Corporate Social Responsibility

Corporate Social Responsibility is a concept that organizations, especially (but not only) the company is to have a responsibility towards customers, employees, shareholders, communities and the environment in all aspects of company operations.

CSR is closely linked to "sustainable development", in which there is an argument that a firm in implementing its activities should not base their decision solely based on financial factors, such as profits or dividends, but must also be based on social and environmental consequences for both current and long term.

Some time ago we are always treated to the news in the Gulf of Mexico oil leak caused the explosion of offshore platforms owned by BP (British Petroleum) dated 20 April 2010. This case requires the U.S. president of Barack Obama directly intervened to suppress the BP, the actions that had led to tensions between the U.S. and the UK (other than because of the name of the British, BP is also one of the pride of British companies).

The incident could be considered accidents, but further investigation showed the existence of willful negligence on the part of BP that resulted in the greatest environmental tragedies in the last 10 years. The investigation showed BP often take measures that are considered risky in order to save operational costs. Some time before the explosion, several BP employees had requested the replacement of one of the parts that are problematic, but it was rejected by BP. In addition, in the last ten years, BP has been caught doing 750 violations (97% of all offenses committed all of its peers!) In short, the tragedy was caused by breach of business ethics by BP.

Because in the case above shows clearly how the companies are willing to do anything for profit, fair to conclude that in business, the only ethics that takes is being nice and polite to the shareholders. Admittedly the main business interest is to generate maximum profits for its shareholders. The focus is to make short-term minded company that seeks by all means do anything to increase profits. Competitive pressures due to globalization and an increasingly finicky consumer is often used as an excuse.

Reflecting on the case example above, it's time we reconsider the old perspective view of business ethics and come from two different worlds. The application of high ethical standards in companies are actually able to provide benefits in two ways at once. In addition to building corporate image and good reputation, the company could also look at the application of high ethical standards as part of risk management to reduce the company's long-term risk.

Doug Lennick and Fred Kiel (2005) and their book Moral Intelligence, concluded that the companies have leaders who apply the standards of ethics and high moral proved more successful in the long run. Of course that is important to note here is the emphasis on long-term word. The owners of capital and short-minded corporate managers certainly difficult to accept this logic because it ethical in business is rarely profitable immediately. Therefore, the organizational system especially a system of incentives should consider long-term achievement and application of ethical values ​​as one factor assessment and promotion. Audit and control systems should also be tightened to detect irregularities that occur as quickly as possible and punish the violators of ethics regardless of fur. Leadership that upholds the ethics and exemplify is strongly needed as well. Without such things, the ethics of the company is simply nonsense.

The role of government is also very important. As explained above, public companies are often under pressure from shareholders to generate profits as quickly as possible and as much as possible. Without a legal framework that gives room for company management to escape such pressures, would be difficult to avoid the pressure which the short-term nature.

We expect the companies and the Indonesian government willing to look at corporate ethics more seriously. The role of the community primarily through oversight bodies, NGOs, media, and be critical consumers are also urgently needed to help improve standards of business ethics in Indonesia. Regrettably, for example, cases of violation of business ethics in Indonesia, including life-threatening consumers often only get a portion of the news rudimentary and no serious investigation of the government.