Sustainability Report: A Guide to Compliance and Impact in Indonesia

As the global focus on environmental, social, and governance (ESG) issues intensifies, sustainability reporting has become increasingly essential for businesses to demonstrate their commitment to ethical practices. In Indonesia, changing regulations require companies to comply with sustainability reporting requirements. 

This guide provides a comprehensive overview of sustainability reporting, its significance, regulatory obligations in Indonesia, and practical steps for effective implementation. 

What is a Sustainability Report? 

A sustainability report is a formal document that communicates a company’s ESG performance and impacts to stakeholders. It encompasses qualitative and quantitative data, offering insights into how the organization manages its environmental footprint, social responsibilities, and governance practices. It enhances transparency and accountability, enabling stakeholders to make informed and confident decisions. 

What is the Purpose of a Sustainability Report? 

Sustainability reporting helps companies in several impactful ways: it provides a clear snapshot of ESG performance and fosters greater transparency among stakeholders. Beyond compliance, it also serves as a strategic tool to identify risks, uncover opportunities, and drive long-term business resilience. 

• Improving Operational Efficiency: It identifies ways to optimize operations, reduce waste, and enhance productivity through better technology and processes. 
• Motivating Employees: Reporting often involves initiatives that enhance staff morale, such as training, fair compensation, and career development opportunities. 
• Addressing Global Challenges: It motivates companies to take meaningful action on critical issues such as climate change, biodiversity loss, and global hunger. 
• Promoting Social Equity and Justice: Companies can use their influence to support equity, humanitarian efforts, and community well-being. 

Why Sustainability Reporting is Important 

Sustainability reporting is vital, as it enables companies to assess and communicate their environmental, social, and economic impacts. By disclosing ESG data, businesses can identify areas for improvement, enhance stakeholder engagement, and align their operations with global sustainability goals.  

READ MORE:

• Decarbonization Strategies for Businesses through ESG Solution
• How ESG is Redefining Mining Operations in Indonesia
• Why Investing in ESG Matters for Your Business

Requirements for Sustainability Reporting in Indonesia 

Sustainability reporting in Indonesia is guided by structured regulatory guidelines, primarily under the supervision of the Financial Services Authority (OJK). Key components include: 

• Sustainability Strategy and Performance: This section provides an overview of the company’s strategy and results in economic, social, and environmental areas, including energy use, emissions, and stakeholder engagement efforts. 
• Company and Governance Details: A brief company profile, board of directors’ roles, and policies for achieving sustainability goals. 
• Sustainability Governance: Staff responsibilities involve sustainable finance, training, risk management, and stakeholder engagement. 
• Performance and Impact: A 3-year summary of ESG performance and the impact of sustainable finance products, including efforts to manage adverse effects. 
• Verification and Feedback: Optional third-party verification and responses to prior report feedback. 

Is Sustainability Reporting Mandatory in Indonesia? 

Yes, sustainability reporting is mandatory for specific entities in Indonesia. According to OJK Regulation No. 51/POJK.03/2017, financial service institutions, issuers, and public companies must prepare and submit sustainability reports. This regulation underscores the government’s commitment to integrating sustainable practices within the economic and corporate sectors. 

Impact and Future of Sustainability Reporting in Indonesia 

Implementing mandatory sustainability reporting has increased awareness and adoption of ESG practices among Indonesian companies. It has encouraged businesses to assess their environmental and social impacts, resulting in more responsible operations. 

The future of sustainability reporting in Indonesia is poised for further development. The government and regulatory bodies are expected to refine reporting standards, enhance enforcement mechanisms, and promote greater alignment with international frameworks. This progression will likely result in more comprehensive and meaningful sustainability disclosures across various industries. 

How to Write a Sustainability Report 

Starting your sustainability report can be straightforward with a clear plan in place. Here’s a simplified step-by-step guide: 

Identify Key Topics 

Concentrate on the sustainability topics that matter most to your business and stakeholders, like emissions, energy use, supply chain integrity, or employee welfare. Tools such as materiality assessments and stakeholder surveys can help you pinpoint priorities that align with internal and external objectives. 

Select a Reporting Framework 

Choose a framework that matches your industry, size, and compliance needs. GRI provides comprehensive disclosures, SASB focuses on financial relevance, and CSRD suits EU compliance—selecting the right one ensures clarity and comparability. 

Gather Reliable Data 

Collect quantitative and qualitative data—from carbon emissions and workforce diversity to community engagement and ethical sourcing. Ensure your data sources are consistent and validate figures to maintain credibility and accuracy. 

Build the Report 

Structure your report according to your selected framework, ensuring it’s easy to navigate and understand. Incorporate visuals, explain key metrics, and use examples or case studies to highlight achievements and ongoing efforts. 

Publish and Share 

Make the report publicly accessible via your website and distribute it to relevant stakeholders, including investors, employees, and partners. This transparency will build trust and encourage dialogue around your sustainability goals. 

Monitor and Improve 

Treat sustainability reporting as a continuous journey, not a one-time task. Regularly track progress, reassess priorities, and refine strategies to demonstrate long-term commitment and improvement.

 

Partner with InCorp for End-to-End Sustainability Reporting 

Sustainability reporting is no longer optional—it’s vital to doing business responsibly in Indonesia. A well-crafted report can strengthen trust, ensure regulatory compliance, and showcase your company’s commitment to ESG principles. 

Need expert guidance on your sustainability journey? InCorp Indonesia (an Ascentium Company) can assist you with ESG Advisory to build a tailored, compliant, impactful sustainability strategy that meets local and global standards. 

• Get guidance from professionals who understand the local landscape. 
• Align your strategy with international frameworks and best practices to ensure alignment with global standards. 
• Ensure your sustainability report is impactful, accurate, and audit-ready. 

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