1.

1 Executive Summary
Economic development and improved welfare of its citizens is one of the crucial goals
of the Indonesian government. In the National Long-term Development Plan 20052025 (RPJPN), the governments 11 priority areas include education, poverty
reduction, energy, and investment in the business sector as keys to development.
Chevron Indonesia recognizes that it is a major partner of Indonesia in building the
capacity necessary to achieve national and local economic and community
development goals.
Chevrons partnership with the people and the Government of Indonesia can be traced
as far back as 1924. Currently, Chevron delivers approximately 40% of national oil
production from its operations in Riau and East Kalimantan and provides electricity to
millions of Indonesians from its geothermal projects in West Java. Through its
subsidiaries, PT. Chevron Pacific Indonesia and Chevron Indonesia Company, they
conduct oil and gas operations. Chevron also manages geothermal projects through
Chevron Geothermal Indonesia, Ltd., and Chevron Geothermal Salak, Ltd., in
Indonesia.
Chevrons operations in Indonesia generate economic and social impacts to the
Indonesian economy. This study is comprised of two parts: (1) the economic
contributions to Indonesia based on Chevrons operations and capital spending in
Indonesia for 2009 to 2013; and (2) the impacts of Chevrons social investment
programs in the communities it operates in. In analyzing Chevrons economic
contributions, the study focuses on its upstream operations in Indonesia. This study
was commissioned by Chevron Indonesia and a partnership between the University of
Indonesias Institute for Economic and Social Research (LPEM) and IHS was
established in order to effectively deliver this analysis.
The objective of measuring Chevrons economic footprint in Indonesia is to fully
size the companys economic influence by capturing all of the production, supplychain and income effects associated with its operations.

LPEM and IHSs comprehensive assessment of Chevrons contribution to the

Indonesian economy, as measured in GDP or value-added contribution, jobs, labor
income and government revenues support the fact that it is a partner for the countrys
development. The results of the study are also benchmarked against other key sectors
within the economy and validated through the experiences of beneficiaries of its
social programs.
The economic impact analysis (EIA) begins with Chevrons reported schedules for
capital expenditures (capex), operating expenses (opex) and production. These data
serve as the primary inputs to the models used by the LPEM/IHS team to quantify
Chevrons contribution to the Indonesian economy. The data and models are then
supplemented with additional information gathered from government and other public
resources to validate model assumptions and Chevron data. In addition, IHS Global
Insight forecasts and the IHS World Economic Services database are used to update
the Input-Output model of the Indonesian economy. Publicly available data from the
Ministry of Finance, and Ministry of Energy and Natural Resources and SKK Migas
are referenced for fiscal contribution analysis.
A complete picture of Chevrons role in the Indonesia economy is established through
the examination of three tiers of Chevron economic contributions:

Results of the LPEM and IHS EIA indicate Chevron maintains a significant role in the
Indonesian economy. In 2013 alone, Chevron and its extended value chain contributed
Rp125 trillion to the nations gross domestic product (GDP) and generated Rp101
trillion in government revenues through government lifting entitlements and taxes. In
the same year, Chevron directly employed 6,219 workers and supported another
259,247 jobs through its business activity with tier-1 suppliers and their extended
supply chains.
Additional key findings include :
Chevrons operation generated government revenues for Indonesia
approximately Rp455 trillion in five (5) years for 2009 to 2013, including its
partners, which is more than enough to construct the Trans-Sumatra highway
from Aceh to Lampung which is 2,700km.
The average annual government revenue for Indonesia from Chevrons operations of
approximately Rp91 trillion was equivalent to 7.7% of the State Budget, including
direct suppliers and the extended supply chain. This is enough to build 41,000 health
clinics.
Chevrons Indonesian operations contributed more than Rp120 trillion to the
nations Gross Domestic Product in 2013, accounting for 1.4% of Indonesias
GDP this is equivalent to the construction of 46,000 primary schools (Rp2.7
billion each).
Chevrons operations generated Rp7.7 trillion of personal income for
working people in Indonesia including Chevron employees and its partners in
2013. This is enough to pay for the secondary tuition fee for 1.8 million
students.
The companys operations supported more than 260,000 direct, indirect and
induced jobs across a broad range of industries in 2013 enough to provide
employment opportunities for the working age population of Yogyakarta city.

 Every Chevron job supported an average of 36 other jobs in Indonesia from

2009 to 2013.
Every Rp10 trillion of Chevron direct local spend in 2013 drove another
Rp7.2 trillion in additional output for contractors and suppliers.
Another way to identify economic benefits from Chevrons activities in the country is
to understand the impact of the companys social investment projects these are the
voluntary investments that Chevron makes to support the local communities in areas
where it operates. Thus, the second part of this report uses a Social Program Analysis
to capture data encumbered by uncertainty or nuance (e.g. peoples perceptions,
values and priorities) that can demonstrate outcomes or cause-and-effect relations
directly from the community projects that Chevron invests in with its partners. This is
a more qualitative approach to demonstrating the economic and social value of
Chevrons social investments in Indonesia.
Chevron has several social investment programs in place that focus on making
education accessible, improving higher education quality, and development of human
capital through skills transfer and the promotion of entrepreneurship. The various
programs target local communities and its members in the Riau Province, East
Kalimantan and West Java region. In particular, the programs are:

Improving access to Education

i. Darmasiswa Chevron Riau Scholarship (DCR)
ii. Polytechnic Caltex Riau (PCR)
iii. University Partnership Program (UPP)

Enhancing opportunities for Economic Development

i. Vocational Training for Employment and Entrepreneurs (VOTEE)
ii. Local Business Development (LBD)
iii. Microfinance & Entrepreneurship Advisory

To understand and demonstrate the effects of Chevrons programs, interviews with

key stakeholders were conducted by LPEM and IHS in December 2014. Each

stakeholder shared their experience and knowledge on the circumstances prior to the
implementation of the programs and the impacts it has created for the beneficiaries.
Apart from their experience and knowledge on the program, stakeholders were also
able to share their feedback, comments and suggestions on how to improve the
program (please see Appendix for more details). The interviews were also an
instrument to evaluate the programs effectiveness. In total, there were 22
stakeholders interviewed for the six programs. Most of them are direct beneficiaries
and administrators of the programs. Their responses and insights revealed the impacts
of Chevrons programs in their lives and their community.

1.2 Background
Corporate Social Responsibility (CSR) is the responsibility of a business
organization on the impact of decisions and activities on society and the environment
that are transparent, ethical, consistent with sustainable development and social
welfare, pay attention to the expectations of stakeholders, in accordance with
applicable law, in line with norms of international behavior, and is integrated in the
company's organizational management. In Indonesia, the regulation of CSR one of
them contained in Law No. 40 Year 2007 Article 1 of the Limited Company.
CSR in the company not only faced with the responsibility based on the Single
Bottom Line alone, but must be based on the Triple Bottom Line, a breakthrough
concept of CSR issued John Elkington through the concept of "3P" (Profit, People,
and Planet) in 1997. Synergy of these three elements is key to the concept of
sustainable development. Explanation 3P principles, namely: profit, the company still
must be oriented to an economic benefit that allows it to continue to operate and
develop; people, companies must have concern for human welfare; planet, the
company cares about the environment and sustainability of biodiversity.

Source: http://www.planetprofit.co.uk
Chevron Geothermal Indonesia, Ltd. CSR programs in 2005 are health,
education, economic development, environment, and infrastructure. However, the
three main pillars of the CSR program Chevron Geothermal Indonesia, Ltd. including
health, education, and economics. CSR Program Chevron Geothermal Indonesia, Ltd.
in economics is called the local economic development or local economic
development (LED). The program is located in two districts, Pasirwangi and
Samarang. Both districts are a region that is located close to the working operation
Chevron Geothermal Indonesia, Ltd.
Chevron Geothermal Indonesia, Ltd. CSR program will be described into
several phases, as follows:
1. Providing capital. This activity is an activity the provision of capital for businesses
agroindustrial fragrant roots as businesses built to increase production in terms of
quantity. Providing capital includes the type of giving capital, capital delivery
mechanism, the level of provision of capital and so forth.
2. Coaching / Training. This activity is carried out by the cooperation CSR partner
PUPUK as Chevron Geothermal Indonesia, Ltd. in Local Economic Development
(LED) program to the agro-industry businesses fragrant roots as a target which aims

to enhance entrepreneurial skills (quality). This variable will describe the formation
mechanism applied to entrepreneurs trained partners and type of activities.
3. Assistance entrepreneurship. This activity is mentoring activities agroindustrial
businesses fragrant roots in terms of production techniques. Assistance will be
targeted businesses, assistance mechanism, and the type of assistance.
4. Marketing product. This activity is an effort Chevron Geothermal Indonesia, Ltd. to
the partners as one of the activities of economic empowerment through the expansion
of the range of marketing.
1.3 Challenge
According to some people, CG (Chevron Geothermal) has several problems:
1. The lack of transparency of what is actually taking and will do CG and
their impact on the environment and surrounding communities in the
perspective of ecological, social, cultural and economic.
2. CG are not able to resolve the various issues that arise in the community
as a reaction to the policy CG itself. During this time, CG only can reduce the
problem but was not able to finish it.
3. The decision makers at the executive level is very stiff, so not maximal
workers and superiors.
1.4 Ethical Justification
Strategic CSR runs the greatest risk of being perceived as self-serving behavior on the
part of the organization. This type of philanthropic activity targets programs that will
generate the most positive publicity or goodwill for the organization. By sup- porting
these programs, companies achieve the best of both worlds: They can claim to be
doing the right thing, and, on the assumption that good publicity brings more sales,
they also can meet their fiduciary obligations to their shareholders. The strategic CSR
will also provides the company in balancing the creating of economic value with the
societal value, it also could provide chevron to manage their stakeholders
relationships this could be refer to the lack of transparency and the impact on the its

surrounding communities in the perspective of ecological, social, cultural and

economics. According to the challenge, in which chevron faced, they are not able to
resolve the various issur in the community and also the decision makers at the
executive level is very rigid, whereas the strategic CSR could manage the relationship
between the company and stakeholders by identyfing and responding to the threats
and opportunities that faced by the stakeholders; This type of CSR could also
developing a sustainable business practices, and deciding the organizations capacity
for philanthropic activities, in which from the perspective of our team could be able to
finish the problem that Chevron faced, rather than just reduce the issues.
2.1. Analysis of Stakeholders
According to 2014 Corporate Social Responsibility Report Highlights, the internal
stakeholders of Chevron are listed below:
External Stakeholders
Internal Stakeholders

Host Government
Investors

Customers
Employees

Local Communities
Board of Director
2.2. Analysis of existing CSR

Projects
In CSR activities of Local Economic Development (LED), Chevron Geothermal
Indonesia, Ltd. has been working with non-governmental organizations (NGOs)
PUPUK (Perkumpulan Untuk Peningkatan Usaha Kecil) located in Garut.

The

position of PUPUK as an organization is to implement agency needs to planning,

implementating and evaluating program of Local Economic Development (LED) to
CSR of Chevron Geothermal Indonesia, Ltd. In Samarang and Pasirwangi Chevron
Geothermal Indonesia, Ltd. only provides its equity. Indefinetly, Chevron Geothermal
Indonesia, Ltd. only facilitates in the terms of capital, but not limited to the technical
implementation of the program called Local Economic Development (LED), Chevron
Geothermal Indonesia, Ltd. is implemented by NGOs.

Initially, the CSR program Chevron Geothermal Indonesia, Ltd. is focused in the
areas of infrastructure, such as the construction of the mosque, educational facilities,
bridges and so forth. However, beginning in 2009, as shown in Table 2 CSR program
Chevron Geothermal Indonesia, Ltd. pengembanagan began to be directed in the local
economy. Local economic development was initiated by Village Sukakarya with
Woven Roots Wangi and Rural Sukalaksana with Bag Folding and Cooperative
Development. While other villages that have not been included in the CSR program
for local economic development but the CSR program Chevron Geothermal
Indonesia, Ltd. still in the field of infrastructure. Then in 2010, the development of
local economy grow to several villages, namely Sukalaksana, Sukarasa, Sirnasari,
Cisarua. So also in the next year developing a local economic development to several
other villages. In the year 2010 there were empty tables which Sukakarya village who
did not get the program submitted late because the village head of the CSR program.
Chevron Geothermal Indonesia, Ltd. CSR program is focused in the areas of
infrastructure, such as the construction of mosque, educational facilities, bridges and
so forth. However, in 2009, Chevron Geothermal Indonesia, Ltd. CSR Program began
to be directed in the local economy. Local economic development was initiated by
Desa Sukakarya with Tenun Akar Wangi and Desa Sukalaksana with folding bag and
cooperation development. While other villages that have not been included in the CSR
program for local economic development but the Chevron Geothermal Indonesia, Ltd.
CSR Program still in the field of infrastructure. Moreover, in 2010, the development
of local economy grow to several villages, namely Sukalaksana, Sukarasa, Sirnasari,
and Cisarua. In the next year the development of a local economic will be engaged to
several other villages.
One of the business man assisted CSR Chevron Geothermal Indonesia, Ltd. which
engaged in the development of the local economy is agro-industry fragrant roots in
Samarang. The fragrant root agro-industry located in three villages namely
Sukakarya, Sukalaksana village, and Desa Cisarua. The agroindustry of Sukakarya is
fragrant roots, in the form of weaving Akar Wangi, Desa Sukalaksana is hand-crafted
goods, Desa Sukalaksana is hand-crafted goods of fragrant root and Desa Cisarua is
Cultivation fragrant root form. It can be seen that for the local economic development
of agro-industry fragrant roots began in Sukakarya village in 2009. But in 2010, Desa

Sukakarya has not received the program, because the program filed late. But in Desa
Sukakarya, the CSR program is still ongoing under the guidance of CSR Chevron
Geothermal Indonesia, Ltd. in 2009. However, in 2010 there is also a villages called
Desa Cisarua and Desa Sukalaksana with local economic development for agroindustry with fragrant roots. Then in 2011, only Desa Sukakarya and Sukalaksana
with local economic development that engaged in fragrant roots, while Cisarua
Village is not covered by local economic development agroindustrial fragrant roots.
But the economics of local development programs in Desa Cisarua (2010) is still
continuing to the next year under the guidance of Chevron Geothermal Indonesia, Ltd.
CSR Program.
2.3. Business and Etchical Justification of Project
Strategic CSR runs the greatest risk of being perceived as self-serving behavior on the
part of the organization. This type of philanthropic activity targets programs that will
generate the most positive publicity or goodwill for the organization. By sup- porting
these programs, companies achieve the best of both worlds: They can claim to be
doing the right thing, and, on the assumption that good publicity brings more sales,
they also can meet their fiduciary obligations to their shareholders. The strategic CSR
will also provides the company in balancing the creating of economic value with the
societal value, it also could provide chevron to manage their stakeholders
relationships this could be refer to the lack of transparency and the impact on the its
surrounding communities in the perspective of ecological, social, cultural and
economics. According to the challenge, in which chevron faced, they are not able to
resolve the various issur in the community and also the decision makers at the
executive level is very rigid, whereas the strategic CSR could manage the relationship
between the company and stakeholders by identyfing and responding to the threats
and opportunities that faced by the stakeholders; This type of CSR could also
developing a sustainable business practices, and deciding the organizations capacity
for philanthropic activities, in which from the perspective of our team could be able to
finish the problem that Chevron faced, rather than just reduce the issues.

References
Elkington, John. (1998). Cannibals with forks: The Triple Bottom Line in 21st
Century Business, Gabriola Island, BC: New Society Publishers.
http://www.chevronindonesia.com/en/business/geothermal.aspx
http://www.chevronindonesia.com/documents/transcript_Geothermal.pdf
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th
http://www.menlh.go.id/DATA/Model_CSR_Bidang_Lingkungan.pdf
http://repository.unhas.ac.id:4001/digilib/files/disk1/164/--adeaprilia-8154-1-14-adear.pdf
https://www.chevron.com/stories/geothermal
http://www.ucsusa.org/clean_energy/our-energy-choices/renewableenergy/environmental-impacts-geothermal-energy.html#.VySG0DB97Dc