GROUP 02/4G AKM

Corporate Social
Responsibility
and Ethics
BIRRA LAILATUL N. KHATERINA ELVIRA S. ULAA MASRUROTUS S.
06 13 28
 Definition of CSR
Benefits of CSR
Reasons for the need for CSR
PRESENTATION along with the theory
OUTLINE Examples of ethical cases
related to group collaboration
CSR
DEFINITION OF CSR
DEFINITION OF CSR
DEFINITION OF CORPORATE SOCIAL RESPONSIBILITY
(CSR) ACCORDING TO THE WORLD BUSINESS
COUNCIL FOR SUSTAINABLE DEVELOPMENT
(WBCSD) ARE:

THE CONTINUING COMMITMENT BY BUSINESSES

TO BEHAVE ETHICALLY AND CONTRIBUTE TO
ECONOMIC DEVELOPMENT WHILE IMPROVING
THE QUALITY OF LIFE OF THE WORKFORCE AND
THEIR FAMILIES AS WELL AS THE LOCAL
COMMUNITY AND SOCIETY AT LARGE
 The public and the law demand that
businesses practice “being ethical and social
responsibility”.

Corporate Social By acting ethically and having social

responsibility, business will be sustainable and

Responsibility there will be long-term relationships with

customers, suppliers and other parties.
and Ethics Customers will buy the product of a company
that has the best reputation in social
responsibility if the quality, service, and price
are the same among competitors.
Trevino and Nelson conceptualize CSR as a pyramid consisting of four types of
responsibilities that must be considered on an ongoing basis, namely:
 5 Pillars of Corporate Social
Responsibility Activities

BUILDING STRENGTHENING ASSESSING ENCOURAGING PROTECTING THE

HUMAN ECONOMIES SOCIAL GOOD ENVIRONMENT
CAPITAL COHESION GOVERNANCE

The forms of implementation of corporate social responsibility such as:

CONSUMERS HEALTHY AND SAFETY

in the form of the use of environmentally in the form of routine care and
friendly and harmless materials maintenance of office facilities and
environment
EMPLOYEES

in the form of equal rights and obligations

for all employees regardless of race,
ethnicity, religion, and class

COMMUNITY AND ENVIRONMENT

in the form of humanitarian and

environmental activities
 Form of Corporate Social Responsibility
Program
several forms of Corporate Social Responsibility programs that can be
selected, namely:
CAUSE PROMOTIONS

Increase public awareness and concern for a particular issue.

Inviting the public to find out more deeply about a particular issue in the community.
Invite the community to donate their money, time or belongings to help overcome and
prevent a particular problem.
Inviting people to participate in organizing certain events, for example: following a walk,
signing a petition, etc.
CAUSE-RELATED MARKETING

For every item sold, a certain percentage will be donated.

Every time you open an account or a new account, a few rupiahs will be donated.
 Form of Corporate Social Responsibility
Program
CORPORATE SOCIAL MARKETING

Health issues, such as reducing smoking habits, HIV/AIDS, cancer, eating disorders, etc.
Injury prevention issues, such as driving safety, reducing the circulation of firearms, etc.
Environmental issues, such as water conservation, pollution, reducing the use of pesticides.
Community involvement issues, such as voting in elections, donating blood, protecting
animal rights, etc.

CORPORATE PHILANTHROPY

Donating money directly, such as providing scholarships to underprivileged children, etc.

Providing goods/products, such as providing stationery assistance for children studying in
open schools, etc.
Providing services, such as providing immunization assistance to children in remote areas,
etc.
 Form of Corporate Social Responsibility
Program

COMMUNITY VOLUNTEERING

The company organizes its employees to participate in the Corporate Social

Responsibility program that is being run by the company, for example as teaching staff,
etc.
The company provides support and information to its employees to participate in
Corporate Social Responsibility programs that are being run by other institutions, where
the Corporate Social Responsibility programs are tailored to the talents and interests of
employees.
Socially Responsible Business
In this activity the company makes changes to one or the entire work system in order to
reduce the negative impact on the environment and society.
BENEFITS OF CSR
BENEFITS FOR BENEFITS FOR BENEFITS FOR
INDIVIDUAL PROGRAM THE
EMPLOYEES RECIPIENTS COMPANY

CSR can be used CSR can be used to CSR can be used to

as an alternative acquire professional improve the
expertise and skills capabilities of
learning method
that the organization employees who
in doing business
does not have the have completed
funds to undertake community
collaboration tasks
BENEFITS FOR BENEFITS BENEFITS FOR
THE FOR SOCIETY THE
ENVIRONMENT GOVERNMENT

CSR can protect The welfare of the The government will

the environment community in the be helped by all the
through its company's social activities that
programs environment is companies carry
increased out
REASONS FOR THE NEED OF
CSR RELATED TO THE
THEORY
 Agency Theory

Legitimacy Theory

Theory of
Corporate
Social Stakeholders Theory

Responsibility
 Agency Theory

Agency theory describes the company as a meeting point between company owner (principal)
with management (agent).
Between the principal and the agent there is a conflict of interest in the agency relationship,
which arises due to their differences goals.

Why A Company Need CSR?

Company discloses their social responsibility in the form of corporate information disclosure with
the aim to build a positive image for the company and get a good attention from the community.
The implementation of CSR can be used as a tool for management so the shareholders know the
condition of the company in order to maximize the value of the company's shares.
 Legitimacy Theory

The theory of legitimacy is the perception that a company will voluntarily report its activities
because management assumes that this is what the society expected. Legitimacy has the
perception that the actions taken by an entity are desirable actions and in accordance with the
system of norms developed by the social community.

Why A Company Need CSR?

Disclosure of the company's Corporate Social Responsibility (CSR) has purpose to get positive
values and legitimacy from the community. So, it can improve the reputation of the company
which will be affect the company's value.
Stakeholders Theory
Stakeholder theory assumes that the existence of the company
requires stakeholder support, so the company's activities also
considering the approval from the stakeholders. Stakeholder is a
group or an individual who can affect or be affected by the success or
failure of an organization, based on this assumption, the company
cannot escape from the social environment.

Why A Company Need CSR?

Companies need to maintain the legitimacy of stakeholders and
place them in the policy and decision-making framework, so they
can support the achievement of company goals.
EXAMPLES OF ETHICAL
CASES RELATED TO CSR
 Lapindo Mud Case
(PT Lapindo Brantas Inc)

MUDFLOW BEGAN TO OCCUR ON MAY 28, 2006 IN THE

PORONG AREA, SIDOARJO. THIS INCIDENT OCCURRED AS A
RESULT OF GAS DRILLING CARRIED OUT BY PT LAPINDO
BRANTAS INC. AS DEEP AS 32 KM WHICH EMITTED GAS
MIXED WITH MUD. THE IMPACT CAUSED BY THE SIDOARJO
MUDFLOW INCIDENT WAS A VERY FATAL LOSS FOR THE
PEOPLE LIVING IN THE AREA AROUND THE INCIDENT.

THE HANDLING OF CASES AND EFFORTS TO HELP THE

VICTIMIZED COMMUNITY CONTINUE TO BE CARRIED OUT
BOTH IN TERMS OF POLICY AND LEGAL ACTION. HOWEVER,
UNTIL NOW THE PROBLEM OF COMPENSATION HAS NOT BEEN
COMPLETELY RESOLVED BY PT LAPINDO BRANTAS INC.
 Cases of 3 Illegal Industrial
Companies in Gresik

THE THREE INDUSTRIES ARE LOCATED IN GRESIK, NAMELY

PT. BKP (COOKING OIL PRODUCER), PT. IDM (FISH
PROCESSING), AND PT. HNF (HEAVY EQUIPMENT
INDUSTRY).

THESE INDUSTRIES ARE CONSIDERED TO VIOLATE

BUSINESS ETHICS IN CORPORATE SOCIAL RESPONSIBILITY
(CSR) BECAUSE ALL THREE HAVE THE POTENTIAL TO EMIT
HAZARDOUS WASTE. NOT ONLY THAT, THEY ALSO DON'T
HAVE A PERMIT FOR AN ANALYSIS OF ENVIRONMENTAL
IMPACTS (AMDAL), THEY ONLY SUPPORT THE
ESTABLISHMENT OF THE GRESIK INDUSTRIAL ESTATE (KIG).
 PT Freeport Indonesia
PT FREEPORT INDONESIA IS A TYPE OF MULTINATIONAL
COMPANY AND IS AN AFFILIATED COMPANY OF FREEPORT-
MCMORAN COPPER AND GOLD INC.
PT FREEPORT INDONESIA MINES, PROCESSES AND EXPLORES
ORES CONTAINING COPPER, GOLD AND SILVER. THE
COMPANY OPERATES IN THE HIGHLANDS OF MIMIKA
REGENCY, PAPUA PROVINCE, INDONESIA.

MINING ACTIVITIES PT. FREEPORT INDONESIA HAS AN

INDIRECT IMPACT ON ENVIRONMENTAL DAMAGE. CSR FUNDS
PROVIDED BY PT. FREEPORT TO PAPUA RESIDENTS IS NOT
MUCH BECAUSE IT DOES NOT REACH 1 PERCENT OF PT FI'S
NET PROFIT. IN FACT, THE PAPUAN PEOPLE PAY MORE
BECAUSE THEY HAVE TO BEAR THE CONSEQUENCES IN THE
FORM OF NATURAL DAMAGE AND THE EXTINCTION OF
PAPUA'S PRICELESS HABITAT.