Integrating Corporate Social Responsibility (CSR) into Business Process: Best Practice of CSR in Mining Industry through Local Contractor Management and Development – Anton Sudarisman
Introduction: CSR in Mining Industry in Indonesia
Mining industry all over the world is one of several sectors marked by much-publicised corporate social responsibility (CSR) activities, both due to its the nature of operations as an extractive industry as well as its impact on local community (most of them operate in remote areas with limited public facilities available). Under such circumstances, mining companies and other extractive industries have been expected to become the main anchor for local economic development (Frynas, 2008; Edoho, 2008).
Mining companies in Indonesia have also come under close scrutiny by the society for their CSR-related activities in the past two decades. Building harmonious relations with the community is expected to contribute positively to the short and long term operational strategies. In fact, many mining companies in Indonesia currently list CSR as one of their main corporate strategies, in particular, a strategy to gain ‘social license to operate’ (community approval to operate that extends beyond formal legal approvals). By engaging and contributing to the community, it is expected that they can operate with minimal social risk, both in short or long run (Kemp, 2009).
Currently, the CSR initiatives are practised in many forms. Based on annual reports of several mining companies in Indonesia released in the past three years, the main CSR programs run by this sector – although claimed to be ‘sustainable’ in these reports – focused on charity or philanthropic approaches. These programs encompass education, health, micro-finance, and physical/infrastructural contributions to the community. While addressing the critical needs of local stakeholders, in many instances, such approach may not be sustainable, and may even further foster the local community’s dependence on the company.
Keywords: corporate social responsibility, measures development, sustainable development, qualitative data and analysis.