Mrs. Sri Urip Former President Director Unilever Indonesia - - PowerPoint PPT Presentation
INTERNATIONAL CONFERENCE ON CSR AND COMBATING MALNUTRITION: OBTAINING MILLENNIUM DEVELOPMENT GOALS (MDGs) IN INDONESIA Keynote Address Mrs. Sri Urip Former President Director Unilever Indonesia Commissioner PT CIMB Niaga Bank Grand Sahid Jaya
INTERNATIONAL CONFERENCE ON CSR AND COMBATING MALNUTRITION: OBTAINING MILLENNIUM DEVELOPMENT GOALS (MDGs) IN INDONESIA
Grand Sahid Jaya Hotel, 13 – 14 December 2010
Keynote Address
Former President Director Unilever Indonesia Commissioner PT CIMB Niaga Bank
13 13-14 4 December 2010 Grand d Sahid d Jaya ya Hot
karta ta Par Partner ersh ship p bet etween Speci cial Envoy on MDGs for the Preside dent nt of the Republic c of Indonesi esia a and PA CSR
Sri Urip Indep epen endent dent Commissioner ioner CIMB Niaga ga Bank Writer er of CSR Strategies gies as a Competi titi tive e Edge in Emerging ing Market ets 2
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THE CHANGING WORLD OF INDUSTRY
revolution
communication, technology and travel, underpinned by broader political, economical and social changes has made all businesses in any country becoming part of a wider Global Market.
understanding of the local community in which a company is operating.
business as well as the wider society This would mean a fundamental internal change, which is integrating CSR into the business processes, as CSR could provide an effective mechanism to create, preserve and enhance the company’s reputation and image. Note: There are few examples of companies struggling to withstand damaged reputation, not because they have breached the law, but mainly due to the lack of trust and acceptance from the community or lack of company’s understanding of the local community’s needs.
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THE HE GLOBAL AL MARKET KET
Opportunity
Challenges
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THE CHALLENGES
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more demanding consumers competitive differentiation emergence of NGO’s complexity of market & environment government policy & regulation Globalization The importance
capability competition the importance of HR dev. convergence & consolidation tightening of margin
Corporate Challenges
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and Planet (3 Ps)
morale / engagement & development (=Company Culture / Good Corporate Governance)- People -internal
entrenched poverty) – People -external
ecosystems etc.- Planet are coming to the fore as core business issues. All these activities are included in the Corporate Social Responsibility of the Company both within and outside the core Business operation.
THE EVOLVING BUSINESS PARADIGM (1)
THE EVOLVING BUSINESS PARADIGM (2)
“Strategic Capabilities” to facilitate the change from “Product” to “Services Capabilities” competition.
ensure sustainable growth and profit.
a business to survive, to define the optimum balance between social, environmental and economic factors for short and long term performance / profit (meaning GCG / CSR activities should be embedded into the company’s culture and should be part of the short / long term strategy of the company)
sustainability related values, principles, strategies and practices.
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THE BOUNDARIES OF GOOD CORPORATE GOVERNANCE & CORPORATE SOCIAL RESPONSIBILITY
Spheres of influence adopted from World Business Council for Sustained Development (WBCSD) to accommodate the unique environment in Indonesia
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GC GCG G AND CSR (1)
CG is is the incorporation of hi high gh st standar ndards ds of
corpora porate beh ehavi vior
thin the the core
busi sine ness ss operati tion
CSR is is the the inter eracti ction
the Cor Corpora
tion
and th the ext xterna ernal en envir vironm
ent outside
the cor
bus usiness ness op
erati tion
its business partners, the environment and the market including the wider community and the government.
th GCG GCG an and CSR CSR are are now bec ecom
ng an an incre ncreas asingly ngly impor
tant par part of
the bus usiness ness strat trategy gy: Good
Corpor
ate Culture Culture and Hum uman an Res esour
ces Cap apab ability ty ar are maj major
ermina nant nt of
company‟s succ success ess or
ailure ure an and CSR CSR activ activities es are are impor portan ant tools
to suppor support the the Company‟s Stra rateg egy and Image / Reputati ation
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GCG AND CSR (2)
CSR an and GC GCG can an be be see een as as intangib ngible el eleme ments nts that contribute to Corpor porat ate Repu eputation tation - hence Corporate Success. It has equal importance but different perspective from that of the financial measures
proc
ess, sys system / techn echnolo
and event ent ar are basi asica cally com
ponen nent of
the core
usiness ness
perations ations which are within the close control of the company which GCG tak takes es a major major par art of
building ding the Comp mpany Reputa tati tion.
usine ness ss has little or no no con
trol
er the the govern ernmen ent, t, indu ndustr stry, so soci ciety ty, espe especi ciall ally now with with the the glob
zati tion
nterna ernati tion
al com
munity ty, but well def defined ned and nd str strat ateg egic CSR CSR acti ctivities es wil will ens ensure ure the the optimum
ance betwee een so soci cial, al, en envir vironm
ental an and economic mic fa factors for short and long term profit sustain tainability.
GCG and CSR is is equ qual to to good “Risk Management nt”
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CSR IN IN COUNTRIES NTRIES WIT ITH DIF IFFERE ERENT NT STAGE GES S OF DEV EVEL ELOPM OPMEN ENT
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Though the princi cipl ples es of CSR are essentially ially the e same globally ally, but each ch countr ntry/l y/loca
tion still calls for differe erent nt emphas asis is in its implementa entati tion
roces ess. s. The e success ssfuk fuk applicati cation
ples es is directl ctly y influen enced ced by the busines ess under ersta tandi nding g of its busines ess strategy egy in pro ropor
tion
commun unity ty. Develo eloped ped Countri ries es, in which most states assume primary responsibility for social welfare of the community,
Develo eloping ping Countries ries: CSR activit ities es is a necess ssar ary part of doing business, in countries which is still lacking ng in basic asic infrastr structu ucture e and the capacit city to build social capit ital
tructure, emp mployme yment nt & wealth h creation ion
unity developmen
t & involvemen ement, t, training ng /voc
ationa
study & emp mpowermen erment.
e social al capita tal
mprove lifestyl tyle
nt /green n issues es
WHY APPLY CSR PRINCIPLES?
WIT ITHI HIN N EACH CORPORA RATE TE BUSIN INESS SS STRATEG TEGY
TO ENSURE RE COMPE PETIT ITIV IVE E EDGE GE
Externa nal l challenge nges = Regional & Global competitive situation = More demanding consumers = Developing market, non- conducive environment, high unemployment, limited education, low purchasing power = Corporate creates consumerism for under privileges consumers and its advertising creates unnecessary needs (Oxfam) = Industries litter/ pollute the
pollute the soil / water, mining ruins the soil. (Environmentalist) = MNC kills local companies (World Social Forum) likewise with Big Local / International companies.
Internal ernal Needs =To achieve sustainable growth within a developed market and conducive environment = It‟s the vision and the commitment of responsible Corporations to contribute to sustainable micro economic development, through involving the community into the corporation “value chain.” and share “Best Practices” = The believe that a company should not only offering excellent products and services, but also contributing to make the world we live a better place to live. = To p parti tici cipat pate actively y in the Government nment Policy Developme ment nt in
r to create a framework k in which h allows Busi sinesses nesses to contri ribut ute actively y to sustainabl tainable e developme pment nt
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CHARACTERISTICS OF SUCCESSFUL CSR PROGRAMS (1)
A Company can expect to successfully practice sustainable CSR, only when the
Company is able to exert a high degree of control required to ensure GCG within its core business operations
A business can not do CSR activities without sustainable profit The principles of CSR are the same globally, but each location calls for different
emphasis in the implementation, depending on the needs of the society in which the business is operating.
Involve and empower the local community and form alliances with NGOs,
central/regional government, expert / educational institutions and media.
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CHARACTERISTICS OF SUCCESSFUL CSR PROGRAMS (2)
Provide a win - win solution Generates sustainable benefit for all stakeholders A win - win situation can only be sustainable if continuous community
“capacity development, involvement and empowerment” are being done, supported by the necessary infrastructure.
Ensure
continuous monitoring and assessing the CSR implementation and issue sustainable reporting, following the GRI standard.
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WHY Y CSR R SHOU OULD LD BE EMBEDDED BEDDED WITHIN THIN THE BUSIN INESS ESS STRA RATE TEGY? Y?
nable le growth within the new global highly y comp mpet etitive mark rket et companies should pursue ue not
, but all 3 dimensi siona
l va value creations, ns, which are Profit, , Peopl ple e and Planet et (3Ps) s)
mpor
ant tool for busines ess s to build trust and confidence ence in their stakeholde
corporations and communities
c CSR program will ensure an optimu mum m balance between social, l, econom nomic and environm
ental al factors
n the Busine ness ss Strategy will provide competitive edge in the areas of:
Green Company Care for environment
PR PROFIT OFIT PLANET
Socio economic growth Improved living standard/ better education & better human resources Increase health concern
PEOPLE
The e imp mpact t of the three ree dimensional ensional creation ion of of the 3Ps
Community development & Involvement Employment / wealth creation (internal & external) Sustainable growth & profit Total Competitive edge Good Corporate Citizen Total Effectiveness Continuous innovation & Total Quality Assurance
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(ALTERNA TERNATIVE TIVE CSR R TYPES) S)
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CSR R MAPPIN ING G WITHIN IN A DEVELOPING PING MARKET KET (1)
.Employment/wealth creation, create social capital and improve lifestyle
CSR linked with the extended supply chain embedded within the Corporate Business Strategy. Developing the Product through innovating & marketing its product, establishing sourcing facilities, suppliers, the logistic and distribution network through partnership / cooperation with mutual benefit with SMEs (e.g. transfer of technology / knowledge /system etc.) –social impact of the Value Chain development.
education and other efforts to improve lifestyle eg. change behavior training
/growth and mitigate risk and Image, through community capacity building /development/ training and empowerment and behavior training & change. Build infrastructure and support primary / vocational studies to facilitate an accelerated development of the local workforce and / or self- employment. IV. Philanthropy – ad-hoc direct benefit for society e.g. helping victims of natural disasters (flood, earth quake etc).
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CSR R MAPPIN ING G WIT ITHIN IN A DEVELOPING PING MARKET KET (2)
Manufacturing
Consumers / End users
Logistic / distribution
Distributors / Traders Insist on GCG
Leverage technical know how / quality assurance GCG operation
Develop training sessions for distributors & their salesmen Responsible Advertising / competition
Building
education
environment
GCG
Leverage logistic / /distribution strategic planning GCG operation Develop 3rd party productions & ensure captive market
Corporate Impact to Society (SME) through the Value Chain development
CSR link with Extended Supply Chain (3)
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BU BUDGET GET / CONTR TROL OL / MONIT ITORING ORING & R & REP EPOR ORTING TING
CSR linked with the extended supply (value) chain of which all activities are
completely the responsibility of the Corporations, monitoring should be done through the company‟s system and reporting of result are included in the corporation‟s financial reporting system (including internal/external audit and risk management control). Cost is part of the operation cost.
CSR linked with market development- cost is a part of the advertising and
promotion budget All other activities, a separate social accounting report is required, the current recommended reporting is using the GRI reporting system
CSR to ensure market and environment conducive for growth – tailor
made budget for CSR could be part of profit, part of advertising / promotion budget
Corporate Philanthropy – cost is part of profit.
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Inter ernati tiona
l Stan anda dard
Gui uidance ance on social respon
sibil bilit ity Fina nal l Draft Copenh enhagen gen 2010
ISO 26000 0 – OVER ERVI VIEW
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THE SEVE VEN PRINCI CIPLES PLES OF SOCI CIAL RESPONS NSIBI IBILI LITY Y ISO 2600 000
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1. Accountability ) 2. Transparency ) GCG 3. Ethical behavior ) 4. Respect for stakeholders’ interest - GCG/ CSR
GCG/CSR
norms of behavior – GCG/CSR
GCG/CSR
THE SEVEN PRINCIPL PLES S OF SOCIAL RESPONSI NSIBI BILIT LITY ISO 26000 00
ration n and the int nterdepe dependenc ndency y of all seven princi nciples es .
rporati ations ns should d pursue sue the 3 d dimens nsional
value creation
( Profit, People, Planet et)
Corp rpora
nanc nce (GCG GCG)
rated ed throug
hout the corp rporati ations ns‟ operation, meaning CSR stra rategy should ld be em embedded withi hin n the busine ness ss stra rategy egy.
unity ty Developme ment nt (CD) is becoming “communi nity ty engagement nt & partici cipa pati tion
is renamed as “Communi nity Involveme ment nt and Developme ment nt” (CID), basically highlighting community involvement, education and culture, employment creation and skills, technology development, wealth and income creation, health and social investment.
rpora rati tion n to understa tand nd and prioriti ritize ze the problems ms and needs s of the community nity, get the maximum um parti tici cipa pati tion
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TWO O DIFFERENT FFERENT ROUTES TES TO START T CSR R ACTIVITIES IVITIES
Inter ernal al need to ensure sustainable growth & development of Corporations through commitment of the development of a sustainable conducive market environment & community wealth creation.
Own Corpor
ate e „s CSR initiati iative , to ensure competitive edge and sustainable growth & profit. To be coor
dinated ed and supported ed by the Gover ernmen ment including ding possible sible tax incen entiv tives s for CSR direc ectly tly benef efit iting ing the Commu munity ity / / Public
National impact, corporations to be encouraged to socialize and collaborate similar community development programs and to learn from each other CSR successes and failures.
Will l ensure e successf sful l contr trib ibutio ion to the achie ieveme ement t of impr mprovi ving Natio ional al welf lfar are, , hence e MDG‟s
Exter ernal al / Global bal pressu sure linked with the signing of the United Nations Millennium Declaration by 189 countries including Indonesia (September 2005), to achieve the Millennium Development Goals (MDG‟s) by 2015.
Exter ernal al / National
sure Since the issuance of Ministry Decree BUMN no. KEP-236/BMU/2003 and updated by Ministry Decree No/ PER 05/MBU/2007, it is becoming compulsory for States Enterprises to set aside a max. 2-3% of its profit for CSR. In the Indonesian Limited Liability Companies Law ( Law No.40, 2007) CSR is becoming mandatory for all corporations and is considered as the responsibility / contribution of Corporations to improve National Welfare
Mandat dator
ms, without realizing their own needs in pursuing CSR to ensure Corporations‟ competitive edge for sustainable growth & profit, will not
imum m result lt in contr trib ibuting ing to the achie hieveme ment t of the MDGs and will be felt as a burden den to the corpor
ions.
TO O ENSU SURE RE REGIONA NAL L / GLOB OBAL L BUSINESS INESS COM OMPET PETITIVE TIVE EDGE, THROUG OUGH H COL OLLECTIVE ECTIVE SOC OCIAL AL RE RESPO PONSIBILIT NSIBILITY (1) (1)
Globalization has changed the market in Indonesia from a local market into a regional / global market, hence to succeed in business, the Indonesian market environment and the product / services offered should have a regional / global competitive edge.
It is all stakeholders (Government, NGO’s, Educational Institutions, Business Corporations etc.) responsibility in making the country (Indonesia) a safe and conducive place for new investments ( both local & foreign) and ensure sustainable growth through Good Governance, Good Social Responsibilities and “Total Competitiveness” (competitive edge)
Collective CSR budget from Corporations could represent a substantial source of Public Revenue ( “wealth creation”)
Collective CSR activities could contribute substantially in developing / accelerating the micro economic sustainable growth ( through leveraging “Good Governance / Value Change” and “Best Practices”)
Collective CSR activities could help accelerate the development of a conducive market environment for both local and foreign investors and will accelerate the micro- economic growth of Indonesia (availability of good infrastructure, good education / health facilities, well trained human resources / labor, care for environment etc.)
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BNENEFITS OF CORPORATE SOCIAL RESPONSIBILITY
Collecti ective e CSR activi iviti ties es amongst st various us corporati tions
ehol
ders s could d contribut tribute e to the micro-econom economic ic developme
nt of a developi
ng countr try through h susta tain inable able benef efit it to all.
Governm rnment ent
Development and acceleration of micro-economic sustainable growth through using “good corporate governane /value change” and “best practices”, resulting to a market environment conducive for both local and foreign investors (with the availability of good infrastructure, good education and health facilities, well trained human resources and labor and well- cared –for environment )
Encouraging CSR activities, giving direct benefit to the community, with meeting certain development and sustainability criteria possi sibl bly y being ng consi sidered ered for tax incenti entives es
Joint CSR budgets possibly reperesenting an additional source of public revenue (employment and wealth creation to reduce poverty)
Local l Commun unity ity and Societ ety
Change habits, improved quality of life
Capacity building, creates employment and wealth
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TO O ENSU SURE RE REGIONA NAL L / GLOB OBAL L BUSINESS INESS COM OMPET PETITIVE TIVE EDGE, THROUG ROUGH COL OLLECT LECTIVE IVE COR ORPORA PORATE E SOC OCIAL AL RE RESPONSIB SIBILIT ILITY (3) (3) Corpora rporation ions
Growth, profit, image and competitive edge.
Community acceptance and goodwill
Pride and spiritual values to employees and their families
Genuine dialog with stakeholders
The e world ld and environme
nt
Waste management Balanced Ecosystem Green and clean environment
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CA CASE E STUDY Y 1: : JO JOB CREATIO TION N / WEALTH TH CREATION TION ( ( THE IMPACT
CT OF OF THE VALUE UE CHAIN IN). ). PT PT. . Un Unilever er Tbk. ( suppliers, 3rd party producers, sales distributors etc.)
1998 - direct employees 2.300 vs. 13.700 2003 - direct employees 3.096 vs. 25.000 2008 - direct employees 3.627 vs. 300.000
People work full time for
roup
the company outside their (paper waste collection as part of internal operation process. its raw materials, husk –waste from rice milling plants - used as fuel for the modified burners of its elecric power station )
2007 - direct employees 8500 vs. 40.000
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CAS CASE STUDY 2: : SOURC RCING OF BLACK SOYBEANS NS (PT UNILEVER ER IND.) .)
(AS PART OF THE VALUE CHAIN)
BACK CKGR GROUN OUND In 2001 Unileve Indonesia acquired Kecap Bango – a sweet soy sauce producer. The basic material for sweet soy sauce is black soy beans. Three years after the acquisition, Kecap Bango sales increased by 425% . With this dramatic change in demand , it was difficult to get sufficient supply locally with consisitent quality of black soybeans. Therefore to secure future demand and ensure consistent quality, Un Unilever Indonesia had created an altenative supply chain to buy directly from local al fa farme
black soybeans is available within the company, hence a cooper
ation with the agric icultu ltural al fa faculty ty of GAMA A Un Univer ersity sity has been en establ ablis ished hed. . The program iis include ded d in the local al gover ernmen ment strat ateg egic ic plan. Unilever provides financial credit and guarantees purchase of the product at a contracted price. GAMA agrcultural faculty develops a new variety of black soybean seed, improve the qualityof the seed, develop certified seeds sources and identify more reliable production/planting method.The local government issues the necessasry regulations and permissions. RESUL SULT:
acres in Yogyakarta, East , West and Central Java
ity of a captiv tive direc ect t market, Unilever/banks fa farmers mers are e able le to increase ase their income
than the market rate. Farme mers also
inuous
vaila ilabi bilit lity of cred edit it from Unilever /Banks and the university‟s technical assistan istant.
ars s through its scien entif ific ic resea earch , the agricul icultu tural al fa facult lty of GAMA MA became ame the founde der of a comp mple letely ely new va varia iant t of premi mium m qu quality ity blac ack soybe beans ans, , certi tifie ied d by the Minister er of Agricu icult lture throu
ee issued ed on Februar ary 2007
es Un Unilever Indonesia esia a secure supply of black soybea beans s with consist isten ent Qualit lity.
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CAS CASE STUDY 3 – DANAMON GO GREEN ( “NOTHING WASTED”THE WINNER OF THE BBC
WORLD CHALLENGE 2009 AWARD AT THE HAGUE DEC,1, 2009)
BACKGROU OUND ND.
The traditional markets in Indonesia are one of the pillars of the economy and welfare of the people, a beehive of activity and they are always dirty. These traditional markets produced thousands of tons of waste every day, of which 70-90% is high quality materials for organic fertilizers. In cooperation with the local al goven enme ment, the market t communit
minen ent t bio-tec echn hnolo
mon Peduli li Founda datio ion (DPF) applies a simple technology to convert thousands of tons of organic waste into high-quality organic fertilizer. Everyday, one composing unit can convert one-to-three tons of organic waste into high quality 500kgs t0 1,2 tons of compost, The e key success ss and sustainabil inability ity of this program is a wi wi-wi win partner ersh ship ip bet etwee een DPF and the local al governmen ment.DPF provide s the project design, machinary and composting house, technical assistance, training, monitoring and evaluation with the help of the exper erts ts from the biolo lotec echn hnolog
tute. The local al gover ernme ment t iden entify ify needs ds, provide land within or close to the markets, issue permission and socialize the program. To ensure commitment, the program is included in the local government strategic planning.. This program has been rolled out and replicated by 31 local goverments within the year 2008. The local governments send progress s repor
ery month to be processed by DPF knowledge managements ystem. Through this monthly reporting system, each local government get a regular feedback on their result compared to
RESUL ULT
Has impr mproved ed health th and hygien ene e in the market place and the market is becoming
sant and clean an envi vironme ment t to wo work in and trade de their goods ds.
Has generated socio io-ec economic
efits its for the comm mmunit ity, meaning it provides additional income for the community, solves fertili ilizer scar arcity ity issues
Impr mproved land d condit ditio ion
Redu duced ed wa wast ste e managem agement t problems blems for the market place.
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