In recent years, sustainability has become an increasingly important topic in business discussions. Companies are no longer evaluated solely based on financial performance, but also on how they manage environmental, social, and governance impacts.
Usually, companies demonstrate their commitment through sustainability. However, an important question remains: how well are sustainability reporting practices implemented in Indonesia?
- The Role of Sustainability Reports
- The Current State of Sustainability Report in Indonesia
- Trends Over Time
The Role of Sustainability Reports
A sustainability report is a document that explains how a company manages its impacts on the environment, society, and the economy. It provides information to various stakeholders including investors, regulators, and the public, about how a company conducts its operations responsibly and sustainably.
Globally, there is no single universal standard that fully governs how sustainability should be prepared. Nevertheless, many companies rely on internationally recognized frameworks, such as the Global Reporting Initiative (GRI), to structure their reports.
Using these frameworks helps ensure that the information presented is systematic, transparent, and comparable across companies. In Indonesia, sustainability reporting has also received growing attention from regulators.
The Financial Services Authority (OJK) has introduced several regulations that encourage companies, particularly financial institutions and publicly listed firms, to publish sustainability reports.
Through regulatory instruments such as POJK 51/2017 and SEOJK 16/2021, the government has signaled a stronger commitment to improving transparency and accountability in environmental and social reporting.
The Current State of Sustainability Report in Indonesia
Despite increasing regulatory encouragement, sustainability practices in Indonesia still face several challenges. Overall, the level of sustainability disclosure among companies remains relatively limited. This can be seen in the amount and depth of information presented in many sustainability reports.
In terms of disclosure quantity, many companies do not report all the indicators recommended in common sustainability frameworks. On average, companies tend to disclose only a portion of the available indicators rather than providing a comprehensive overview of their sustainability performance.
Another issue concerns the readability of sustainability reports. Many reports are written using highly technical language and complex structures, which can make them difficult for general readers to understand. As a result, the information intended to improve transparency may not always be easily accessible to broader audiences.
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The Evolution of Sustainability Reporting Practices in Indonesia
Trends Over Time
If we examine the practices over time in recent years, it shows mixed progress. The quantity of sustainability disclosures has fluctuated from year to year.
However, environmental performance indicators suggest a gradual improvement in corporate environmental management. Government led environmental performance evaluations have shown that more companies have been achieving better ratings over time.
This indicates that while the quality of sustainability reporting itself may still require improvement, some companies are beginning to strengthen their environmental practices.
Overall, sustainability report in Indonesia is still developing. While more companies have begun to publish sustainability reports, there is still significant room for improvement in both the completeness and clarity of the information presented.
Companies should pay attention not only to the amount of information disclosed, but to how the information is presented as well, so that it becomes more transparent and easier to understand.
With better reporting practices, companies can strengthen stakeholders’ trust while demonstrating a genuine commitment to sustainable development.
Simply understanding IFRS S1 and S2 is not enough the next challenge is how to prepare a report that truly reflects business conditions and can be clearly read by investors.
Many companies have already begun collecting sustainability data, but still struggle to connect it with financial aspects in a consistent manner. As a result, the full potential of these reports has yet to be fully realized.
Through Validerra’s Sustainability Report preparation service, this process can become more structured from refining the report’s framework, ensuring alignment with IFRS standards, to presenting information that is more relevant for market needs and decision making.
Author: Ainur
Editor: Shoofi
Reference
Harymawan, I., Putra, F. K. G., & Agni, T. D. K. (2020). Sustainability report practices in Indonesia: Context, policy, and readability. International Journal of Energy Economics and Policy, 10(3), 438-443.