Has Indonesia’s Unique Progressivism in Mandating Corporate Social Responsibility Achieved Its Ends?

Abstract

It has been a decade since Indonesia implemented its first mandatory CSR requirement. The time is ripe for the discussion: can Indonesia confidently say that it has saved Indonesia by making companies publicly answer for many social issues? Can it successfully bring social and economic justice by continuously enforcing this radical progressivism or utilitarianism? To begin to address these questions, this paper first examines Indonesia's unique features that strengthen CSR as a legal obligation and analyzes the current regulatory frame of CSR. Then, it discusses whether these laws and regulations have actually worked as a practical tool to encourage and enforce companies to perform CSR activities. This research concludes that company law can save Indonesia despite its failure so far due to a number of problems in and out of positive law. It suggests how it can specifically structure the CSR regulations and seeks attention to the more structural reform from the longer-term goal of developing a national mechanism.

Assessing Indonesian Community Development and Empowerment Program for Mandatory CSR Implementation in Mining Industry

“…The implementation of mandatory CSR in Indonesia is considered more legitimized and follows the characteristics of the CSR concept (Waagstein, 2011;Kalbuana et al, 2022;Tjaraka et al, 2022), and is in line with the basic constitutional studies in Indonesia (Fajar, 2018;Sudaryanto et al, 2022;. The idea of voluntary CSR implementation based on the financial performance of the company does not guarantee the growth and sustainability of the company in the long run (Chang, 2018;Marnelly & Marnelly, 2012;Prasetio et al, 2021). Despite the differences of opinion regarding the nature of CSR implementation in Indonesia, most studies pronounce that the regulatory framework for mandatory CSR in Indonesia needs to be more specific in terms of the regulatory structure that forms the basis for the development of a long-term national mechanism (Chang, 2018)…”

“…The idea of voluntary CSR implementation based on the financial performance of the company does not guarantee the growth and sustainability of the company in the long run (Chang, 2018;Marnelly & Marnelly, 2012;Prasetio et al, 2021). Despite the differences of opinion regarding the nature of CSR implementation in Indonesia, most studies pronounce that the regulatory framework for mandatory CSR in Indonesia needs to be more specific in terms of the regulatory structure that forms the basis for the development of a long-term national mechanism (Chang, 2018)…”

Enforcement and Compliance: The Case of Mandated CSR Provisions in an Emerging Economy

“…However, it did not quantify the CSR spend or specify the implementation regulations (Waagstein, 2011). Additionally, there is no empirical evidence that mandating CSR norms resulted in higher CSR spend as compared to voluntary CSR provisions (Chang, 2018). Along similar lines, mandatory CSR provisions were passed in Mauritius in 2009, requiring all profitable companies to disburse 2% of their profits on socially responsible activities irrespective of their income or profitability status (Guha, 2020).…”

Why comply with an unenforced policy? The case of mandated corporate social responsibility in India

“…It was also not accompanied by implementing regulations, making it "more inspirational in character than … any kind of operational regulation" (Waagstein 2011). Perhaps inevitably, the law has failed to result in CSR spending increases over previous voluntary levels (Chang 2018). On the other hand, the Mauritian law, introduced in 2009, was similar to India's as it also introduced a requirement for companies to spend 2% of their profits on CSR (although, unlike the Indian law, this requirement extended to all profitable companies regardless of their size).…”