Corporate social responsibility in Indonesia: Quinxotic Dream of confident expectations

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 corporate 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 proceeds in four main sections. The first refers to historic and cultural factors, which inhibit significant changes in corporate social and environmental performance. The second section examines codes of conduct and how they are viewed in Indonesia. The third section refers to the environmental impact of large business, with particular reference to the mining and palm oil industries. The conclusion sums up the main points of the paper and reflects on the relevance of corporate social and responsibility for Indonesia. The discussion on codes of conduct presents both civil society and TNC perspectives on the implementation, achievements and limitations of such initiatives. According to the author's assessment, 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. Some tentative steps have been taken by both the government and some TNCs to improve their environmental performance, but such initiatives tend toe restricted to a few companies. Some government-led voluntary initiatives related to pollution control have attempted to motivate change by naming, praising and shaming corporations. Some successes have been achieved, but consumer activism remains relatively weak, government and company resources for environmental initiatives have been stretched by economic crisis, and only a minority of participating firms have taken significant measures to improve their environmental management systems. Company participation in international certification schemes like ISO14000 remains very limited.