Critical Review of the Change in CSR Regulation and Concept For Soes: From Partnership and Environmental Development Programme to Corporate Social and Environmental Responsibility

Abstract

This paper aims to analyze the social and environmental responsibility obligations of State-Owned Enterprises (SOEs) in Indonesia, as stipulated in Law No. 19/2003 on SOEs, specifically Article 2 and Article 88(1). The implementation of these obligations is further detailed in the Regulation of the Minister of SOEs No. PER-09/MBU/07/2015 and its subsequent amendments, the most recent being No. PER-1/MBU/03/2023, which was introduced in response to the Covid-19 Pandemic. The novelty of this article lies in its examination of the regulatory changes, which are identified as contradictory (contadictio in terminis) and problematic. Currently, there is legal uncertainty surrounding the Corporate Social and Environmental Responsibility (CSER) obligations for SOEs, as they are based on provisions from the Company Law. Historically, the Partnership and Community Development Program has been a key component of CSR for SOEs, offering more legal clarity than the CSER framework under the Company Law. As a result, these recent regulatory changes can be viewed as a step backward. These changes, introduced by the Government through the Ministry of SOEs, not only modify the structure of the programs but also diminish the unique characteristics of the Partnership and Community Development Program by merging it into the broader CSER-BUMN framework. Previously, the budget for the Partnership and Community Development Program was capped at a maximum of 4% of the SOE's net profit from the previous financial year, with adjustments made for non-profitable SOEs without a fixed percentage. However, in practice, SOEs continue to implement CSR through two models: the Partnership and Community Development Program and the  Corporate Social and Environmental Responsibility by SOE's. Unfortunately, this dual model creates overlaps and causes legal uncertainties, complicating the effective implementation of these programs.