Why responsible business conduct matters

(News Terupdate) - The Asian region has no doubt become one of the most influential powerhouses of the world economy.

While the world is acknowledging the success of Asian firms in generating impressive economic growth, Asian firms should also be fully alert that Asian businesses should also pay due attention to their broader social responsibilities toward the governments and societies in which they operate.

Among one of the important lessons that Asian businesses should seriously heed from the recent economic and financial meltdown in 1998 and 2008 is that wealth creation is pointless without the protection and respect of human rights, improvement in social conditions and the environment, and therefore the concept and practices of “green growth” will be a very important factor to avoid or at least to deal positively with possible economic and financial problems that may occur in the future.

The collapse of international investment in 2008 with its global impact convinced political leaders all over the world that there was a serious failure in public and private sector governance, and therefore, unquestionably responsible business conduct (RBC) or corporate social responsibility (CSR) will be very crucial to restore confidence and trust in international, regional and national economic and financial systems.

In this context, the United Nations Economic and Social Commission for Asia and the Pacific and the Organization for Economic Cooperation and Development (OECD) in collaboration with the International Labor Organization (ILO), the UN Global Compact and Global Reporting Initiatives organized a regional conference on corporate social responsibility with a focus on responsible business conduct in Bangkok on Nov. 2 and 3, 2009 on the occasion of the First Asia-Pacific Trade Investment Week.

The conference was attended by delegations from Asia-Pacific countries, which mainly discussed the synergies between major international instruments and guidelines vis-à-vis the roles of governments, business and other stakeholders in promoting and implementing responsible business conduct/corporate social responsibility in the Asia-Pacific region.

The main leading instruments widely accepted at present in the implementation of corporate social responsibility/responsible business conduct are the OECD Guidelines for Multinational Enterprises, ILO’s Core Conventions and Tripartite Declaration of Principles Concerning Multinational Enterprises, UN Global Compact and the Global Reporting Initiatives.

A number of country RBC/CSR experiences and practices were presented and discussed during the conference. While the forum agreed in principle that RBC/CSR should become part and parcel of a company’s policy and strategy in doing business that would contribute to the Millennium Development Goals (MDGs), the delegates also demanded that the existing international instruments and guidelines should only be used to actively promote a fair and just international business environment that would lead toward an equitable global sustainable economic growth based on the “green growth” concept.

While CSR is a relatively new concept in Indonesia, CSR has already made good progress among multinational enterprises (MNEs) and large national companies.

MNEs operating in Indonesia and large national companies have shown their commitment to CSR by increasingly implementing CSR programs throughout Indonesia, and in order to make a more concerted and coordinated efforts, these companies formed a foundation, Indonesian Business Links (IBL), to promote CSR practices among its corporate members.

IBL also actively involves relevant government and non-governmental organizations in its programs and activities, including organizing regional and national CSR conferences in the country. In addition, many other CSR-related activities are being undertaken by other important stakeholders in Indonesia.

At present, more than 150 large and medium companies have become members of the UN Global Compact under the coordination of Global Compact Network Indonesia. In addition, forms of appreciation such as CSR awards, social entrepreneurship awards and MDGs awards are being used to measure companies’ performance and achievements in their contribution to sustainable development in the country.

While CSR practices are making progress in Indonesia, particularly among the MNEs and large national companies, there is still a lot of work to be done in this area in order to ensure that, in general, Indonesian business can give a clear picture to the international community that doing business in Indonesia is becoming more responsible, accountable and transparent based on national and international requirements.

The latest developments that the public and international communities could follow during the last month certainly do not give the kind of signal that Indonesia would need to position itself in a comfortable place within the global market.

Therefore, there is an urgent need for all stakeholders (government, private sector, civil societies, academicians and the media) to take responsible business conduct/corporate social responsibility more seriously so that Indonesian business can improve its image and become a well calculated contender in the global economic market.

Don’t forget that Indonesia has become a member of G20, and that implies that we have to show to the international community that Indonesia is worthy of that position.


Urgent work to be undertaken to put Indonesia on the right track:
1. Further strengthening of CSR awareness and training among MNEs and large national companies and other stakeholders.
2. Improve coordination and cooperation among CSR practitioners and organizations.
3. Strengthening reporting mechanisms and related training programs.
4. Raise awareness on responsible business code of conduct among SMEs and gradually on CSR issues.
5. Work closely with the government on Law No. 40/2008 concerning social and environmental responsibility of limited liability companies in order to ensure that implementation of CSR programs is based on the basic principles of the CSR concept in coordination with the government.
6. Be proactive in the CSR ASEAN Foundation and other international CSR initiatives.

What is happening now in the country should become a wake up call, especially to the public and private sectors, to be more serious in taking the necessary steps to reform our governance and performance as early as possible so that they comply with national and international standards. This would make Indonesia compatible in the global economy, especially since Indonesia now has an honorable place in G20. It is certainly not an easy task but neither is it impossible, if all stakeholders are willing to take the right steps in the right direction.

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