111129 nk rajawali foundation csr gathering

• 1. NOKE KIROYAN President Director & Chief Consultant,PREVIOUS ASSIGNMENTS Kiroyan Partners Commissioner, PT Agincourt Resourceso President Director, PT Newmont President Commissioner, PT Amstelco Indonesia Tbk.Pacific Nusantara (10/05 12/ 06) Independent Commissioner, PT Asuransi CIGNA o Chairman, PT Rio Tinto Indonesia Independent Commissioner, PT SMR Utama Tbk. (10/03 09/05) Commissioner, PT Wana Hijau Nusantara (Macquarie - REDD) o President Director, PT KaltimCURRENT PUBLIC SERVICE AND PROFESSIONAL MEMBERSHIPSPrima Coal assigned by Rio Tinto (12/01 10/03) Chairman, International Chamber of Commerce Indonesia (ICC) Co-Founder and Chairman, Board of Patrons, Indonesia Business Links (IBL)o President Director, PT Rio Tinto Business Advisory Council Member, United Nations Economic and Social Committee Indonesia and Chairman, Riofor Asia & the Pacific (UNESCAP) Tinto Foundation (09/97 11/01) Partner, Partnership for Governance Reform in Indonesia Member, National Committee on Governance (KNKG)o CEO, Salim Oleochemicals Inc., Founding Member and Advisor, UI Center for Governance Studies (UI CGS) USA (04/96 08/97) Charter Member, Institute for Commissioners and Directors of Indonesia (LKDI) Country Rep. Salim Group cum Member, Australian Institute of Company Directors (AICD) o Trustee, Padjadjaran University (UNPAD)Director and Treasurer Albright & Trustee, The United States Indonesia Society (USINDO)Wilson Ltd., Australia (12/94 Trustee, Fulbright Indonesia Program (AMINEF)03/96) Advisory Board Member, The Nature Conservancy (TNC)o Managing Director, Salim Deutschland GmbH, Germany,TERTIARY EDUCATION (10/91 11/94) Postgraduate Diploma in Business Administration, Heriot-Watt University, o Siemens Indonesia, starting asEdinburgh, UK Management Trainee, ending as Bachelor of Arts in Liberal Studies, Syracuse University, New York, USA President Director, PT Siemens Bachelor in Communication Science, Padjadjaran University, Bandung, Indonesia Industriekaufmann (Diploma in Commerce & Accounting), Nrnberg, GermanyIndonesia (02/74 09/91) 2

2. Conceptualization of CSRRegulating CSR: Law No. 40/2007 Reporting on CSR Convergence of Concepts Standardizing CSR: ISO 26000At the heart of CSR: Stakeholders3 3. Pre 1950 Personal philanthropy of business people1950s Frank Abrams (Standard Oil of New Jersey): Managements Responsibility in a Complex World (HBR 1951) Howard R. Bowen: Social Responsibilities of the Businessman (1953)1970s Morrell Heald: The Social Responsibility of Business: Company and Community, 1900 1960 (1970) Archie B. Carroll:The Four-Part Model of Corporate Social Responsibility (1979)1984 R. Edward Freeman: Strategic Management: A Stakeholder Approach 1987 Brundtland Commission: Sustainable Development1992 Earth Summit in Rio de Janeiro1997 John Elkington: Triple Bottom Line1999/2000 The Global Compact and Millennium Development Goals2000s Ethical conduct of business (post Enron, Tyco, WorldCom, Parmalat and others)Mid-2000s Mainstreaming of CSR and convergence of concepts2010 ISO 26000 international standard 4 4. STRATEGY AND COMPETITION Community Environmental Human rights Employment complianceVoluntary policies and actions beyond legal Anti-corruption TransparencyDevelopment Policies InitiativesPoliciesinitiativesPolicies ANTI-COMPANENVIRON HUMAN STOCK- LABORCORRUPT Y-MENTAL RIGHTSMARKET LAWS -ION LAWSLAWSLAWSRULES LAWS 5 5. The commitment of businesses to behave ethicallyand to contribute to sustainable economic development by working with all relevant stakeholders to improve their lives in ways that are good for business, the sustainable development agenda, andsociety at large.(The World Bank Group, 2008) 6 6. Responsibility of an organization for the impacts of itsdecisions and activities on society and the environment,through transparent and ethical behavior that Contributes to sustainable development, health and the welfare of society; Takes into account the expectations of stakeholders; Is in compliance with applicable law and consistent with international norms of behavior; and Is integrated throughout the organization and practiced in its relationships.7(Adapted from ISO 26000: Guidance on social responsibility , 2010 ) 7. OBLIGATIONCHARITY OFCOMPANIES PAID FORSEPARATEFROMFROMPROFIT, NOTBUSINESSCOSTS 8 8. InnovationCSR Fundamental Sustainable asstrategic and business modelsvalue creationoperational impact Medium to highCSRstrategic and Complianceas risk management operational impactProvide LittlefundingCSR strategic orand skillsas corporate philanthropyoperationalimpact(UN Global Compact as cited in Corporate Social Responsibility in a Global Economy, 2009)9 9. Transform- ElementaryEngagedInnovative Integrateding Focus on jobs, Companies begin Companies begin Companies begin Full disclosure ofprofits, andto introduce to pay realto integrate their what is happen-paying taxes with philanthropy and attention to business modelsing within thea legal some degree of stakeholders more holisticallycompanycomplianceenvironmental Adopt a more with corporate includingorientation management responsive citizenshipnegative Since there is no Leadership stance toactivities information viacorporate becomes awarestakeholders with Responsibility social reportscitizenship of the need for aprograms based management Changing thestrategy, social license to on their interests Leadership game byleadership tend operate and needsbegins tocreating newto be out of touch Still reactive Willingness to understand thatventures orwith issues and rather thanengage withreputation crucial markets that haverelationships proactiveCSOs and NGOsto success and pro-socialtend to be Beginthat havethat corporate benefitsunilateralcommunicatingconcerns about citizenship is Engage with wide When issues with CSOs andthe businessintegral part in range of civilarise from theNGOs on apracticesdeveloping society.societal domain project basis Willingness to reputation Governmentalthey tend to reactrather thanbegin being more Incorporateand non-defensively and systematically transparentexternal governmentalcommunicate and strategicallythrough public assurance such enterprisesunilaterally multiple bottom- as responsibility Leading on line reporting auditing bysustainability andoutside agencies business-society relationships(The Paradoxes in Communicating Corporate Social Responsibility, Sandra Waddock and Bradley K. Googins in The Handbook of10Communication and Corporate Social Responsibility ivind Ihnen, Jennifer L. Bartlett and Steve May [eds.], 2011) 10. Tanggung Jawab Sosial dan Lingkungan adalah komitmen Perseroan untuk berperan serta dalampembangunan ekonomi berkelanjutan guna meningkatkan kualitas kehidupan dan lingkungan yang bermanfaat, baik bagiPerseroan sendiri, komunitas setempat, maupun masyarakat pada umumnya.11 11. Laporan tahunan sebagaimana dimaksudpada ayat (1) harus memuat sekurang-kurangnya: a. Laporan keuangan yang terdiri atas sekurang- kurangnya neraca akhir tahun yang baru lampau dst. b. Laporan mengenai kegiatan Perseroan; c. Laporan pelaksanaan Tanggung Jawab Sosial dan Lingkungan;12 12. Bab V Pasal 741) Perseroan yang menjalankan kegiatan usahanya dibidang dan/atau berkaitan dengan sumber daya alam wajib melaksanakan TJSL2) TJSL sebagaimana dimaksud dalam ayat 1)merupakan kewajiban Perseroan yang dianggarkan dan diperhitungkan sebagai biaya Perseroan ygpelaksanaannya dilakukan dg memperhatikankepatutan dan kewajaran3) Perseroan yg tidak melaksanakan kewajibansebagaimana dimaksud pada ayat 1) dikenai sanksisesuai dengan ketentuan perundang-undangan 4) Ketentuan lebih lanjut mengenai TJSL diatur dengan Peraturan Pemerintah 13 13. Human Rights Labor Environment AntiStandards Corruption1. Support and3. Freedom of 7. Support a pre-10. Work against respect association and cautionaryall forms of protection of recognition ofapproach to collectivecorruption, human rightsenvironment2. Avoid being bargaining 8. Promote greater including complicit in 4. Elimination ofenvironmental extortion and human rightsforced andresponsibilitybribery abusescompulsory labor 9. Encourage5. Abolition of childenvironmentallylaborfriendly6. Elimination oftechnologiesdiscrimination inemployment andoccupation(United Nations, 1999/2000)14 14. Global Reporting Initiative (GRI) currently the most comprehensive and influential de facto standard for Sustainability Reporting its principles displays profound stakeholder orientation: INCLUSIVITY - calls for the organization to identify its stakeholders and explain how it has responded to their needs RELEVANCE AND MATERIALITY - requires coverage in the report of issues and indicators that would substantively influence the decisions of stakeholders COMPLETENESS - entails providing information sufficient to enable stakeholders to assess economic, environmental and social performance in the reported period(The Oxford Handbook of Corporate Social Responsibility Andrew Crane et al, 2008) 15 15. UNGC Communication onGlobal Reporting Initiative G3 GuidelinesProgress (COP) Element DisclosuresA statement of continued Strategy and Analysis:support for the Global Compact in aSupport for the Global Compact and how the ten principles influences themessage from the CEO.companys strategy can be presented in a CEO letter.A description of practical Governance, Commitments, Engagement:actions (commitments, policies,Descriptions of statements of mission or values, codes of conduct, principles,systems and activities), including, if charters, or other initiatives the company endorses that assist the company inappropriate, partnerships created, thataddressing sustainability issues, along with high level processes for settingparticipants have taken to implement the strategies, defining risk and opportunities, can be used to demonstrateGlobal Compact principles during the commitments to implementation of GC principles.previous year. Disclosure on Management Approach (DMA): Overview of the companys management approach in each category (e.g. human rights) can be used to describe how the GC principles are put into practice. Select Performance Indicators: Select performance indicators ask for description of actions in addition to quantitative data.Measurements of outcomes Performance Indicatorsusing, as much as possible, standard Stating performance shows outcomes and results for economic, environmentalindicators or metrics. and social categories. Performance on each of the GC principles is covered with one or more indicators.(Making the Connection: The GRI Guidelines and the UNGC Communication on Progress, UNGC Office, 2007) 16 16. ScopeClause 1Guidance to all types Two fundamental practices of social responsibility Clause 5of organizationRecognizing socialStakeholder identificationregardless of their sizeor locationresponsibilityand engagementDefinition Clause 2 Social resp. Sustainable developmentTerms, abbreviationsOrganizational governanceClause 6and abbrev. Terms core subjectsUnderstanding TheFair Community HumanLabor ConsumerEnviron- operating involvement/Social Clause 3rightspractices mentpractices issuesdevelopmentResponsibilityHistory, Characterist-ics, Relationship Related actions and expectationsbetween SR andSustnble. Developmnt.. Integrating The relationship ofUnderstanding theClause 7 social an organizationssocial responsibilityPrinciples ofresponsibility characteristics to SRof the organizationSocialClause 4 throughout anResponsibility organizationPractices for AccountabilityCommunication integrating social Voluntary initiatives Transparency on socialresponsibilityfor social Ethical Behavior responsibility throughout an responsibility Respect fororganizationstakeholder interests Reviewing and improving an Enhancing Respect for rule of organizations actions and credibilitylaw practices related to SRregarding SR Respect for internatnlnorms of behavior Bibliography: Authoritative sources andAnnex: Examples of voluntary initiatives Respect for human additional guidance and tools for social responsibilityrights(Adapted from ISO 26000: Guidance on social responsibility, International Organization for Standardization, 2010 ) 17 17. Sustainable DevelopmentEconomic growthSocial progress Environmental protection(The Future of Sustainability: Re-thinking Environment and Development in the Twenty-first Century, IUCN, 2006) 18 18. Economy SocietyEnvironment(The Future of Sustainability: Re-thinking Environment and Development in the Twenty-first Century, IUCN, 2006) 19 19. Government Creditors (Regulator)CGin broad Board of senseAGMCommissionersCGin SuppliersCustomers narrowBoard ofsenseDirectorsCorporateManager Manager ManagerManagerManage-ment Employees Other groupsCommunity(Adapted from Forum for Corporate Governance in Indonesia, 2005) 20 20. A company must provide material and relevant information that is Transparencyeasily accessible and understandable by stakeholders and include issues not mandated by laws but also other information deemed necessary by stakeholders. A company must be accountable for its performanceAccountability transparently and fairly. Thus the company must be managed in a proper and measurable manner considering the interests of shareholders and other stakeholders. A company shall abide by laws and regulations and fulfill itsResponsibility responsibility to the communities and environment for the purpose of maintaining long term sustainability of the business and be recognized as a good corporate citizen. To accelerate the implementation of GCG principles, a companyIndependence must be managed independently with an appropriate balance of power, in such a manner that no single companys organ shall dominate the other. In conducting its activities, a company must always consider the Fairnessinterests of shareholders and other stakeholders on a fairness principle.(Indonesias Code of Good Corporate Governance National Committee on Governance, 2006)21 21. Any group orindividual who canaffect or is affectedby the achievementof the organization objectives(Strategic Management: A Stakeholder Approach, R. Edward Freeman, 2011) 22 22. International media INTERNATIONAL National NationalNATIONAL mediagovernment CustomersInternationalNGOsLocalLocalLOCALmedia governmentAcademic CustomersinstitutesContractors Employees INTERNALLocal CustomersNGOs Trade UnionsThinkSuppliers LocalIndustrialtanks interestcustomersLocal groupscommunityInvestors Industry & NationalbusinessNGOsassoc.Multilateral investors(Unfolding Stakeholder Thinking: Theory, Responsibility and Engagement Jrg Andriof, Sandra Waddock, Bryan Husted, SandraSutherland Rahman, 2002) 23 23. Identification of and engagement with stakeholders are fundamental to social responsibilityAn organizations should determine who has aninterest in its decisions and activities,so that it can understand its impacts and identify how to address them(Adapted from ISO 26000: Guidance on social responsibility, International Organization for Standardization, 2010 ) 24 24. Stakeholder StakeholderStakeholderIdentification Analysis Engagement What corporateWho are our What are their social responsibilities do stakeholders?stakes?we have to our stakeholders? WhatWhat strategies, opportunities andactions, orchallenges are decisions should presented by our we take to best deal with thesestakeholders?responsibilities?(The Pyramid of Corporate Social Responsibility Toward the Moral Management of Organizational Stakeholders, - Carroll, A. B., BusinessHorizons No. 34, 1991) 25 25. To whom does the organization have legal obligations?Who might be positively or negatively be affected by the organizations activities or decisions?Who manifested concern about the issues or impacts?Who has been involved in the past when similar concerns need to be addressed?Who can help the organization address specific impacts?Who can adversely affect the organizations ability to meet its important objectives?Who would be disadvantaged if they were excluded from the engagement?Who in the value chain is affected?Who may have an impact on the reputation of an organization?Who may influence the policy and regulatory environment in which the organization operates?Who may impact on the value of the organization?(Adapted from ISO 26000: Guidance on social responsibility, International Organization for Standardization, 2010 ) 26 26. 1 2 1 3 3 0 =Non-Stakeholder 1 =Latent Stakeholder2 4 22 =Expectant Stakeholder 3 3 3 =Definitive Stakeholder 4 =Primary Stakeholder1 2 1(The Primordial Stakeholder: Advancing the Conceptual Consideration of Stakeholder Status for Natural Environment, - Driscoll, C. andStarik, M. Journal of Business Ethics, Vol. 49, 2004)(The Natural Environment as a Primary Stakeholder: the Case of Climate Change, - Haigh, N. and Griffiths, A. Business Strategy and the 27Environment, Aug 2007) 27. Legiti- Score StakeholderCategory Power macy UrgencyProxi-mity (/20) Bupatipr 55 5 520 BAPPEDA pr 45 5 519 BPN pr 45 5 519 BAPEDALDA pr 35 5 518 Gunung Village de24 5 314 Wira (informal leader) de55 2 315 Ethnic Community (Jakarta)la 11 1 2 5 Village Youth Org. de45 1 515(Adapted from Stakeholder Analysis and Perception Study conducted by Kiroyan Partners around a mining operation inIndonesia as basis for Stakeholder Engagement and Community Development programs)28 28. Stakeholder engagement involves dialoguebetween the organization and one or more of itsstakeholders Stakeholder engagement can take many forms it can begin as a response by an organization to one or more stakeholders and can take place in informal or formal settingsStakeholder engagement should be interactive andis intended to provide opportunities forstakeholders views to be heard its essentialfeature is that it involves two-way communication(Adapted from ISO 26000: Guidance on social responsibility, International Organization for Standardization, 2010 ) 29 29. Level of EngagementMethods of Engagement ConsultSurveysFocus groups Limited two-way engagement: organization Meetings with selected stakeholder/s ask questions, stakeholders answer Public meetingsWorkshopsOnline feedback mechanismsAdvisory committees NegotiateCollective bargaining with workers through their unions InvolveMulti-stakeholder forums Two-way or multi-way engagement: Advisory panels learning on all sides but stakeholders and Consensus building processParticipatory decision making process organization act independently Focus groupsOnline feedback schemes CollaborateJoint projectsJoint ventures Two-way or multi-way engagement : joint- Partnerships learning, decision making and actionsMulti-stakeholder initiatives EmpowerIntegration of stakeholders into governance, strategy and operations management New forms of accountability; decisions delegated to stakeholders; stakeholders play a role in governance(AA1000 Stakeholder Engagement Standard 2011 Final Exposure Draft, AccountAbility, 2011) 30 30. Social research-based approach to CSR and StakeholderRelations Management (Sniper Approach) allows moreeffective and efficient use of resources and thereforecontributes to economic sustainability as well. 31 31. Market Environment BusinessCOMPETITIVE Financial Resources ADAVANTAGE Strategy PerformanceCorporate Valuesand IdeologySocial Social Responsibility Performance NonmarketEnvironment(Corporate Social Strategy: Stakeholder Engagement and Competitive Strategy, - Bryan W. Husted & David Bruce Allen, 2011) 32 32. Menara Karya, 10th Floor Suite HJl. HR Rasuna Said Blok X-5 Kav. 1-2 Jakarta 12950 INDONESIA T: +6221 5794 4694 F: +6221 5794 [email protected] www.kiroyan-partners.com