Corporate Social Responsibility in the Rule of Law and Welfare State Concept

The provision of the Law Number 40 of 2007 concerning Limited Company on Corporate Social Responsibility has changed the nature of such responsibility from voluntary into mandatory. Similarly, it strengthened welfare state (verzorgings staat) concept as commanded by Article 33 (3) and (4) of the 1945 Constitution of the Republic of Indonesia. Denaturing of this Corporate Social Responsibility is progressively assured by the Decision of Indonesian Constitutional Court, so that responsibility must be performed as legal responsibility or mandatory.


INTRODUCTION
(1) Company that runs its business in and/ or related to natural resources is mandated to perform Social and Environmental Responsibility.
(2) Such Social and Environmental Responsibility as aimed by Section ( 1) is a Company' obligation that is budgeted and accounted for as Company' expense and its implementation is conducted by considering fit and proper aspects.
(3) Companies that fail to meet the mandate as mentioned in Section (1) shall be subjected to sanctions according to the provisions of the law.
(4) Further provisions on Social and Environmental Responsibility shall be regulated by Governmental Regulation.
The peak of the discourse leads to judicial review of the provisions of Article 74 of the Limited Company Act to the Consti-   In regards to that, reinterpretation is necessary on the understanding of the principles of CSR by companies comprehensively.If by far CSR is identicized as responsibility in an an sich social meaning, then in the future, the word 'responsibility' must be comprehended as "legal responsibility". 8In doing so, then the sense of CSR from "voluntary" can be turned into "mandatory".
When CSR is understood as an obligation of a company, then the implementation of CSR (3) The ownership rights is not absolute; (4) The state is not merely as guardian of order and security, or in other words, night watch officer (nachtwakerstaat), but it also participates in social and economic efforts; (5) There are more theorems of administration law are that rule socialeconomic realm and provide certain burdens to citizens; (6) The roles of public law tend to heave private law, consequently, the roles of the state is broader; (7) The rule-of-law is more matteroriented that emphasizes a more matter-oriented social justice.Referring to the concept of modern rule-of-law state, the state/the government is not only required to refer its actions to law, but it is also given broad roles, duties and responsibilities to provide prosperity for its people.On such consideration, Bagir Manan 27 expresses that moder ruleof-law state must contain three aspects: 1) Political aspect that compels limitation of state; 2) Legal aspect that emphasizes legal supremacy, legality principles and the rule of law; and 3) Social-economic aspect that emphasizes social justice and public welfare.
The three aspects take its start at human rights and social-economic welfare.Rights.The Constitutional Court Verdict also describes state intervention so CSR that had so far been considered as voluntary transformed into mandatory.The shift in the nature of CSR is state intervention in order to improve its people's welfare.However, it must be duly noted that state intervention is not to be overdone as it would trigger other issues such as "inefficiency".Consequently, further regulations on CSR is necessary as a completion of welfare state.This regulation must describe mutualistic symbiosis wherein the relations between the social and business interests and legal duties become three inseparable things.When the issued regulation does not accommodate this, then companies would evade from CSR when the regulation on CSR creates injustice.Companies must comply with and be obedient to legal regulations as law is formulated as instruction or state policy.
No equivalence between the commanded and the commanding (compliance principle).
Companies must cooperate with the state in the attempt to make the people prosperous (cooperation principle).
Considering the provisions on CSR as welfare state' policy, CSR becomes collective responsibilities of the state, business actors, companies, and the society.It should not create repudiation from companies to find loopholes on the legal regulations for further exploitation for the sake of evading such responsibility.CSR is affirmative regulation, which according to the argumentation of the natural law (lex naturalis), that requires not only compliance but also cooperation from all stakeholders.
CSR as affirmative regulation in the context of welfare state requires cooperation among the state, society, and companies, especially those that are in or related to natural resources cultivation.Hence, investors both domestic and foreign that act as exclusive entities that are isolated and alienated from surrounding society should create harmonious, good cooperation with the surrounding society so it would provide the greatest benefit for the society.This is in line with the principle of pareto superiority, where companies in running their activities do not sacrifice others' interests.Similarly, companies need to be more aware that the sustainability of the companies depend on the relations of the companies with the society and surroundings of the company.This is in line with the legitimacy principle that companies are bound to contract with the society to run their activities based on the values of justice.Disharmony between the value system of company and the society' value system may lead to a condition where companies lose their legitimacy, and thus, this condition may pose a threat to the sustainability of the companies themselves.

CONCLUSION
After the Corporate Social Responsibility (CSR) became a trending issue through the promulgation of the Law Number 40 of 2007 concerning Limited Company (Limited Company Act) as the substitution of Law Number 1 of 1995, the issue since then provoked pros and cons even resistance from various quarters on the provision of Article 74, Section (1), (2) and (3) of the Limited Company Act on CSR.Article 74 says as follows: to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large". 5 Teguh.(2006).Op.Cit.b.World Bank The World Bank iterated CSR as "the commitment of business to contribute to sustainable economic development working with employees and their representatives, the local community and society at large to improve quality of life, in ways that are both good for business and good for development" c.European Union EU formulated that "CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis".d.Article 1 Point 3 of Law No. 40 of 2007 concerning Limited Company Social and Environmental Responsibility is the commitment of a Company to partake in the sustainable economic development for the sake of improving the qualities of beneficial life and environment, both to the Company itself and the society at large.In principle, the formulations of CSR by WBCSD and World Bank are both emphasizing CSR as the Business commitment to contribute in the sustainable economic development, in cooperation with company' employees, family of the employees, and local residents in improving the quality of life.However, World Bank added as long as such activities are helpful to the company and development itself.Meanwhile, the definition by EU only depicts CSR as a concept where companies attempt to integrate social and environmental aspects with the stakehold-ers 6 on the basis of 'voluntary' in conducting their businesses.The formulation of CSR in the Limited Company Act attempts to separate between social responsibility with the environmental responsibility.Yet, such separation is still describing company' commitment in the sustainable economic development in the course of improving the quality and envronment of life.Such distinction is strengthened by the formulation made by Trinidad and Tobacco Bureau of Standard (TTBS) which concludes that CSR is related to the balues and standards performed in relations to the operation of a company.Hence, CSR is defined as an ethical commitent in business, lawful operation and contribution to the improvement of economy as well as the improvement of the quality of life of the employees and their families, the local community, and society at large. 7

( 3 )
and (4) of the 1945 Constitution must be able to provide social justice and welfare for all the citizens of Indonesia.Considering Article 33 Point (3) of the 1945 Constitution as the constitutional basis for the state occupation on natural resources, then the provision must be used as fundamental law and the highest law and its Point (4) as an operational basis.As constitutional basis, its substance implicates on how efforts or management and use of natural resources would serve people' welfare objective.Consequently, the state must be able to: (1) Regulate and manage the allotment and use of ownership object; (2) Determine and regulate the legal relations between individuals and the object of ownership; 30 W. Friedmann.(1971).The State and The Rule of Law in A Mixed Economy.London: Stevens and Sons, p. 3, as cited in Abrar Saleng, Loc.Cit.

( 3 )
Determine and regulate the relations between individuals and the legal acts on object of ownership.Based on such grounds, then Article 33 point (3) and (4) of the 1945 Constitution was formulated in a way that the meaning of the word "state occupation" is implemented in State Occupying Rights that is in line with prosperity as the objective of State Occupying Rights on the principles of economic democracy.In legal perspectives, the meaning of "for the greatest benefit of the people" is a legal assurance on people' social and economic rights, so they may live properly as citizens.On such grounds, then it was a mistake if the CSR provision as stated in Article 74 of the Limited Company Act is viewed in contrast to Articles 28D point (1), 28I point (2) 33 point (4) of the 1945 Constitution.The Constitutional Court's Verdict that denies the legal standing lawsuit on the provision of CSR contained in Article 74 of the Limited Company Act strengthens the concept of welfare state (verzorgings staat) as implemented as part of State Occupying CSR as regulated in the provision of Article 74 of the Limited Company Act is an implementation of the provision in Article 33 point (3) and (4) of the 1945 Constitution of the Republic of Indonesia must be comprehended as commitment of companies to improve the welfare of the surrounding societies where companies run their activities Such commitment is no longer understood as voluntary, but a commitment that is mandatory in nature.With the shift of the nature of CSR, then the responsibility concept should self-evidently be comprehended as legal responsibility.As legal responsibility, then companies that is absent in implementing CSR would receive sanction.The shift in the nature of CSR from voluntary into mandatory is already in line with the concept of welfare state as aimed by Article 33 point (3) and (4) of the 1945 Constitution.Consequently, the state must attempt in its strongest manner to optimize the use of natural resources in Indonesia