Bill Makes CSR Funding Mandatory

August 9, 2007

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Indonesia’s President is expected to sign a bill this month requiring natural resources companies to spend money on corporate social responsibility programs, The Wall Street Journal reports. “It would be the first instance we know of world-wide that CSR is mandated by law,” The Journal writes.

The bill provides no definition of how much money a company has to spend, how it should spend it, or how the spending will be taxed. Article 74 is so vague that lawyers tell us it could apply to any company that uses natural resources; in other words, every limited liability company in the country.

Jakarta has a spotty record of enforcing rules on its books, so even when it becomes law, the CSR legislation may ultimately prove a dead letter, according to the article. Regardless, Article 74 sets a precedent that other countries might try to copy.

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