After almost 5 years since the enactment of Law No 40 of 2007 concerning Limited Liability Companies (‘Law 40/2007’), the Indonesian Government has finally enacted the implementing regulation derived from Clause of Law 40/2007 which states that companies that manage or utilize natural resources, or that impact natural resources, are required to fulfill social and environmental responsibilities. As an implementing rule, Government Regulation No 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies (‘GR 47/2012’) specifically addresses the relevant issues of Corporate Social Responsibility, as generally applicable to Indonesian companies. GR 47/2012 took effect from 4 April 2012 and provides certain issues related to CSR obligations, implementations and sanctions.
GR 47/2012 stipulates that all companies that manage or utilize natural resources or that impact natural resources are required to bear a social and environmental responsibility which is harmonious and balanced with the surroundings and according to the values, norms and culture of that society. Obligations include the preservation of the function of the environment pursuant to the law along with its implementing regulation regarding natural resources or matters pertaining to natural resources, as well as the ethics of running a company. One example is the obligation to implement community development according to Law No 4 of 2009 concerning minerals and coal. In addition, this regulation also stipulates that CSR is required to be practiced both inside and outside the company.
One of the consequences of the CSR regulation is a budget allocation requirement. A company’s CSR program and its related budget must be included in its annual work plan which needs to be approved by the Board of Commissioners or the General Meeting of Shareholders of the company (based on the company’s articles of association or as otherwise provided by law). The results of the implementation of the CSR work plan for the previous year must be included in the company’s annual report, and reported to shareholders at the annual shareholders meeting. Thus, for a public company, CSR activities can be observed through its disclosure in the annual report submitted to the Indonesian Stock Exchange Commissioners.
- Gunawan, J. (2016). Corporate Social Responsibility Initiatives in a Regulated and Emerging Country: An Indonesia Perspective. Springer International Publishing Switzerland. pp 325-340. DOI 10.1007/978-3-319-21641-6_15
- The Financial Services Authority. (2007). Law No 40 of 2007 concerning Limited Liability Companies.
- Government Regulation. (2012). Government Regulation No 47 of 2012 concerning Social and Environmental Responsibility of Limited Liability Companies.
- Google Image. (2021)