The Importance of Corporate Social Responsibility as an Alternative Financial Supportin Implementing Government, Development and Community Services
A company with good governance is not only faced with responsibilities that focus on company value in the form of financial aspects, but companies need to guarantee company value to grow and develop in a sustainable manner by paying attention to social and environmental aspects, or known as CSR (Corporate Social Responsibility). or corporate social responsibility.
CSR is the responsibility of both profit and non-profit companies for the impact of decisions and activities taken on society and its environment. The company is committed to minimizing negative impacts and maximizing contributions to Stakeholders, both individuals and groups who can influence or be affected by the achievement of company goals.
Broadly speaking, stakeholders are divided into two, namely inside stakeholders (managers, shareholders and employees) and outside stakeholders (government, company colleagues and the community).
The idea of CSR was born from 3 different periods, namely:
- The early development of the concept of CSR in the 1950-1960s, where CSR was more directed towards charity.
- Subsequent developments in the 1970-1980s era, CSR has three dimensions, namely Social Obligation where corporate behavior emphasizes economic and legal aspects, Social Responsibility is corporate behavior that aligns social obligations with values and norms in society, and Social Responsiveness is corporate behavior that related to anticipatory and preventive actions, such as fulfilling all licensing requirements set by the government, such as AMDAL, ANDALALIN, and others.
- Then finally the concept of CSR in the era of the 1990s until now, the definition of corporate social responsibility has referred to the concept of Sustainable Development Goals (SDGs) or sustainable development goals.
So, it can be said that the things behind the existence of CSR are nothing but solely for the common good, both companies, communities and the government.
Corporate Social Responsibility, which we are more familiar with as CSR, or abbreviated CSR* is a form of corporate social responsibility towards the surrounding environment, which is a concept that an organization or especially a company has social responsibility towards consumers, employees, shareholders, communities and environment in all aspects of the company’s operations, such as issues that have an impact on the environment such as pollution, waste, product safety and labor.
The emergence of CSR is due to the modernization of society which already understands that activities carried out by companies will have a negative impact on the environment. As we all know, there have been many cases involving disputes between companies and communities. Factory waste and environmental pollution are big factors triggering these problems, and it is certain that the company will bear large costs for solving these problems, for this reason the company will prefer to provide CSR which will financially benefit the company more than if it is involved in problems with the environment or local communities.
In addition, when viewed from the government’s point of view, the three pillars of the main actors in development that should be running, namely the Government, the Community and the private sector will be evident with the existence of this CSR. For example, some government programs that may not be accommodated by the government, can be synergized with the CSR program, which has been discussed in advance in the regional development planning and financial planning of the CSR provider or the company. Of course this will be very beneficial for the parties, the Government, society and companies, as a symbiosis of mutualism,
With CSR, of course the government will be greatly assisted in meeting the needs for governance, development and service to the community, for example in the provision of infrastructure both software and hardware. As stated by the Ministry of Finance, that for the provision of infrastructure up to 2024, the APBN budget is only able to accommodate 40% of the entire required budget. For infrastructure development, then how about 60%? Indeed, currently the government is intensively implementing it and urging regional governments to make efforts to cooperate with the private sector in providing infrastructure, as an effort to solve the problem of budget constraints but is required to build service provision to the community. However, it should be understood that when the government cooperates with the private sector, of course there will be costs that will be borne by the government to pay for the implementation of the cooperation, which is referred to as a return on capital to the private sector which will certainly be accompanied by a margin or profit for the private party but within reasonableness.
We can see with the following illustration: to build a type C hospital, with 160 beds, with excellent service Lung Center and Trumatology center because the area/location of the hospital is prone to respiratory diseases and the accident rate is quite high, because the area has a lot of companies, and the government needs 350 billion in funds, while the government’s budget is insufficient, the government cooperates with the private sector, where the government only provides land/assets for the construction of the hospital, then, the private sector will build the building, the operation and management of the hospital will be run for a certain period of time/agreed cooperation concession, for example 10 years. Then when the construction is complete and the hospital’s operational period, the government will return the construction and operational costs of the hospital to the private party by installments according to the concession period (for example 10 years) of course accompanied by profit sharing for the operation of the hospital and added to the margin. after 10 years, the collaboration period ended with the assets and buildings including hospital management, existing infrastructure including human resources being handed over to the government and fully owned by the government.
From this illustration, it does help the government’s financial budget for a while, but the government will still be given the burden of making repayments, it’s a different matter for building the hospital in the CSR concept, of course the government will get the infrastructure for free without having to pay back the costs.
The concept of infrastructure development in the CSR scheme must be carried out in careful planning through discussions on regional development planning and synergized with corporate financial planning, so that the parties understand each other’s needs and capabilities, what things the government needs, and the extent of financial strength company to support the implementation of the government program. So that there is harmonization in the planning, implementation and evaluation of the CRS program.
If the company has taken the role of providing its CSR program, then the government should be able to give appreciation to the company, for example in the form of tax breaks. It is hoped that the Company will be more active and eager to improve its CSR program, and of course the government will benefit from the availability of infrastructure and facilities for governance, development and service to the community.
Thus, we can summarize that the existence of a CSR program is very important in supporting the government’s efforts to carry out governance, regional development and service to the community, especially as an alternative to support government finances.
The parties will benefit from each other, both the Government, private parties/companies and the community, as in a symbiosis of mutualism, the government can still carry out its duties and responsibilities for the community even though finances are limited, but facilities, infrastructure, infrastructure can still be provided, the public can enjoy services better access, ease of access and others, while the company will also benefit, with the guarantee of the continuity of the company’s existence and operations, including from a financial and existential perspective.
Author: ELY WIDI ASTUTIK NIM. 228221018