Picture 1. Walk for Sight 2012
Investment grade awarded to Indonesia gives impact to the nation. Companies from other countries are willing to keep their presence or investing in Indonesia. The investments come with the companies' culture carried from its originating country, including the culture to give back to local community which is commonly referred to CSR (Corporate Social Responsibility). Now local companies also actively conduct CSR programs.
CASE STUDY 1: Cataract Surgery
Standard Chartered Bank launched "Seeing is Believing" (1), a global CSR program to help people with eye problems since 2003. The program was introduced in Indonesia as well. Activities held were:
- free cataract surgery (in cooperation with Perdami, a local ophthalmologist association, and Hellen Keller International)
- training for blind people and fund rising (in cooperation with PERTUNI, a local blind association)
- others (like giveaway free glasses)
CASE STUDY 2: Hand Wash
Unilever sponsored World
Handwashing Day 2012 in public elementary school 003 - 005, Jakarta this
October (6). The event was a joint collaboration with Bank Tabungan
Pembangunan Nasional (BTPN), a local bank. This event promoted a habit
to wash hands with soap to the students which was align with market
proposition of Lifebuoy soap. Lifebouy was consistently advertised as a
soap that cleaned and killed germs. This event strengthened value proposition and brand image of the product to customers. It was also covered by local newspaper like Bisnis.com.
BACKGROUND
In 2007, Indonesian government introduced law number 40 on limited liability companies. Chapter V of Article 74 of the law regulates social and environmental responsibility, where companies which perform its business activities in sectors of and/or related to natural resources are required to undertake social and environmental responsibilities (4). This enforce companies to develop and execute CSR strategies.
A study was conducted by Universitas Negeri Semarang to analyze the correlation between CSR disclosure and share price movement in BEI (Indonesia Stock Exchange) (5).
Picture 2. Impact of CSR to Share Price
From 4 different types of CSR, two of them (community and environment) were proven to give positive correlation with share price increase.
OPINION
Indonesian consumers and shareholders have been more aware with social issues as
- Number of companies initiated CSR activities is increasing
- Local icons expressed their concern about social issues through social media
- Companies actively published their CSR activities
Hence, to cope with the local competitors, CSR is important. Rather than viewed CSR activities as additional operational activities which required to be included in budget, CSR activities should be included in the DNA of the company.
Market drives the market price of company's share price. Hence, value of the company will be determined by demand from shareholders and potential shareholders (including consumers). The Hand Wash case above is one example of CSR activities implemented to the DNA of the company - integrated to marketing campaigns. The new formula of corporate value is:
wealth produced + value returned to the community
Hence, alignment between corporate strategy, image, and CSR activities is important. Furthermore, if the company is viewed to be more valuable as more value returned, not only to customers, but also to community and environment, its market value may be more resistant to drop because of external factors.
Sources:
- Seeing is Believing
- PT. SIDOMUNCUL ADAKAN BAKTI SOSIAL DI TOMPASO BARU MINAHASA SELATAN
- Soho Group Pharma Gelar Bakti Sosial Untuk Penderita Katarak
- Corporate Social Responsibility by Limited Liability Companies - Indonesia
- Pengaruh Indeks Pengungkapan Corporate Social Responsibility (CSR) Terhadap Harga Saham Pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia Tahun 2006-2008
- Murid SD gelar peringatan CUCI TANGAN sedunia
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