In recent years, the business world has increasingly emphasized the importance of sustainability reporting that is credible and comparable across countries.
To meet this need, the International Sustainability Standards Board (ISSB) launched the global standards IFRS S1 and IFRS S2. These standards aim to unify sustainability reporting practices to be more consistent, transparent, and relevant for investors.
Indonesia has not remained idle. Through the Indonesian Institute of Accountants (IAI) and with the support of the Financial Services Authority (OJK), the government has prepared a roadmap toward adopting ISSB standards. However, the process is not without challenges.
- What Are ISSB Standards?
- Indonesia’s Steps Toward Adoption
- Challenges of Adoption in Indonesia
- Impacts and Opportunities
- Strategies to Overcome Challenges
What Are ISSB Standards?
ISSB is an international body under the IFRS Foundation tasked with developing sustainability reporting standards. The two main standards already issued are:
- IFRS S1: General Requirements for Sustainability related Financial Disclosures, which regulates general principles of sustainability disclosure.
- IFRS S2: Climate related Disclosures, which focuses on disclosing climate related risks and opportunities.
The main goal of ISSB is to create a reporting framework that can be compared across countries, so that global investors have a consistent basis for assessing corporate sustainability performance.
Indonesia’s Steps Toward Adoption
In July 2025, the Sustainability Standards Board of the Indonesian Institute of Accountants (DSK IAI) officially ratified Indonesia’s first Sustainability Disclosure Standards (SPK), namely PSPK 1 and PSPK 2. These standards are adaptations of IFRS S1 and S2 and will take effect on January 1, 2027.
The launch of SPK is the implementation of the roadmap published in December 2024. The roadmap outlines the strategic direction for developing sustainability disclosure standards in Indonesia in stages. In addition to IAI, OJK, Bank Indonesia, and the Ministry of Finance are also involved in collaboration to ensure these standards can be applied nationally.
Challenges of Adoption in Indonesia
Although initial steps have been taken, there are several major challenges in adopting ISSB in Indonesia:
- Limited technical capacity The number of professionals who understand ISSB standards is still small. Auditors, accountants, and corporate management need intensive training to be able to prepare reports according to the new standards.
- High implementation costs Medium and small companies face difficulties because adopting ISSB standards requires significant investment in data systems, verification, and training.
- Data readiness Sustainability data infrastructure in Indonesia remains weak. Many companies do not yet have systematic data collection for emissions, energy, and social indicators.
- Low management awareness Some companies still view sustainability reports as regulatory burdens rather than strategic opportunities. This slows down ISSB adoption.
- Regulatory synchronization Indonesia needs to adjust ISSB standards to local needs, including harmonization with OJK regulations and national policies.
Impacts and Opportunities
Despite the challenges, adopting ISSB offers significant opportunities for Indonesia:
- Enhancing report credibility: sustainability reports aligned with ISSB are more trusted by global investors.
- Attracting green investment: companies compliant with ISSB standards can more easily access green finance.
- Strengthening export competitiveness: European and American markets demand ESG transparency, making Indonesian companies that comply with ISSB more competitive.
- Regional strategic position: Indonesia could become a hub for sustainability reporting practices in Southeast Asia if ISSB implementation is successful.
However, risks also exist. Companies that are slow to adapt may fall behind in global competition and lose access to international markets.
Learn more :
How Credible Is Sustainability Reporting in Indonesia Today?
Strategies to Overcome Challenges
To ensure effective ISSB adoption, several strategies can be pursued:
- Capacity building: intensive training for auditors, accountants, and corporate management.
- Regulatory support: the government should provide incentives, such as tax relief or subsidies, for companies committed to sustainability reporting.
- International collaboration: cooperation with global institutions for knowledge transfer and benchmarking.
- Digitalization of reporting systems: using technologies such as IoT and blockchain to facilitate data collection and verification.
Conclusion
Adopting ISSB standards is an important step for Indonesia to align with global practices. The challenges are real ranging from technical capacity, costs, to management awareness but the strategic opportunities are substantial.
Companies that proactively adopt ISSB will be better prepared to meet global demands, attract green investment, and strengthen export competitiveness. Ultimately, ISSB is not just a reporting standard but a new foundation for corporate reputation and sustainability in Indonesia.
Given the complexity of adopting ISSB standards, increasingly stringent requirements demand not only understanding, but also readiness in data, systems, and an integrated reporting strategy.
Without the right approach, efforts to comply with these standards risk becoming a burden rather than a value driver. Through Validerra’s Sustainability Report development services, your company is supported in preparing reports aligned with ISSB standards more structured and better equipped to meet global investor expectations.
This way, the adaptation process becomes not just a compliance exercise, but a strategic step to strengthen your business position in an increasingly competitive market.
Author: Nadhif
Editor: Shoofi
References
ANTARA News. (2025, July). Indonesia unveils global-standard sustainability reporting system. ANTARA News Agency.
IFRS Foundation. (2025). Jurisdictional Snapshot: Indonesia. IFRS Foundation. Retrieved from https://www.ifrs.org
Ikatan Akuntan Indonesia. (2024). Roadmap of Indonesian Sustainability Disclosure Standards (ISDS). Jakarta: IAI.