The AFOLU (Agriculture, Forestry, and Other Land Use) sector plays a dual role in global climate issues. According to IPCC AR6 (2023), AFOLU contributes about 20–24% of total global emissions, making it the second-largest sector after energy.
At the same time, AFOLU offers significant mitigation potential through reforestation, conservation, and sustainable agricultural practices. For Indonesia, AFOLU is highly relevant as it is directly linked to major export commodities such as palm oil, coffee, cocoa, timber, and rubber.
Companies are therefore required to prepare sustainability reports that are transparent, aligned with international standards, and supportive of national targets such as Net Zero Indonesia 2060. Two key global standards are the ISSB (International Sustainability Standards Board) with IFRS S1 & S2, and the GRI (Global Reporting Initiative).
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The Importance of Global Standards
ISSB IFRS S2 emphasizes that climate disclosures must be relevant to investors. Agribusiness and forestry companies are expected to present quantitative data on emissions, supply chain risks, and mitigation strategies. Reports based on verifiable figures are essential for investors to assess long-term risks and opportunities.
Meanwhile, GRI places greater emphasis on stakeholder engagement and socio-economic impacts. A recent academic study by Moggi (2023) shows that applying GRI helps companies highlight social aspects but also faces challenges such as fragmented data and limited management capacity in smaller firms.
This is particularly relevant for Indonesia’s AFOLU sector, which involves millions of smallholder farmers and local communities. Integrating ISSB and GRI creates balance: ISSB is investor-oriented with a focus on quantitative data, while GRI is stakeholder-oriented with a focus on social narratives.
Sustainability reports that combine both will be more comprehensive and globally recognized.
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Integrating AFOLU into Sustainability Reports: Essential Parameters and Key Considerations
Key Considerations
Companies must ensure compliance with ISSB, for example by reporting emission intensity per ton of product or carbon sequestration data from agroforestry. This aligns with IPCC findings that AFOLU is not only a source of emissions but also a significant provider of mitigation solutions.
Reports must also meet GRI standards by emphasizing social aspects. Working conditions of farmers, community welfare programs, and contributions to rural development should be documented.
Moggi (2023) stresses that without stakeholder involvement, sustainability reports risk being seen as irrelevant by local communities. Data credibility is another crucial factor. MRV (Measurement, Reporting, Verification) systems based on transparency and consistency principles must be applied so that data can be independently verified.
With MRV, sustainability reports are not just narratives but evidence-based documents.
Challenges
Integrating AFOLU with ISSB and GRI faces real obstacles. Fragmented supply chains make verification difficult, especially among smallholders.
Independent audit costs are also high, creating burdens for medium and small enterprises. Additionally, the differing focus of ISSB and GRI requires companies to produce balanced reports.
ISSB emphasizes quantitative data for investors, while GRI emphasizes social narratives for stakeholders. Moggi (2023) notes that many companies struggle to balance both, particularly when internal capacity is limited.
Strategic Opportunities
Despite these challenges, integrating AFOLU with ISSB and GRI opens major opportunities. Companies that produce reports aligned with international standards will gain greater trust from global investors.
This strengthens export competitiveness, especially in markets that increasingly demand climate transparency such as the European Union. Comprehensive sustainability reports also open access to green finance.
Green investors and sustainable financial institutions are more attracted to companies with credible reporting. Thus, sustainability reports become not just compliance documents but gateways to sustainable financing.
Integration also drives transformation in Indonesia’s agribusiness sector. With ISSB and GRI standards, companies are encouraged to adopt production practices that are more ethical, environmentally friendly, and inclusive of local communities.
Conclusion
Integrating AFOLU with ISSB and GRI standards is a strategic step for Indonesian companies. By presenting data on emissions, land cover change, sustainable farming practices, and socio-economic aspects in line with global standards, sustainability reports become internationally recognized documents.
Ultimately, sustainability reports aligned with ISSB and GRI, reinforced by quantitative data from IPCC and critical perspectives from Moggi (2023), not only meet market demands but also strengthen Indonesia’s reputation as a key player in sustainable trade. AFOLU-integrated sustainability reports are a strategic foundation for building trust, opening access to premium markets, and supporting transformation toward a green economy.
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Author: Nadhif
Editor: Lina
References
Intergovernmental Panel on Climate Change. (2023). Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva: IPCC.
Moggi, S. (2023). Sustainability reporting and GRI applicability: Challenges and opportunities. Sustainability Accounting, Management and Policy Journal, 14(4), 699–742.