Trends in Sustainability Reporting in Indonesia: A Local Perspective
Across Indonesia, sustainability is no longer seen as a side note, it’s becoming central to how businesses operate and communicate value. What was once a voluntary initiative adopted by a handful of multinationals is now entering the mainstream. Whether prompted by regulatory pressure, investor interest, or shifting consumer behavior, sustainability reporting in Indonesia is evolving into a strategic business practice.
This shift is happening across sectors, from publicly listed corporations to privately owned firms and small businesses. The rise of Environmental, Social, and Governance (ESG) reporting reflects a growing understanding that transparency around sustainability is no longer optional – it’s a necessity.
POJK 51: The Starting Point for Many
The most significant trigger for this shift was the issuance of POJK No. 51/POJK.03/2017 by Indonesia’s Financial Services Authority (OJK). This regulation requires publicly listed companies and financial service institutions to publish a Sustainability Report annually, alongside their financial disclosures. The impact was significant. In just a few years, the number of companies disclosing sustainability information increased substantially, with 88% of listed companies publishing reports in 2022.
What sets POJK 51 apart is its emphasis on substance over statements. Companies are no longer expected to provide broad claims about being “environmentally conscious” or “socially responsible.” Instead, the regulation outlines structured guidance for disclosing tangible efforts and outcomes across environmental, social, and governance (ESG) aspects. To support credibility and comparability, it also encourages alignment with international frameworks like the Global Reporting Initiative (GRI), SASB, and TCFD—a move that benefits companies looking to meet global investor and market expectations.
Initially, many saw the regulation as just another compliance task. However in practice, POJK 51 has served as a catalyst for deeper organizational change. For many companies, it marked the first time teams were required to gather specific ESG-related data, whether on energy use, workforce diversity, or waste generation. This process has sparked valuable internal discussions and led businesses to reflect on their impact in more structured and strategic ways. Over time, sustainability reporting has evolved from a regulatory obligation into a tool for operational insight, brand positioning, and long-term value creation. It has also encouraged cross-functional collaboration between departments like finance, operations, and human resources to support integrated ESG performance.
Private Sector Participation and Voluntary ESG Adoption
Interestingly, the wave of ESG adoption isn’t limited to companies that are legally required to report. An increasing number of private firms are voluntarily disclosing ESG information, often because it’s now a requirement in global supply chains, a condition for sustainable financing, or a reputational factor influencing long-term growth.
According to PwC Indonesia, ESG performance is now a key consideration in investment decisions for many businesses. While global frameworks like the GRI Standards remain the most widely used in Indonesia, there’s growing alignment with newer standards like TCFD and IFRS S1/S2, which focus on climate-related financial disclosures and broader ESG issues. The Institute of Indonesia Chartered Accountants (IAI) is also stepping in, preparing local adaptations of these global standards.
Still, mindset remains a challenge. In many organizations, ESG reporting is treated as a checklist, a task completed for compliance. But that’s slowly beginning to change. Discussions about ESG are moving from the sustainability team to executive meetings, and from one-off initiatives to long-term planning. This cultural shift is crucial for ESG to become a value driver rather than a reporting exercise. It reflects a broader trend of embedding ESG into governance structures, performance metrics, and stakeholder communication.
Where Do SMEs Fit In?
The rise of corporate sustainability trends in Indonesia isn’t limited to large players. Small and medium-sized enterprises (SMEs), which make up 60% of Indonesia’s GDP and form the majority of businesses, are also beginning to engage with sustainability, though in different ways. Although POJK 51 doesn’t directly apply to them, many SMEs are beginning to feel the indirect pressure. Some are responding to supply chain requirements set by larger corporations, while others are exploring access to green financing or looking to future-proof their operations. Despite this, formal sustainability reporting among SMEs remains relatively uncommon.
While most SMEs don’t publish formal ESG disclosures, many are taking steps that reflect sustainability inclusion in the decision making process. These actions might include reducing energy consumption to cut costs, improving working conditions, supporting local suppliers, or introducing more responsible waste practices. In many cases, these efforts arise not from external pressure but from internal values or practical business considerations.
Frameworks like GRI are oftentimes too complex for smaller organizations. This highlights the need for simplified approaches. Encouragingly, support programs are beginning to emerge, offering basic templates, training, and pilot initiatives to help SMEs adopt sustainability measures in manageable steps. For example, local chambers of commerce have started running ESG workshops for SMEs, and some banks now require SMEs to track basic energy and waste data as part of green loan eligibility. These entry points, though modest, create important momentum toward more structured sustainability strategies.
In our experience at Sustainahaus, even informal tracking of basic metrics like energy use, waste generation, or workforce well-being can be a meaningful first step for SMEs. Over time, these practices build the foundation for more formal and comprehensive ESG strategies.
ESG Trends and Market Signals
As more Indonesian companies adopt sustainability reporting, we’re seeing harmonization between regulation, market expectations, and international standards. GRI and SDGs remain dominant, but TCFD-style disclosures are becoming increasingly common.
Recently, the International Sustainability Standards Board (ISSB) released two landmark global standards:
IFRS S1, which sets out general requirements for disclosure of sustainability-related risks and opportunities across topics such as water, biodiversity, and supply chain impacts.
IFRS S2, which focuses specifically on climate-related disclosures, including details on governance, strategy, risk management, and metrics and targets related to climate risks and opportunities.
These standards aim to create comparable, consistent, and decision-useful ESG information for investors and stakeholders worldwide. In Indonesia, local regulators are aligning with these standards: the PSPK (Pedoman Standar Pelaporan Keberlanjutan) has been introduced as a national sustainability reporting guideline based on IFRS S1 and S2.
The Financial Services Authority (OJK) has announced that large Indonesian companies will be required to adopt sustainability reports aligned with these standards starting in 2027 (covering data from 2026). This is a major shift that will shape how companies, including SMEs indirectly through supply chains and financing requirements, collect, verify, and disclose ESG data.
Meanwhile, concerns around greenwashing, where ESG claims are made without reliable data, highlight the importance of assurance. Most sustainability reports in Indonesia are yet to be audited, which can undermine trust. Strengthening third-party verification and establishing clearer performance baselines will be essential as expectations continue to rise.
Looking Forward
Indonesia’s sustainability reporting landscape is entering a new phase; with both regulatory enforcement and market incentives on the rise, companies are under increasing pressure to report better, not just more. The focus is shifting from simply disclosing ESG information to actually using it to guide strategy, manage risk, and build stakeholder trust.
As global frameworks evolve and expectations grow, Indonesia has the opportunity to align more closely with international best practices, while still keeping local context in mind. Whether it’s through tailored support for SMEs, harmonizing standards, or building ESG literacy at the board level, the future of sustainability reporting in Indonesia will depend on collaboration, education, and a shared commitment to transparency.
Looking ahead, companies that treat ESG not just as reporting but as a business imperative will be best positioned to thrive. For now, one thing is clear: ESG is no longer optional. And the earlier companies start engaging with it, the more prepared they’ll be for a rapidly changing market.
References
Climate Policy Initiative. (2022). Are Indonesian Banks Ready to Account Climate-related Matters? https://www.climatepolicyinitiative.org/publication/are-indonesian-banks-ready-to-account-climate-related-matters/
Financial Services Authority (OJK). (2017). Regulation No. 51/POJK.03/2017 on the Implementation of Sustainable Finance for Financial Services Institutions, Issuers, and Public Companies. https://www.ojk.go.id/id/kanal/perbankan/regulasi/peraturan-ojk/Pages/POJK-Nomor-51_POJK.03_2017.aspx
Grant Thornton Indonesia. (2022). IPO Readiness: ESG Disclosure Trends in Indonesia. https://www.grantthornton.co.id/globalassets/1.-member-firms/indonesia/home2022/ipo-2.pdf
Gunawan, J., et al. (2022). The evolution of sustainability reporting practices in Indonesia. https://www.researchgate.net/publication/360177264_The_evolution_of_sustainability_reporting_practices_in_Indonesia
Ikatan Akuntan Indonesia (IAI). (2024). ISMS-IAI Joint Webinar on IFRS S1/S2 Local Implementation. https://web.iaiglobal.or.id/assets/files/file_publikasi/IAI%20-%20ISMS%20Joint%20Webinar%2006.02.2024%20Rev1.pdf
Monash University. (2023). How sustainability disclosure can help Indonesian corporations to compete and thrive. Monash Lens. https://lens.monash.edu/@business-economy/2023/04/04/1385586/how-sustainability-disclosure-can-help-indonesian-corporations-to-compete-and-thrive
Permatasari, D., & Kosasih, D. (2021). Challenges and opportunities in sustainability reporting: A focus on small and medium enterprises (SMEs). https://www.researchgate.net/publication/378212581_Challenges_and_opportunities_in_sustainability_reporting_a_focus_on_small_and_medium_enterprises_SMEs
PwC Indonesia. (2023). The Most Recent State and Future Directions of Sustainability Reporting in Indonesia.https://www.pwc.com/id/en/media-centre/press-release/2023/english/the-most-recent-state-and-future-directions-of-sustainability-reporting-indonesia.html
Setyaningsih, R., Pradana, A., & Azzahra, N. (2024). Simplifying ESG Reporting for Indonesian SMEs. https://pdfs.semanticscholar.org/cca7/d9b45bd08f55bca78cca27ae41048410a9db.pdf
