Strengthening Local NGOs in Areas Where Extractive Industries Operate
- June 2013
The objective of the project was to enhance trust-building and cooperation among local government, nongovernmental organizations and extractive industries in Indonesia, by strengthening the capacity and credibility of NGOs as partners in corporate social responsibility (CSR) programs. The focus was on improving the ability of local NGOs to forge permanent partnerships with companies and local governments in CSR policy design and implementation.
The project was relevant, given the legal and fiscal requirements governing CSR, the degree of poverty in extractive areas, the lack of enforcement of CSR policies, and the lack of attention paid to civil society engagement and NGO involvement as direct benefits of CSR policies. However, the project risks and problems in terms of corporate and local government commitment were neither adequately identified nor addressed during the design and implementation phase.
Lessons from Project
When the project ended there was no formal partnership among the stakeholders involved. Most of the microprojects had ended and the participating organizations considered themselves beneficiaries of corporate social responsibility funds rather than as pro-active partners. The project reinforced current corporate practices in which civil society empowerment is regarded simply as making donations to NGOs. Better information about the costs and benefits of corporate social responsibility implementation and an inventory of industry practices could help to identify NGO capacity constraints and priority needs, tailoring different partnership models to the situation in each district.
The project travel budget was high because of the widely dispersed geographic areas that were selected. The high travel budget took away resources from the NGO microprojects and concrete corporate social responsibility field activities and therefore reduced the project’s impact.
Most of the 12 microprojects selected involved business opportunities in agroindustry and farming. There was no specific mechanism to review the results of NGO microprojects . This was a missed opportunity. Reviewing the results in a workshop could have built broader support for the changes advocated at the local and government level. This was not an effective way to help local actors make their voices heard by authorities and private enterprises or to facilitate trust-building and dialogue on how corporate social responsibility should be managed and how to involve NGOs as CSR partners.
The project considered NGO capacity weakness as an obstacle to implementation rather than a need that should be addressed. A wide range of topics, including an understanding of CSR policies and practices, could have been addressed in training courses – such as budget analysis, monitoring of oil and mining operations, tax laws, public information on government revenues and payments by extractive companies, information on other CSR networks – for NGOs in Indonesia.
The project did not fully appreciate the complexity of the companies’ corporate social responsibility activities―which are patchy, sector-based, and influenced by the political climate in each extractive area. Nor did the project take into account how complex NGO and community based organization participation would be. Changes in corporate social responsibility governance will not come about without concerted advocacy on the part of civil society groups that come together with an understanding of challenges for society as a whole. The kinds of activities that NGOs engage in could be used to improve information to raise awareness about corporate social responsibility, facilitate dialogue, and promote advocacy skills to tackle performance on poverty issues.
The diagnostic review and needs assessment did not capture the information needed for project implementation. There was no contextual information on corporate social responsibility budget allocation per district, the degree of integration in local development planning, the nature of civil society engagement with stakeholders, budget allocations to NGOs, or data to assess what specific CSR practices had achieved thus far and what was needed in terms of local NGO capacity-building to improve these organizations’ credibility with stakeholders.
The specified outcomes were ambitious, given the outputs that were designed to achieve them. The project assumed that putting stakeholders together and sharing knowledge through local and national workshops, NGO training activities, and micro project experiences would be sufficient to alter perceptions and create stakeholder partnerships for joint corporate social responsibility policy design and practices in Indonesia.
Meeting with all parties involved was an important first step in building mutual trust to facilitate a common understanding of the challenges of corporate social responsibility, including those related to civil society engagement in Indonesia. All stakeholders expressed their concerns, and it was established that companies and local governments must pool local civil society resources if they are to have a visible impact on the community with which they are working.
The project’s strategy of identifying and working directly with local NGOs community based organizations, local government, and commercial companies at the district level in Indonesia made project activities more relevant to beneficiaries.