CSR, strategy to face business competition

The implementation of corporate social responsibility (CSR) is decidedly one of the tangible or real steps of a company that applies good corporate governance (GCG).

The GCG includes a number of related pillars, namely transparency and accountability by a company’s responsible and professional management as well as its owners for the sake of all concerned stakeholders.

The public in general, including consumers who are an inseparable part of a company’s existence, will always demand that a company’s operations are clean and friendly. Above all, investors who are also shareholders are starting to care more about their investment locations. So it is not surprising that in recent times corporate social responsibility has become a vital and inseparable part of a company’s activities, as is the case with good corporate governance.

Globalization, changes in ideology and technology advancement have all changed the way companies are managed. These days, quite a number of companies strive to enhance their reputation for better public acceptance. This is indeed natural as a good reputation is one of a company’s strategic assets in facing the tough competition of this global era.

Stiff competition is faced especially by natural resources-based companies, such as those dealing in pulp and paper, plantations and forestry. Companies using natural raw materials like fiber are often criticized over environmental issues. Therefore, most natural resources-based companies are fully committed to executing environment preservation programs because such programs are closely related not only to their existence but also to their business sustainability. However, equally important are a company’s socio-economic programs for the benefit of the communities in its vicinity because a company’s operations impact the communities to a certain extent.

A number of companies, especially those in remote areas, understandably intensify their socio-economic CSR programs for communities that are in dire need of aid and various assistance, and such programs have indeed helped improve communities’ welfare. On the other hand, investing in a community’s education and welfare has the ability to reduce any negative actions by the community that may harm the company.

“CSR is important for a company’s sustainability. Education, health care and empowerment programs are expected to improve a community’s welfare and hence naturally reduce harmful actions, such as theft and burning the forest,” said Dedy Sunardi, head of forest protection department at Sinar Mas Forestry (SMF) Palembang Region.

For its CSR programs to achieve their goals, SMF, in collaboration with its working partners PT Sebangun Bumi Andalas, Wood Industries (SBAWI), PT Bumi Mekar Hijau (BMH) and PT Bumi Andalas Permai (BAP), creates programs that match an area’s specific character in order to satisfy the communities’ needs.

Although many local people have been employed by contractors that are SMF partners, job opportunities are limited in number and scope while some types of work require a higher level of education. That is why SMF and its partners have built the necessary infrastructure — such as schools in remote and extremely remote areas like in Riding village, Kampong Penyabanga, which is about 100 kilometers from Ogan Komering Ilir (OKI) regency where PT Sebagun Bumi Andalas operates — and provided training and assistance to local contractors so that they can run their businesses.

For the company’s economic empowerment program, for instance, in Kuala XII village, which is more suitable for plants not prone to plant disease or pests, orange trees have been planted.

“The majority of people here do not usually plant paddy, so when they tried it once, the paddy fields were attacked by various vermin, such as grasshoppers, wild boars, birds and rats, and within less than a week the paddy, which was almost ready for harvest, was almost totally consumed by these vermin. As a result, the farmers suffered huge losses and had to revert to planting orange trees in order to survive,” said SMF Palembang region CSR head Herwansyah.

Next to providing aid and assistance for the orange orchard, SMF in collaboration with the local trade office also gave them machines on which to weave. The women at Ulakemang village use the machines to make various items, such as bags, shoes and tissue boxes, from pandanus leaves, which are abundant in the village. The local women can pick as many leaves as they want for free.

For health care, SMF has built 11 clinics called Acacia Mandiri to help the poor people in the area.

“Just imagine the difficulties they have to face because to get medical care in the city they have to ride on a riverboat for more than three hours,” Herwansyah said, adding that, “And what if the patient’s condition is extremely critical? Anything could happen on the way.”

Because the clinics’ facilities are limited to a certain extent, SMF refers critically ill patients to hospitals in Palembang and takes care of the expense.

Meanwhile Anwar Lawden, corporate secretary of PT Toba Pulp Lestari Tbk (TobaPulp), said, “One of our CSR programs is to recruit local people and provide aid and assistance for education and health care.”

TobaPulp offers two types of employment. The first type is as permanent employees at the company’s plants in Parmaksian (Tobasamosir) and on industrial timber estates (HTIs) located in eight regencies, namely Tobasamosir, Samosir, North Tapanuli, Humbang Hasundutan, Dairi, Pakpak Bharat, Simalungun and South Tapanuli Selatan. As per December 2010, the number of locals employed by the company was 1,011. The second type of recruitment is employment by one of the company’s 424 local business partners, in which the number of employees is approximately 5,000.

“Our business partners transport raw materials from the estates to our factory, build roads on the estates, prepare estate locations, plant and fertilize the land, treat and nurse the plants, and harvest and transport the wood produced. Our business revenue for the 2003-2010 period reached Rp1.73 trillion, hence the number of employees relying on TobaPulp for an income is about 6,000,” he said.