A Literature Review based on Corporate Social Responsibility and

Sustainability within the accommodation sector in Bali,

Indonesia.C3430301

The Sustainable BusinessBA Honours International Tourism Management

Lisa Gorton, Dr Ulrike Kachel

18/4/16 (2,916 words)

1. Introduction

The aim of this literature review is to critically evaluate Corporate Social

Responsibility (CSR), Sustainability and Ethics and identifying the main issues

concerning CSR and Sustainability whilst reviewing the literature. The overall focus

will be the accommodation sector in Bali Island, Indonesia.

The literature review will incorporate and examine the definitions of CSR, Ethics and

Sustainable Tourism and the challenges the accommodation sector faces in regards

to Economic, Environmental and Social issues.

2. Literature Review

2.1 CSR Overview and Ethics

There are many definitions used to describe the meaning of Corporate Social

Responsibility (CSR) and the concept has become a progressively recognised term

in recent decades (Chung & Parker, 2010). The World Business Council for

Sustainable Development (2016) defines CSR as the attitude and commitment of a

business to behave ethically as well as contributing to economic development while

taking into consideration the quality of life of local communities and the whole society

at large at an organisational level. A business becomes sustainable when it ensures

that the day to day operations of the company has “economic prosperity,

environmental quality and social justice” (Cherapanukorn & Focken, p.199 2014).

Many organisations are becoming much more aware of the concept of CSR and are

embracing it into everyday operations. However the claim that companies engage

with CSR is still widely seen as economic benefits and to improve the overall image

of the company (Cherapanukorn & Focken, 2014).

Investigating the accommodation sector in Bali it is evident that the tourism and

hospitality industry claims to use the concept of CSR but finds difficulty to see

progress and how businesses demonstrate the impacts and the changes because of

the lack of the worldwide recognised definition and guidelines on CSR

(Cherapanukorn & Focken, 2014). Similarly by McWilliams et al (2006) who defines

CSR as when a business is contributing to social welfare beyond what is expected of

them financially. Conversely Friedman (1970) argues that CSR is usually just in the

interest of the employer, employees and of the stakeholders involved and that it is

mainly focused on economic returns instead of trying to be sustainable.

The vast increase in development and tourism in Bali aims to eliminate poverty, to

conserve nature and the enviroment as well as resources and to preserve the local

culture by creating a positive image to other countries (Satuwa, 2012). Developing

an island such as Bali has many implications however it is essential that actions are

carried out sustainably and that all levels of the tourism industry make efforts in

participating in Corporate Social Responsibility (CSR).

In the tourism industry there is also the concept of “greenwashing” as many

organisations claim sustainability however do not follow up with the appropriate

actions (Stambach & Surmeier, 2013). As the definition of sustainability is often

misunderstood many organisations market their companies as “ecotourism” however

the reality is that they are dishonest and are “greenwashing” for marketing or media

attention (Self et al, 2010).

An awareness of sustainability and ethics is causing potential customers and

organisations to question if actions are morally inclined and expectations have

increased in regards to caring for the surrounding world (Holcomb, Upchurch &

Okumus, 2007). Examining the attitudes of consumers towards sustainable tourism,

it is also noted that customers say they are willing to pay more towards making their

holiday sustainable (Dodds et al, 2010).

Research by Trianasari (2015) explores the distribution of CSR funds in Bali and

explains how there is a CSR program including activities such as visiting

orphanages, local child education, cleaning activities on the beaches and park areas

and many other worthwhile sustainability programmes. Improving productivity and

efficiency can be positive impacts generated from a CSR programme however it is

still important to understand whether organisations are genuine or whether they use

it as a marketing ploy (Trianasari, 2015). The increase in tourism causes ongoing

issues, Miller (2001) states how the lack of ownership is ruining the regions in which

tourism operates because there is no sense of responsibility and no real vision for

the future.

Sustainable tourism also known as Eco-Tourism refers to the Economic, Social and

Enviroment aspects of the development of tourism when controlled with

“development guidelines and management practices” (Lansing & Vries, P.77 2006).

There are many mixed definitions used to describe Sustainability and the concept

has often been described as ‘‘patchy, disjointed and often flawed with false

assumptions and arguments’’ (Liu, 2003 cited in Lansing & Vries, 2006). WCED

(1987, p.2 cited in Dodds and Joppe 2009) defines sustainable tourism as

“development that meets the needs of present generations without compromising the

ability of future generations to meet their needs”. Many small islands with warm

climates depend on sun, sea and sand tourism and it is now increasingly important

to ensure long term viability (Dodds et al, 2010).

In developing countries it is essential for tourists to understand whether it is ethically

viable to visit as many countries are controlled by other organisations other than the

local people (Hudson, 2006). As Pryor (2015) argues it is essential to be informed of

laws and be politically aware when visiting Bali to ensure respectful tourism.

2.2 Economic Issues in Bali

There are many reasons why the accommodation sector adopts the concept of CSR

(Argandona & Hoivik, 2009). One reason is economic benefits and to make as much

profit as possible and that is what primarily encourages businesses to start using

CSR (Friedman, 1970). Chappel (2005) states how it is believed that Asia is behind

in CSR compared to Western Countries as the Western Countries are associated

with higher levels of economic wealth and this then results in lower CSR activity.

Gurtner (2006) undertook research on the economic impacts on Bali and states how

The United Nations Development Program and the World Bank helped Bali become

a tourism destination in the early 1970s. However it was primary focussed on a

smaller market of tourists but as the tourism began to grow Balinese became reliant

on tourism instead of traditional agriculture.

The impact on rural development in Bali is causing an alarming increase of

urbanization however The International Labour Organisation booklet for Bali,

Indonesia (2012) states the positive economic benefits of developing suburban areas

with the recreational facilities that locals can use such as theme parks, shopping

centres and hotel swimming pools. The urban population of Bali has more

disposable income and improved living conditions because of the development of

tourism and this is also going to benefit the rural economy in regards to healthcare,

education and community needs. The International Labour Organisation (2012)

argues that development in rural areas will be sustainable and agriculture will be at

the heart of the programmes creating special interest tourism, eco-tourism lodges

and accommodation in local areas as well as farm- based tourism.

Nonetheless the integration of business and the society still presents ethical issues

as Porter and Kramer (2007) state that the driven economic benefits still rely heavily

on the enviroment, employees and host communities in which they operate and that

the programmes primarily support business goals.

Another issue identified Gehrmann (2000) is the concept of Leakage in Bali which

also provides concern as many International Businesses operate and local

communities cannot gain from tourism. Although there is promotion to tourists to

experience the real Balinese atmosphere such as using local accommodations and

restaurants owned by the Balinese to strengthen the local economy the foreign

owners and stakeholders are still present and powerful (Suryawardani et al, 2014).

However The ILO (2012) have established goals to “reduce leakage, reduce poverty,

preservation of culture and society, gender equity and environmental protection,

employment creation, promotion of green jobs and environmentally friendly products”

and ensuring that tourism increases the livelihoods and the quality of life of all the

Balinese population.

Tourism in Bali, Indonesia has become extremely popular with visitors from all over

the world for many reasons including the climate, exotic beaches and volcanic

mountain peaks (Gurtner, 2006). In 2008 Bali attracted 4.7 million tourists with the

tourism economy providing 481,000 jobs which provides a balanced argument (Cole,

2012).

2.3 Environmental Issues in Bali

Environmental issues are seen as one of the main issues in regards to CSR and it is

becoming an increasing worry for the accommodation sector in Island destinations

(Chung & Parker, 2010). Graci et al (200) states that problems include the

overdevelopment of the enviroment and the increase of dependency of the host

community on economic tourism benefits which then increases pollution and strains

on the enviroment. King (1999 cited in Bramwell 2004) also states that the lack of

local financial capital results in giving power to foreign stakeholders which do not

take into consideration the economic, social and environmental issues of the

destination. There are many issues in Bali with the constant exposure of resources

and this can then result in harmful consequences to the island as well as the local

people (Gibbons & Fish, 1989). Environmental Issues in Bali, include the lack of

water on the Island and waste pollution. The demand on limited resources is a world

problem and the accommodation sector in Bali needs to preserve and care for the

land to ensure an unspoilt enviroment for customers and the local people present

and future (Hampton & Jeyacheya, 2015). Measuring sustainability in tourism terms

on Islands such as Bali will result in being less harmful than to build and develop in a

Boosterism manner (Dodds, 2010). Butler (p.4, 2006) was keen to communicate that

destinations such as Bali need to “maintain their natural aesthetic appeal in order to

maintain the tourism numbers”.

A serious issue in Bali is the availability of water. Water is essential for tourism as it

is a crucial element for all human activity and it is currently a scarce resources for all

tourism industries (UNWTO, 2003). With the increase in climate change the hydro-

ecology systems are extremely weak in developing countries because of the lack of

water infrastructure (Lenz, 2001). Tourists reportedly use 65% of the water in Bali

and that 85% of the tourism economy is not in the hands of the Balinese people

increasing strains on the enviroment as foreign stakeholders are exploiting the

resources (Cole, 2012). However even stakeholders need to ensure that they are

involved in looking after the enviroment and educating local workers. According to

the Environmental Protection Agency in Bali the water in most places is unfit for

human consumption and locals are struggling even though tourists have gallons to

waste on recreational facilities (Cole, 2012).

An essential way to ensure that sustainability is being achieved is to create

benchmarks and standards. Green Globe 21 and ASEAN (2016) have established

standards for Asia which it expects from accommodation facilities. The standards

include energy and water use as well as the amount of solid waste which is

produced by hotel operations (Green Globe, 2016).The Green Globe 21 and ASEAN

organisations collect annual data on the hotels and compare it to a sustainability

criteria of energy and water consumption, resource conservation, water management

and biodiversity conservation, the data collected is then used as a best practise to

improve the tourism impacts (Green Globe & ASEAN, 2016). Bali has won awards

as one of the most sustainable areas in Indonesia, however even the certifications

come at a high cost as small to medium enterprises are required to pay for

certifications (Dwipayanti, 2015). Bohdanowicz et al (2011) in the Hilton “We care”

programme states that it is important to carry our environmental concerns from all

sectors and that engaging employees will only increase the level of motivation of the

employees as they can see that something is being done about environmental

concerns.

Waste is another serious issue in Bali which is causing increasing environmental and

health concerns, The R.O.L.E Foundation, (2016, Rivers, Oceans, Lakes, Ecology)

has introduced programmes such as “Ego-Surf Rescue” and “Waste to Wonder”

which aim to reduce the rubbish and waste on the streets of Bali and the beaches by

recycling and educating local communities and tourists on the importance of the

programmes.

A good example of sustainability within the Bali accommodation sector is The

Rezidor Hotel Group named as the World’s Most Ethical Hotel Company which is

very much present in Bali, Indonesia and Asia. The Hotel group is the leading

company in the ”Ethisphere Institute” in the 2016 list of the World’s Most Sustainable

Hotels (O’Neil, 2016). The programme is built on three main concepts of “Think

Planet, Think People, Think together” in all of the 40,000 hotels under the Carlson

Rezidor Hotel Group name (O’Neil, 2016). The organisation ensures reduction in

energy, water and waste with the Earth Check benchmarks which cover all CSR

aspects such as environmental, social, energy, region and climate Zone and all

benchmarks include the development policies, waste management, paper usage,

and chemical use as initiatives (Earth Check, 2016). The Rezidor Hotel Group

operating in Asia has a high standard of Ethical and Sustainable practices in place

which is beneficial to the local communities as well as the enviroment and economy.

2.4 Social Issues in Bali

Social issues are an essential part of tourism as not only does it affect the host

community but also the tourists experience (Bell, 2014). Gibbons and Fish (1989,

cited in Ingram 1995) argue that the issues with tourism being pushed towards the

densely populated regions of Bali has and is causing dilemmas concerning loss and

change of local culture. However the increase in tourism in Bali has contributed to

better standards of living, income, and jobs even if there has been an influx of

tourists (Bell, 2014).

Indonesia can no longer be characterised as a nation of “religious peasants in rice

fields” as Indonesia is on the way to total modernisation and development

(Gehrmann, p. 12 1994). Loss of culture has been happening since the 1980 study

from Poffenberger and Zurbuchen with reports that show that village families that

once used to make profit from rice agriculture have now evolved into selling

handicrafts and performing dramatic arts as a source of family income.

The increasing popularity of tourism in Bali has resulted in a change of power and

many large organisations and developments have taken over small scale tourism

entrepreneurs leaving Balinese locals secondary on their own island which is

causing conflict between stakeholders and the ethnic groups (Hampton &

Jeyacheya, 2015).

Gehrmann (2000) states how the increasing number of Australian stakeholders and

owners of what once used to be local businesses has increased and the Balinese

population is experience exploitation within poor working conditions. The structures

of local, regional and nation power has caused the Balinese population to increase

efforts in renegotiate their social position (Gehrmann, 2000). Gehrmann (1994)

argues that tourism has uprooted fishing communities in small villages from their

livelihood to create large scale recreational facilities which locals are expected to

work in as strangers on their former homes.

Bali is known as the main holiday destination because of the proximity to many

Australian tourists however many Australian visitors are buying second homes and

establishments such as bars and restaurants with strong stereotypical influence of

their own culture in many of the popular Bali Regions (Gehrmann, 1994). It can be

argued that Australian and foreign stakeholders are employing and educating the

local Balinese people however the concept still has social impacts on the local

people as they feel secondary in their own country (Bell, 2014). A more recent study

by Saunders et al (2016) states that Australians are now labelled as “”Fly in Fly Out

workers” as they are flocking to work in Bali as it is much cheaper than staying in

their own country. Social issues are however are gaining increasing attention and the

change in power, poor working conditions and exploitation of culture is effecting the

Balinese population (Picard, 1990). Bali described only as the “most exotic of the

exotic islands” is under threat with the increase in development and it was recorded

in 1992 that there were 20,000 hotels under construction causing deforestation and

uprising of local villages increasing pressure on the Balinese Culture (Cole, 2012).

Conclusion

In conclusion there are many issues that are explored within sustainability in the

accommodation sector in Bali Indonesia and all tourism sectors should be aware of

the main factors such as Water and Waste problems when developing CSR

strategies. Water is a scarce resource in Bali as in most Islands and it is essential

that the accommodation sector participates in water and waste reduction as

demonstrated by Green Globe 21, ASEAN and The R.O.L.E Foundation.

Economic Issues highlighted is the concept of Leakage within Bali and how the

tourism industry can benefit the economy. Urbanisation is also a major factor within

Bali as many of the rural destinations are created for economic factors. However the

argument is balanced as many of the locals are involved in the tourism industry

which has provided jobs, reduced poverty and improved the quality of life.

Regarding social, issues lie within the change of power and loss of culture. The

domination of the “Australian Fly in Fly Out workers” is increasing and the local

people are under threat of losing their own country. Training and educating of foreign

stakeholders would improve the attitudes and expectations of the Balinese Locals

and create fair working conditions.

The ultimate aim of the accommodation sector is incorporating CSR and

sustainability issues in regards to ethical behaviour, environmental programmes to

reduce water and waste consumption and to ensure that tourism contributes to the

Island of Bali in a positive economic manner.

Company Description- Eco Cottages in the Friends of the National Parks Foundation, Ubud Bali Indonesia

The bamboo eco cottages in the rice fields of Ubud, Bali are a mix of newly

established and traditional ways of accommodation in Indonesia. It is a family run

business however has influence from western shareholders in terms of finance. It is

ran by local people however the cottages are owned by an Australian couple, the

cottages are made of bamboo and located in the rice fields which are farmed by local

people who live in the area. The Bamboo cottages are minutes from central Ubud

down a quiet secluded path.

The accommodation is made up of 4 cottages which all accommodate 4 people in

each cottage, there is a bathroom in each and a kitchen and lounge area which is

situated on two floors. The treehouse is mainly made up of bamboo and is located

on two floors with an organic garden located outside. The bamboo cottages are fully

furnished and include a canopy mosquito net over the beds. This cottage included

modern amenities but in the nature of the forest.

There is also a pool which can be used by the

guests with breakfast and Wi-Fi included in the

price. Guests can enjoy freshly prepared meals and

enjoy he many hiking surrounding areas. Guests

tend to be luxury visitors wanting to witness the

culture first hand staying usually around 4 to 5

nights. Ubud is the cultural heart of Bali and attracts

many tourists all year round and it is popular for

yoga and the monkey forest which has many

visitors each year. The Neighbourhood is

completely secluded and the path overlooks the

organic garden along with the endless rice fields

which can be explored.

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