Understanding CSR – When there is a large company standing in the community, then automatically the big company has a social responsibility to the community or the environment where it stands. The responsibility of a company to society has a mandatory nature. This means that if the company does not carry out its responsibilities to the community or the environment around it, then the company is threatened with sanctions.
Well, Corporate Social Responsibility or abbreviated as CSR is one of the programs used to carry out the obligations of the company. To understand CSR further, this article will explain the meaning of CSR, the benefits of CSR, the types of CSR, to examples of CSR from a large company. The following is an explanation.
A. Definition of CSR
Corporate Social Responsibility or commonly referred to as CSR is an English term. The word “Corporate” means company, while “Social” means social, and “Responsibility” means responsibility. Etymologically, the notion of Corporate Social Responsibility can be interpreted as a company’s activities that have a social responsibility to the surrounding community and society in general to stakeholders.
In their research in 2008, Widjaja and Yeremia revealed that the form of cooperation between companies (not only Limited Liability Companies (PT)) and all stakeholders either directly or indirectly interact with companies to ensure the existence and sustainability of the business ( sustainability) of the company.
The opinion of Widjaja and Yeremia is the same as social and environmental responsibility. Companies are required to have a commitment to participate in the role of carrying out community economic development in a sustainable manner in order to improve the quality of life and preserve a beneficial environment, both for the company or the company itself, the local community, and society in general.
CSR is a concept or action taken by a company as a form of corporate responsibility towards society or the surrounding environment. The forms of responsibility of a large company can be very diverse, ranging from carrying out activities that can improve people’s welfare, improving the environment, providing scholarships to children from underprivileged surrounding communities, providing funds for maintenance of public facilities, to donations to villages/ social facilities.
This responsibility is a form of reciprocity from large companies that are in the territory of a community. It is a well-known fact that the establishment of a large business or company has the potential to damage the environment. Therefore, CSR is expected so that a company can help reduce the potential for environmental damage or even zero percent potential for environmental damage.
CSR itself is indeed formulated as a form of strategy from a large company to meet and accommodate the needs and interests of its stakeholders or stakeholders. The phenomenon of CSR appears a lot after there is a lot of awareness that sustainability or sustainability of the company in the long term is more important than just profit or profitability.
B. A Brief History of CSR
CSR was only popularly used in Indonesia in the 1990s. Several companies have actually implemented the concept of CSR for a long time, it’s just that they call it CSA or Corporate Social Activity, which means company social activity. Even though it has a different term from CSR, several CSA activities carried out by companies have approached the concept of CSR, in which companies pay attention to ‘participation’ and ‘care’ for social and environmental aspects. By using the concept of social investment from companies, starting in 2003, the Ministry of Social Affairs was recorded as a government agency that was active in developing the concept of CSR and advocating for various national companies.
The social concern of a company is based on the reason that the company’s activities have had a negative impact on the environmental and socio-economic conditions of the community, especially the areas around the company. In addition, the actual owners of the company are not only shareholders, but also stakeholders or commonly called parties who have an interest in the existence of the company.
C. CSR Principles
CSR is a concept that provides a new view of the company’s concern for society. CSR is used as a form of reasoning that production activities carried out directly or indirectly have had an impact for better or worse for the socio-economic and environmental situations and conditions in which the company was founded and operates.
In addition, the company owner is actually not only the stakeholders in the internal component of the company. Stakeholders also mean all external parties or outside the company who have an interest in the existence of the company. Parties outside the company who are very dependent on the existence of a company, such as employees, customers, consumers, distributors, the wider community to the surrounding community, even the government as a policy maker have an interest in the establishment of a company.
The following are some of the principles of CSR or Corporate Social Responsibility which can be beneficial for the environment and socio-economic community according to Pearce II and Robinson, including:
1. Identify a long-lasting, long-term mission
Companies make the greatest social contribution when they identify important and long-lasting policy challenges and participate in their long-term solutions.
2. Contributing what has been done
A company maximizes its benefits and contribution if it can enhance its core capabilities and contribute products and services that are based on the expertise used in or resulting from its normal operations.
3. Contributing large-scale special services
Companies have the greatest social impact when they make a special contribution to large-scale cooperative ventures.
4. Considering government influence
Government support for company participation in CSR or at least a willingness to remove barriers can thus have an important positive effect.
5. Compile and assess the total benefit package
Companies benefit most from their social contributions if they price the total benefits package. This assessment should include the social contributions made as well as the reputational impact that strengthens or enriches the company’s position in the eyes of its constituents.
D. The Important Factors of CSR
Sulistyaningtyas in research published in 2006 revealed that there are several factors that can cause CSR or social responsibility of a company to be very important to be carried out accordingly. The following are some of the important factors of CSR, including:
1. The existence of globalization, which illustrates the loss of dividing lines between various regions in the world so as to present universality. Thus it is very possible that multinational companies can develop anywhere as a link in the globalization chain.
2. Consumers and investors as the primary public for profit organizations need an overview of the organization’s responsibility towards social and environmental issues.
3. As part of organizational ethics, organizational responsibility is needed to be able to manage the organization properly (more properly known as good corporate governance).
4. Communities in several countries consider that an organization has met organizational ethical standards, when the organization cares about environmental and social issues.
5. Social responsibility can at least reduce a crisis that has the potential to occur in an organization.
6. Social responsibility is considered to improve the reputation of the organization.
E. CSR objectives
Based on the Harvard Business Review, CSR carried out by companies has the main goal of aligning a company’s social and environmental activities with its business goals and values.
In addition, a company that carries out CSR must be directed to efforts to increase the company’s triple bottom line (TBL), namely social, economic and environmental. The purpose of CSR is for companies to carry out development and improvement in these three dimensions. The three dimensions of CSR performance are often referred to as the three pillars, which include:
1. People or Social
People or society refers to the various social initiatives that shape the CSR strategy of the company. For example, company giving, community involvement, and various company efforts to improve the quality of life of stakeholders, both internal and external.
2. Planet or Environment
Planet refers to the ecological or environmental impact and environmental practices of a company. For example, carrying out reforestation efforts in the areas where the company operates, closing the pits of ex-mining excavations, and restoring the function of ex-mining land.
3. Profit or Profit
Profit includes not only the benefits that a company gets for its shareholders, but also the benefits that are also felt by society more generally. For example, both the company and the community benefit from the company’s success, the local community can open businesses around the company, and so on.
F. Benefits of CSR
After understanding the meaning, history, principles, and objectives of CSR. It should be noted that apart from having the benefit of minimizing potential environmental damage, CSR also has various other advantages. The following are some of the benefits of Corporate Social Responsibility, including:
1. For the Environment
First, CSR can provide benefits to help make efforts to preserve the environment and even companies should be able to prevent all potential damage to nature. In the concept of CSR, a company does not only pursue profits within a certain period of time, but must participate and contribute actively to environmental quality through the company’s CSR funds.
2. For the Community
Second, CSR can provide benefits to contribute to society. The concept of CSR requires companies to be able to provide comfort and safety to the surrounding community. Not only that, in CSR, companies can also absorb labor from local residents or the environment in which the company operates.
3. For the Company
Third, the benefits of CSR that companies get are to give the company a good image in the eyes of society. If the company has a good impression in the eyes of the public, then the process of long-term sustainability and branding of the company will also be easier. CSR activities that are often carried out by companies to improve their image are football scholarships, building wells in dry areas, community empowerment, and so on.
4. For the Government
Fourth, CSR has proven to be very useful for the government as a policy maker. CSR can participate in supporting programs from the government in carrying out regional development. CSR has succeeded in contributing to regional development such as environmental preservation, reducing unemployment, poverty alleviation, building health facilities, building educational institutions, and so on.
G. Types of CSR
After understanding the various meanings, history, principles, goals and benefits of CSR, the following are several types of CSR, including:
1. Nature Rehabilitation
First, the most important and most frequently carried out type of CSR is natural rehabilitation. Companies have a big responsibility towards preventing damage to nature as well as preserving it, especially for companies that produce waste. The examples of natural rehabilitation activities that can be carried out by companies are forest reforestation, mangrove planting, productive plant seed grants, and so on.
2. Environmentally Friendly Waste Management
Second, waste management with an environmental perspective is expected to prevent toxic waste that can poison the community. Management should dispose of waste products, waste does not cause damage to the ecosystem.
In processing environmentally sound waste, companies need to sort it so that the type of waste can be decomposed according to its nature, namely organic, inorganic and toxic. Furthermore, the company is obliged to process the waste according to the technique so that it can be properly absorbed by nature.
3. Philanthropy
Third, the easiest CSR activity to do is philanthropy. Philanthropic activity is a humanitarian activity to help people in distress. Examples of philanthropic activities are very diverse, ranging from fundraising through donations, opening entrepreneurial villages, to MSME funding assistance, and so on.
4. Use of Renewable Energy Sources
Fourth, the concept of CSR can encourage companies to use renewable energy sources, such as solar power, wind, water, and natural steam. The use of renewable energy can be used by companies to participate in efforts to conserve endangered resources such as petroleum and natural gas.
5. HR Friendly Work Culture
Fifth, creating a friendly work culture for HR is a type of CSR that is not based on material. This type of CSR allows companies to instill values and attitudes to their employees. CSR is very good because it can improve the character of employees for the better.
6. Volunteering activities
Sixth, the type of CSR volunteering or volunteer activities can be carried out routinely or incidentally. This volunteer program can be carried out routinely by sending teaching staff, medical personnel, community assistants to the outermost areas in Indonesia. Meanwhile, incidental volunteer activities can be carried out when there is a natural disaster.
7. Employee Economic Empowerment
Seventh, the type of CSR is to carry out economic empowerment of employees. CSR funding can be used by employees to improve their skills, it is hoped that employees will be able to empower themselves economically. For example, forming employee cooperatives, training entrepreneurial skills, and providing business funding assistance to employees.
G. Examples of CSR
So, after understanding the meaning of CSR and its ins and outs. The following are examples of CSR implementation from various companies. Currently, many companies are implementing good CSR programs in various purposes and forms of activity. The following are examples of CSR programs that have been implemented by various companies, from big to small in Indonesia and the world, including:
1.Google
The giant technology company from the United States, Google has many CSR programs. Several CSR programs from Google such as Google AdGrant and Google Green. The AdGrant program enables Google to provide grants to empower more than 20,000 non-profit organizations in 50 countries.
2. Legos
Lego as a company engaged in the production of educational toys has two CSR programs, namely the Sustainable Materials Center and Build the Change. In carrying out its CSR program, Lego cooperates with WWF and has a commitment to produce toys from environmentally friendly materials.
3. PT Telkom Indonesia
Telkom Indonesia as a state-owned network company has a CSR program called Indonesia Digital Learning (IDL). Indonesia Digital Learning seeks to encourage a change in the digital paradigm for all teachers in the country. This CSR program has also succeeded in increasing the competence, skills and quality of teachers in utilizing information and communication technology.
4. PT Unilever Indonesia
Unilever Indonesia is a company that produces household products. The company has many CSR programs through its products, including a campaign for washing hands with soap (Lifebuoy), preservation of Indonesian culinary (kecap Bango), and dental and oral health education (Pepsodent).
5. PT Pembangkitan Jawa Bali
In carrying out its CSR program, this Java-Bali power plant company launched the Community Academy CSR program which provides D1 Electricity scholarships to the community around the generating unit. It is hoped that the scholarship recipients who have graduated will be employed in the generating unit.