Regulatory on the corporate social responsibility in the context of sustainable development by mandatory in the world trade organization law perspective (case study in Indonesia)

• Author: Sh. M. Hum. Taufiqurrahman
• Position: Law Faculty of Wijaya Putra University of Surabaya, Indonesia
• Pages: 45-65

Regulatory on the corporate social responsibility in the context

of sustainable development by mandatory in the world trade

organization law perspective (case study in Indonesia)

1

Lecturer SH. M. Hum. TAUFIQURRAHMAN2

Abstract

Regulatory on the Corpora te Social Responsibility (CSR) by mandato ry in

Indonesia a s stipulated in Article 74 of Law No. 40/2007 on the Limited Liability Company

(hereafter the Company Law) raises a contr adiction. Those who agree a rgue that the

company is not solely for pr ofit, bu t more tha n that are pa rticipating in social issues and

the preservation of the environment within the framework of sustainable development.

Conversely, those who disa gree view that socia l issues and the environment are the full

responsibility of state. The involvement of a corpora tion in social and environmental

activities is voluntary.

Verdict of the In donesian Constitutional Court in ca se no. 53/PUU-VI / / 2008

dated 13 April 2009 which rejected a r equesting of materia l test of the Article 74

para graph (1), (2) and (3) of the Company Law confirms the existence of th e CSR by

mandator y in internationa l trade tra ffic today.

The a nalytical r esults indicates that mandatory CSR r egulation in the Company

Law is not a form o f a state intervention to the priva te activities. In addition, the

arr angement is not contrary to the pr inciples of free tra de within the framework o f the

General Agreement on Tariffs and Trade (GATT) / World Tra de Organization (WTO).

Keywords: Corpor ate Social Responsibility, Environment and Utility.

JEL Classification: K22, K23

A. Introduction

1. Background

A fact that the implementation of development in many countries,

including Indonesia in this regard, of great benefit in improving the quality of life

and well-being for humans on this earth. Especially with the development and

advancement in the field of Science and Technology recently, increasing the

quality of life and people welfare.

However, one thing can not be denied that the building was also a negative

impact on human life itself. Particularly, in the field of environment, science and

technology development of control speeding is in fact result in a catastrophe, either

physically or socially. Some of them are leaking nuclear reactor disaster,

1 This article had been presented at the International Conference on Corporate Social Responsibility

and Sustainable Development held by cooperation between Law Faculty of Brawijaya University

with School of Law of Utrecht University on 9th – 11 th April 2011.

2 Sh. M. Hum. Taufiqurrahman – Law Faculty of Wijaya Putra University of Surabaya, Indonesia,

taufiqurrahman@uwp.ac.id

Volume 3, Issue 2, December 2013 Juridical Tribune

46

destruction of the ozone layer, the acid rain, forest fires, mud of Lapindo and

others. Negative impacts can not be separated from the nature of human greed in

natural resource management. In the name of freedom of the flag of capitalism,

human beings treat nature and make it as a commodity through a variety of

exploitation, mining, management and exploration. It was done on a continuous

basis regardless of the relentless nature also systematically organized material that

has limitations on the time will be damaged resulting in a systematic way nature

works to be shaken even broken.

All of that makes the specter of a frightening and worrying that makes

people always plagued the nightmares as a result of the implementation of the

development itself. This does not mean that development must be stopped at all.

On the contrary, with all its positive impact development should be continued and

enhanced by taking into account all the negative impact that would occur.

Development is not only oriented to promote economic growth per se, but more

than that the sustainability of the development itself.

Basing on the above reality, a new breakthrough in the development of

legal institutions in Indonesia is carried out by the Government together with the

House of Representatives on August 16, 2007 with the enacted Law No. 40/2007

on Limited Liability Company (the Company Law) (State Gazette of Year 2007

No. 158 / No. 5336). This Company Law accommodate the concept of social

responsibility and sustainable development paradigm. Article 74 of the Company

Law clearly states:

(1) Company runs its business activities in the field and / or related to the

natura l resources required to r un the Social and Environmental

Responsibility.

(2) Social a nd Environmental Responsibility as referred to in paragra ph

(1) an obligation of the Company which are budgeted a nd accounted

for as a n expense of the Company whose implementation is carr ied

out with respect to decency and fairness.

(3) the Company does not perform its obliga tion as referr ed to in

subsection (1) subject to sanctions in accordance with the pr ovisions

of the legislation.

CSR in the formulation that would give a legal sanction according to the

company that does not perform shows that CSR is a mandatory, not a voluntary as

applicable in other countries. The regulatory of CSR by mandatory raises a

contradiction.

3 Those who agree argue that the company is not solely for profit,

3 The existence of CSR itself have created a contradiction. Milton Friedman and others have argued

that a corporation's purpose is to maximize returns to its shareholders, and that since on ly people

can have social responsibilities, corpo rations are only responsible to their shareholders and not to

society as a whole. They perceive that corporations have no other obligation to society and CSR as

in-congruent with the very nature and purpose of business, and indeed a hindrance to free trade.

They argue that improvements in health, longevity and/or infant mortality have been created

by economic growth attributed to free enterprise. Critics of this argument perceive the free market

as opposed to the well-being of society and a hindrance to human freedom. They claim that the type