an assessment of stakeholder participation in …icta.uab.cat/etnoecologia/docs/[276]-fitri_inez_an...

UNIVERSITAT AUTÒNOMA DE BARCELONA INSTITUT DE CIÈNCIA I TECNOLOGIA AMBIENTALS

JOINT EUROPEAN MASTER IN ENVIRONMENTAL STUDIES (JEMES)

2012/2013

Public Participation

An Assessment of Stakeholder Participation in

Companies’ Environmental Performance Rating:

The Case of Indonesia's PROPER program

INEZ SILVY YOANITA FITRI

Supervisor: Aili Pyhälä – Universitat Autònoma de Barcelona Co-Supervisor: Andrew Jamison – Aalborg University

28 June 2013

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Preface

This study was carried out as a requirement for completing the program of Eramus Mundus Master Course – Joint European Master in Environmental Studies (JEMES). The research was conducted from February to June 2013.

The research topic was chosen based on the researcher’s interest in environmental regulation in Indonesia. With the growing concern of NGOs towards the specific governmental program of PROPER, and the lack of studies in this area, the researcher felt that a study in relation to stakeholder participation in the PROPER program could be of both scientific interest and policy relevance.

Background information was collected to find out the nature of the PROPER program, and a literature review of previous studies in stakeholder participation was performed. This step provided a foundation on which to build a suitable conceptual framework for assessing the implementation of stakeholder participation in the PROPER program. Based on the established framework, fieldwork was carried out in April and May 2013 in Jakarta Province and West Java Province of Indonesia. Key informants from diverse stakeholder groups were identified and thirty personal interviews were conducted. Afterwards, data analysis and report writing were completed.

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Acknowledgement

First of all, I am grateful to The Almighty God for establishing me to finish this report and complete this master study. I would like to express my gratitude to my supervisor Aili Pyhälä for her guidance, input and encouragement throughout the process of carrying out this study. I would like to thank Andrew Jamison as my co-supervisor for his valuable input to this report. I take this opportunity to extend my gratitude to Martin Lehman as JEMES Coordinator and Gara Villalba as Local JEMES Coordinator and all JEMES professors in Aalborg University, Technische Universität Hamburg-Harburg and Universitat Autònoma de Barcelona for their guidance. I would like to thank all of interviewees who have taken their time to help and provide valuable information.

I wish to express my sincere thanks to all JEMES fellows that have been around and made happy memories during the master program. Thanks to my mother and all of my family for their love and support. To all parties who have helped and supported during the process, thank you for everything.

The research project that was part of Eramus Mundus Master Course – Joint European Master in Environmental Studies (JEMES) funded by European Commission through Erasmus Mundus Scholarship Grant.

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Abstract

Until recently, Indonesia used the common “command-and-control” policy approach to regulate business activities in relation to environmental protection. Indonesia’s PROPER program is the first developed incentive-based monitoring system of companies’ environmental performance through public disclosure of companies’ performance rating at the national level. Already adopted in many other developing countries, one of its keys to supposed effectiveness is that it incorporates stakeholder participation into the mechanism. However, to date, no study has been undertaken to evaluate the participatory process. This study aims to fill this gap by assessing the implementation of stakeholder participation in the PROPER program and investigating stakeholders’ perceptions towards the program. The study identifies current levels of stakeholder participation and shortcomings in the process, and suggests ways to improve the PROPER program through the reinforcement of stakeholder participation.

Keywords: PROPER, public participation, environmental regulation, environmental performance rating, performance disclosure, Indonesia

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Table of Contents

Preface........................................................................................................................................ ii

Acknowledgement ................................................................................................................... iii

Abstract ..................................................................................................................................... iv

Table of Contents ....................................................................................................................... v

List of Tables ............................................................................................................................ vi

List of Figures ........................................................................................................................... vi

1. Introduction ........................................................................................................................ 1

2. Theoretical Framework ....................................................................................................... 2 2.1 History of Corporate Environmental Responsibility ............................................... 2

2.2 Stakeholder Participation in Environmental Management ...................................... 3

2.3 Typology of Stakeholder Participation .................................................................... 4 2.4 Evaluation Framework of Stakeholder Participation ............................................... 6

2.5 Requirements of Stakeholder Participation ............................................................. 8

2.6 Research Objectives ................................................................................................. 8 3. The case of PROPER .......................................................................................................... 9

3.1 Development of PROPER........................................................................................ 9 3.2 PROPER Mechanism ............................................................................................. 11 3.3 PROPER Outcomes ............................................................................................... 14 3.4 PROPER Stakeholders ........................................................................................... 15 3.5 Stakeholder Participation in PROPER ................................................................... 15

4. Methods ............................................................................................................................ 18

4.1 Data Collection ...................................................................................................... 18 4.2 Data Analysis ......................................................................................................... 20 4.3 Evaluation Framework for Stakeholder Participation Assessment in PROPER ... 20

4.4 Scope of the Study ................................................................................................. 20 5. Results .............................................................................................................................. 21

5.1 Implementation of Stakeholder Participation in PROPER .................................... 21

5.2 Perceptions and Expectations of PROPER ............................................................ 26

5.3 Perceptions of Stakeholder Participation in PROPER ........................................... 33

5.4 Challenges in Implementing Stakeholder Participation in PROPER .................... 35

6. Discussion ......................................................................................................................... 39

6.1 Meeting An Appropriate Level of Participation .................................................... 39

6.2 Strengthening Stakeholder Participation in PROPER ........................................... 39

6.3 Stakeholder Participation as A Tool to Improve PROPER ................................... 41

7. Conclusion ........................................................................................................................ 44

8. References ........................................................................................................................ 46

Appendix A. List of Informants ............................................................................................... 50 Appendix B. Profile of Interviewed Institutions/ Persons/ Local community ......................... 52

Appendix C. Interview Questions ............................................................................................ 56

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List of Tables

Table 1. Levels of Participation and Participation Techniques ................................................ 6

Table 2. Guidance for Selecting Appropriate Level of Stakeholder Participation ................... 6

Table 3. PROPER Color Rating .............................................................................................. 13

Table 4. Criteria for Evaluation of Stakeholder Participation ............................................... 20

Table 5. Participation Techniques Used and The Level of Stakeholder Participation in PROPER .................................................................................................................................. 20

Table 6. Evaluation of stakeholder participation in the PROPER program, 2011 ................. 25

Table 7. List of Informants ..................................................................................................... 50

Table 8. Profile of Interviewed Institutions/ Persons/ Local Community .............................. 52

List of Figures

Figure 1. Wheel of Participation ................................................................................................ 5

Figure 2. The Number of Participating Companies in PROPER from 2002-2012 ................ 14

Figure 3. Public Complaint Mechanism ................................................................................. 17

Figure 4. Map of Field work Location ..................................................................................... 19

Figure 5. Process of Stakeholder Participation in PROPER in 2011 ....................................... 22

Inez Silvy Yoanita Fitri / Joint European Master in Environmental Studies (2013) 1

1. Introduction Tietenberg (1998) suggested existing three types of environmental policy. “Command-and-control” approach is the “first wave”, market-based-instrument is the “second wave” and public disclosure is the “third wave”. Public disclosure refers to the provision of information regarding company activities and environmental performance to the public, including to consumers, government, financial institutions, and societies (Institute for Global Environmental Strategies 2010). Based on this information, relevant stakeholders can respond and provide feedback in order to influence company activities to be more environmentally friendly. These feedbacks are interpreted as incentives both for companies performing environmentally well, as well as companies performing poorly. Dissemination of corporate environmental performance is relevant to stakeholder participation in the form of provision of environmental information (OECD 2004). Environmental problems are often multifaceted, facing high uncertainty and influencing multiple stakeholders. Therefore, environmental decisions should also be made flexible and taken through transparent processes that include related stakeholders to consider options based on comprehensive information and values. Stakeholder participation is regarded as key to obtaining sound environmental decisions (Reed 2008). Beierle (2002) did a study comprised of 239 published case studies of environmental decision-making through stakeholder participation taken place in the U.S. It was found out that in most cases, stakeholder participation provides comprehensive information hence enhancing the quality of the decision made. On the other hand, there are concerns that the benefit of participation is not always necessarily obtained when the process is not going well. For instance, participants may sense that they receive only little compensation for their participation, or that they have limited power and capacity to affect decisions that impact upon themselves (Burton et al. 2004). Following difficulties in regulating environmental performance of companies through “command-and-control” policy, Indonesia has developed a complimentary policy of environmental performance rating of companies (Afsah and Vincent 1997). The PROPER program, the alternative policy implemented in Indonesia, enables the government to mandate companies to report their environmental performance to the PROPER team, to be rated and disseminated publicly. Based on disclosed information, relevant stakeholders can respond and provide feedback in order to influence company activities to be more environmentally friendly (Institute for Global Environmental Strategies 2010). For instance, companies concerned about their reputation are incentivized by stakeholders, thus encourage them to improve their environmental performance, as opposed to being pushed by a “command-and-control” policy framework (Afsah et al. 1995). Meanwhile, poor performers can also be identified and forced to undergo law enforcement. PROPER incorporates instruments of public disclosure of companies’ performance and stakeholder participation. Public disclosure promotes stakeholder participation in environmental management through dissemination of environmental information of companies to the public. It facilitates stakeholders to participate in encouraging companies to be more sustainable (Wang et al. 2004). The disseminated information of companies’ rating is established through a decision-making process conducted by government. Stakeholder participation, in turn, may support decision-making processes in yielding legitimate and high quality decisions (Dietz and Stern 2008).

2 Inez Silvy Yoanita Fitri / Joint European Master in Environmental Studies (2013)

This thesis examines to what extent stakeholder participation is implemented in an environmental performance rating program of companies. In this research, PROPER was selected as a case study (Yin, 2003) for assessing stakeholder participation in the decision-making process of environmental performance rating of companies. The PROPER case study is an interesting one, because it is a unique mechanism for pollution control strategies using public disclosure. It is also an extreme case in that PROPER is regarded as the first major program of corporate environmental information disclosure among developing countries (Lopez et al. 2004). Following the success of PROPER, the program has been imitated by several other countries. Philippines’ EcoWatch was launched in 1996 by adapting PROPER (Tietenberg 1998), and similar programs have sprung up in several other Asian countries, including Green Watch in China, and Environmental Rating program in India (Institute for Global Environmental Strategies 2010). Other developing countries that are also applying this strategy include Thailand, Bangladesh, Mexico, Colombia and Papua New Guinea (Kathuria 2006). Stakeholder participation is one of the principles exercised in PROPER. In wide literatures, stakeholder participation has been claimed to be beneficial for decision-making processes in relation to better outcomes and engaging stakeholders in environmental management (Richards et al. 2004). However, to date, no study has been undertaken to evaluate the participatory process implemented in the PROPER program. This study aims to fill this gap by assessing the implementation of stakeholder participation in the PROPER program and investigating stakeholders’ perceptions towards the program. The study identifies current levels of stakeholder participation and shortcomings in the process, and suggests ways to improve the PROPER program through the reinforcement of stakeholder participation.

2. Theoretical Framework This section presents first a historical review of corporate responsibility, focusing particularly on environmental performance of companies. It then presents a conceptual background on stakeholder participation, as well as the research aims and objectives.

2.1 History of Corporate Environmental Responsibility

In the 1970s and 1980s, governments in industrialized countries started to pay more attention to environmental protection by establishing national level Environment Ministries, and supporting the growth of environmental NGOs. The increasing environmental problems due to industrial development awakened governments and industry to take action in environmental management. Environmental responsibility of business activities started to develop in the 1990s. Strategies of minimizing environmental impacts were integrated into all aspects of business activities, including production activities and management, all the way to marketing, in order to fulfill stakeholders’ demand of environmentally-friendly business. Strategy-related production activities started with the transformation of end-of-pipe pollution abatement to pollution prevention principles. The environmental management system approach was pioneered by the establishment of The British Standard, BS 7750 “Specification of Environmental Management Systems” in 1992 and the European Union (EU) regulation for “Eco-management and Audit Scheme” (EMAS) was launched in 1993.


Moreover, the original version of ISO 14001 as the first international environmental standard was issued in 1996. Meanwhile, public disclosure (also referred to as environmental reporting) was started voluntarily in the 1990s by a few multinational and mega-companies like Monsanto from the U.S. and Norwegian Hydro, as part of annual financial reports. Following this trend, in the first decade of the new millennium, the United Nations Environmental Program (UNEP) began to globally promote and encourage the cleaner production concept. Today, public disclosure has evolved into integrated sustainability reporting that includes financial, environmental and/or social issues in the company (Kørnøv et al. 2007). In Indonesia, the 1980s witnessed the highest development rate of industrial growth, accompanied by increased environmental damages resulting from industrial activities. Government efforts to regulate industry related to environmental protection through the broadly used command--and-control approach was proving to be unsuccessful. Therefore, in 1995, the PROPER program was established. The idea was to mandate companies to report their environmental performance and then disclose this information publicly through the PROPER program. Through disseminated information, more actors would be able to be involved in “punishing” polluters. Meanwhile, PROPER would facilitate those companies with good performance to get market advantage (Afsah and Vincent 1997). PROPER was started as “Clean Water Program”, focusing on monitoring and minimizing wastewater effluent of companies. Nowadays, PROPER has been developed to encourage companies to comply with environmental laws as well as accomplish environmental excellence through the practice of sustainable development principle in the business activity and carrying out business ethically through community development program (Reliantoro 2012). In Indonesia’s environmental law, in the 2009 Environmental Protection and Management Act Nr. 32, the obligation of business activities towards environmental protection and management is stated in Article 68:

“Everybody undertaking business and/or activity shall be obliged to: a) provide information related to environmental protection and management truthfully, transparently and punctually; b) preserve the sustainability of environmental functions; and c) abide by the provision on the quality standard of environment and/or standard criteria for environmental damage.”

2.2 Stakeholder Participation in Environmental Management Stakeholders are defined as parties that can influence or be influenced by a decision (Freeman 1984). Stakeholder participation, in turn, is defined as an individual or collective activity of stakeholders taking part actively in influencing a decision that can have impact on them (Wilcox 1994; Reed 2008). The focus here on stakeholder instead of public participation is based on a study by Reed (2008). The actual practice of stakeholder participation leads to the empowerment of stakeholders, thereby also increasing their capacity to be actively involved (Richards et al. 2004). According to Dietz and Stern (2008), the aim of participation is to increase the quality, legitimacy, and capacity of environmental decisions. According to Dietz and Stern (2008), high quality decision-making requires that the decision in question takes into account all relevant information and considerations from all affected parties, and is produced based on supreme knowledge and relevant methods, which in turn can a) lead to useful action and b)


anticipate possible effects. Legitimacy they define as a process that is considered as unbiased, lawful and proficient by involved parties. In order to improve legitimacy, stakeholder participation can be used to achieve public acceptance of the decision. This in turn reduces possible conflicts and enhances trust between parties. Capacity, in turn, indicates that the participants are: a) educated with more information regarding the related issue, b) more skilful to engage in the participation process, and c) building mutual trust (ibid.). The impetus of participatory processes comes from broader global processes ranging from top-down drivers, including global conventions such as the Rio Declaration (signed at the United Nations Conference on Environment and Development in 1992) and the 1998 Aarhus Convention of the United Nations Economic Commission for Europe (Wang et al. 2004), as well as bottom-up drivers such as public protests and demonstrations. In environmental decision-making, participation is utilized as a tool to capture public opinion (Richards et al. 2004). The tenth principle of the Rio Declaration stated that environmental problems should be solved through participation of society, and governments should facilitate stakeholder participation through providing access to public information. In the Aarhus Convention, it was established that participation in the making of environmental decisions has been recognized as a democratic right. This principle is increasingly being adopted by many environmental agencies (Reed 2008). The public have the right to get information and be involved in environmental decision-making to assure transparency and gain benefits from the outcomes (Lostarnau et al. 2011).

In Indonesia’s environmental law, in the 2009 Environmental Protection and Management Act Nr. 32, participation is recognized in Article 2 point (k), that participation is included in the basic principles of Environmental Protection and Management. In article 65 point (b), the Act states:

“Everybody shall be entitled to environmental education, information access, participation access and justice access in fulfilling the right to proper and healthy environment.”

In relation to society’s role to participate in Environmental Protection and Management, it is stated in Article 70, that society has equal rights and opportunity to participate actively in environmental management and protection through social control, and/or submitting suggestions, opinions, recommendations, objections, complaints, information, or reporting. Moreover, the Act states that society’s role is to: generating awareness in environmental protection and management; enhancing independence, capability of communities and partnership; develop capability and pioneer of communities; develop emergency response of communities to social control; and develop and preserve local culture and wisdom in the conservation of environmental functions.

2.3 Typology of Stakeholder Participation

Stakeholder participation can be defined as performing consultation and including public opinion in the making of an agenda, policy or decision of an agency with respective function (Rowe et al., 2004). According to Arnstein (1969), participation is the distribution of power to society to influence decisions. Without public empowerment, the public will not be able to take active involvement in order to influence a policy or decision that can affect them (Wilcox 1994; Reed 2008).


There are many typologies of stakeholder participation suggested by scholars (e.g. Arnstein 1969; Biggs 1989; Pretty 1995; Davidson 1998; Farrington 1998; Goetz and Gaventa, 2001; Lawrence, 2006). The appropriate level of participation is influenced by the objectives of the project and the competency of stakeholders to affect the decision-making process. This concept is aligned with Davidson’s (1998) "Wheel of Participation" approach.

The “Wheel of Participation” is divided into four levels of participation (see Figure 1) which are: information, consultation, participation and empowerment. Depending on the kind of information published and how it is disseminated, information is divided into: a) minimal communication, when the decision does not involve citizens and is then disseminated publicly; b) limited information, when published information is determined by the council, and; c) high quality information, when published information includes what the citizen wants to know about. Limited consultation, customer care and genuine consultation constitutes the wheel segment of consultation. Limited consultation is when the public is responsible for giving opinion based on limited information. Customer care takes place when the public is facilitated to provide input for participation. Genuine consultation involves the council engaging the public in discussion. The participation segment consists of: a) effective advisory body, when public opinion is included into the decision-making process b) partnership, when solutions are decided through cooperation with society, and c) limited decentralized decision-making, which enables society to decide on some problems. The fourth segment, empowerment, comprises delegated control, independent control, and entrusted control. This level is related to the power of society in the decision-making process, whether it is partially delegated, facilitated by the council, or given up to society.

Figure 1. Wheel of Participation (Davidson 1998)

Some common obstacles in the accomplishment of higher levels of participation include the building of sufficient knowledge in society for it to be competent enough to effectively participate, and complexity involved in forming a citizen council that is representative and liable. In Davidson’s Wheel of Participation, each level of stakeholder participation is manifested through different tools and participation techniques, examples of which are listed below in Table 1.


Table 1. Levels of Participation and Participation Techniques

Level Participation technique

Information - Minimal communication Public notices - Limited information Press release, newsletter, campaigns - High-quality information Leaflet

Consultation - Limited consultation Public meeting, survey - Customer care Comment cards, one on one interviews - Genuine consultation Citizen panels, district circles, focus groups,

Opinionmeter, user panels, stakeholder groups Participation

- Effective advisory body Citizens’ juries - Partnership Co-option, Stakeholder groups, Design game - Limited decentralized decision making

Empowerment - Delegated control - Independent control - Entrusted control

Application of participation techniques with political support to delegate power

Source: Davidson (1998) According to Davidson (1998), the essential objective of participation will not be achieved when an inappropriate level of participation is used. The OECD (2004) and Blackstock et al. (2007) provide helpful guidance for deciding appropriate levels of stakeholder participation based on necessity, stakeholder interest and capacity. The conditions are outlined below in Table 2.

Table 2. Guidance for Selecting Appropriate Level of Stakeholder Participation

Level of participation Condition

Inform when A decision has already taken, public needs to acknowledge the consequence of a process, acceptance of a resolution is necessary, prepare society for involvement, crisis situation where immediate response is needed, it is involve insignificant subject.

Consult when Information gathered to be considered in the decision-making process.

Participate when Information exchange is necessary, society has interest in the subject and would be influenced by the result, information will be taken into consideration for final outcome and influencing decision is still possible.

Delegate when Society have adequate capacity to involve in shaping policy that will give impact to society, there is opportunity in terms of sufficient time for the participation process.

Adapted from: OECD (2004) and Blackstock et al. (2007)

2.4 Evaluation Framework of Stakeholder Participation Many scholars have already developed evaluation criteria of participation processes (e.g. Rosener 1981; Blackstock et al. 2007; De Stefano et al. 2010). The first step in the evaluation of stakeholder participation is selecting the evaluation criteria. Blackstock et al. (2007) presented evaluation criteria which were widely used by scholars. Reed (2008) suggested that what is mandatory in achieving higher quality decisions through stakeholder


participation is to ensure the quality of the process itself. Six of the most relevant evaluation criteria are included in this study, and selected in relation to the importance of the activity that should be present in order to obtain successful stakeholder participation throughout the process. These criteria are as follows.

a. Develop shared goals

The criterion of develop shared goals refers to whether any attempts were made to have an agreement with society of the goals about the participation process. In the participation process, a better outcome can be achieved when clear goals which accommodate the interests of all participants are agreed upon. The goals must be shared among participants so that they have the same level of understanding, hence increasing the probability of a decision made by the agency to be accepted publicly (Hibbing and Theiss-Moore 2001).

b. Capacity building

Simply providing the opportunity to participate is not enough to actually engage participants (Weber and Christopherson 2002); rather, it is essential to ensure that all stakeholders have equal access and capacity to participate. When the potential participants lack adequate technical competency, capacity building of those participants is needed to attain a proper participation process (Richards et al., 2004). The capacity building criterion refers to the presence of efforts of the agency conducting the participation process in building relations, and the competency of society to be involved in the participation process.

c. Conflict resolution

Conflict is unavoidable in the process of obtaining an outcome based on different points of view and differing interests among participants. Therefore, it is important to have already established a sound plan and methodology for conflict management in order to achieve a smooth participation process (Burton et al., 2004). The conflict resolution criterion refers to the presence of conflict between society and the agency conducting the participation process, and how it possible conflicts are solved.

d. Transparency

The criterion of transparency refers to whether the decision-making process is transparent and acknowledged by society. Participation that provides transparency in the process can increase trust of the public in the environmental decision, and can eventually encourage the public to be more active participants (Dietz and Stern 2008).

e. Representability

Representability implies to how the advisory board represents society and how the public perceives the legitimacy of this representation. O'Meara et al. (2004) stressed that it is important that the board or council represents the community in order to shape the outcome of participation to yield what is community-desired.

f. Recognized impacts

The recognized impacts criterion refers to whether changes due to impacts of the participatory process are recognized and acknowledged by society. Especially when the work required in participating is demanding, it is in the nature of the individual to be motivated to participate if there is a perceived incentive or benefit (Davies et al. 2004).


2.5 Requirements of Stakeholder Participation

Stakeholder participation needs careful planning. According to King and Hyder Consulting (1999), there are three important steps required in designing a participation process that enables fruitful participation. Identifying and determining important stakeholders needs to be the first step. Second, suitable methods of participation need to be selected in order to achieve a desired level of participation. When deciding upon the techniques of participation, additional factors need to be considered, including the identification of problems that may occur during the process, selecting methods relevant to solving the identified problems, and monitoring accomplishment. The third stage is to evaluate the process and do iteration to assess if the methods need to be changed in order to solve the problem and to improve the process. In practice, the decision-making process should be designed to incorporate participation from the planning stage, be transparent throughout the whole process, and maintain good communication throughout.

Based on Dietz and Stern (2008), additional conditions need to be fulfilled in order to achieve successful participation. Firstly, participation should be fully implemented in a decision-making process with involvement of all actors instead of through normative procedures only. When the decision is carried out by a governmental body, successful stakeholder participation requires that there is: a) a clear objective; b) clear communication to inform about the activities, and; c) sufficient budget, human resources, and time for making decisions and incorporating lessons learned from previous experience. The timing in stakeholder participation process is essential. The duration of a stakeholder participation process should consider whether it is sufficient to gain and process all relevant information and building trust among participants. Engaging stakeholders in the early stage of participation process is the most recommended way (ibid.).

Furthermore, the role of stakeholder participation in a decision-making process needs to be clarified by the agency in charge and explained to participants in order to encourage participation of all parties based on incentives that they are to receive from the outcome and from the participation process itself. Different understandings among participants may raise conflict and mistrust (Dietz and Stern 2008), and should therefore also be prepared for and avoided whenever possible.

2.6 Research Objectives

This research focuses on the assessment of stakeholder participation in the PROPER program. To date, the evaluation of stakeholder participation in PROPER is still lacking. This study aims to find out whether there are any gaps or flaws in the current system of public participation in the PROPER program, and if so, how improved participation can be used as a tool to enhance the PROPER program. The main research question was developed as follows.

How can the PROPER program be improved through reinforcement of stakeholder participation? Several sub-research questions are raised in order to achieve the answer to the main research question. These are: • How is stakeholder participation currently implemented in PROPER? • How do different stakeholders perceive PROPER, and what are their expectations of it? • How do different stakeholders perceive stakeholder participation in PROPER?


• What factors hinder effective stakeholder participation in PROPER? • What could be done to improve stakeholder participation in PROPER?

In order to answer the main research question, the current implementation of stakeholder participation in the PROPER program must be investigated. This will be addressed in the first sub-question. The second sub-question examines how current stakeholders in PROPER, including NGOs, companies, communities, and PROPER board members themselves view the current process of stakeholder participation of PROPER. The third sub-question investigates whether there are any obstacles to smooth and effective stakeholder participation in PROPER. Based on this, the last sub-question will cover feasible strategies to improve stakeholder participation in PROPER. Concerning the aim of stakeholder participation and the perception of stakeholders of the PROPER program, the main research question can then be answered.

The thesis project will have as an expected result an evaluation of, and conclusion about, stakeholder participation in the case of PROPER, Indonesia’s environmental performance rating program. The evaluation result will be recommended as a foundation for future improvement of the program. Through enhanced stakeholder participation implementation, the ultimate objective is to find out ways on improving PROPER thus making the program more accessible for society to actively participate in influencing companies to do business in a more environmentally friendly way. This research can be regarded as a suggestion for government to implement more effective stakeholder participation processes through PROPER.

3. The case of PROPER

PROPER (Companies’ Pollution Control, Evaluation and Rating Program) is Indonesia’s complimentary environmental regulation at the national level, created to assist in the enforcement of already existing regulation. Annually, hundreds of companies’ effluent and environmental management systems are assessed, rated, and then announced publicly through the PROPER mechanism. As a consequence, the identified non-compliant companies can be penalized. PROPER is conducted according to the 2009 Environmental Protection and Management Act Nr. 32. It includes supervision and monitoring of the compliance of companies to environmental laws and regulations, public disclosure of companies’ environmental performance, involvement of the public in environmental management activities, and accommodation of the obligation of companies in providing information regarding its environmental management.

The main objectives of the PROPER program are to: 1) increase companies’ compliance regarding environmental management; 2) increase stakeholders’ commitment to sustainability; 3) raise awareness of business actors in environmental legislation compliance; and 4) promote the “Reuse, Reduce, Recycle” principle.

3.1 Development of PROPER

The PROPER program started originally as PROPER PROKASIH (“Clean Water Program”) in 1995, as set up by BAPEDAL (Indonesia’s Environmental Impact Management Agency), with the main objective being to monitor and minimize industries’ wastewater discharge into


rivers. During its first years (1995-1998), the early development of PROPER PROKASIH focused on how the assessment of companies’ wastewater effluent could be carried out with: a) relatively simple measures; b) in a short time; and c) with low cost. The rating at the time was not aimed at representing the overall environmental performance of a company, rather, only in terms of how the company managed its wastewater. For instance, if a company did well in managing its wastewater but meanwhile disregarded its hazardous waste and air effluent, it could still be rated as a "good performer". While limited in scope, PROPER was successfully implemented as it managed to decrease water pollution levels by 40% in the period of 1995 to 1997, with 187 participating companies (Lopez, 2004). The main reason for the establishment of PROPER was that the then widely practiced "command-and-control" approach was seen as ineffective in increasing compliance of companies with regulation. The non-compliance was largely due to weak law enforcement, weak regulation, and lack of human resources to do the monitoring. It was therefore very challenging to stimulate companies to comply with regulation and to invest in building and maintaining waste treatment facilities. However, a number of lessons were learned from PROKASIH. First, according to a survey done by Afsah and Vincent (1997) of all the companies participating in PROKASIH at the time, 50% of total biochemical oxygen demand (BOD) dumped into rivers was produced by only 10% of companies. It was therefore seen that measures for pollution reduction would be more effective if focusing on a selected number of companies who contributed the most to water pollution. Second, as mentioned, the “command-and-control” approach was ineffective due to the lack of human resources to actually monitor the performance of companies. This was solved by PROPER PROKASIH by broadening the spectrum of actors who could carry out monitoring, in this case by giving more influencing power to both the market and the public. It was soon seen that it takes less time and less costs to monitor companies with this new approach rather than relying only on the old “command-and-control” approach. Information of environmental performance of companies could be disseminated to the public, shaping company public image. The public, in turn, could respond through providing further incentives and pressure (Reliantoro 2012). Despite early success, the PROPER program was frozen in 1998 due to a national political and economic crisis. The program was then reactivated again in 2002. At reactivation, the criteria for assessment were extended to include air effluent quality, management of toxic and hazardous waste, and environmental impact assessment (EIA) according to the 1999 Government Regulation Nr. 27 of Environmental Impact Assessment. Moreover, the implementation of the environmental management system, resources conservation, and community development are nowadays also incorporated in PROPER criteria. This assessment is today implemented to gain representative measures of a company's environmental performance. While certainly more comprehensive in its coverage of environmental performance, the new criteria have caused more complicated procedures in collecting data and more resources needed for monitoring and assessment, including increased time and costs, and the need for more expert analysts (PROPER 2009). In 2010, decentralization of PROPER to the provincial level was started. The objective was to increase the scope of monitoring through PROPER so that by reaching high numbers of participating companies, PROPER could contribute to significant improvements in environmental quality. In 2010-2011, the number of participating companies in PROPER reached 1000, from many sectors of industry including manufacturing, mining, oil and gas, textile, agro-industry, and service industry such as hospitals and hotels. Through decentralization, the provincial level has authority to do field verification, propose temporary


blue, red and black ratings, and propose candidates for green rating. In 2012, decentralization of PROPER was conducted in 22 provinces. By the end of 2013, the decentralization will have expanded to regencies and cities (Reliantoro 2012).

In 2011, radical changes took place in the criteria and assessment of PROPER. A criterion of assessment for potential environmental damage of mining activities was added into PROPER assessment. The criteria for beyond compliance level were also added with new criterion of assessment of biodiversity protection. The mechanism of assessment for candidates of green and gold rating was modified to be more objective, through methods of desktop studies instead of short presentations and grouping industries to be compared within the same sector. Moreover, since 2013, PROPER encourages companies to do sustainability reporting. In following years, innovative industry is expected to get higher appreciation (Reliantoro 2012).

3.2 PROPER Mechanism The PROPER Technical Team is responsible for carrying out PROPER assessment. The decision-making process in PROPER is performed by the Technical Team and ultimately by the PROPER Advisory Board. This board is responsible for proposing the rating of companies based on information provided by the technical team. The result will then be the main consideration of the Minister of Environment to decide the companies’ rating. The PROPER Advisory Board, Technical Team, and PROPER officers need to be reliable as being the source of information and performance rating of the companies that are publicly disclosed. In order to ensure credibility, PROPER Advisory Board members are composed of 8 persons representing different elements in the larger community, including academics, NGOs, mass media and government officers, as well as representative of ex-member of international community (PROPER 2009). The scope of activities of PROPER is regulated under the 2011 Ministerial Decree of Ministry of Environment Nr. 5. The PROPER program starts with the selection of participating companies, focusing on companies with high environmental impact, registered in stock exchange, and producing export-oriented products, or used by the public at large. The companies that do not participate in PROPER are monitored through regular monitoring programs. The next stage is to collect self-assessment data by reviewing self-assessment reports of companies, as well as primary data through field verification by environmental inspectors in order to validate the data through measurements at accredited laboratories. This information is presented in the form of environmental performance reports which include environmental performance evaluations in pollution control related to wastewater and air emission, and also toxic and hazardous waste management according to the 2011 Minister of Environment Decree Nr. 5. PROPER evaluation is mandatory for certain selected companies, but other companies can also voluntarily participate in PROPER (PROPER 2009). PROPER assessment is conducted through a decentralized system, in cooperation with provincial and district level officials. To ensure accountability, the assessment system of PROPER is done using a multilevel framework. Peer review is undertaken to check the environmental performance reports by the PROPER Technical Team, and then reported to First Echelons (Deputies of Ministry) in the Ministry of Environment for comments. The result is then discussed by the PROPER Advisory Board. According to the discussion, temporary rating will be assigned, and temporary environmental performance reports are disseminated to local government and participating companies, who are then able to object


and/or clarify as long as supported by valid updated data. These two stages of the disclosure system are applied in the PROPER rating process in order to assure the fairness and transparency of PROPER. The updated data will be presented for consideration to the PROPER Advisory Board, to be decided in the form of new possible ratings. After that, the Ministry of Environment checks and establishes the PROPER rating based on discussions with the PROPER Advisory Board. The final decided PROPER rating is then reported to the President of Indonesia to be agreed upon and disseminated publicly (PROPER 2009). The PROPER rating process comprises both compliance aspects and ‘beyond compliance’ aspects. Compliance aspects of companies involve evaluating whether companies already comply with the following criteria: a. Environmental documents and reporting

In carrying out any activity, companies must be equipped with environmental permits, and an environmental document such as an Environmental Impact Assessment (EIA) report and/or an Environmental Management Effort/ Environmental Monitoring Effort report, and must also comply with regulation that is reported regularly as per requirement.

b. Water pollution control A wastewater disposal permit is the required document to discharge wastewater into the environment. It regulates threshold limits of wastewater quality and quantity which should be checked at the point of compliance regularly, measured with required equipment, and tested in an accredited laboratory to ensure the compliance with the water pollution control law.

c. Air pollution control In order to meet air pollution control criteria, all emission sources must be identified and monitored. Companies are required to fulfill emission standards in terms of measured parameters, frequency of monitoring, and sampling apparatus.

d. Toxic and hazardous waste management This criterion requires a thorough toxic and hazardous waste inventory and management license for continued processing.

e. Marine pollution control Companies are obliged to have wastewater disposal permits and comply with the requirement on the permit.

f. Potential of land degradation criteria This special criterion for mining activities was established in 2011. This criterion is based on best mining practices, which includes managing land clearing, maintaining height and slope level for stability based on a feasibility study, building erosion control facilities, and a good drainage system.

PROPER is developed to encourage companies to implement green business as manifested in a so-called “green economy” (Reliantoro 2012). This includes resource efficiency, sustainable consumption and production, and internalization of environmental and social costs. Based on this, the beyond compliance aspect is evaluated according to companies’ fulfillment of the following criteria: a. Environmental management system which can influence customers and suppliers to

practice good environmental management; b. Energy efficiency that comprises four scopes of activities, which are production process

and utility system, replacement of less environmentally friendly machineries or production process, buildings and transportation;

c. Emission reduction including reductions of pollutants and greenhouse gases through usage of renewable energy and more environmentally friendly fuels;


d. Reduce, reuse, and recycle of toxic and hazardous waste; e. Reduce, reuse, and recycle of non-toxic and non-hazardous solid waste; f. Water conservation and reduction of wastewater pollution load; g. Biodiversity protection through conservation activities and building information system

of biodiversity status and company’s activities; h. Community development program that accommodates community needs. The program

should be arranged based on social mapping in order to find out detailed conditions and social networks of neighboring communities, social problems, and identification of potentially vulnerable groups. The program should be designed for the long term, with an annually updated yearly plan. The planning process should involve the community, and the program should have indicators for evaluation.

In the PROPER mechanism, companies are graded using a five-color performance rating scheme which can be easily understood by the public. The color rating was designed to be directly related to perceived reputational incentives received by the companies. The five color performance rating is elaborated in Table 3. The rating process comprises of a compliance aspect and a ‘beyond compliance’ aspect. To ensure accountability, detailed procedure of assigning PROPER color rating to the level of companies’ performance was designed by teams of experts from Australia, Canada and the World Bank (Institute for Global Environmental Strategies 2010). The colors in the rating scheme, in order of excellence, are gold, green, blue, red, and black.

Table 3. PROPER Color Rating

Color Indicator Color Specification

GOLD For business and/or activities that have consistently demonstrated environmental excellence in terms of production or service processes, conducting business ethically and responsibly towards society

GREEN For business and/or activities that have performed environmental management as required in accordance with any applicable laws

BLUE For business and/or activities that have performed environmental management as required in accordance with any applicable laws

RED For business and/or activities that have performed environmental management, however does not meet requirement stipulated in the law

BLACK

For business and/or activities that intentionally perform any act or omission that leads to pollution or environmental damage and violations of laws and regulations applicable or not carrying out administrative sanctions handed down to them

Source: Reliantoro (2012) PROPER functions as a support tool for law enforcement. The result of PROPER is followed up further by giving incentives and disincentives to companies. As a form of incentive, PROPER awards companies with good environmental performance. On the other hand, companies with poor environmental performance are given a sentence according to national law. BLACK rated companies will face law enforcement. And RED rated companies are given opportunities to improve their performance in 6 months duration. From a financial


aspect, a company's PROPER rating performance is considered as part of prospective debtor assessment by financial institutions. For instance, a bank can suspend the credits it gives to a company if the company is badly rated. Nevertheless, alongside sanctions, the government also supports companies to improve their environmental management by providing soft loans for companies to build waste treatment facilities. (PROPER 2009)

3.3 PROPER Outcomes

PROPER has been considered as a successful governmental environmental program based on the decreasing pollution levels it has helped achieve and the increasing compliance levels that participating companies have demonstrated. One indicator of success of PROPER is the increase of companies’ compliance with environmental regulation. Furthermore, each year, more and more companies are selected to participate in PROPER, helping to increase PROPER effectiveness as a supporting tool for environmental policy. The number of companies involved reached 1317 companies in 2012.

Regarding compliance levels of companies, the number was relatively high in 2002 because only a limited number of companies, most with good environmental management, participated in PROPER. In 2003-2005, the compliance levels decreased due to stricter criteria. In 2006-2007, compliance levels reached the highest (76%), and in 2008-2009 they decreased again (to 70%). Figure 2 shows the increase of PROPER participant numbers; the companies that complied with pollution control regulation reached 69% in 2012.

Figure 2. The Number of Participating Companies in PROPER from 2002-2012 Source: Indonesia. Sekretariat PROPER Kementerian Lingkungan Hidup (2012)

PROPER has been successful in reducing pollution loads to the environment in many different aspects. The pulp and paper industry managed to decrease pollution loads by a total of 2900 tons of chemical oxygen demand (COD)/year by 36 companies out of 60 companies.


The fertilizer industry managed to decrease pollution loads of wastewater by 470 tons of Ammonia/year, 550 tons of COD/year, and 57 tons total suspended solid (TSS)/year by 4 companies. Furthermore, 24 textile companies out 268 companies had decreased pollution loads by 30 tons COD/year, 9.75 tons BOD/year and 8.5 TSS/year. However, there is no data on whether these numbers were significant or not (Adnan 2009).

3.4 PROPER Stakeholders

According to PROPER (2009), various stakeholders are involved during the whole process of executing the PROPER program, including creating a detailed assessment process, assigning companies, and disclosing the result to the public. The main stakeholders of PROPER are the government, company managers, investors, suppliers, consultants and the public at large. The success of PROPER is related to how active stakeholders act in response to companies’ PROPER ratings. Stakeholder response is influenced by three aspects: credibility of PROPER Advisory Board as the responsible group in the decision-making process of PROPER rating; effectiveness of the applied communication strategy, and; synergy with other compliance programs through giving incentives and disincentives for companies according to PROPER functions as a supporting environmental policy tool. The public disclosure process is implemented through mass media and internet. It is aimed at obtaining stakeholder responses regarding the company performance ratings. The PROPER results are also disseminated to local governments, financial institutions, and announced in an annual event of Environmental Award Night (PROPER 2009).

Communities, NGOs and other society organizations are all stakeholders dealing with environmental risk that can take actions against companies that are not environmentally friendly. Influencing customers not to buy products of the company, gathering public opinion against the company through mass media, boycott, demonstration and environmental lawsuit are all commonly carried out by NGOs to force companies to perform better environmentally (Institute for Global Environmental Strategies 2010).

The PROPER program provides benefits to various stakeholders. The government utilizes PROPER as a tool to monitor and encourage improvement in companies’ environmental performance nationwide, even to the ‘beyond compliance’ criteria. Company managers can use PROPER data to improve their environmental performance, and PROPER rating to gain reputational incentive by being promoted as an environmentally friendly company. Investors can make use of PROPER information as part of prospect business assessments. Suppliers and consultants can predict the demand in environmental technology and management systems based on disclosed companies’ environmental performance through PROPER. Finally, the public at large can obtain facts to actively participate in increasing environmental quality (PROPER 2009).

3.5 Stakeholder Participation in PROPER

Even though PROPER was considered successful from year-to-year based on the already mentioned decreasing pollution levels and the increasing number of participant companies, there is another aspect that is important in assessing PROPER implementation, namely stakeholder participation. There is to date a lack of evaluation regarding stakeholder participation in PROPER implementation. Hence, little effort has been done to improve this aspect of PROPER.


Participation of society, as an important stakeholder in environmental management, is included in Indonesia’s environmental law, the 2009 Environmental Protection and Management Act Nr. 32, Article 70, that:

“(1) Community shall have the equal and broad right and opportunity to participate actively in Environmental Protection and Management.

(2) Public participation may be in the form of: a) social control; b) suggestion, opinion, recommendation, objection, complaint; and/or c) information and/or report.”

PROPER provides room for stakeholder participation in environmental management through a public complaint mechanism and via the PROPER Advisory Board. Complaints from society regarding industrial effluents are taken into account in PROPER assessment. After the complaints are verified as fact and proven that the company violated environmental regulation, it can affect the PROPER assessment of the company (Dewi 2011). The 2011 Ministerial Decree of Ministry of Environment Nr. 5, Annex III, Section B regarding assessment of BLUE, RED and BLACK rating, states in point 11 about public consultation, that:

“PROPER Advisory Board may request the PROPER Technical Team to hold a consultation to stakeholders such as NGOs, Technical Sector Agencies, Industry Associations and other parties who deemed necessary to accommodate input related to PROPER rating.”

In the Annex III, Section C regarding assessment mechanism of GREEN and GOLD rating, states in point 7 (d) related to GOLD rating candidates, that:

“PROPER Advisory Board may use other information derived from public consultation or trusted sources to give consideration to the proposal of GOLD rating candidates from PROPER Technical Team.”

As society’s role to do social monitoring is constituted by law, information based on verified public complaint is considered as major data in PROPER assessment. PROPER officials and Advisory Board have authority to lower the final rating of companies that is proven to be involved in an environmental case. PROPER program provides limited facilitation for public complaint. PROPER receives public complaint which is processed together with general public complaint to Ministry of Environment. Public complaint mechanism is regulated under the 2010 Ministerial Decree of Ministry of Environment No. 9. Through this mechanism, public is enabled to be indirectly involved in PROPER assessment by submitting general complaint of environmental case related to companies.

General procedure of processing public complaint is as follows. Public can submit complaint to Ministry of Environment, Local Environmental Management Agency, or directly to PROPER Secretariat. Complaints are then sorted as environmental complaint and non-environmental complaint. The environmental complaint then being processed by Ministry of Environment or undergo devolution to local government according to which local government issued the environmental permit of the activities. In the Ministry of Environment, public complaint is handled by Deputy Minister for Environmental Compliance. After that, the complaints undergo verification process to find out whether it is valid information or not. There are parties who submit complaints to gain personal benefit. Moreover, people can submit the complaints with invalid supporting data, such as sample of effluent of companies. These are investigated during verification stage. After the complaint is verified, it is followed up with law enforcement. Government also takes care of complaint from society in mass


media. However, the processing of complaints is prioritized according to the possible impacts of the complaints and availability of environmental investigators. The public complaint mechanism is illustrated in Figure 3.

Figure 3. Public Complaint Mechanism Source: The 2010 Ministerial Decree of Ministry of Environment Nr. 9

One of the indicators used to measure public satisfaction in PROPER is public confidence regarding companies’ performance ratings (PROPER 2009). In recent years, there have been protests from NGOs about the ratings of several companies, with claims that the ratings are unacceptable (WALHI 2012). For instance, some companies which have received environmental lawsuits have been rated by PROPER as “good performers”. This overrated PROPER rating could for instance lead to green-washing of companies that want to cover up for their poor environmental activities. Therefore, some NGOs continue to have low confidence in PROPER ratings credibility, accuracy, and implications. Based on a “Protest Letter of PROPER 2011” written by NGOs to the national government, NGOs criticized the unacceptable PROPER ratings of several companies, the lack of transparency in PROPER assessment, and weak environmental regulation as the legal framework of PROPER assessment (ICEL 2011). Based on the occurrence of these NGO protests, reinforcement of stakeholder participation might be beneficial to improve public acceptance of PROPER ratings and the program itself. Therefore, evaluation of stakeholder participation is needed to find out to what extent there is implementation of stakeholder participation in the program and to investigate ways to improve it.


4. Methods In this section, methods of data collection and analysis are described. Moreover, the evaluation framework for stakeholder participation assessment is presented. A qualitative approach was applied in order to have depth in understanding of the PROPER program and its procedures. The research conducted is one of ex post facto; in other words, the results and findings of events analyzed here have already taken place.

4.1 Data Collection

The first step of the study was to gather information about PROPER and undertake a literature review in association with the objective of research, namely public participation. Articles related to PROPER in online media published between 2010 and 2012 were also used for obtaining more up-to-date information. The next step after the literature review involved preparing and undertaking the fieldwork, which was carried out over a period of two months in West Java Province, Indonesia. Purposive sampling was done to decide on the informants and area of study in order to address the research objective (Bryman 2008). According to Bellamy et al. (2001), evaluation of participatory processes should be done based on data gathered from various stakeholders in order to obtain diverse standpoints of interest and expectation. Thus, rather than aiming to obtain maximum numbers of informants, this research intentionally prioritized informant diversity over informant numbers; in other words, the research sought to get breadth of stakeholder representation rather than quantity of total number of informants. Key informants were selected based on their knowledge of, and involvement in, PROPER, and they include representatives from several different institutions and communities in order to gather different points of view from as many important stakeholders as possible. Snowball sampling was used in order to identify key informants. The main informants identified in the early stage were PROPER officials, PROPER Advisory Board, Ministry of Environment, and several NGOs. The contacts to other NGOs were obtained from NGOs who were reported as the protest initiators to PROPER according to collected news articles. Furthermore, NGOs provided contacts to suggested local communities located near a company that achieved GOLD or GREEN rating in 2011 and 2012, and also reachable from the researcher’s location. PROPER officials gave links to PROPER Advisory Board members and academics who had been involved in PROPER assessments and environmental management in general. The contacts with companies were established through formal procedure to each company. The map of the industrial area covered in this report is presented in Figure 4.


Figure 4. Map of Field work Location

Interviews were done with representatives of stakeholders related to PROPER, including government, community, academics, and industry. PROPER officials, an officer of the Ministry of Environment, and the Local Environmental Management Agency represent the national government. Two members of PROPER Advisory Board were included as informants. Nine NGOs and the local communities adjacent to four geothermal companies in West Java Province were selected as further informants in this study. The NGOs interviewed are all organizations that have concern in environmental issues and social issues in general. The detailed profile of interviewed NGOs is presented in Appendix C. Three lecturers who are actively involved in environmental management efforts by government, industry and society were interviewed for obtaining a wider and more scientific perspective of PROPER. One mining company and two geothermal companies were interviewed in order to get insights from the company perspective. The location of field work related to industry and local communities was decided in order to get: a) information from companies who were awarded GOLD and GREEN rating in 2011, and the b) company-adjacent local community insights, in this case from communities located in West Java Province in Bandung Regency. Thus, the representatives from The Provincial Environmental Management Agency as executor of PROPER onsite also as representative of local governmental agency were also interviewed. All in all, 30 informants were interviewed, together representing a wide range of stakeholder interests. The list and short profile of informants are presented in Appendix A and B. Data collection was done using semi-structured interviews in Indonesian. Interview questions related to the research objective were outlined beforehand, but the questions were answered according to the interviewee and the interviewer could follow up with unplanned interview questions (Bryman 2008). Direct face-to-face interviews were carried out with 24 informants, and phone interviews were conducted with the remaining 6 informants. Twenty-five of the interviews were audio-recorded (there were exceptions due to technical problems), and all were noted on paper and later translated and transcribed. The lists of interview questions are presented in Appendix C.


4.2 Data Analysis

The result in this study is presented in four sub-sections. The first section covers the identification of the level of public participation implemented based on Davidson’s “Wheel of Participation” (1998). The analysis was applied to the different participation techniques used in the PROPER program. Moreover, the implementation of stakeholder participation is analyzed based on the evaluation framework derived from the study by Blackstock et al. (2007), as described above in Section 2.4. The second and third sections present stakeholder perceptions of PROPER – both as a program and in terms of the stakeholder participation in the program. Obstacles in implementing stakeholder participation in the PROPER program are identified and presented in the fourth section and further explored. The discussion part in this report elaborates on appropriate level of participation in the PROPER program and efforts that can be taken for better realization of public participation in the program. Finally, the main research question of utilizing stakeholder participation as a tool to improve the PROPER program is discussed.

4.3 Evaluation Framework for Stakeholder Participation Assessment in PROPER

The evaluation framework for this study is developed based on the evaluation used by Blackstock et al. (2007). The criteria assessed in the evaluation framework of stakeholder participation in the PROPER program are listed below in Table 4.

Table 4. Criteria for Evaluation of Stakeholder Participation

Criteria Description Develop shared goals

Referring to presence of attempt to set up agreement with society of goals about the participation process in the PROPER program

Capacity building

Referring to presence of effort of PROPER officials in building relations and competency of society as of participants to be involved in the participation process in the PROPER program

Conflict resolution Referring to presence of conflict between society and PROPER officials (e.g. public protest of PROPER ratings)and how it was solved in the participation process

Transparency

Referring to which decision-making process in the PROPER program was acknowledged by society

Representability Referring to how was the PROPER Advisory Board representing society and how public perceive the legitimacy of the representation

Recognized impacts

Referring to whether changes due to impacts of the participatory process in the PROPER program was recognized by society

Adapted from: Blackstock (2007)

4.4 Scope of the Study

In this study, the subject of assessment of stakeholder participation in the PROPER program is limited to government, academics, industry, local communities and NGOs. The main


subject in the evaluation framework of stakeholder participation would be local communities and NGO, concerning that local communities and NGOs are potential actors to be involved in environmental management with little opportunity to participate in the PROPER program. The planning and evaluation stages of PROPER were out of scope of this research. Also, the purpose of the evaluation was not intended to judge whether the participation has to date been successful or not. Rather, the aim of the evaluation was to investigate any possible actions relevant to improve the PROPER program through practicing more ideal and effective participation processes.

5. Results

5.1 Implementation of Stakeholder Participation in PROPER

The implementation of stakeholder participation in the PROPER program was identified through participation techniques applied in the program. According to Davidson’s “Wheel of Participation” (1998), the consultation level was identified when the PROPER Advisory Board did public consultation to several NGOs in 2011 and included information from interviews with communities in assessing GOLD rating candidates. However, public consultation was not conducted in 2012 due to limited time. Inviting NGOs to discuss about GREEN and GOLD rating candidates can be viewed as limited consultation through a public meeting. According to the 2011 Ministerial Decree of Ministry of Environment Nr. 5, Annex III, Section B in point 11 about public consultation, the public consultation is not mandatory, but upon request of the PROPER Advisory Board. Meanwhile, interviews with community members can be categorized as customer care, as society was enabled to give input and affect the decision-making process. The scope of the interviews was limited only to local communities adjacent to GOLD rated company candidates. Meanwhile, PROPER ratings were affected by verified public complaint. When the public purposely submitted complaints in order to affect PROPER ratings, these were included in the public participation. Internet and mass media were utilized to inform the public. This indicates the informing level of participation. Participation techniques and the level of stakeholder participation in the PROPER program are summarized in Table 5.

Table 5. Participation Techniques Used and

The Level of Stakeholder Participation in PROPER

Stages in PROPER Mechanism Participation techniques Level of Participation

Selection of polluters Data collection Data analysis Data verification Assessment of BLUE, RED and BLACK rating

Assessment of GREEN and GOLD rating

Limited public consultation Direct interview

Consultation: Limited consultation Customer care

Public disclosure of environmental performance rating

Dissemination of information via internet and media

Information: Limited information


Stakeholder participation in PROPER was implemented in the decision-making process of rating companies’ performance. It was aimed to include relevant stakeholders in order to gather information about actual conditions of environmental performance of companies. After the PROPER results were decided, stakeholder participation included dissemination of information regarding PROPER ratings of participating companies. The stakeholder participation in the PROPER assessment is depicted in Figure 5.

Figure 5. Process of Stakeholder Participation in PROPER in 2011 Results of evaluation of stakeholder participation in the PROPER program according to the evaluation framework adapted from the study by Blackstock et al. (2007) are presented as follows. Regarding the first evaluation criterion of developing shared goals, it was confirmed by all representatives of NGOs and PROPER officials that there is no discussion about shared goals of PROPER to NGOs or community. Furthermore, according to interviews with all NGOs and PROPER officials representatives, capacity building for the public or NGOs to participate in PROPER has never been done. Representatives of PROPER officials and PROPER Advisory Board mentioned that capacity building of PROPER has been done only to companies and local government. As for conflict resolution, the NGOs protests about PROPER results were not considered as a “conflict” by the government, as stated by representatives of PROPER Advisory Board and PROPER officials. Rather, these were


perceived as common reactions from NGOs due to their extreme standpoint about environmental protection, opposition to companies, demanding for direct punishment for violators and also mandate of NGOs to be critical to the government. The protest was responded to by the Ministry of Environment through mass media and an official letter containing an explanation that the PROPER assessment was already done according to procedure. There was no other attempt in equating perceptions and expectations of NGOs to PROPER. The government considered that the protest could be positive as giving pressure to companies to be more environmentally friendly. It also pushed government to pay more attention to the neighboring communities of industrial areas. With regard to transparency, seven NGOs representatives perceived that the transparency of information related to PROPER should be increased so that the public can know what indicates how a company gets a specific rating. The dissemination of information through the website is not seen by them as effective to inform the public, especially local communities with very limited access to internet. The NGO representatives argued that neighboring communities, especially those who receive direct negative impacts of the company, have the right to access information as much as possible. This issue was acknowledged by the government, as stated by PROPER officials and one of PROPER Advisory Board representatives interviewed, who perceived that transparency in PROPER had been realized by dissemination of PROPER assessment criteria, assessment mechanism, and PROPER rating of participating companies through internet and mass media. However, there is no disclosure of detailed assessment of PROPER. There is also no introduction of PROPER to the neighboring communities around industries. One of the PROPER officials representatives claimed that awareness-raising to local communities was not necessary. There are currently no efforts made to provide information through other media that is more easily accessible. In addition, there were not enough resources to do direct awareness-raising to society. PROPER officials also argued that dissemination of information through the PROPER website might not be effective, but it is the optimum way considering the time constraint. Four government representatives interviewed clarified the reason of not announcing the detailed assessment, which according to them contains too much data (of more than 1000 companies), so the question is one of practicality. The ratings that are disseminated through color coding are intended to simplify the rating system so that the public can easily understand, instead of publish the technical data such as BOD or COD levels of wastewater of companies. According to them, such technical data is not understood by the public. Furthermore, published technical data may cause possibility of misuse. Nevertheless, one PROPER official representative pointed out that the public can ask for detailed explanation of PROPER assessments by fulfilling certain requirement. Once it is announced, PROPER information becomes public information. One of the company representatives interviewed did not object to the idea of making public detailed PROPER assessments, although these should consider confidentiality of company data. However, in practice, there was experience of one NGO asking for detailed information of a PROPER assessment of a company and the information was not given (Dewi 2011). In order to increase transparency, one PROPER official representative stated that the candidates of participating companies in PROPER in 2012/2013 will be disseminated in the PROPER website. Concerning representability, the PROPER Advisory Board is in charge of making the final decision on the rating to be proposed to the Ministry of Environment. Its members are representative of several sectors, with two members from the Ministry of Environment, two members from academia, two members of NGOs, one journalist, and an ex-activist from the


international community. In relation to PROPER Advisory Board, four of NGOs representatives were not aware of the existence of the board and five of NGOs representatives argued that PROPER Advisory Board is not representing the public especially local communities. Arguments regarding representability are the following. Five NGOs representatives mentioned it is due to that the board members were not aware of the real conditions of neighboring communities of industrial areas. One NGO representative stated that the board members are not familiar with company activities which contribute to significant environmental damage. And two NGOs representatives pointed out the absence of a clear procedure for board member selection. The representative of local communities was neither selected by the communities nor was there an open recruitment for such a representative to be a board member. Therefore, one NGO representative said that the PROPER Advisory Board was aimed only to legitimize PROPER without any consultation to NGOs who are really dealing with environmental cases onsite. Meanwhile, one academia representative argued that, in deciding PROPER ratings, the PROPER Advisory Board should not be given prerogative right and should include more scientific reasoning in the decision-making process. Three government representatives and the PROPER Advisory Board members, in turn, stated that the PROPER Advisory Board was formed to ensure credibility of PROPER assessment. The current composition is considered as credible to produce fair PROPER rating that is free from political interests. The selection of board members is done internally, selecting seniors who have expertise in their field, with capability to give wise input to PROPER results. According to them, due to time constraints, the selection cannot be done openly (e.g. to ask NGOs to select their own representatives). The PROPER Advisory Board is more involved in assessing social aspects rather than technical aspects, hence focused more on issues related to public opinion, public policy, or other institutional standpoints, and deciding on the ratings with precaution of preventing chaos in the public sphere.

From the interview with six local community representatives, it became clear that they did not know about of PROPER. Only one of them who have had interaction with the PROPER team in direct interviews for assessment of GOLD and another one who have had interaction with the PROPER officials in the assessment of GREEN PROPER ratings were aware that PROPER is an award given by the Ministry of Environment and somehow related to assessments of the Corporate Social Responsibility (CSR) program of the company. Hence, being unaware of PROPER, there are also no recognized impacts of PROPER by local communities. As described later in Section 5.2, other impacts of PROPER with regard to environmental management of companies and government in general were not acknowledged by most NGOs either. There were two different standpoints among NGOs regarding PROPER: some opposing and some supporting PROPER. Two out of nine interviewed NGO representatives were in favor of PROPER due to positive impacts of PROPER related to biodiversity protection and community development criteria incorporated in the PROPER program. The seven NGO representatives that were against PROPER were from NGOs which focus on environmental advocacy and concern about social justice for communities, as well as on negative impacts of company activities to society. On the other hand, the other two NGOs representatives were from NGOs who cooperate with companies in implementing their biodiversity protection and community development programs. According to the interviewees, these NGOs support PROPER because PROPER managed to encourage companies to make efforts in biodiversity protection and community development programs. In other words, PROPER had provides a


legal framework with more detailed regulation about these criteria in the ‘beyond compliance’ aspect in the PROPER assessment as companies’ obligation, thus encouraging companies to improve their environmental performance. Environmental cases related to PROPER were not their main concern. One statement from an NGO representative was:

“Conceptually, objective of PROPER is good, to give guidance to companies to manage their business, not only for profit solely. But the preservation of the surrounding environment and local community nearby the company site also live prosperously. (…) The companies came to our NGO to ask for help in enhancing their biodiversity program. (…) From the experience with companies who cooperate with us, to create program to achieve better PROPER rating, I saw their sincerity that they did not consider PROPER as only for marketing importance. But they are aware and actively participate in preserving environment and give positive advantage to local community.” – NGOs representatives (April 2013)

The result of the evaluation of stakeholder participation in the PROPER program is summarized in Table 6 and elaborated as follows.

Table 6. Evaluation of stakeholder participation in the PROPER program, 2011

Criteria Description Result Develop shared goals

An attempt to set up agreement with society of goals about the participation process in the PROPER program

Absent

Capacity building

Efforts on behalf of PROPER officials in building relations and competency of society as participants to be involved in the participation process in the PROPER program

Absent

Conflict resolution How any conflicts between society and PROPER officials (e.g. public protest of PROPER ratings) were solved in the participation process

Government perceived that protest of NGOs was not a conflict, the resolution was giving an explanation in an official letter to NGOs

Transparency

Whether decision-making process in the PROPER program was accessible to society

NGOs perceived that PROPER was not transparent. However, Government argued that more transparency would create public confusion.

Representability Whether the PROPER Advisory Board represents society and how the public perceives the legitimacy of the representation

NGOs perceived that PROPER Advisory Board did not represent NGOs and local communities. Government insisted that the board members were competent to represent community.


Table 6. Evaluation of stakeholder participation in the PROPER program, 2011 (continued)

Criteria Description Result Recognized impacts

Whether changes due to impacts of the participatory process in the PROPER program were recognized by society

Two out of nine interviewed NGOs recognized some impacts of PROPER, while local communities were not aware of PROPER impacts.

5.2 Perceptions and Expectations of PROPER The interviews revealed that each stakeholder had different perceptions and expectations of PROPER. In this Section, findings related to these perceptions and expectations are elaborated on, categorized under the following themes: a) scope and criteria of PROPER; b) credibility of PROPER rating; c) political issue; d) legal issues; e) social issues; and f) impacts of PROPER. a. Scope and criteria of PROPER Those NGO representatives opposing PROPER argued that the criteria of PROPER must be reformulated to be more comprehensive and strict, and that GREEN and GOLD ratings should not be generously awarded to companies. Five NGO representatives argued that PROPER assessment needs to consider all impacts of company activities, including land use change and deforestation caused by building of company facilities and raw material extraction, accumulative environmental impacts, and social impacts of the presence of company in the surrounding area, such as on relocation of residents and social gaps between company workers and non-workers. However, this argument was countered by PROPER Advisory Board members claiming that environmental damage due to company activities is inevitable, therefore the judgment is not based on absolute environmental impact, but on relative performance. PROPER is only concerned about the commitment of companies to perform environmental management through company policy, and realizing it through adequate programs and budgets and whether it is executed successfully or not. If the assessment was based on their environmental impact, then it would not be possible for companies with high environmental impact to achieve good rating and PROPER would not be able to motivate them to improve their environmental management.

One of NGOs representatives expected that GREEN rating should be given to companies who have successfully diminished conflict. On the other hand, from one academic’s point of view, it is impossible for companies to have zero conflict with communities. The important thing is whether the company has a system to respond to and resolve the conflict.

Two NGOs representatives expected PROPER to solve problems in the other mechanisms in environmental management, such as problems related to environmental permits and Environmental Impact Asessements, which are included in one of PROPER criteria. One PROPER official explained that PROPER was not designed to resolve problems in other mechanisms. Due to limited human resources, other mechanisms are taken care of by other divisions in the Ministry of Environment and considered this as appropriate. PROPER officials coordinate with other divisions only to check if there are any problems faced by participating companies of PROPER related to the rating criteria.


All of industry representatives perceived that the criteria of PROPER were already comprehensive enough. Moreover, the increasing standards of assessment from year to year has increased the challenges faced by companies to obtain the same or even higher PROPER ratings in the following year. The PROPER officials stated that the increasing standard is part of continuous improvement in PROPER assessment. However, one NGO representative perceived this as inconsistency of PROPER assessment due to lack of information regarding this increase.

b. Credibility of PROPER rating Based on interviews with the representatives of the Provincial Environmental Agency, it cannot be assured that PROPER rating represented companies’ day to day performance. This argument was aligned with NGOs perception. The local government representatives stated that even PROPER assessment includes regular reporting of companies throughout the year, there is still possibility that company has been prepared for inspection conducted by PROPER field verification team and the limited time of field verification activity might constraint the process to observe all company sites relevant to PROPER criteria. It was mentioned that one day to do field verification in a company is not enough. Field verification has to cover observation of many criteria and taking many samples. The data for PROPER assessment of one company depend on how many chimneys or compliance spots for taking samples. It has to be compiled into official report. Not to mention traveling time to reach company location. During field verification, it was possible that company representative directed the inspectors to check the prepared site and not to check part of company site which can prove violation to regulation.

There were cases in West Java province that BLUE rated companies got complaint from communities and it were verified as violation of environmental regulation. Regarding this, the environmental investigators are not authorized to check the PROPER assessment of related companies. It was mentioned by one of representatives of Provincial Environmental Management Agency:

“Don’t think that it is guaranteed that the company which has been assessed means that they are disciplined. Because I reflect to my experience. Two cases that I handled (…) one involves administration sanction, they [got] BLUE [rating]. (…) Even the other one when it was under investigation process, they also [got] BLUE [rating], which is surprising (…) It is humane that today they [the companies] are inspected, and the next day they dump wastewater [not as per regulation].” – Representative of Provincial Environmental Management Agency (May 2013)

Based on interviews with six NGOs informants, they perceived PROPER as a tool for companies only for image building and even lead to green-washing to cover bad performance of companies with good rating from PROPER. PROPER assessment system which graded unit business separately is regarded as possible for company to do green-washing because company can expose the award received by one unit business to media while covering up their poor performance of other unit businesses in the company. This prejudice was based on Lapindo case (see Box 1). The explanation given by PROPER officials was that PROPER assessment for Wunut Unit Business of PT Lapindo Brantas was already based on procedure of PROPER. One of PROPER Advisory Board member argued that if company only published information that is advantageous for their image building or to raise stock price, the


media can still expose the unit business with bad PROPER rating and it will affect the company image. Therefore, when different unit businesses receive different PROPER rating, the corporation will aim for good PROPER rating for all of the unit businesses anyway. Different unit businesses in a corporation are running different activities such as production unit and marketing unit. Thus, separate assessment of different unit businesses in one corporation is based on fairness in order to appreciate environmental efforts done in each unit business in a corporation. One company representative stated that one of PROPER rating advantage is that it can be justification to open new unit business. When the business activities had been acknowledged through PROPER award, opening new one with similar activities would be easier in terms of getting public acceptance. This was related to the concern of one NGO representative. However, when the PROPER rating was not credible, the PROPER rating will be justification shows that a business activity is environmentally friendly when it is actually not; for instance the Lapindo case in relation to mining activity nearby settlement area. The government had acknowledged it through PROPER program, when it is very dangerous; refer to the Lapindo mudflow case. This case should lead I think government need to check the regulation about it. This can be justification to result the re-examination of the regulation related to the mining activity nearby settlement area instead of justification that it can be done in environmentally sound way, concerning the environmental risk that may be received by local communities. The concerns of six NGOs informants were that companies are participating in PROPER only for gaining higher profit. Regarding this, company is encouraged to apply new business concept of Creating Shared Value by linking business strategies and CSR through PROPER. Company aims for getting incentive of award and good image, increase of stock price, and fulfilling requirement for loan approval from financial institution through such effort and high investment in increasing environmental quality and welfare of neighboring community. Nonetheless, NGOs were not aware of companies’ effort in achieving PROPER award. One of company representative interview was quoted as follows.

“It was not simple for us to obtain GOLD PROPER rating. We go through process and so on. We have planning towards achieving GOLD rating. (…) Our [company’s] vision and mission is translated in to company policy. That shows that achieving PROPER award is not as easy as falling off a log. There

Box 1. The Lapindo case

It is a national disaster of mud flowing from down hole in Porong Subdistrict of Sidoarjo in East Java Province caused by blowout during natural gas well drilling in 2006 by PT Lapindo Brantas. Now the mud has covered area of 22 villages and it is still flowing. Seventeen thousand people are affected by this disaster. In 2011, Wunut unit business, one of unit business owned by PT Lapindo Brantas awarded GREEN rating. This raised protest from NGOs that it is inappropriate for PT Lapindo Brantas who caused such disaster to receive PROPER award. The protest was responded by Ministry of Environment with explanation that the PROPER award was not awarded for the unit business which caused the disaster even they are under the same corporation. PROPER assessment of Wunut unit business has been done based on regulation and PROPER assesses unit business separately, therefore Wunut unit business was given the award. (Ministry of Environment of Indonesia 2012, Taylor 2013)


has to be planning [as part of requirement given by PROPER]. If there is no planning, PROPER will not assess it [company’s environment related programs]. And of course we translate it [company policy] into implementation. (…) Management has a very important role in achieving GOLD PROPER rating. Because in the planning towards achieving PROPER award, we need budgeting and management support to employees, and of course we must have continuous improvement based on audit etc.” – Company representative (May 2013)

Therefore, it is unfair to judge the company as being solely profit oriented in joining PROPER. It was supported by companies’ argument that aiming for GOLD PROPER rating was not as easy as doing regular promotion but it takes a lot of effort to develop an innovative and sustain community development program to be regarded as excellent. c. Political issues One finding of political relevance was that one particular BLUE rated company was later complained due to its poor environmental performance. The government did verification about the complaint, and when the complaint was proven, it caused confusion afterwards since the law enforcement and the PROPER program were activities conducted by the same institution within the Ministry of Environment or Local Environmental Management Agency. In an interview with the representative of the Provincial Environmental Management Agency, the interviewee stated that:

“When we do verification to the BLUE rated company, they become arrogant. They asked why we have to do verification when they already got BLUE rating. I said ‘It doesn’t matter. Even if you got GOLD rating, [what if] there is public complaint and then it is proven that you did violation?’ I think it doesn’t seem good when an institution conducts two programs which do not have good collaboration and it happened like that. I was ashamed, because we [public complaint and PROPER mechanism] came from the same institution and treat [company] differently; this one awarded something, and the other one act upon a case. (…) So I think we need to improve the communications [inside the agency]” – Representative of Provincial Environmental Management Agency (May 2013)

The integrity of the institution, even a governmental body, is questioned, when it carries out contradictory actions, on the one hand giving an award and on the other hand a penalty, both at the same time. d. Legal issues Legally binding of PROPER ratings can be used by companies as justification of environmental performance. This argument posed by an NGO informant was related particularly to the Newmont case where the company PT Newmont Nusa Tenggara submitted its GREEN PROPER rating as evidence in court (see Box 2). Two of NGOs informants considered that PROPER obstructs society from getting justice in environmental cases where the lawsuit is against companies with good PROPER rating. Therefore, according to them, it is better if PROPER awards are designated by non-governmental bodies, especially for beyond compliance aspects, in order to avoid it being used for justification out of context. This opinion was aligned with one of PROPER Advisory Board member opinion.


Meanwhile, instead of giving awards, the government can still monitor companies through similar programs, but assessing compliance aspects to link it to law enforcement as was the original function. The explanation from a government representative was that PROPER as a legally binding program is designed to stimulate companies to comply with regulation. Four NGOs informants stated that the PROPER program is conducted according to loose and weak environmental regulation. Not all of substances contained in the industrial waste are included in the regulation; therefore the impact of it may be neglected. Indonesia still does not have comprehensive and detailed environmental regulations, for example threshold limits for PAH (Polycyclic Aromatic Hydrocarbons), for oil or gas industry, or for Aox5 in the pulp and paper industry, and Indonesia still allows waste dumping into the ocean. This statement was encountered by three interviewed government representatives and two academia representatives, which environmental regulation should be strict but realistic, which means achievable by industry. Threshold limit determination is according to them done using scientific approaches. Characteristics of waste, concentration, toxic substances, and degradable components are reviewed according to available, applicable and economical abatement technology. They also stated that the industry sector had been asked about the feasibility to reach the threshold limits, and technical reasons which obstruct the production system to reach the threshold limits were investigated for adjustment accordingly. After practical approaches, researchers also compared the threshold limit to other countries with similar technological levels and environmental conditions. Therefore, Indonesia’s environmental regulation is not comparable with developed countries since the latter have better infrastructure and more available budget and technology than Indonesia.

e. Social issues

Two NGOs stated that from a social justice perspective, it is not fair that community welfare is so low for those communities neighboring with such big companies. A company should be able to increase the welfare of neighboring communities and reduce their negative impacts to the environment. For instance, the geothermal companies in West Java Province are amongst the biggest contributors to the Regional Government Budget. Nonetheless, the local adjacent community remains marginalized and in poverty. It was mentioned that in Kamojang area, where two geothermal companies with achievement of GOLD and GREEN ratings operate, local communities face water scarcity problems. One academic interviewee argued that this problem cannot be solved by the PROPER program. Obligation of increasing social welfare is in the hand of the government and companies can only provide additional support. This issue of welfare was acknowledged by the local community representatives as well, who mentioned that the problem occurred due to unequal local government budget allocation and corruption in all of local governmental institutions, even in the village administration organization.

Box 2. The Newmont Case NGOs submit a lawsuit against Ministry of Environment on 29 May 2011 regarding extension of dumping permit of PT Newmont Nusa Tenggara’s tailing into Senunu Bay located in East Nusa Tenggara Province. This was supported by complaint from local fishermen that the fish cultivation was decreasing. In 2011, Newmont received GREEN PROPER rating. NGOs also protested about this. The company argued that the environmental permit was valid and supported by scientific research that it would not affect fishery activity in the area. (ANTARANEWS 2011; WALHI 2011)


f. Impacts of PROPER All government and PROPER Advisory Board informants agreed that PROPER has positively affected environmental management in Indonesia. In general, companies who comply with environmental regulation will cause less environmental damage. PROPER also provides assessment of the environmental management system of a company which indirectly will give positive impact to neighboring communities if the system is conducted properly. PROPER increases awareness of companies to be more environmentally sound through assessment in the ‘beyond compliance’ aspect. One of the direct impacts of PROPER to the environment mentioned by one PROPER Advisory Board member is the reforestation done by a company in the surrounding area of the company site in order to fulfill biodiversity protection criteria, which also resulted in better environmental conditions for the local community. According to interviews with one local government informant, PROPER provides a format for comprehensive monitoring of companies and will be the standard format for regular monitoring in West Java Province. One of PROPER official representative mentioned that in East Java Province, the local government conducted a program that was similar to PROPER for companies in the region which means that local government is encouraged to improve their environmental management. One government informant shared the following:

“ In East Java, they [local government] conducted an Environmental rating program, which is actually like PROPER, but for small industry. (...) That is how PROPER is successful, I think, in delivering the knowledge, [of monitoring activity] even if it is not labeled as PROPER.” – Secretary of PROPER (April 2013)

PROPER is also seen to have strengthened environmental regulation and the government’s monitoring activities. According to interviews with five government informants, before PROPER was conducted, regular monitoring was usually done only for manufacturing industries that were located close to big cities. But PROPER has increased the scope of monitoring to more industry sectors which are located in remote areas, such as oil and gas industry, mining industry, and agro-industry. Quality of monitoring activities is increased through capacity building of environmental inspectors at provincial, regency and city levels. Through PROPER, self-assessment data of companies are validated. Moreover, PROPER facilitates government to push companies to improve their performance by giving bad ratings. PROPER provides an additional legal framework, including cleaner production principles, biodiversity protection, and CSR. From the company perspective, one of informant explained that PROPER provides guidance for improvement of environmental management in the company. For instance, the company makes an effort to fulfill beyond compliance aspects such as resource efficiency and emission reduction. Moreover, PROPER encourages companies to do continuous improvement from year to year because in PROPER assessment, companies within the same sectors are compared to each other in order to achieve higher PROPER ratings. One criterion that directly relates to society is the community development criterion. In relation to impacts of PROPER on local communities, PROPER provides the legal framework and guidance for implementing participatory community development programs that focus on community welfare. It fills the gaps of detailed regulation regarding community


development implementation. For instance, community development program has to be prioritized for vulnerable community groups in the surrounding area of company facilities. Based on PROPER criteria, participation of communities is part of the requirement in planning a community development program. Therefore, the community development program can be more beneficial for communities and precisely in addressing community needs. Three government representatives considered this as a indirect impact of PROPER to society, especially to local communities, as quoted from an interview with a PROPER official:

“The indirect impact [of PROPER], [there are] many of them. For example, the budget for community development program from only 181 companies of GREEN rating candidates is 923 billion [of Indonesian rupiah]. (…) What we push companies … to do is community development. We cannot measure it other than from the money that is dispersed [related to] the benefit.” – Secretary of PROPER (April 2013)

There were different opinions regarding impact of this specific criterion among companies. One representative of academics stated that PROPER affected organization structure in some companies related to community development. The company decided to form a division with proper budget and human resources for implementing the community development program. On the other hand, one of the interviewed companies mentioned that they already incorporated this in their business activities and organization even before they joined PROPER. So, PROPER did not give significant impact related to their community development program. However, these impacts of PROPER to government and companies were not known by NGOs and local communities. NGOs suspected that PROPER did not affect management system in the company in any way. Based on interview with community regarding the cause of improvement of CSR program, it was either unknown or due to protests and negotiations by the community itself as stated by one of representatives of local community.

“ When I became the village chief, we tried to push the company to set up activities [for society], which was based on existing regulation [regarding CSR]. [We demanded that] the concept [of community activities] had to be built together. At first, they dispersed high amount of money [to be claimed as CSR], but it was not translated into a clear concept where people receive [optimum benefit]. But it became advantage only for certain community groups. For company, it was fine as long as the business activity was not disturbed. But it did not educate [society] because it would stimulate the occurrence a group of “gangster”, pardon my language, that is institutionalized, whether it is local NGO or local media [community group that financially supplied by company to prevent the disturbance to business activity by the local community]. (…) Now, it has been three years of cooperation between society and company in managing CSR program. However, I am not aware how the company can achieve GOLD PROPER rating.” – Local community representatives of Pangalengan Subdistrict (May 2013)


Four NGOs argued that there was insignificant contribution of PROPER to the increase of environmental quality. They perceived that PROPER is only usual award program instead of strategy of government to monitor companies performance and encourage them to improve and achieve beyond compliance level. PROPER is regarded as only a ceremonial program and uncorrelated to attempts of minimization of pollution and environmental degradation in Indonesia. It is based on 10 years of PROPER and the level of pollution and environmental degradation is not declining. One of NGOs used indicator of the level of disaster and pollution in the coastal area where the waste from rivers and land accumulated. Rather than PROPER, NGOs expected government to prevent the negative impact of companies start from the planning of a company to ensure the compliance with regulation. PROPER officials and Advisory Board members stated that the main objective of PROPER is increasing compliance of companies regarding environmental management and promote environmental excellence in business activities. However, it was confirmed by two academics interviewed that industry is not the only contributor to environmental degradation. There are a lot more pollution sources such as domestic waste and agricultural waste which should be taken into account in the environmental quality. One academic argued that NGO concern was too focused on companies who received good rating but still involved in environmental cases without looking at positive impacts of PROPER.

5.3 Perceptions of Stakeholder Participation in PROPER

This section presents perceptions of different stakeholders towards stakeholder participation in the PROPER program. Seven interviewed NGOs representatives agreed that PROPER assessment should involve opinion of NGOs and local community in the decision-making process of companies’ PROPER rating. On the other hand, PROPER Officials and Advisory Board member argued that the PROPER officials have been done field visit to verify relevant issues. However, this was not acknowledged by NGOs.

Two of local government informants agreed on this, that companies’ performance should be crosschecked to local communities who are aware of daily performance of companies. Moreover, two NGOs informants mentioned that there is no detailed regulation of public participation mechanism in PROPER. Four NGOs representatives that local communities as the most vulnerable group to negative environmental impact of business activities have right to receive such information. The argument that PROPER was not conducting participation process was aligned with one of academics informant that public participation is very limited in PROPER. One of government informant and one PROPER Advisory Board member argued that public participation was not part of key indicators of PROPER success given in the regulation. Furthermore, another representative of PROPER Advisory Board pointed out that PROPER was not appropriate for participation.

One government representative mentioned that it was practically very difficult to arrange involvement of NGOs in the field visit to assess actual condition of local communities around the location of companies which were GOLD rating candidates as quoted below.

“If we [government] have to involve them [NGOs] in the assessment, we are very happy [to do that] but it is technically impossible in two weeks [for field visit for GOLD candidates] to arrange assessment by so many people. If it is for BLUE and lower rating, it is clear in the regulation, it only allows certified environmental inspector to do formal monitoring.” –Secretary of PROPER (April 2013)


On the other hand, based on the 2009 Environmental Protection and Management Act Nr. 32, Article 70 in relation to society’s role to participate in Environmental Protection and Management, three government representatives stated that information based on verified public complaint is considered in PROPER assessment and may cause to lower PROPER rating. There are problems which commonly occurred in public complaint mechanism according to interview with local government representative. First, there is no solid procedure in devolution mechanism. Ministry of Environment can delegate the complaints to provincial level or to regency/ city level without notify provincial body. Due to regional autonomy, there is no hierarchical structure between Ministry of Environment and local environmental management agency. There was a case that handled by regency/ city and provincial agency (double verification) due to lack of coordination. And there is high possibility that some complaints are not being handled at all due to lack of clear procedure in devolution mechanism. The second problem is lack of human resource in the Ministry of Environment and local environmental management agency which takes care of public complaint. This cause delay and longer time to take care of many complaints so the process cannot work optimally and public perceive it as the government not handling the complaints seriously. Related to public complaint, PROPER deals with lack of human resources in handling public complaint submitted to PROPER Secretariat as explanation by PROPER officials during interview:

“We, in PROPER, don’t have people to conduct that [public complaint] mechanism, so we trust other system to run properly. For example, [if] there is public complaint to provincial [level], and then verified [and] it turn out to be proven; in the PROPER mechanism it become major finding. If we have to accommodate that [public complaint mechanism] maybe we need all Ministry of Environment officers to work on PROPER.” – Secretary of PROPER (April 2013)

Therefore, PROPER officials rely on sorting mechanism and checking mechanism. In the selection process of PROPER participants, there is a sorting mechanism in Ministry of Environment that the companies who are involved in environmental case during the period of determining PROPER participants are not allowed to participate in PROPER. Before the rating was finalized, there was a checking mechanism in Ministry of Environment to Deputy Minister for Environmental Compliance who deal with public complaint and Deputy Minister for Spatial Planning regarding EIA documents and requirements before the rating of PROPER is decided to check whether the candidates of good rating involved in environmental case.

According to representative of Ministry of Environment, there was an example of rating of a company was lowered to RED rating due to verified public complaint. This example proves that public complaint could be important information to be considered in the PROPER assessment.

“There is [an example of] public complaint related to a company [that participating in PROPER]. (…) It was assessed that the company achieved BLUE rating. It turned out that there is a public complaint. (…) I review the case. It was [the rating was lowered to] RED rating. (…) Public complained due to the burning waste that gave impact to local community. (…) The


complaint was before the announcement of PROPER rating. (…) So, PROPER already considered public complaint that affected environmental performance of companies.” – Ministry of Environment representative (April 2013)

In order to pay more attention in environmental cases of PROPER participating companies, one PROPER official stated that media analysis will be included in PROPER mechanism started in 2013 to find out whether there are environmental issues related to companies which are candidates for GREEN rating.

According to representative of Provincial Environmental Management Agency, sorting mechanism is mandated by regulation and conducted by the agency. However, checking mechanism is not part of PROPER procedure in provincial level as quoted from the interview in the following, whereas the agency receives public complaint and responsible to determine temporary BLUE, RED and BLACK rating and propose candidates for GREEN rating for further assessment. Even though there can be communication about this between officers in the Subdivision of Environmental Compliance and Subdivision of Environmental Pollution Control who takes care of PROPER in Provincial Environmental Management Agency.

“We [Subdivision of Environmental Compliance] never intervened PROPER [assessment process]. We only inform when there is sorting of [PROPER] participants, before the [environmental performance] report even established. (…) Because it [sorting mechanism] is instructed by the superior officer. (…) We do not have authority to change, for example to lower the mark in the [environmental performance] report based on the fact that they [the company] are still being verified by us [Subdivision of Environmental Compliance]. Because we do not know the process in it [PROPER assessment].” – Representative of Provincial Environmental Management Agency (May 2013)

On the contrary, six NGOs informants perceived that public complaint is neglected in PROPER assessment. This opinion based on many of environmental cases taken care by NGOs involved companies who are considered as comply with regulation and receive good PROPER rating. NGOs demanded PROPER officials to directly collecting information from neighboring communities of industrial area or from local NGOs. NGOs argued that local community and local NGOs holds actual information about current environmental cases which should be considered in PROPER assessment.

5.4 Challenges in Implementing Stakeholder Participation in PROPER This section presents findings that were identified during interviews as challenges that hinder the implementation of stakeholder participation in the PROPER program. It includes the following themes: a) extreme standpoint of environmental NGOs; b) legal vs. perceived environmental standards; c) limited competencies; d) public trust in government; and e) resource constraints. a. Extreme standpoint of environmental NGOs PROPER is different from traditional monitoring policy which directly punishes the companies which violate the law. One government representative explained that the PROPER


mechanism is focused on monitoring, educating the companies with bad performance, and translating the result into color rating to be disseminated to the public. There are different opinions between government and NGOs regarding this matter. Three interviewed NGOs informants disagreed with the education mission of PROPER through giving chance to RED rated companies to do improvement that allowing companies to avoid law enforcement. Furthermore, one NGO representative argued that the poor performer should be more exposed in order to create pressure. Meanwhile, one of local government informants argued that RED rating represents that the company has attempted to fulfill the environmental regulation but the result is slightly off the threshold limit. Requirement for RED rating is that it is not major violation of regulation, and even if a company got RED rating from year to year, it can be because of different criteria, one criterion which slightly off threshold limit can cause RED rating. Therefore the Ministry of Environment provides guidance and gives opportunity to them to improve their performance so as to increase the compliance level of companies in general in the long run. Another extreme standpoint of NGOs is that NGOs do not tolerate industries that cause such significant environmental degradation. In relation to extreme perspective of NGOs, one of PROPER officials stated that PROPER facilitates the interest of investment as well as environmental conservation.

b. Legal vs. perceived environmental standards One PROPER official representative stated that there was a problem of difference in legal standard and environmental standard based on public perception related to companies’ compliance. There can be a gap between threshold limit of pollutants set in the regulation and public acceptance. It is also possible that the environmental carrying capacity cannot handle the industrial waste even it is lower than the threshold limit. Companies which comply with regulation are not necessarily free from polluting the environment. For instance, society can complain that the air emission from certain factory is harmful based on white colored flue gas. However, the company might not violate any air pollution regulation according to threshold limit set in the environmental regulation. Public could raise this issue into conflict with company. One of PROPER official argued that this gap has been overcome by requirement of good conflict management as part of criteria of GREEN PROPER rating as follows.

“… there is gap of written language and everyday language (…) That is overcome with GREEN rating assessment (…) One of criteria is to report conflict management, so we can see that conflicts were happened and whether they have system or not. The important thing is not the absence of conflict but how they manage it.” – Secretary of PROPER (April 2013)

Four NGOs agreed that the issues related to public perception of companies’ environmental impacts should be investigated and considered in the PROPER assessment. For instance, the case of water scarcity nearby industrial area, skin illness experienced by local community around the river that also the location of industrial waste discharge, and the drop of fish catch due to submarine tailing disposal by mining industry. Cumulative impact of industrial waste discharge is not considered in PROPER, when this is the main problem regarding environmental quality of surroundings of industrial area.


c. Limited competencies

This issue was pointed out by three government informants and one PROPER Advisory Board member. However, it is confirmed by an NGO representative in relation to Newmont case in Senunu Bay in East Nusa Tenggara Province. The NGO representative were concerned about mining activities by Newmont which receive GREEN PROPER rating with the fact that they released waste to the ocean and polluting the environment. In this case, the environmental permit has been issued as per regulation and based on scientific research that waste dumping to the ocean will not affect fishery activity in the area. In this case, WALHI asked information about the related research done by Indonesian Institute of Sciences (LIPI). As public institution, LIPI should publish the result publicly, but it is rejected due to confidentiality since the research was funded by Newmont. Therefore, NGOs cannot prove the environmental pollution due to the waste dumping to the ocean. This shows lack of NGOs power to get hold of technical competency and it affects NGOs credibility. Based on interviews with six local community representatives, local community has weak competency about negative impacts of business activity. Three government informants mentioned that society is incompetent to be environmental inspectors. It is against the law when public present unverified data to prove their complaint. Some of public complaints are submitted with supporting data such as sample of wastewater. This action is crossing the boundary of social monitoring by public. Public are not authorized to do sampling, because it has to be done by certified environmental inspectors who are competent to do it correctly and then it should be analyzed by accredited laboratory as per regulation. Related to public awareness of PROPER program, according to interview with six local community representatives, it was found out that the local community was not familiar with PROPER. Only two informants recognized PROPER as an award program conducted by Ministry of Environment only because they had interacted with PROPER assessment team. d. Public trust in government Six NGOs representatives mentioned the problems related to the Ministry of Environment activities which are corruption, lack of commitment and lack of attention to local community. This all related to the low of trust to governmental agency. There is prejudice that government is vulnerable of bribery and data manipulation. The NGOs representatives suspected that PROPER will be similar to other programs of Ministry of Environment such as Adipura, the award program for cleanest city. It was suspected that there was corruption in the system; therefore the assessment of Adipura was not valid. However, NGOs does not found any evidence of corruption in PROPER yet. Three government representatives argued that possibility of data manipulation had been prevented as much as possible through the multi-level assessment. Compared to Adipura program, one PROPER advisory Board member argued that there are political interests related to Adipura program such as the head of region use Adipura award as campaign tool to be re-elected by citizen, so they tried illegal effort to win Adipura which is already happened and proven. On the other hand, PROPER Advisory Board is a neutral group who puts more perspective during decision-making process of companies rating. One of NGO representatives stated that there is lack of commitment of government to improve environmental quality as quoted below:


“We are doing advocacy for fishermen in Jakarta Bay [in the north of Java Island]. According to data from government, 94% of rivers in Jakarta are severely polluted. There are 13 rivers. Then, condition of Jakarta Bay, 64% of it is severely polluted, 30% is moderately polluted, and 6% slightly polluted. There is none with good condition. Based on this, government is supposed to do something extreme to reduce the pollution level. But from year to year, the pollution level is even more increased. We have submitted complaint to Provincial Environmental Management Agency of Jakarta Province. It was accepted but there is never concrete program to overcome this problem. We also report this issue to Ministry of Environment, but it did not result a concrete effort either. In fact, they answered that this should be taken care by Provincial Environmental Management Agency of Jakarta Province in accordance with their authority.” – NGO representatives (May 2013)

Four NGOs representatives insisted that the Ministry of Environment as a powerful body should optimize its function by concentrating to other program which contributes significantly to environmental quality instead of conducting PROPER. These NGOs representatives perceived PROPER as only insignificant award program for companies. Ministry of Environment was demanded to take extreme step to overcome environmental problems in Indonesia. e. Resource constraints

It was mentioned by one of PROPER officials as the following quote, indicates that the schedule of PROPER assessment was very tight.

“The given time [for one cycle of PROPER assessment] is only one year so the time available for this [field visit for GOLD candidates] is only two to three weeks. (...) Last year [2012] we were too hectic [in conducting PROPER assessment] so we did not involve [NGOs], but the year before, we disclosed [the list of the candidates for GREEN and GOLD rating]. [Possibly] because it as a long list, so they did not comment [giving feedback regarding the appropriateness during the given time]. (…) If it [PROPER assessment] is 2 years [for one cycle], then it might be ideal, company can do improvement, public also able to give comments. But the policy is only for one year [for one cycle of PROPER]. One year to take care 1800 companies, and involve 30 provinces … ” – Secretary of PROPER (April 2013)

Therefore, mechanism of consultation with NGOs cannot be held. Three NGOs informants and three government representatives agreed that one year is not enough to do comprehensive assessment that cover of such high amount of companies. Two representatives of PROPER officials voiced that PROPER is run with limited human resources. This was also admitted by representatives of the Provincial Environmental Management Agency, who stated that it would be beneficial to have more outsourcing for human resources with training and certification in order to decrease the responsibility of local environmental inspectors dedicated to PROPER so they can be more focused on their daily responsibilities.


6. Discussion

6.1 Meeting An Appropriate Level of Participation

According to Davidson’s “Wheel of Participation” (1998), the stakeholder participation level in the PROPER program has been identified as consultation and information (see Table 5 and Figure 5 above in Section 5.1). However, the implementation of this level of participation was still further hindered by practical issues which are time constraints and lack of dedicated human resources. Seven interviewed NGOs representatives perceived that the implementation of stakeholder participation in the program needed to be improved in order to obtain a genuine participation process. Guidelines on how to choose appropriate levels of public participation are presented in Table 2 in Section 2.3 (OECD 2004, Blackstock et al. 2007). As already emphasized in this work, it is important to engage the public in a participatory process, especially when the public has concern over the subject in question and be impacted by the decision. For example, the company might use the PROPER rating against lawsuit submitted by society or NGOs in order to cover violation of environmental regulation.

There are many challenges in achieving suitable levels of participation. One of the difficulties is in establishing a representative and accountable citizen advisory board. The lack of competency of stakeholders in technical aspects and participatory skills in a decision-making process also needs to be considered (Arnstein 1969). These obstacles must be thoroughly studied in order to aim at a genuine participation level. Further study needs to cover more various stakeholders in order to gain more diverse insight and comprehensive information.

6.2 Strengthening Stakeholder Participation in PROPER

If the government of Indonesia aimed to utilize PROPER as a tool for public participation, the public participation process would need to be redesigned, institutionalized, and provided in a legal framework and detailed mechanism in order to fulfill all important aspects in achieving better outcomes and for fulfilling the participation process itself. According to Richards et al. (2004), it is known that participatory processes can be time- and resource- consuming. It is common that participation process is unsuccessful due to lack of time and resources dedicated to run the participation process. In PROPER, insufficient time and resource caused public participation mechanism in PROPER such as selection of representative PROPER Advisory Board and public consultation to NGOs mentioned in Section 5.1, not conducted optimally. PROPER should be designed in more loose time limit in order to allow sufficient time to conduct proper public consultation and obtain all relevant information to obtain better outcome. According to Dietz and Stern (2008), it is recommended to engage public in the early phase of participation process in order to building trust and gathering adequate information for decision-making process.

An adequate amount of human resources are essential in achieving fruitful public participation process. The activities cannot be conducted when there is absence of human resources. Government commitment in participation process in PROPER can be shown by providing enough resources to ensure the participation process to be conducted properly (Dietz and Stern 2008).


Findings in Section 5.2, that PROPER result may not represent daily performance of the companies and possibility of contradictive actions of environmental government institutions, revealed that it is important to incorporate public participation in terms of public social monitoring and public complaints in PROPER assessment in order to include all relevant information so that yield accurate PROPER result. In other words, participation of society of submitting information about performance of companies based on social monitoring is important.

Regarding the cases of BLUE rated companies who involved in environmental cases, it was a major finding that should be investigated thoroughly since it may indicate the need of improvement of PROPER criteria and mechanism. Some findings showed room of improvement in the PROPER mechanism. As elaborated in Section 5.3, it showed that public complaint mechanism and communication in the internal of Ministry of Environment and external with local environmental management in relation to PROPER assessment should be improved in order to ensure the integrity of PROPER and the institutions itself. The absence of checking mechanism in Provincial Environmental Management Agency can cause missing information of any good rating candidates’ involvement in environmental cases handled by provincial agency. The procedure of devolution between the institutions needs to guarantee that cases related to participating companies in PROPER is not neglected and included in PROPER assessment. It is very important to consider public complaint as indication of environmental problems to be considered in the PROPER assessment. Therefore, this process should be optimized to increase the validity of PROPER ratings. Referring to findings about public indirect involvement in PROPER, these related mainly to a lack of human resources and insufficient field verification mechanisms in PROPER. In such cases, a partnership with society in social monitoring would be a possible option to resolve these problems. There is an ongoing partnership between government and public in monitoring Citarum River Basin in West Java Province. A study by Halimatusadiah, (2011) showed that partnership of government and society have resulted fruitful outcome in supporting environmental management.

In order to represent companies’ environmental performance through PROPER, social control and feedback from neighboring communities regarding company's activities are essential. It is very important to empower neighboring communities to do social monitoring of industry's effluent whenever possible so it provides pressure to industry to always comply with pollution prevention regulation and care about neighboring communities because they are the everyday informal monitoring officers. As of now, general public complaint was not encouraged in relation to influence PROPER rating of the related company, according to public unawareness of the PROPER program. Through partnership between community and local environmental management agency, social monitoring can be more effective. In relation to educating public, PROPER can be a good tool for education and raising awareness of public to involve actively in increasing environmental quality. Related to impacts of PROPER, positive changes in environmental management through public engagement should be reported publicly to encourage public to participate. It should be informed that public involvement in environmental management would bring benefit to public itself of better environment.


Besides partnership with society, partnership with NGOs can be also favorable. If government facilitates to overcome problem of weak technical competency of NGOs, this partnership would bring environmental management to higher level. The relationship built will lead to reciprocated trust and better understanding between partners (Brinkerhoff 2002).

6.3 Stakeholder Participation as A Tool to Improve PROPER Following is a summary of how stakeholder participation can support PROPER to achieve public acceptance through legitimacy of results, improvement in the decision by considering diverse information and interests of public and public participation, and increased capacity of community. a. Stakeholder participation to create legitimate decision-making

PROPER was designed to be a program that can generate incentives or pressure for companies through public disclosure. This public information is expected to encourage public reactions in the forms of incentives or pressure. Rather that responding by putting pressure or giving incentives towards PROPER participating companies, some NGOs protested regarding PROPER result disseminated by government. This protest of NGOs showed that decided PROPER rating of companies is not widely accepted by NGOs. It happened because of different perceptions and expectations of NGOs and government who are responsible of PROPER which was presented in Section 5.2. NGOs demanded PROPER to be more aggressive program towards business activities in order to increase environmental quality, improving other mechanisms and instruments of environmental management. It can be regarded as lack of legitimacy. In this case, stakeholder participation can increase public acceptance.

Related to evaluation criteria of stakeholder participation, develop shared goal is an important step to build legitimacy of decision. Participation based on shared goal that considers all participants’ interest leads to generating decision that is widely accepted and tends to be more successfully implemented. (Richards et al. 2004). In order to achieve successful participation process, the step of developing shared goal needs to be conducted with public especially NGOs who have interest in PROPER in order to obtain public acceptance. It was identified that there were different perception and expectation from various stakeholders towards PROPER which was related to diverse standpoints of each stakeholder, which covered the scope and criteria of PROPER, credibility or PROPER ratings, political issues, legal issues, social issues, practical issues and the impacts of PROPER. Through developing shared goal, common ground may be established to overcome these different viewpoints. According to Stringer et al. (2007), participation facilitates participants to cooperate through establishment of common ground for mutual understanding, building trust, and respect the legitimacy of each stakeholder’s standpoint. Related to conflict resolution criterion, government perceived that the protest of NGOs is not a conflict caused by problems in PROPER result. It is because extreme standpoint of NGOs to criticize governmental program is inevitable. However, NGOs could also provide valuable input to government to yield better environmental management. Regarding this matter, according to Richards et al. (2004), public participation includes conflict resolution through finding agreement in defining the problem and solution is advantageous for all participants in order to support environmental management. Hindess (1997) pointed out that the ‘democratic deficit’ has encouraged the need of participation in relation to legitimacy, related to the issue


of public trust in government mentioned in Section 5.4. Through stakeholder participation, possible conflict can be reduced and trust between parties might be increased (Dietz and Stern 2008). Concerning transparency criterion, the lack of transparency is one of the problems that caused protest of NGOs. Limited media coverage about PROPER caused public especially local communities who received direct negative impacts of companies were not informed of PROPER. NGOs argued that genuine participation would need absolute transparency of public information for affected stakeholders. However, government had different perception regarding necessary transparency in PROPER. Transparency was limited in order to prevent miscommunication to society by complex information. Moreover, the absence of socialization was due to lack of human resources and time constraint. Transparency is necessary to build public trust and eventually provide education tools for public to participate actively in environmental management (Dietz and Stern 2008). When the participation process was conducted in transparent manner and embrace the diverse perspectives of relevant stakeholders, it may enhance public trust of the environmental decision. Environmental decision would be considered as unbiased and holistic when it includes interests of stakeholders. (Richards et al. 2004) According different perception and expectation of transparency of PROPER assessment, to what degree the transparency must be realized should be discussed between stakeholders. Criterion of representability was included in the evaluation framework of stakeholder participation. There are different opinions regarding representability of PROPER Advisory Board. In public participation process, inequality of representation of stakeholders can damage the participation process (Richards et al. 2004). In this case, NGOs as one of stakeholders were not represented enough by PROPER Advisory Board. Government was hindered by limited time in conducting PROPER. Thus the representability was not optimally achieved. According to Arnstein (1969), problems commonly occurred in forming citizen board that is accountable and representative in achieving successful participation. However, by giving NGOs opportunity to select their representative, power in shaping decision would be granted through representative in the decision board. Tippett et al. (2007) argued that fair and legitimate participation process may be attained through equity in the power of influencing decision among participants and building relations between participants to build trust. Through increase trust and public acceptance of PROPER assessment, include diverse viewpoints in the decision-making process, transparent process and equity in representability of PROPER Advisory Board, PROPER program may be improved. b. Stakeholder participation to improve decision quality

Protests of NGOs regarding PROPER rating also rose due to inaccurate decided PROPER rating. NGOs argued that it is possible that the company violate environmental regulation even if they have received good PROPER rating. Finding presented in Section 5.2 about companies who got BLUE rating but proven to be involved in environmental case shows that PROPER result may not represent daily performance of the companies. The importance of gathering information from relevant stakeholders is to ensure credibility in deciding representative rating of companies. Therefore, participation of society of submitting information about performance of companies based on social monitoring is important.


Moreover, public complaint is very important as indication of environmental regulation violation by companies that can happen any day. NGOs argued that public complaint is important as initial information about performance of companies to fill the gap of PROPER assessment which based on onsite verification that was conducted only in one day in each company. This opinion is supported by officers in the local environmental management agency that inspection with companies are notified beforehand, it is possible for companies to plan the production cycle to perform well on the day of verification to achieve good rating. There is no guarantee that result from one day field verification is representing companies’ environmental performance for the whole year. In this case, public participation allows PROPER to yield high quality decision. It means that the decision-making process has include all related information, issues and concerns from all relevant stakeholders (Dietz and Stern 2008). The excellence of decision is achieved through including comprehensive knowledge (Fischer 2000). The enhanced decision quality in terms of PROPER rating may improve the PROPER program. c. Stakeholder participation to increase capacity of community Public participation implies empowerment of public (Arnstein 1969). Empowerment of participant including capacity to influence in terms of technical competency (Richards et al. 2004) and power to shape the decision (Tippet et al. 2007). When decision include technical aspect, the participant has to have competency to be involve in decision-making process, therefore building competency is necessary to ensure stakeholder participation (Reed 2008). Public has been involved indirectly in PROPER through public complaint mechanism and interview with PROPER Advisory Board and assessment team for GOLD rating candidates as mentioned in Section 5.1. However it is not based on motivation to affect PROPER result. Related to lack of information to encourage public to be involve in environmental management, public should be provided more access to environmental information. PROPER is a good tool of environmental information in order to raise awareness to actively participate in environmental management. Findings described in Section 5.4 regarding gap of legal standard and standard based on public perception in social monitoring and weak competency of society in environmental management showed that public should be educated to be involved in environmental management. It was regulated by law that society role is particularly social monitoring and informing government about environmental issues. If communities are trained to recognize inappropriate dumping, communities can do social monitoring and submit complaint to Local Environmental Management Agency for unlawful environmental activities of companies. This may improve PROPER result through provision of wider perspective of PROPER. In order to engage public in participation process, capacity building to enhance competency of society in participatory process is necessary to be done (Richards et al. 2004). Through participation in PROPER, public supports environmental management. Trust of public will also be developed through capacity building (Dietz and Stern 2008). When the participants were only given limited power and capacity to affect decision, the benefit of participation would not be achieved. (Burton et al. 2004) It was found out that, in the PROPER program, capacity building in terms of building relations was not conducted based on limited disclosure of information and lack of encouragement for public to submit complaint or information regarding companies’ environmental impact. Capacity building in association


with indirect involvement of public in PROPER through public complaint and partnership with community regarding social monitoring is necessary to improve the PROPER program. PROPER gives positive impacts to environmental management in Indonesia. These impacts include strengthen government’s regular monitoring activities, filling the gaps of regulation regarding community development program and provide legal framework about biodiversity protection by companies. PROPER is affecting society through increase of environmental quality in surrounding area, for instance through reforestation effort and through community development criteria especially for local community of companies that have achieved GREEN and GOLD ratings. Unfortunately, these positive impacts of PROPER were not acknowledged by public especially NGOs. In association with recognized impact criterion, positive impacts of PROPER to society should be exposed in order to encourage public to participate. It should be demonstrated that by caring for environment through take part in the participation process, it may result better quality of environment which is beneficial for society. When public recognized that their involvement in PROPER will bring positive changes for them, they would have reason and motivation for active participation. According to Davies et al. (2004), it based on the nature of human being to involve in participation when it is beneficial for them. Community should not be expected to recognize the advantage of participatory process due to lack of competency or motivation to investigate result of participation. It is rather the participation role to demonstrate this benefit out of agreed environmental decision (Davies et al. 2004). Improvement in participation process in association with exposing positive impact to society might be interested for NGOs to involve in supporting PROPER hence PROPER can yield more positive outcome.

7. Conclusion This thesis project is aimed to investigate the implementation of stakeholder participation Indonesia’s PROPER program. Based on built evaluation framework, the level of stakeholder participation was identified and the challenges in the implementations were also recognized. Based on that, ways of enhancing stakeholder participation process in order to improve the PROPER program were proposed. Enhanced stakeholder participation process is expected to support PROPER program in encouraging public to be more actively participate in persuading companies to be more environmentally friendly and to support environmental management in general. The implementation of stakeholder participation process was identified. According to Davidson’s “Wheel of Participation” (1998), participation level in PROPER includes information and consultation which consists of limited consultation and customer care. Based on the evaluation of participation process in the PROPER program presented in Section 5.1, there was absence of activities required to obtain genuine participation. There was no attempt of government to develop shared goal and building stakeholders’ capacity. Public perception of stakeholder participation in the PROPER program was that PROPER did not give opportunity for NGOs and local community to influence the PROPER rating. Transparency and conflict resolution was considered lacking. PROPER advisory board was regarded as not representing public especially NGOs. Public also did not recognized positive impacts of PROPER program to society. Public participation process can be enhanced by


realization of important criteria of successful participatory process that included in the applied evaluation framework and wide literatures. Factors that could hinder stakeholder participation process were identified. From these findings, ways of improving stakeholder participation were provided as follows. Efforts on improvement of stakeholder participation process in the PROPER program comprise incorporation of public social monitoring and public complaint mechanism, improving communication and other PROPER supporting mechanism in the internal and external of environmental government agency, allowing sufficient time and more dedicated human resources, stakeholder participation redesign, public information access and education about environmental management, partnership of society and government for social monitoring, and capacity building of NGOs to support PROPER through providing positive input to government. There are different perceptions and expectations of various stakeholders towards PROPER. Stakeholder participation is an appropriate tool to include diverse viewpoints into establishment of common ground hence yield fair decision and holistic outcome that widely accepted by public. Enhanced quality decision can be resulted from incorporate environmental information from local NGOs and community that has been proven to be important source of information (Section 5.3). Current condition of competency of stakeholders in technical aspect and participatory skill were captured. Capacity building would significantly improve participation of stakeholders the PROPER program thus increase public involvement in environmental management. Through these improvement, it support trust development of public to government. This report might also propose recommendations to environmental management effort in Indonesia in general. As described in Section 5.2, PROPER was perceived as not significantly contribute to environmental quality. It was also realized by the government, according to statement of one government representative, that PROPER alone cannot solve all environmental problems in Indonesia. According to Adnan (2009), even though PROPER has been successful in increasing compliance of companies and reducing pollution load to environment, there is still no direct correlation to the increase of environmental quality. This is because PROPER only focuses on industry which is not the only contributor in environmental pollution and the important contributors such as agriculture activities and domestic activities are not yet well controlled. Therefore, it is very important to formulate new policies and programs to control pollution from the activities with significant contribution to environmental degradation. It is very important to develop synergy between PROPER and other environmental program and other tools of environmental management in Indonesia in order to achieve good environmental quality.


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Appendix A. List of Informants

Table 7. List of Informants

PROPER Advisory Board

No Institution Position

1 PROPER Chairman of PROPER Advisory Board/ Professor in environmental management, School of Business and Management, Institut Teknologi Bandung, Indonesia

2 PROPER Member of PROPER Advisory Board/ ex-international community representative

Government


3 PROPER Secretary of PROPER/ Assistant Deputy Minister for Pollution Control of Mining, Energy, and Oil and Gas Industry under Deputy Minister for Environmental Pollution Control

4 PROPER PROPER Field verification team member/ Head of Subdivision for Surveillance and Monitoring of Oil and Gas Industry under Deputy Minister for Environmental Pollution Control

5 Ministry of Environment Assistant Deputy Minister for Public Complaint and Environmental Administration Compliance under Deputy Minister for Environmental Compliance

6 PROPER/ Provincial Environmental Management Agency of West Java Province

PROPER Technical Team Coordinator for West Java Province/ Head of Subdivision for Environmental Pollution Control

7 Provincial Environmental Management Agency of West Java Province

Government civil servant environmental investigator

Academia


8 Institut Teknologi Bandung, Indonesia Professor in Bioprocess Engineering, Department of Chemical Engineering, Faculty of Industrial Technology

9 Universitas Gadjah Mada, Indonesia Lecturer in Social Science and Political Science Faculty

10 Universitas Lampung, Indonesia Associate professor of Dept. of Agro-industrial Technology


Industry

No Companies Position 11 PT Aneka Tambang, UBPE Pongkor Staff of HES Department

12 PT Indonesia Power, UBP Kamojang

Senior supervisor for security and public relation

13 Associate expert for chemicals and environment

14 PT Pertamina Geothermal Energy

Assistant manager of public relation

15 Environmental specialist

Non-governmental Organizations

No Institution Position 16 WALHI (Wahana Lingkungan Hidup Indonesia) Campaign Manager for Mining and Energy

17 ICEL (Indonesian Center for Environmental Law) Advocacy staff

18 JATAM (Jaringan Advokasi Tambang) Campaign Manager

19 SatuDunia Manager of Knowledge Management

20 KIARA (Koalisi Rakyat untuk Keadilan Perikanan) Manager of Knowledge Management

21 DPKLTS (Dewan Pemerhati Kehutanan dan Lingkungan Tatar Sunda) Coordinator of Information and Communication Division

22 WALHI West Java Province Executive Director

23 Yayasan KEHATI (Keanekaragaman Hayati Indonesia) Director of Communication and Resources Mobilization 24 Yayasan SPEKTRA (Studi dan pengembangan Keberdayaan Rakyat) Executive Director

No Sub-district Position 25 Kertasari Farmer 26 Pangalengan Environmental activist

27 Pangalengan Village Chief Marga Mulya - Leader of Village Chief association Subdistrict Pangalengan (involved in community development program of PT Star Energy Geothermal (Wayang Windu, Ltd.)

28 Ibun Environmental activist 29 Ibun Neigborhood Leader in Laksana village/ Leader of Seedbed Community Group under PT Indonesia Power, UBP Kamojang

30 Ibun Worker in PT Indonesia Power, UBP Kamojang/ Leader of Community Empowerment Group under PT Indonesia Power, UBP Kamojang)

*All local community representatives are male with age ranging from 29 to 60 years old.


Appendix B. Profile of Interviewed Institutions/ Persons/ Local community

Table 8. Profile of Interviewed Institutions/ Persons/ Local Community

Government Institution

No Institution Profile

1 Ministry of Environment

The Ministry of Environment is the main government agency responsible for environmental management in Indonesia. It has seven deputy ministers. PROPER assessment is under Deputy Minister for Environmental Pollution Control and Deputy Minister for Toxic and Hazardous Substance, Toxic and Hazardous Waste and Waste Management (Dewi 2011; Kementerian Lingkungan Hidup 2011)

2 Provincial Environmental Management Agency of

West Java Province

The Provincial Environmental Management Agency of West Java Province is responsible for environmental management in West Java Province. The organization structure consists of four divisions which are Division of Environmental Governance, Division of Environmental Pollution Control, Division of Conservation, Division of Environmental Compliance and Partnership. PROPER assessment is under Subdivision of Education of Pollution Control. (BPLHD Jawa Barat 2013)

Academia

No Person Profile

1 Prof. Tjandra Setiadi

Professor in Bioprocess Engineering, Department of Chemical Engineering, Faculty of Industrial Technology, Institut Teknologi Bandung, Indonesia. He has been working with Ministry of Environment as expert in creating draft of environmental regulation of toxic and hazardous waste management and other regulation. (Source: interview)

2 Jamil Bahruddin

Lecturer in Social Science and Political Science Faculty, Universitas Gadjah Mada, Indonesia. He was involved in the team to formulate PROPER criteria of community development. Currently, he is the coordinator of PROPER assessment team for community development criteria. (Source: interview)

3 Dr. Udin Hasanudin

Associate professor in Department of Agro-industrial Technology, Universitas Lampung, Indonesia. He has been involved with Ministry of Environment in doing regulation revision, and with industry to increase their environmental performance, help them regarding industrial waste treatment or reuse which is related to achievement of better PROPER rating. (Source: interview)


Companies

No Companies Profile

1 PT Aneka Tambang,

UBPE Pongkor

PT Antam Tbk is a mining company which is the only state-owned enterprises which conducts exploration and mineral exploitation in Indonesia. One of the leading commodities PT Antam Tbk is gold. One of production and processing of gold located in Pongkor, Bogor Regency, West Java Province. PT Aneka Tambang, UBPE Pongkor has been participating in PROPER since 2003 and achieved BLUE PROPER rating, and then achieved GREEN PROPER rating four times in a row in between 2007 and 2011. In 2012, It achieved BLUE PROPER rating not because of decrease in performance, but because there is a change in the assessment criteria of PROPER. (Source: interview)

2 PT Indonesia Power,

UBP Kamojang

PT Indonesia Power was established on 3 October 2000 as a subsidiary of PT Pembangkitan Jawa Bali I. Indonesia Power operates eight Power generation Business Unit (UBP) and Maintenance Services Business Unit in strategic locations in Java and Bali Island, one of it is UBP Kamojang. PT Indonesia Power, UBP Kamojang achieved BLUE PROPER rating and then five times of GREEN PROPER rating until 2012. (Source: Indonesia Power 2011; interview)

3 PT Pertamina Geothermal Energy Area Kamojang

Pertamina Geothermal Energy (PGE), a subsidiary of PT Pertamina (Persero), was established in 2006 as mandated by the government to develop 15 Geothermal Business Working Areas in Indonesia. The Kamojang unit business run with capacity of 200 MW. PGE Area Kamojang achieved BLUE PROPER rating in 2003, GREEN PROPER rating until 2011, and GOLD PROPER rating in 2011 and 2012. (Source: Pertamina 2013; Pertamina Geothermal Energy 2013; interview)

Non-government Organizations


1

WALHI (Wahana Lingkungan Hidup Indonesia/ Indonesian Forum for Environment)

WALHI is an independent environmental organization, non-profit and the largest in Indonesia. It presents in 28 provinces with a total of 479 member organizations and 156 individual members (as of December 2011) and are actively campaigning at the local, national and international. WALHI opposes current model of development that economic globalization and corporate oriented. WALHI promotes solutions that will help to create sustainable environment and social justice for society. Strength and knowledge are obtained out of the work with communities that have been marginalized and victimized. We together do campaign locally, nationally and internationally (WALHI 2010).



2 ICEL (Indonesian Center for

Environmental Law)

ICEL is a non-governmental organization of environmental law which is independent, engaged in the research and development of environmental law, advocacy and community empowerment that seeks to realize the establishment of the principles of Good Governance Sustainable Development in Indonesia (ICEL 2013).

3

JATAM (Jaringan Advokasi Tambang/

Mining Advocacy Network)

JATAM is a network of non-governmental organizations (NGO) and community-based organizations (CBO) working on issues concerning human rights, gender, the environment, indigenous people and social justice in relation to the mining, oil, and gas industries. JATAM 's goals are to support Indonesian communities, especially indigenous communities, against the dehumanization and environmental destruction caused by the invasion of the mining, oil and gas industries (JATAM 2013).

4 KIARA (Koalisi Rakyat untuk Keadilan Perikanan/ Fisheries

Justice Coalition)

KIARA is a non-governmental organization established in 2003. This non-profit organization was initiated by WALHI, Bina Desa, JALA (Fishermen's Advocacy Network for North Sumatra), Federation of Fishermen Archipelago (FSNN), and individuals. Since its establishment, KIARA has been committed to strengthening fishers’ groups and people living in coastal regions and small islands, in order to obtain protection and welfare of their communities (Forest People Programme 2013).

5 SatuDunia

(OneWorld Indonesia)

SatuDunia Foundation Network is a collaborative network that is settled, in a relatively long period of time, and has common goals. SatuDunia in the network has the role and competence in the field of Information, Knowledge, Communication and Technology. SatuDunia is part of a global network OneWorld.net consisting of 11 regional centers and 1600 partner organizations around the world. (SatuDunia 2010).

6 WALHI West Java Province WALHI is an independent environmental organization, non-profit and the largest in Indonesia. WALHI West Java presents in 8 regencies/ cities with a total of 23 members and organizations that actively campaigned at the local level in West Java (WALHI Jawa Barat 2013).

7

DPKLTS (Dewan Pemerhati Kehutanan dan Lingkungan Tatar Sunda/ The Board of Forestry and Environmental Observer of Sundanese Region)

DPKLTS is an independent institution whose activities are focused on forest conservation and maintain environmental quality, and educating communities of forest villages. Forest and environmental damage in the region of West Java and Banten is getting worse and has reached a critical point (DPKLTS 2008).

8

Yayasan KEHATI (Keanekaragaman Hayati Indonesia/ Indonesian Biodiversity Foundation)

KEHATI is an independent, non-governmental grant-making institution aims to promote conversation and sustainable use of biodiversity resources in Indonesia for current and future generations nationally and globally. KEHATI funds and facilitates biodiversity conservation efforts made by NGOs, local communities, youth, scientist, professionals and other civil society members. To achieve its objectives, KEHATI support public awareness and education, community empowerment, policy advocacy, and networking at local, national and international levels (KEHATI 2013).



9

Yayasan SPeKTRA (Studi dan pengembangan Keberdayaan Rakyat/ People's Empowerment and Development Studies)

LP3ES a national NGO, on January 9, 1996 agreed to set up an NGO named SPEKTRA (People's Empowerment and Development Studies). SPEKTRA in carrying out the vision and mission are supported by various International agencies, companies and the government. Currently SPeKTRA works together with PT Unilever Indonesia community development program. (Source: interview)

Local community No Subdistrict Profile

1 Kertasari The subdistrict neighboring to PT Star Energy Geothermal (Wayang Windu Ltd.) and PT Chevron Geothermal Indonesia. (Source: interview)

2 Pangalengan The subdistrict where PT Star Energy Geothermal (Wayang Windu Ltd.) located. The company has community development programs for six closest village located to the company facilities including Margamulya village. (Source: interview)

3 Ibun The subdistrict where PT Pertamina Geothermal Energy Area Kamojang and PT Indonesia Power UBP Kamojang located. Both companies conducted their community development programs in this sub-district. (Source: interview)


Appendix C. Interview Questions

a. General interview questions in the evaluation framework of stakeholder participation in PROPER

Individual Profile Name: Position: Organization: Date of interview:

NGO Profile When it was founded: Legally listed as: since: How are you involved in/with PROPER? Please describe the work you do related to PROPER.

General question about involvement in and impact of PROPER 1. What has been your experience working with PROPER? 2. Do you think PROPER is working? 3. How do you think it is working well? How do you think it could work better?

Stakeholder participation in general and related to PROPER 1. Is there any evidence of public participation increase in environmental management? 2. What are some obstacles or limitations in the public participation aspect of PROPER? 3. What are your suggestions and expectation regarding public participation aspect of PROPER in

the future? 4. Are you aware of regulation about public participation? 5. Is PROPER implementation already fulfilling law of public information and public participation? 6. How is facilitation provided by PROPER as an organization? 7. Is there any evaluation regarding public participation aspect of PROPER? If yes, how is the

result? 8. Is there any attempt in increasing public participation aspect of PROPER? How?

Develop shared goals Is there any attempt in developing shared vision and goals of PROPER with society?

Capacity building 1. Is there any attempt in capacity building of society to more actively involve them in PROPER? 2. Should there be? 3. If so, how do you think it should take place?

Conflict Resolution 1. What is your opinion about the many protests regarding PROPER implementation? 2. How has this been followed up on by PROPER? 3. What has been done to prevent conflicts? 4. What is your opinion about resolution of conflicts or protests being done in PROPER

implementation?

Transparency 1. What is your opinion about PROPER transparency currently? Is there any plan to

increase it in the future? If so, how? 2. Would it be more useful if the whole information regarding assessment is disseminated?


3. What is the reason regarding the partially disseminated information (only color rating instead of whole information regarding the assessment)? Do you agree with this? Why or why not?

Representability of PROPER Advisory Board How do you think the representability of PROPER Advisory Board? Recognized impact Is there evidence that the decided rating influences the public, especially communities nearby industries?

Public involvement 1. Is public complaint taken into account in the decision making of PROPER rating? If so, how? 2. How is public been considered in PROPER? 3. Is public complaint followed up in PROPER? If so, how? 4. Can a public complaint significantly change/influence on decided color rating? 5. Have public complaints ever influenced or changed the decided color rating? For NGO: 1. From previous experience, how is the public capacity and opportunity considered in the decision

making of PROPER rating? 2. How is public consultation implemented in practice? (Who is consulted? At what stage? Where?

How?) 3. What has been done to encourage the public to give feedback? Is there a feedback provided to

their input?

PROPER criteria Do you think the current criteria of PROPER are adequate and sufficient to reach a sound assessment of companies’ environmental performance?

Specific question to PROPER advisory board: How is the public participation realized through advisory board, especially through each member?

b. Interview questions for Industry

1. Could you explain your company participation in PROPER? 2. Are there any advantages of participating in PROPER? If so, what/which? 3. How does PROPER affect your environmental performance? 4. Are there any disadvantages to participating in PROPER? If so, what/which? 5. Has being involved in PROPER changed the way your company manages its environmental

responsibility? If yes, how? 6. Are the neighboring communities on site involved in the environmental management of the

company? If yes, how? 7. Has the company had any interaction or dialogue with the local communities? If so, what? Have

you ever inform neighboring communities about PROPER? 8. What do you think about local communities being involved in PROPER assessment? 9. Do you think it would work? If not, why not? 10. Have you had any direct communications ever with the PROPER Advisory Board? 11. What do you think about its representation of communities and its credibility? Do you have any

objection or suggestion for PROPER Advisory Board?


12. Do you think that PROPER as a program functions well? Please explain? 13. How do you think PROPER could function better? 14. Do you agree that all results of PROPER assessments are disseminated publicly? Why or why

not? 15. What do you think about the standards of assessment criteria in PROPER? 16. Do you have any other suggestions for improving PROPER?

c. Interview questions for Academic

1. Could you explain your participation in PROPER? 2. What do you think about protest of NGOs to PROPER? 3. What do you think about NGOs standpoint and perception about environmental management in

Indonesia? 4. Do you think that PROPER as a program functions well? Please explain? 5. How do you think PROPER could function better? 6. What do you think about the standards of assessment criteria in PROPER? 7. Do you have any other suggestions for improving PROPER?

d. Interview questions for Local Community

1. What is the company working here near your community? 2. Do you know what the company does? 3. Has the presence of the company had any impacts/effects on the community, or changed the life

of you or your community in any way? If so, what/how? 4. Have you observed any negative environmental impacts of the company? 5. Have you observed or experiences any positive impacts of the company? 6. Could you please describe the general condition of the area (population and welfare)? 7. Have you heard of PROPER? If yes, how/from whom/ what do you know about it?

(If not, explain to local community what PROPER is) 8. Have you been involved in PROPER assessment?

If so, what was your experience with it? Would you be willing to be involved in the future? (If not, explain what PROPER assessment is, and ask them if they would be willing/interested to be involved)

9. Do you have any suggestions with how your community could be better involved with PROPER?

10. Is community involved in planning the program that included in CSR of company? Is there evaluation of the program that involved communities?

11. Have you had any communication/interaction with workers or representatives from the company? If yes, how when/who/what (explain)?

12. In general, what are the community relations with the company (good, bad or neutral)? 13. Have you been involved in PROPER assessment (being interviewed by PROPER Advisory

Board)?

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