ESG Reporting Standards for Indonesia Companies

Environmental, Social, and Governance reporting has transitioned from a voluntary best practice to a regulatory expectation for an expanding number of Indonesian companies. The Jakarta Securities Exchange and Surabaya Financial Market have both introduced ESG disclosure requirements for listed entities, and the broader regulatory environment is moving toward mandatory sustainability reporting across the private sector. Understanding the current requirements and preparing for future mandates is essential for compliance and competitive positioning.

Current Regulatory Requirements

The Jakarta Securities Exchange introduced mandatory ESG disclosure for listed companies beginning with the 2023 reporting year. The IDX ESG Disclosure Guidance requires companies to report on 31 key metrics across environmental, social, and governance categories, including greenhouse gas emissions, energy consumption, water usage, workforce diversity, and board composition. The Surabaya Financial Market has implemented similar requirements through its ESG Reporting Guide, which aligns with international best practices while accommodating the specific context of Indonesian markets. Listed companies on both exchanges must publish annual sustainability reports alongside their financial reports, and these disclosures are increasingly subject to scrutiny from regulators, investors, and rating agencies.

Global Framework Alignment

Indonesian companies face the challenge of aligning with multiple global reporting frameworks that are converging but not yet fully unified. The Global Reporting Initiative remains the most widely used framework for sustainability reporting globally and provides comprehensive standards across environmental, social, and governance topics. The Sustainability Accounting Standards Board, now part of the IFRS Foundation, offers industry-specific disclosure standards focused on financially material sustainability issues. The Task Force on Climate-related Financial Disclosures framework has become the dominant standard for climate risk reporting, requiring companies to disclose their governance, strategy, risk management, and metrics related to climate change. Indonesian companies should consider which frameworks are most relevant to their stakeholder base and regulatory obligations, and many large companies report against multiple frameworks simultaneously.

Environmental Metrics and Carbon Reporting

The environmental component of ESG reporting is receiving particular attention in Indonesia given the country's climate commitments and the new Climate Change Law. Companies must report their Scope 1 and Scope 2 greenhouse gas emissions at a minimum, with growing expectations to include material Scope 3 categories. Beyond carbon, environmental metrics include energy consumption and efficiency, water withdrawal and recycling rates, waste generation and diversion rates, and biodiversity impacts for relevant sectors. Companies should ensure their environmental data collection systems are robust, consistently applied, and capable of producing data that can withstand third-party assurance, as assurance requirements are expected to become mandatory in the near future.

Building Internal ESG Capabilities

Effective ESG reporting requires cross-functional coordination and dedicated resources. Companies should establish an ESG committee or working group with representation from operations, finance, human resources, legal, and sustainability functions. Data collection processes must be formalized, with clear ownership of each metric and documented methodologies for calculation. Many Indonesian companies are investing in dedicated ESG software platforms to automate data collection, perform calculations, and generate reports in compliance with various framework requirements. Training programs for staff involved in data collection are essential to ensure data quality and consistency.

Looking Ahead

The ESG reporting landscape in Indonesia is expected to evolve significantly over the coming years. The adoption of IFRS Sustainability Disclosure Standards, built on the ISSB framework, is anticipated to create a global baseline for sustainability reporting that the Indonesia securities regulators are likely to adopt. Companies that invest now in robust ESG data systems, stakeholder engagement processes, and assurance readiness will be better positioned to meet future requirements with minimal disruption. Early movers also benefit from enhanced access to sustainable finance instruments, improved investor relations, and stronger brand reputation in a market where sustainability credentials are increasingly valued.