Home Blog A Guide to Sustainability Report in Indonesia Business Advisory | ESG Advisory | Indonesia A Guide to Sustainability Report in Indonesia InCorp Editorial Team 12 November 2024 6 reading time Table of Contents Is Sustainability Reporting Mandatory in Indonesia? What are the Sustainability Efforts in Indonesia? What is Indonesia's Environmental Sustainability Index? Is a Mandatory Sustainability Report Still Beneficial? Requirements for Sustainability Reporting in Indonesia Why ESG Consultants Are Important for Your Sustainability Strategy Start Your Sustainability Reporting with InCorp To address the critical environmental challenges from extensive industrial activities, the Indonesian government has established regulations like Law No. 40/2007 on Sustainability Report Indonesia requirements, mandating sustainability reports for specific companies, especially those in the natural resources sector. These regulations highlight the significance of Environmental, Social, and Governance (ESG) standards and encourage transparency through sustainability disclosures in Indonesia. The law requires organizations in the natural resources sector to engage in socially and environmentally responsible practices, referred to as Corporate Social Responsibility (CSR). Since 2017, Indonesia’s Financial Services Authority (OJK) has issued sustainable finance regulations to enforce responsible practices further. These regulations include mandatory sustainability reporting for banks and listed companies. Is Sustainability Reporting Mandatory in Indonesia? Sustainability reporting has been mandatory for banks in Indonesia since 2019 and for listed companies since 2020. However, the enforcement was delayed due to COVID-19, with the first full implementation occurring in 2021. As of 2021, 88% of Indonesian listed companies had submitted their Sustainability Report—a document essential for demonstrating ESG performance, risk management, and climate action, aligning with Sustainable Development Goals (SDGs) Indonesia. It defines the Board of Directors’ responsibilities for sustainability, highlights efforts to upskill employees on sustainability matters, and emphasizes the importance of external assurance to enhance credibility. The sustainability report is a key means of ensuring transparency, aligning with global standards, and demonstrating a strong commitment to sustainable practices. READ MORE:How Green Building Benefits Business in IndonesiaRenewable Energy Investment in The Manufacturing Sector What are the Sustainability Efforts in Indonesia? Indonesia is making significant sustainability strides, with government initiatives and corporate actions playing key roles in environmental protection and climate action. Key efforts include: Climate Change Mitigation: Indonesia aims to reduce carbon emissions by 29% by 2030, with an additional 12% reduction possible through international support. This goal is part of their broader climate action plan. Regulations: New laws and regulations, such as carbon trading initiatives and emission reduction frameworks, are being developed to help achieve climate goals and manage environmental impact. Natural Resource Management: Indonesia conserves its forests and ecosystems to help offset carbon emissions. Social forestry programs also involve local communities in managing natural resources. Technology Use: Innovative technologies like AI and blockchain are being explored to improve carbon tracking and enhance transparency in sustainability efforts. What is Indonesia’s Environmental Sustainability Index? According to the Sustainable Development Report 2024, Indonesia ranks 78th on the Environmental Sustainability Index, scoring 69.51. This reflects the country’s ongoing efforts to improve environmental practices, but it also highlights the challenges it faces in addressing issues like climate change, resource management, and biodiversity. The ranking places Indonesia in the middle tier compared to other nations globally, indicating progress alongside areas still requiring attention. Is a Mandatory Sustainability Report Still Beneficial? Yes, a mandatory sustainability report will still be beneficial in 2024. Sustainability reporting can foster consumer trust, meet investor expectations, enhance operational efficiency, and maintain certifications. In Indonesia, sustainability initiatives contribute to the nation’s sustainable development goals, supported by regulatory frameworks that encourage companies to adopt responsible practices that align with sustainability regulations in Indonesia. Through these efforts, Indonesia is progressively improving its Environmental Sustainability Index, reflecting its commitment to long-term ecological balance. Requirements for Sustainability Reporting in Indonesia In Indonesia, public companies, issuers, and financial services providers must submit a Sustainability Report (Laporan Keberlanjutan) along with a Sustainable Finance Action Plan (Rencana Aksi Keuangan Berkelanjutan, RAKB) to the Financial Services Authority (OJK). This is part of the government’s commitment to driving sustainable finance practices and improving transparency in corporate responsibility. These reports ensure organizations minimize environmental impact, improve social welfare, and create a sustainable business ecosystem. Who Needs to Prepare a Sustainability Report in Indonesia? According to OJK regulation (POJK No. 51/POJK.03/2017), all public companies, issuers, and financial services providers must prepare and submit a sustainability report to comply with sustainable finance regulations. Large-scale issuers (companies with large assets) must submit their first sustainability report by April 30, 2021. Medium-scale issuers must meet the reporting deadlines by April 30, 2023, and small-scale issuers by April 30, 2025. The submission deadlines for financial services providers depend on the type of service, such as insurance or financing companies, each having a unique deadline. Issuers (except financial services providers) must implement sustainable finance in their business operations, and their sustainability reports should reflect these efforts. However, they must only submit the RAKB if involved in the financial services sector. What Should Be Included in a Sustainability Report? OJK’s regulations specify that certain Corporate Social Responsibility (CSR) activities can be included in the sustainability report if they directly support sustainable finance initiatives. The following CSR activities can be highlighted: Financing provisions for micro-businesses or underserved sectors Training programs aimed at sustainable business practices Campaigns for sustainable consumption and production Insurance subsidies for vulnerable groups, such as farmers or fishermen, to reduce disaster-related risks The activities of subsidiaries of issuers or financial services providers can also be included if the parent company is directly involved in these operations. Reporting Deadlines Based on the recent update, implementing sustainability reporting in Indonesia will see a deadline shift. Based on the most recent regulations (POJK No. 51/POJK.03/2017), the deadlines for various types of issuers are as follows: Large-scale issuers: Required to submit their sustainability reports by April 30, 2021. Medium-scale issuers: Their deadline is April 30, 2023. Small-scale issuers: These companies have until April 30, 2025. For financial services providers, such as insurance and securities companies, the deadlines vary based on the company type: Insurance companies: Their deadline was April 30, 2021. Securities companies: Their deadline is April 30, 2023. READ MORE:Responsible Investing to Avoid Recession Through ESG InvestmentIs The ESG Implementation Strategy Beneficial for Business? Why ESG Consultants Are Important for Your Sustainability Strategy Engaging an ESG consultant can significantly elevate your business strategy by embedding proven, data-driven methodologies into your operations. A skilled ESG consultant brings extensive industry experience to streamline your ESG initiatives, ensuring alignment with your strategic objectives and crafting actionable, precise roadmaps that enhance organizational efficiency, minimize costs, and reduce time burdens. Key areas where an ESG consultant drives value include: Establishing efficient data collection and baseline measurement for ESG indicators Implementing data management tools to streamline analytics, performance tracking, and reporting Embedding ESG metrics into existing processes, supported by guidelines for reliable execution and adherence Start Your Sustainability Reporting with InCorp With a structured ESG framework, businesses gain enhanced reporting and strategic insights that track progress toward their environmental, social, and governance targets. This creates tangible business value and reinforces market competitiveness. Ultimately, an ESG consultant’s expertise allows your organization to build a transparent, data-backed foundation for long-term sustainability. At InCorp, we can guide you through every step of sustainability reporting. Our ESG advisory services include: Sustainability Strategy Development Sustainability Report Preparation Performance Tracking and Analysis Regulatory Compliance Guidance Fill out the form below to begin a personalized consultation on sustainability reporting in Indonesia. Read Full Bio Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.