To protect the environment due to the damage it has been taking on for many years from modern development, the government of Indonesia came up with a regulation (Law No. 40/2007) that certain companies must comply with.
This law stipulates that organisations involved in the natural resources sector must perform activities that are social- and environmental-responsible. These social and environmental activities are known as Corporate Social Responsibility (CSR). Also, since 2017, through the Financial Services Authority (Otoritas Jasa Keuangan, or OJK), the Indonesian government further issued a new rule, indicating that these companies are obliged to implement sustainable finance.
Sustainability Report in Indonesia and Its Relation to Sustainable Finance Action Plans
In addition to the sustainable finance implementation and submission of a sustainability report, public companies, issuers and financial services providers must prepare and submit a sustainable finance action plan known as RAKB (Rencana Aksi Keuangan Berkelanjutan) to OJK along with a sustainability report known as Laporan Keberlanjutan.
In addition to minimising the environmental damage and improving social welfare, the submission of a sustainability report and a sustainable action plan can help organisations gain the trust of their stakeholders and communities. The report and action plan also reduce business risks and errors for investors in the long run.
Who Should Prepare a Sustainability Report in Indonesia?
Under Rule 51 by OJK, all public companies, issuers and financial service providers must prepare and submit a sustainability report to the authority for sustainable finance implementation.
Certain issuers that are not financial services providers are not required to prepare and submit their finance action plan. However, the mentioned issuers must carry out sustainable finance in their business operations. Besides, their sustainability report must reflect the implemented sustainable finance.
What can be Included in a Sustainability Report?
According to OJK’s provision Rule 51, not all corporate sustainability responsibility (CSR) can be included in a sustainability report as it doesn’t necessarily mean sustainable finance.
Companies can only put certain CSR into their sustainability report by showing that those CSR activities support sustainable finance implementation.
Below are some of the examples of the CSR activities a sustainability report can contain:
- Financing provision to micro businesses which are unable to access the financial services provider’s funding that is utilised for the development of sustainable business
- Training provision to potential clients regarding sustainable business
- Campaign creation for sustainable consumption and production
- Insurance subsidy for fisherman, farmers, and low- and middle-income individuals who are more susceptible to disasters
Also, the activities of issuers or financial services providers’ subsidiaries can only be included in the sustainability report if the issuers or financial services providers are directly involved in the subsidiaries’ activities.
When is the Deadline?
For the reporting period from January 30 to December 31, 2020, the deadline for large-scale assets issuers to submit their first sustainability report in Indonesia is April 30, 2021.
As for small- and medium-scale assets issuers, the deadlines for their first submission of a sustainability report in Indonesia are April 30, 2025, and April 30, 2023, respectively.
Depending on the sector that the financial services provider belongs to, the deadlines of sustainability report submission for financial services providers may be different. For instance, the submission deadline for insurance and financing companies is April 30, 2021, and the submission deadline for securities companies is April 30, 2023.
To find out more on how to leverage our regional expertise, contact the relevant team below.
How Cekindo can Assist
Cekindo can assist you with the sustainability strategy and implementation, and the submission of a sustainability report in Indonesia. Our professional advisory team has been working with Indonesia’s prominent companies and governments to help them innovate and outperform others.
With our services, you can successfully leverage sustainability opportunities to gain competitive advantages and recognition in Indonesia and globally.
To know more about the submission of your sustainability report in Indonesia, kindly speak to one of our specialists. Fill in the form below.