a community’s dignity. This would go some way in addressing the dependency culture among the poor, thereby benefiting businesses which would no longer have to serve as cash-cows for the poor.

So, as ASEAN Secretary-General Le Luong 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.”

[This article was first published in The Jakarta Post on 29th January 2013 and can be found at: http://www.thejakartapost.com/news/2013/01/29/asean-s-role-corporate-social-responsibility.html]