Introduction

The CSR concept is a subjective concept which does not provide a space for universal definition. Therefore, the CSR concept could have a different meaning and understanding for every group (Jamali, 2008). PT.Timah defines CSR as a social and environmental program under company management, and a commitment to build a better quality of life together with related stakeholders including the community where the company operated and it was carried out thoroughly through company activities according to the good corporate practices²². The CSR activity of PT. Timah started before the enactment of the Indonesian law on CRS, but the reporting practices began in 2007 following the regulations. This chapter will discuss the CSR practices of PT.Timah, particularly related to environmental security which consists of environmental management and environmental performance.

5.2. Environmental Management System of PT. Timah 5.2.1. Environmental Policy and Management

Based on the review of good CSR practices as mentioned in chapter 2, a good CSR policy defines a set of policies which promote effective use of resources, environmental preservation, tailing management and a comprehensive mine closure plan. Along with the corporate policy, PT. Timah has established a policy on Occupational, Health and Environmental Safety policy or K3-LH. This policy includes five objectives which are: (1) Compliance with the law and norms of environmental management; (2) Preventing pollution,

22 PT. Timah Sustainability Report, 2014

65 accidents and occupational diseases; (3) Improving employee skills to maintain the environmental impact control; (4) Increasing the awareness of environmental issue; and (5) Continuous improvement in terms of environmental protection. Although not all the sub-indicators has been met by PT.Timah, but in general, the PT. Timah objectives are also generated to promote the effective use of natural resources, environmental preservation, tailing management and a comprehensive mine closure plan (Table 5.1).

Table 5.1. Comparison of Environmental Policy Indicator of Best Practices and PT. Timah Policy

Indicator Sub-Indicators PT. Timah Policy

Effective use of resources

Develop and implement technologies to efficiently

recover resources Available

Develop new and effective uses for by-products Available Promote recycling (effective use of recycled

resources)

Available (waste and water) Environmental

Preservation

Developing biodiversity management plans including area delineation, elements identification, identification of potential effects, risk and impact assessment, and implementation and monitoring.

Available Maintain company record of zero significant

environmental accidents Available

Assessment on pollution of water and air Available, not comprehensive Protection from toxic and hazardous wastes Available

Land conservation plan Available

Sea conservation plan Available

Tailing

Management Creating Tailings Review Boards

Includes in Environmental Division Developing tailings management system (PDCA

strategy) Available

Developing operations, maintenance and

surveillance manual Available

Developing emergency preparedness and response

plan Unclear

Application of Best Available Technology for the design, construction and operation of tailings facility

Available The Tailings Management System is integrated into

operations and daily activities Available Multiple levels of monitoring and inspection to

ensure control systems are implemented and maintained

Available

66 Table 5.1. Comparison of Environmental Policy Indicator of Best Practices and PT. Timah Policy (continued)

Daily visual inspections by operators Available Weekly inspections by site technical inspector Available Regular inspections by expert corporate technical

Annual Dam Safety Inspections (DSIs) Unclear Periodic reviews by third-party qualified engineers Unclear Mine closure plan Removing, relocating or demolishing buildings and

physical infrastructure Available

Closing pits and shafts Available

Stabilizing underground workings Available

Water management Available

Sloping and contouring waste rock dumps as

necessary Available

Capping or covering and vegetating waste rock

dumps and tailings impoundments Available

Post-closure monitoring Available

Source: Author Analysis based on PT. Timah Annual Report

Planning is the first step in executing as environmental policy into practice. The policy implementation efforts require careful and comprehensive planning. Without proper planning, the company’s policy will become an empty slogan. Environmental planning is a derivative of the environmental policy established by PT.Timah. The planning mentioned in this study consists of a management plan including the environmental program, implementation procedure, budgeting, and monitoring as well as evaluation.

The environmental management of PT. Timah is fundamentally referring to the environmental impact assessment, as a requirement for the issuance of the mining licenses.

Environmental impact assessment (AMDAL) consists of environmental plan and environmental monitoring plans. In addition to the environmental impact assessment, PT.Timah has also used ISO 14001 as guidance in implementing the environmental practices.

ISO 14001 is an environmental management guideline and certification for companies. It stated that the policy on environmental management and environmental responsibility are integrated into business strategy and decision making, which means that PT.Timah tried to

67 implement the environmental practices thoroughly. To ensure the proper implementation of environmental policy, PT.Timah established Occupational, Health and Environmental Safety Division (K3-LH Division) which has responsibility for ensuring the K3-LH policy implementation.

“Sejak perencanaan kita memperhatikan kualitas lingkungan terutama reklamasi. Harapan kita lingkungan kembali seperti semula, meskipun itu susah dan perlu usaha yang besar. Oleh sebab itu kita mengupayakan agar pelaksanaan kegiatan tambang itu hanya di wilayah KP Timah saja sehingga kita mudah mengawasi..” (Sain, Februari 2016)

(Since mining operation planning, we pay special attention to the restoration of environmental quality, especially reclamation. We try to make the environmental condition as it was. We also expressly stipulate that the mining activity should be carried out only in our mining authority, so that easy for as to monitor it..)

Figure 5.2. Environmental Policy of PT. Timah Source: PT. Timah Report on Reclamation and Closure Plan

Based on the Figure (5.2), PT. Timah seems to separate the environmental management and corporate social responsibility. The implementation of CSR is underway through Green Figure 5.1. Interview with Mr.Sain

and Mr.Ahmad, the

representatives of PT.Timah, Muntok

Source: Author documentation

68 Bangka Belitung Program by performing critical land rehabilitation, ex-mine land reclamation and idle land utilization. While Environmental management is following AMDAL and ISO 14001. This scheme provides a risk to the viewpoint of environmental responsibility by the company for the public. Environmental responsibility will only focus on reclamation and rehabilitation programs which usually are conducted after mining activity is completed.

Environmental management of PT.Timah covers five items, which include:

1. The preparation of the reclamation plan and fund, including five-year plan, and closure plan;

2. Development and utilization of local plant and species and another productive plant for revegetation program;

3. Minimizing the size of pit mining;

4. Controlling the mining impact, both from solid waste or hazardous waste, towards air, water and soil quality; and

5. Post mining reclamation through utilization of a local plant which has an economic value.

To anticipate the high risk of a company’s activity which is caused by malfunction of internal processes, human error, system failure, or external problem, PT.Timah has set a performance standard of each piece of production equipment. The performance standard is monitored, documented, and evaluated every two weeks through evaluation by the operational manager and once a month in documentation discussed at a senior manager meeting. In addition, PT.

Timah has also carried out several actions in ensuring the implementation of environmental policy, which consist of:

1. Compliance with the restrictions that have defined in the environmental plan and monitoring plan;

2. Respect the laws and perform a good mining practice by reducing the environmental loss due to mining activities;

69 3. Implement rehabilitation and reclamation accordance with the environmental law;

4. Perform continuous environmental monitoring on air quality, air quality, soil quality, social commitment and reclamation

5. Implement the proper “house keeping”, effective use of fuel and residual disposal, intensive conservation;

6. Report practices on the environmental preservation activity to the board of directors;

7. Increasing the employee awareness on the environmental protection program;

8. Continuously conduct the research to find a new and better way of performing mining activities;

9. Ensure that technology investment and operational methodology has met the obligation in environmental protection;

10. Provide sufficient fund to meet the company obligation toward community and environment which unfilled in the past.

Based on the policy and environmental evaluation plan, PT. Timah showed attention to maintaining and improving environmental quality by establishing the green mining policy (mining more environmentally friendly), minimizing the waste that potentially pollutes the environment during the mining process (green processing) and carrying out the reclamation process.

5.2.2. The Implementation of Environmental Plan

PT.Timah has made three strategic steps as a part of company’s commitment in implementing the environmental protection and reclamation, which consist of:

1. Improving technical skill and knowledge of the employees in maintaining environmental quality;

70 2. Providing environmental protection as the main subject in the good corporate

governance guideline; and

3. Requiring the mining partner to comply good mining practices and uphold the occupational safety.

The environmental management program compiles and integrates itself into the company’s daily activities. It is intended to achieve a greater positive impact on the program. Following the implementation of environmental management activities and CSR regulations, PT.Timah allocates a budget for environmental management activities every year in alignment with a regulation which obligate the state-owned company to allocate 2% of net profit for CSR activities. The regulation has been incorporated as a fluctuation of the PT. Timah environmental budget (Figure 5.3). The environmental management budget of PT.Timah include environmental monitoring, sample analysis, internal and external inspection, training and education, report and documentation, consultant service, meeting/ workshop/ seminar, and relation meeting.

Figure 5.3. CSR fund allocation and distribution of PT.Timah for environmental management (in million rupiahs)

Source: Sustainability Annual Report of PT. Timah (2008-2014) 3500

6630

5034 10287

18064

13100

0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000

2010 2012 2014

Environmental Spending Total CSR Fund

0 500000 1000000 1500000 2000000 2500000 3000000

Environmental monitoring Sample analysis External Inspection Internal Inspection Training and education Report and documentation Consultant fee Meeting/seminar/workshop Evaluation meeting and…

71 The total budget for environmental management in 2014 is 5.03 million rupiahs, which declined by 19.2% from 2013. The chart portrays the orientation of CSR implementation of PT.Timah which emphasized more on social rather than environmental responsibility. The total spending of PT. Timah on environmental management has never exceeded than 38%

of the CSR fund.

5.2.3. The Monitoring and Evaluation

Each policy and program are monitored and evaluated in accordance with ISO 14001:2004. The monitoring and evaluation program by PT.Timah included external and internal monitoring. The internal monitoring is a part of continuous improvement which was intended to achieve a good corporate practice by controlling the environmental impact from the company activity (PT. Timah annual report, 2013). The product of internal monitoring is a recommendation or suggestion in improving the environmental management practices to the higher level managers. One of the objectives of environmental performance monitoring is intended to find out the cause of the reclamation plan failures. The scope of the internal monitoring includes adherence to the procedures and compliance with the occupational and health safety norms and rules. Meanwhile external monitoring conducted through PROPER (ministry of environment), BAPETEN (Nuclear Energy Regulatory Body) and also monitored by Environmental Agency of the provincial government. In 2014, PT.Timah paid 834 million rupiahs in conducting external monitoring which consisted of 753 million rupiahs for PROPER, 60 million rupiahs for BAPETEN and 20 million rupiahs for the provincial government.

To meet the regulations related to environmental standards, PT.Timah has conducted environmental management programs which consist of land use change monitoring, land clearing and land reclamation, plant maintenance, seeding and planting, erosion control,

72 hazardous waste management, emission and effluent management, and a community development program. PT. TIMAH refers to the standard from the Ministry of Environment Regulation No.13 Year 1995 about Emission Quality Standards and Ministry of Environment Regulation No. 21 Year 2008 about Emission Quality Standards of a Thermal Power Plant in Environmental Quality Monitoring.