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CSR is good for business and the environment - Jakarta Post
Last modified: 2010-08-09 02:27:54

President Susilo Bambang Yudhoyono's (SBY) demand that a Thai oil-rig operator be held responsible for last year's massive oil spill in Timor Sea has similarities to President Barack Obama's skirmish with BP.

But, unlike the United States, where corporations are commonly held to account for environmental misdemeanors, SBY's quarrel with PTTEP Australasia is relatively novel for Indonesia.

In spite of many appalling environmental transgressions, it is rare indeed for companies to be brought to justice.

With untold ecological damage caused by the release of millions of liters of crude, conservationists are pleased that the government is taking this incident seriously.

They hope that it will act as a wake-up call for Corporate Indonesia to improve its environmental standards.

It took more than two months before the 500,000-liter-a-day spill was plugged, causing untold damage to sea life and coastal areas.

With concerns of an all-too-often lax approach to environmental management, there are fears of other looming catastrophes that could further threaten the nation's rich biodiversity.

These are changing times for Indonesia with its global reputation now on an impressive upward trajectory. With optimistic economic growth forecasts and leading international ratings agencies now awarding investment grade status, Indonesia's standing in the world has arguably never been better.

As interest in Indonesia flourishes with the country held in ever-higher regard for investment and trade potential, so do the levels of scrutiny.

This enhanced reputation comes at a price, with growing expectations of the business sector to raise its ethical and environmental standards.

If Indonesia is to fully capitalize on the opportunities that its newfound status surely brings, the business sector must pick up its socks, shore up its governance and significantly advance its environmental performance.

Indonesia is now in the spotlight. Now it is time for the private sector to deliver real Corporate Responsibility. No more disingenuous posturing by companies strong on environmental rhetoric and weak on action.

Corporate Social Responsibility (CSR), as it is commonly called, has become an essential business strategy for Western companies.

Twenty-first century corporations must incorporate public interest into its decision-making, and embrace what has become commonly known as the Triple Bottom Line, giving equal weight to "People" and "Planet" as well as "Profit".

This so-called "Three-Ps" approach to business has to be more widely adopted and practiced by companies in Indonesia.

"Business as usual" with scant regard for CSR will inevitably attract mounting criticism from non-governmental organizations and other watchdogs as world interest in this nation increases.

Companies that disregard the expectations of society and disrespect the need for environmental protection could well end up losing their "license to operate", metaphorically as well as legally. And they will jeopardize the significantly improved reputation now enjoyed but this country.

The Indonesian economy is sizably rich in natural resources. The unsustainable harvesting of these resources has already provoked the wrath of leading conservation groups which strive to demonize those companies that are perceived to lack the necessary environmental standards.

Unscrupulous behavior by some companies motivated by short term gain often at the expense of ordinary people and nature, have brought disrepute on this great nation. Government has an urgent duty to stamp out ethical business practice.

Forestry, mining and oil palm companies among other those in other industries which allegedly disregard conservation imperatives increasingly find themselves being vilified.

Their customers are often targeted with calls for markets to boycott unsustainable products. And their shortsighted greed diminishes the value of their businesses.

Indonesian companies must have robust and verifiable Corporate Responsibility policies if they are to survive in this new era of accountability. Today's business in required to go way beyond legal compliance to compete on the world stage.

This country's future is dependent not only on economic development, but the preservation of its invaluable and fragile ecosystems. Profitable companies are vital for economic development which Indonesia so badly needs. But success cannot be attained without due regard for the environment.

CSR can no longer be regarded by business managers as a luxury. Nor should it be seen as an irritant or an unnecessary financial burden. That's dinosaur thinking.

Equal consideration for the needs of society and the environment as well as the bottom line is a crucial business strategy for every modern company.

There are some shining examples of progressive Indonesian companies that can be accurately described as good corporate citizens.

They are led by innovative management that appreciates the benefits that accrue from this.

Now that Indonesia is finally being taken seriously and gaining real respect from the international business community, companies must expect to be held to account for their behavior - fiscally, socially and environmentally.

Jonathan Wootliff leads the Corporate Accountability practice at the consulting firm, Reputation Partners. He specializes in sustainable development and in building of productive relationships between companies and NGOs. He can be contacted at jonathan@reputationpartners.com

Jakarta Post

Keywords: CSR is good for business and the environment, Jakarta Post, Indonesia, CSR, SBY, Corporate Social Responsibility, environment, Jonathan Wootlilff, Reputation Partners, sustainable development
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