As business actors in direct contact with the community through their operational activities, companies in Indonesia need to ensure that their operational activities can have a positive impact on the environment. Companies can contribute and implement their obligation through social and environmental responsibility or corporate social responsibility (CSR), companies can contribute and implement their obligation.

Corporate social responsibility in Indonesia is a form of the company’s commitment to participate in sustainable economic development to improve the quality of life and the environment that is beneficial for the company itself, the local community, and society in general. Article 74 of Law no. 40 of 2007 concerning Limited Liability Companies (UUPT) states that companies that carry out their business activities in the field and/or related to natural resources are required to implement CSR. 

CSR is a company obligation budgeted and calculated as a company expense whose implementation is carried out with regard to decency and fairness. In case the company does not carry out these obligations, it can be subject to sanctions in accordance with the provisions of the law. 

Sanctions for The Company for Not Implementing CSR

The company’s sanctions for not implementing corporate social responsibility are still not explicitly regulated in the Company Law.

However, there are administrative sanctions for CSR, which are specifically regulated in Law No. 25 of 2007 concerning Investment (Law 25/2007). Companies that do not fulfill their obligations under regulations, including the implementation of CSR, may be subject to administrative sanctions in the form of (Article 34 of Law 25/2007):

1. Written warning; 
2. Restrictions on business activities; 
3. Freezing of business activities and/or investment facilities; or
4. Revocation of business activities and/or investment facilities. 

The Implementation of Corporate Social Responsibility

One of the implementing regulations is Government Regulation No. 47 of 2012 concerning the Social and Environmental Responsibility of Limited Liability Companies (PP 47/2012). Article 4 of PP 47/2012 states that: 

1. The Board of Directors carries out social and environmental responsibility based on the company’s annual work plan after obtaining approval from the Board of Commissioners or the General Meeting of Shareholders (GMS) by the company’s articles of association unless otherwise stipulated in the laws and regulations.
2. The company’s annual work plan, as referred to in paragraph (1), contains the activity plan and budget required to implement social and environmental responsibility. 

The implementation of CSR is contained in the company’s annual report and must be accounted for by the GMS. The purpose of this CSR regulation is to increase company awareness of the implementation of CSR in Indonesia. In addition to raising awareness, this regulation is also necessary to meet the growing legal needs in society regarding CSR and strengthen the existing CSR regulations in Indonesia.

There are various ways for companies to implement CSR, depending on the business model that obtains and the expected impact, and also how the company conveys its value to the community. 

For example, Unilever (PT Unilever Indonesia Tbk) carries out various CSR activities such as the National Dental Health Month to improve clean and healthy living behavior, a waste bank program, a Creasolv plastic waste processing facility, etc. Companies can also carry out activities to support MSMEs in their area, like what Shopee does.

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