Sustainable Development Goals (SDGs) are a universal call by the United Nations for all organizations including private sectors to contribute to the sustainable development of the world. Apart from that, it is an opportunity for companies to align their corporate social responsibility (CSR) agendas with the government visions as well as develop products and services that help them grow in harmony with the environment and community.
According to Indonesia’s voluntary national review published earlier this year, the country’s investments in poverty alleviation has successfully resulted in a 7% reduction of the percentage of population living in poverty, between 2006 to 2016. However, there are still challenges to be tackled every day in order to eradicate poverty and improve the welfare of the population. Indonesia is aligning its efforts with SDGs 1, 2, 3, 4, 5, 9, 14 and 17.
However, as mentioned earlier, the role of the government, although considered critical, it isn’t the only main player in achieving the SDGs zero targets. From the business perspective, the question to ask is what role can companies play in all of this?
To address this question, we analyzed the CSR agendas of 22 leading companies in Indonesia.
The companies we focused on are operating in various dominant industries such as energy, financial services, mining, construction, and agriculture. Our data was extracted from their sustainability reports published on GRI website for the year 2016.
It is worth mentioning that 35% of the companies are aware of the SDGs and have stated their commitments in their respective annual GRI reports. Meanwhile, the remaining 65% have yet to mention SDGs, but still carried out CSR activities that align with the SDGs.
What are the most popular SDGs tackled by companies in Indonesia?
Our data indicate that SDGs 3, 4, 8 and 11 are the top four SDGs that have received the highest attention with no significant gaps between them. Around 70% of the analyzed companies have focused their programs on education and training, healthcare services, disaster aid and growth of small and mid-size enterprises.
Goal 3: Health-care Services
In order to improve public health, many companies have facilitated access to quality, affordable health-care services and medicines for local people, particularly in the areas where their operations are established.
Goal 4: Education and Training
Companies also executed programs that provided underprivileged youth with access to education through different types of scholarships and trainings.
Goal 8: Economic Growth
Local economic growth was improved, mainly through contributions made by investments in small and medium-sized enterprises.
Goal 11: Disaster Aid
Located in one of the world’s highly prone natural disaster areas, Indonesian citizens become more vulnerable in the aftermath of natural hazards, thus making sustainable communities become the focal point of many companies in this analysis. Immediate food/medical aid for communities that suffered from disasters are the most common form of CSR activities. However, there is still room for innovation. Instead of getting involved post-disaster, companies can invest in products, services or technologies that prevent or minimize the effects of natural disasters.
Recalling what has been confirmed in the voluntary national report 2017, priority of the government is to work on improving the quality of human resources, through investments in the Health and Education sector. There seems to be a positive alignment between the private and public sector in terms of contributing to Indonesia’s national vision.
What SDGs are prioritized by two most dominant sector?
The financial services and energy sector is pioneering sustainability disclosure and reporting in Indonesia. Banks in Indonesia are leading in supporting productive and equal employment, which includes young people and persons with disabilities.
Since 2010, PermataBank has employed 15 vision-impaired staffs in its Telesales operation. One of them has become the best and most productive Telesales staff, with working abilities and ethics above those of their normal colleagues.
Bank Central Asia
Bank Central Asia, invested in the development of Micro, Small, and Medium Enterprises (MSME) through their Business Development Institution. Highlighted activities of the Bank is consultation and training about business operations as well as financial support (loans) for MSMEs.
It seems that banks in Indonesia are starting to focus on topics that are material to their industry. Having said that, there are still many opportunities for banks to explore, such as financing renewable energy projects that are still underfunded globally. According to the new climate economy, “If clean energy projects could access low-cost, long-term financing, the cost of clean electricity could be reduced by as much as 30% in emerging economies. In 2015, clean energy attracted US$329 billion in global investment, a new record but still not enough to limit global warming below 2°C or provide energy access to the 1.1 billion people who lack it.”
Examples of companies aligning with SDGs
Some companies have developed a more strategic approach to align with the SDGs by setting long-term targets and taking advantaging of technology.
One of the biggest construction materials company in Indonesia aligned its 2020 Sustainability ambitions with the SDGs. Their 5 Program Pillars contribute specifically to the SDGs 1, 3, 4, 8, 9, 12, 13, 15 and 16. The company has described business activities in support of each of the prioritized SDGs. Time-bound targets are set for 2020 and current progress is measured. In its efforts to support Goal 13: Climate Action, Indocement successfully replaced 18% electrostatic precipitators with bag filters in 2016 and is aiming for 100% replacement by 2020.
One of the biggest food company in Indonesia, has aligned its business priorities with SDGs, committing to joining the combat for zero hunger, good health, and quality education. Many projects to scale up nutrition, hygiene, and health targeted at mothers with infants as well as young children. For example, SUN Mobil program was introduced to educate mothers on the importance of good nutrition for the first 1,000 days of life, as well as distribute baby foods and supplements to malnourished infants.
Indonesian companies are taking advantage of the SDGs to mitigate conflicts in their operating areas, while setting up good relationships with communities and the government. A strategy to address conflicts is important and can be developed by integrating the SDGs into their plan.
However, the SDGs go beyond a risk and reputation management system. They essentially highlight and address the big gaps in development that exist across the globe, thus presenting huge opportunities for companies to develop their markets.
A question for ambitious companies is how they can focus on material issues that help them develop innovative products and services that go hand in hand with community and environment. Many Indonesian companies are still struggling to find the answers to that, as there is a lack of deeper research to understand the SDGs and lack of determined leadership to integrate sustainability into companies’ culture.
For companies to gain competitive advantages, their CSR agendas need to be able to align with the new policies created by the government. This means better understanding of the link between governments and business, understanding business impact towards SDGs, translating this into a strategic plan with actionable steps, awareness of the business tools available for us, and consistently monitoring, collecting data and reporting on progress.