FreeportCSR Problem with Internal Parties

Nadya AugustivaniMaster of Management – Gadjah Mada University

PT Freeport Indonesia is a subsidiary company established by Freeport McMoran Copper and Gold Inc, who own the majority of its shares.

Indonesia has conducted exploration at two sites in the Tembaga Pura region, Mimika Resident, Papua Province, namely the Erstberg mine (from 1967) and the Grasberg mine (since 1988).

Business Activities

Gold, Mine

Mining Companies

Mining Supplies

ProblemsThere is a claim from employees to the

company for increasing their salary.

The salary is not enough to fulfill employees needs

Utilitarianism The utilitarianism principle means

that managers should act in ways to create the greatest benefits for the largest number of people.

Problems with this ethics base are related to defining which groups have to be involved, defining the largest number of people who benefit from decisions, and the ignoring of harm that may be done through the means used to achieve the ends.

Corporate Social Responsibilty

• Sustainable commitment from business sector to doing ethically and give contribution for economic development, thus increasing life quality of employees and their family, and local community and people in general.

(World Business Council for Sustainable Development)

UU PT No 40 Tahun 2007 Pasal 74

1. Perseroan yang menjalankan kegiatan usahanya di bidang dan/atau berkaitan dengan sumber daya alam wajib melaksanakan Tanggung Jawab Sosial dan Lingkungan.

2. Tanggung Jawab Sosial dan Lingkungan sebagaimana dimaksud pada ayat (1) merupakan kewajiban Perseroan yang dianggarkan dan diperhitungkan sebagai biaya Perseroan yang pelaksanaannya dilakukan dengan memperhatikan kepatutan dan kewajaran.

3. Perseroan yang tidak melaksanakan kewajiban sebagaimana dimaksud pada ayat (1) dikenai sanksi sesuai dengan ketentuan peraturan perundangundangan.

4. Ketentuan lebih lanjut mengenai Tanggung Jawab Sosial dan Lingkungan diatur dengan Peraturan Pemerintah.

Impact

A demo happens at April 18 until April 21 2007 asking about salary increase. Because of that, operational process in Freeport halted.

Unethical Issue

Freeport did not do their CSR as well. Employee, as an internal factor, is also a crucial element in CSR. CSR is not an obligation for the external parties only

SWOT Analysis

StrengthHave good relationship with government so they have power as a company in mining industry.

WeaknessHaving labor union so that they could propose for their right to the company.

Continue...

OpportunityThe lack of law enforcement in Indonesia.

ThreatDemand for implementing GCG.

Solution and Recommendation

to make the company more proactive and interactive about CSR awareness for external parties without sacrificing internal parties

THANK YOU

GRACIAS!