The first quarter of this year saw CSR making headlines again—not for achievements, but for scandals. From allegations of Bank Indonesia's CSR funds flowing to shady foundations, to BJB's ad procurement masquerading as CSR, and PT Timah's version of CSR that suspiciously resembled security payments for mining operations, corporate social responsibility in Indonesia is once again under fire. Rather than a tool for social good, CSR is turning into a slush fund for the elite. Why do these governance failures keep recurring?

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Figure 1. "Dana CSR" mostly linked to negative terms (55%): corruption, KPK, and banks.

CSR in Indonesia is not only marred by corruption. In recent months, we’ve seen programs rolled out without community involvement, as in the case of PT IHIP in Morowali. Others operate disconnected from regional development plans, like those in Karawang and East Aceh. Some local governments, like East Halmahera and Pasuruan, are drafting local bylaws just to get CSR programs back on track—a bureaucratic bandage for a systemic problem.

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Stuck in the Sisyphean Loop

Figure 2. Is CSR in Indonesia like living a life akin to Sisyphus?

The state of CSR in Indonesia feels like a loop of futile repetition. Nearly a decade ago, Bahruddin (2015), a lecturer at Gadjah Mada University, warned about the Freeport CSR scandal involving politicians and civil society organizations. Today, the cast has changed but the plot remains the same: CSR is still a transactional tool between corporations and political elites.

Globally, CSR has evolved into a broader framework: Environmental, Social, and Governance (ESG). It pushes beyond one-off charity acts toward transparency, stakeholder engagement, and integrated impact. CSR is part of this framework. But if CSR continues without accountability and disclosure, ESG becomes just another hollow acronym (Putri et al., 2025, pp. 1552–1553).

In the ASEAN region, Indonesia’s ESG performance remains weak. According to a 2021 study, Thailand leads in ESG governance. Indonesia and Vietnam still struggle, mainly due to the dominance of high-risk sectors like mining and oil, and poor ESG management practices (Exhibit 1). This reflects back on the quality of CSR in both countries: still reactive, still underperforming.

Exhibit 1: ESG Performance Comparison

Back in 2016, a study by NUS Business School gave Indonesia’s CSR score a 48.4 out of 100—placing it below Thailand (56.8) and Singapore (48.8). Years have passed, metrics have shifted from CSR to ESG, yet Indonesia’s position remains relatively unchanged. We keep pushing the boulder uphill, only to see it roll back down. Again.

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Two Assignments: Transparency and Participation

If the core problem is CSR funds managed like a back-alley kitchen—opaque and reserved for insiders—then the first fix is to open the windows. Bahruddin (2025) highlights the importance of public disclosure as a way to break the transactional loop between companies, politicians, and proxy foundations. Sustainability reports must do more than list budgets and project photos. They should disclose beneficiaries, locations, and actual outcomes. International donors like The Packard Foundation already do this—why can’t our companies?

But transparency is only the first chapter. What about CSR programs that wander aimlessly? Too often, CSR is planned in boardrooms, far removed from the voices of those affected. The result? One-size-fits-all programs that feel more like annual rituals than responsive interventions. This is where social innovation comes in—a shift from performative charity to collaborative value creation.

The OECD (2000) and Caulier-Grice et al. (2012) define social innovation as the design and implementation of new solutions—in processes, products, or organizational models—that more effectively meet social needs. The concept has five pillars: novelty, implementation, effectiveness, contextual relevance, and transformative impact. It’s not about giving more; it’s about giving better.

Figure 3. Core elements and common features of social innovation.

Indonesia has begun to formalize this approach. The Ministry of Environment and Forestry embedded social innovation into Ministerial Regulation No. 1/2021 on PROPER. Companies seeking the coveted Gold rating must now implement at least one standout social innovation program. These are not TikTok-worthy tree-planting sessions, but rigorous community solutions backed by outcome mapping and Social Return on Investment (SROI) metrics.

Companies are encouraged to begin with social mapping to understand local needs, rather than assuming what the community wants.

In this shift, CSR is no longer just a public relations tool. It's a negotiation table—one that includes communities, local governments, and yes, even critics.

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Why It’s Worth Doing

Addressing these two challenges—transparency and participation—is not just about checking regulatory boxes or avoiding bad press. Done right, it opens doors to real gains: improved investor trust (which enhances ESG scores and funding access), potential tax incentives, better alignment with regional development plans, and even higher revenue when CSR supports your core business.

On the intangible side, you build a stronger brand, reduce the risk of protests, and earn social legitimacy. As a bonus, your company might walk away with a Green or Gold PROPER award—not just for prestige, but as proof that you’re operating above the baseline.

So back to the title: CSR is at a crossroads. Will your company stick to outdated rituals, vulnerable to misuse and irrelevance, or take the strategic turn toward impact, value, and trust?

References:

Antara News. (2025, April). Bupati Aceh Timur soroti program CSR perusahaan migas. https://www.antaranews.com/berita/4777841/bupati-aceh-timur-soroti-program-csr-perusahaan-migas

Antara News. (2025, April 16). Bupati Karawang inginkan keselarasan antara pembangunan dengan CSR perusahaan. https://megapolitan.antaranews.com/berita/388961/bupati-karawang-inginkan-keselarasan-antara-pembangunan-dengan-csr-perusahaan

ASEAN CSR Network. (n.d.). Riset temukan kualitas CSR perusahaan Indonesia rendah. https://www.asean-csr-network.org/c/news-a-resources/media-coverage/920-riset-temukan-kualitas-csr-perusahaan-indonesia-rendah

Bahruddin. (2015, December 7). Freeport, CSR, dan kebatilan. Kompas. https://nasional.kompas.com/read/2015/12/07/15000061/Freeport.CSR.dan.Kebatilan

Bahruddin. (2025, April 18). Buruk rupa kebaikan. Kompas.id. https://www.kompas.id/artikel/buruk-rupa-kebaikan

Betahita. (2025, April 19). Warga kembalikan bantuan CSR PT IHIP. https://betahita.id/news/detail/11021/warga-kembalikan-bantuan-csr-pt-ihip.html

ESDN. (2015). Social innovation in Europe: ESDN Quarterly Report No. 36. European Sustainable Development Network. https://www.esdn.eu/fileadmin/ESDN_Reports/2015-April-Social_Innovation_in_Europe.pdf

Halmahera Post. (2025, April 19). Pemda Halmahera Timur siapkan Perda CSR tambang, DPRD targetkan sahkan tahun ini. https://halmaherapost.com/2025/04/19/pemda-halmahera-timur-siapkan-perda-csr-tambang-dprd-targetkan-sahkan-tahun-ini/

IDX. (n.d.). ESG Score. Indonesia Stock Exchange. https://www.idx.co.id/en/listed-companies/esg-score

Kompas. (2025, April 17). Pemkab Pasuruan buat Perda TJSL untuk rapikan CSR badan usaha. https://surabaya.kompas.com/read/2025/04/17/100732078/pemkab-pasuruan-buat-perda-tjsl-untuk-rapikan-csr-badan-usaha

Peraturan Menteri Lingkungan Hidup dan Kehutanan Republik Indonesia Nomor 1 Tahun 2021 tentang Program Penilaian Peringkat Kinerja Perusahaan dalam Pengelolaan Lingkungan Hidup. (2021). https://peraturan.bpk.go.id/Details/163436/permen-lhk-no-1-tahun-2021

RMOLJabar. (2025, April). Ketua yayasan penerima aliran CSR BI berstatus tenaga honorer di Bapenda Kabupaten Cirebon. https://rmoljabar.id/ketua-yayasan-penerima-aliran-csr-bi-berstatus-tenaga-honorer-di-bapenda-kabupaten-cirebon

Republika. (2025, April 16). Inovasi sosial dalam program CSR. https://www.republika.id/posts/44167/inovasi-sosial-dalam-program-csr

Tempo. (2025). Harvey Moeis digugat kembalikan dana CSR Rp 73 miliar. https://www.tempo.co/hukum/harvey-moeis-digugat-kembalikan-dana-csr-rp-73-miliar-1229273

Tribunnews. (2025, April 17). Ridwan Kamil terseret kasus dugaan korupsi dana CSR. https://www.tribunnews.com/nasional/2025/04/17/ridwan-kamil-terseret-kasus-dugaan-korupsi-dana-csr-bahlil-biarlah-semua-itu-kita-lihat-berproses