Sustainable Livelihood Approach in Corporate Social Responsibility

by Adi Prasetijo & Ratna Amini, Paper for IPA Conference -2010


Corporate Social Responsibility (CSR) issues have a very massive growth in Indonesia. This can be seen with the Law No.40/2007 Law 40/2009 regarding limited company liability on social responsibility and the environment. This law has pro and contra on the implications. However, irrespective of the fact that it is important to get attention are how CSR programs that are run by many companies not only as a sticker, but the program can be significant, both for the company as well as targets of the program itself. The costs that incurred become useless if the outcome not measured. Even the benefit of the program is not optimal and sustainable.

Many factors that cause the CSR program are not running well. One of them is the lack of planning and coordination. So the program implementation is often overlapping not integrated and unsustainable that result in waste of budget. In advanced, this is cause new problems, both for companies and related stakeholders. In the end, not only the impact of the program succeed can not be measured moreover it will inflict the conflict, such as the prevalence is not the distribution program, the problem of local labor, and compensation issues. Otherwise, the CSR at same level will produce new conflict situation for the company.

Regarding to the main problem, so to maximize the success of CSR programs, we can use the Sustainable Livelihood Approach. The sustainable livelihood approach is not new approach in development area. It’s an approach to reduce poverty rank in some countries arisen by some international agencies. Many NGOs and international funding agencies, including UN use this approach for their programs to reduce poverty in many countries. The approach not only offers tool for analyze the situation but also offers comprehensive framework to solve the problem with stimulant actions. I believe, with the sustainable livelihood approach will make the company gain maximum benefits with minimum support.

Sustainable Livelihood Approach (SLA)
The sustainable livelihoods approach (SLA) is basically a method to develop appreciative of the livelihoods of poor people. It can be used in planning new development activities and in assessing the contribution that existing activities have made to sustaining livelihoods in around company or industry locations.
The two main components of the SLA are:
• a framework that support in understanding the complexities of poverty
• a set of principles to guide action to address and resolve poverty problem

The SL framework put people, particularly rural poor people, at the centre of thought that affect how these people create a livelihood for themselves and their households, along with the resources and livelihood assets that they have access to and use.

People in SLA are the main concern, rather than the resources or assets. SLA will identify the main constraints and opportunities faced by poor people, as articulated by them. It builds on these definitions, and then supports poor people as they address the constraints, or take advantage of opportunities. The framework is neither a model that aims to incorporate all the key elements of people’s livelihoods, nor a universal solution. Rather, it is a means of stimulating thought and analysis, and it needs to be adapted and elaborated depending on the situation.

The thought of sustainable livelihoods approach (SLA) was first announced by Brundtland Commission on Environment and Development. And then in 1992, United Nations Conference on Environment and Development starting used the idea as a broad goal to reduce poverty at international level. After that the idea of sustainable livelihood come up rapidly and was used by international agency (UNDP, DFID, Care International, SIDA, IDS, etc) which is they have own definition on sustainable livelihood.

Basically sustainable livelihood approach wants to aware of the asset and able to predict the shocks in way to develop comprehensive move toward reducing poverty. DFID’s definition of sustainable livelihood follows the one developed by IDS and which in turn is a modified version of the original definition elaborated by Chambers and Conway (1992):

A livelihood comprises the capabilities, assets (including both material and social resources), and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stresses and shocks and maintain or enhance its capabilities and assets both now and in the future, while not undermining the natural resource base (Lasse Krantz, 2001).

The definition of sustainable livelihood is definitely emphases to cover the household unit of the community. The approach should be makes sure the household unit is able gain maximum benefits from the program developed by agency. The objective of SL approach is to increase the agency’s effectives in poverty reduction by seeking to mainstream a set of core principles and a holistic perspective in the programming of support activities to ensure that these correspond to issues or areas of direct relevance for improving poor people’s livelihoods as we can see the framework in the below:

There are some components in the sustainable livelihood approach that defines in 3 main boxes, which are Assets, Vulnerability, and Transforming Structures & Processes Structures, and then livelihood strategic and livelihood outcomes as the result that we want to achieve.

First is the portfolio of assets, including stores, resources, claims and access. It’s more related to what people construct for their living, which includes both tangible assets and resources, and intangible assets such as claims and access. Assets are the resources people own or to which they have access. There are five categories of assets in the sustainable livelihood approach framework:
1) financial (e.g. cash, regular remittances, small livestock)
2) physical (e.g. land, housing, livestock, crops)
3) human (e.g. labor available to the household, knowledge, skills, education, health, self-esteem)
4) natural (e.g. water, rainfall, forests, land)
5) social (e.g. networks, rights, power, access to sources of influence ,membership in groups, extended family)

Assessing existing household assets can help project stakeholders to think of project strategies that protect and strengthen these assets.

Second is the mapping of vulnerability at the community. We deliberate the vulnerability in the 3 components: shocks, trends, and seasonability. Shocks, Trends and seasonability are external factors that influence all other components on sustainable livelihood approach within the framework: strategies, outcomes, assets, and structures, policies and processes. Shocks are disasters or sudden events – both human and natural – such as volcanic eruption, earthquakes and civil war. Trends refer to economic recessions, HIV/AIDS, environmental degradation, globalization, rural-urban migration, and political change. Seasonability is recurring conflict, poor crops, depressed food prices and recurring droughts or floods.

Transforming Structures & Processes Structures
Transforming Structures & Processes Structures are the organizations, institutions, and individuals who govern or otherwise have influence and power in society. They also include the beliefs, values, policies, markets or rules that influence how organizations and society functions. By examining these policy and cultural factors, along with asset status, you can get a fairly complete picture of power structures within communities or countries and how they affect the asset base of the poor and marginalized. This includes economic (markets), social (health centers and schools), and political structures and institutions.

Livelihood Strategy and Outcome
This box will mention the livelihood strategy to respond all situation regarding asset, the structure, and vulnerability factors. Livelihood strategy will be defined in to the livelihood framework to implement at the field. The livelihood strategy should be countered and answered the problem rooted at the community as the same time responds the vulnerability factors.

Livelihood outcome will contain the result of the program expected. The project outcome should mention the increasing degree of poverty line of the people and the basic need fulfillment. And then the project results according the vulnerability factors defined before. Potential livelihood outcomes can include more income, increased well-being, reduced vulnerability, improved food security, more sustainable use of the natural resource base, and recovered human dignity, between which there may again also be conflict.

Sustainable Livelihood Approach Principle Guiding

SLA has several guiding principles that support the framework. The guiding principles are:
1. People-centered. The livelihoods approach puts people at the centre of development. SLA put the people actively participate throughout the project cycle
2. Holistic. The livelihoods approach attempts to identify the most pressing constraints faced by, and promising opportunities open to, people regardless of where.
3. Dynamic. It seeks to understand and learn from change so that it can support positive patterns of change and help mitigate negative patterns.
4. Building on Strengths. An important principle of this approach is that it starts with an analysis of strengths, rather than needs.
5. Macro-Micro Links. Development activity tends to focus at either the macro or the micro level. The livelihoods approach attempts to bridge this gap, emphasizing the importance of macro level policy and institutions to the livelihood options of communities and individuals.
6. Sustainability. The notion of sustainability is a key to this approach. It should not be ignored or marginalize.
The SLA framework is presented in schematic form above and shows the main components of SLA and how they are linked. It does not work in a linear manner and does not attempt to provide an exact representation of reality. Rather, it seeks to provide a way of thinking about the livelihoods of poor people that will stimulate debate and reflection about the many factors that affect livelihoods, the way they interact and their relative importance within a particular setting. This should help in identifying more effective ways to support livelihoods and reduce poverty.

CSR and Sustainable Livelihood Approach

The thought of Corporate Social Responsibility is developed from the beginning definition that stated by World Business Council for Sustainable Development (WBCSD) in 1999. Some of institution varied definitions of CSR to support in implementation. CSR is not just philantropic mode but its business ethics mode of business that reflected in company image and operation.

Unfortunately the dilemma of CSR is still questioning by publics and NGO. Mostly the question is related to how far CSR can address and answer the root causes of poverty. The company mostly claimed sophisticated the success of CSR with fantastic numbers of funds given to the community, annoying the issue of human right and environment. The most problem of CSR related to the mining company is issue of depence of the local community to the company. The success of the CSR in some points develop the tension of depence of the local community to the public facilities and infrastructure that developed by company. The ideal objectives of the CSR program is should be developing the empowerment of the local community, whereas they can empower after mining operation of the company. Therefore CSR program of the mining industry needs a comprehensive approach that can showed the significant progressive and the effect of the program to the community.

Various tool in CSR is being introduced to the public which have objectives to support CSR program more effectives and efficients. The sustainable livelihood is kind of approach that proven able to reduce poverty rank in underdevelopment country. The framework of SLA is able to make company detect and analysis the potencies of the communirt as well vulnarability and structures factors. The framework of SLA presented here attempts to develop on the original SL framework, make it more “people-centred”, more complete in its coverage of key elements affecting people’s livelihoods, and more expressive of the principle issues that the Sustainable Livelihoods Approach aims to address. In particular it provides users with a more accessible means of understanding and analysing policies, institutions and processes and emphasises the central importance of linkages between different elements in the framework. It thus aims to provide facilitators of Sustainable Livelihoods analysis with an improved set of tools to support this process (Lasse Krantz, 2001)

The framework shows how the sustainable livelihood framework helps improve the quality of CSR implementation developed by company. The sustainable livelihood approach in this case is able to promote integration of different sectors within CSR-supported projects and programs. They are also highlights the interrelationship of relief, rehabilitation and development within projects that sometimes occur all at the same time; and opens project boundaries to better understand the influences of national and global issues, policies and other actions (macro-level) on individuals, families, and communities (micro-level).

How and when to implement SLA
When and how to SLA in CSR program? SLA program is an approach that integrated with planning and monitoring evaluation program. The position of SLA actually is a guidance at the project cycle which start on planning, implementation, and monitoring – evaluation.

Preferably, we can use the SLA at the beginning of the CSR program. SLA in this term has a function as analysis tool along with other tools. SLA will give effective impact in process of planning as main guidance to develop CSR program that developed by company. Meanwhile SLA can be function as monitoring and evaluation tool with using it as framework to check and identify the progress based on key component analysis; assets, vulnerability, and structure.


CSR is not settle document and concept. CSR is the living concept that able to integrate with other paradigm and framework in order to improve human live. The sustainable livelihood is paradigm of development that focus on reducing poverty with adequate framework and principle. Some benefits for the company if implemented the sustainable livelihood approach in theirs CSR program.

Adi Prasetijo, Arif Budimanta, Bambang Rudito, Corporate Social Responsibility: Jawaban bagi Model Pembangunan Indonesia, ICSD Press, 2003
Ian Scoones, Sustainable Rural Livelihoods: A Framework for Analysis, IDS Working Paper 72, 1998, Institute of Development Studies, England, 1998
Lasse Krantz, The Sustainable Livelihood Approach to Poverty Reduction, (SIDA) SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY, Stockholm, February 2001

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