Environmental, Social, and Governance (ESG) compliance is no longer optional for companies operating in Indonesia. Since 2017, the Financial Services Authority (Otoritas Jasa Keuangan, or OJK) has mandated sustainability reporting for public companies and financial institutions — and the regulatory framework is expanding rapidly toward 2027. If you operate a foreign-owned company (PT PMA) or manage a publicly listed entity in Indonesia, understanding these obligations is essential to staying compliant and avoiding administrative sanctions.
This guide breaks down the current ESG regulations in Indonesia, who they apply to, what reporting is required, and what major changes are coming in the next two years — written specifically for foreign investors and multinational companies entering or already operating in the Indonesian market.
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Is ESG Reporting Mandatory in Indonesia?
Yes — but with an important caveat. ESG reporting is currently mandatory only for specific categories of companies. Private companies that are not publicly listed and not classified as financial institutions are not yet subject to mandatory sustainability reporting under existing OJK regulations. However, this is changing, and the scope is expected to broaden significantly by 2027.
The two primary categories currently subject to mandatory ESG disclosure are:
- Public companies and issuers listed on the Indonesia Stock Exchange (IDX)
- Financial service institutions (banks, insurance companies, securities firms, financing companies)
For companies in these categories, the obligation includes preparing and submitting both a Sustainable Finance Action Plan (Rencana Aksi Keuangan Berkelanjutan, or RAKB) and an annual Sustainability Report (Laporan Keberlanjutan) to OJK.
Key ESG Regulations in Indonesia You Need to Know
Indonesia’s ESG framework is built on several overlapping regulations issued by OJK, Bank Indonesia, and the national accounting standards body. Here is the current regulatory landscape, organized by instrument.
OJK Regulation No. 51/POJK.03/2017 (POJK 51)
This is the cornerstone of Indonesia’s sustainability reporting framework. Issued in July 2017, POJK 51 requires financial service institutions, public companies, and issuers to implement sustainable finance principles and submit annual Sustainability Reports. The regulation adopts an “inside-out” perspective, focusing on how a company’s operations affect external stakeholders — communities, ecosystems, and the environment.
The submission deadlines under POJK 51 were phased by company size. Large-scale issuers were required to comply from April 2021, medium-scale issuers from April 2023, and small-scale issuers from April 2025. Financial service providers such as insurance companies and securities firms have separate, type-specific deadlines.
OJK Circular Letter No. 16/SEOJK.04/2021 (SEOJK 16)
SEOJK 16, issued in June 2021, provides the technical template for ESG disclosure within annual reports. It specifies the exact format and content required from public companies and issuers. Among other disclosures, companies must include the industry associations relevant to their sustainable finance activities, a record of social and environmental responsibility actions, and a response to feedback raised in the previous year’s report.
Think of POJK 51 as the legal obligation and SEOJK 16 as the execution manual — both must be followed together.
OJK Regulation No. 14/POJK/2023 — Carbon Trading
Issued in 2023, this regulation introduces a formal framework for carbon trading through Indonesia’s carbon exchange. It is part of the broader move to align Indonesia’s financial regulatory infrastructure with climate transition goals. Companies in high-emission sectors need to monitor how this regulation intersects with their operating licenses and investment reporting obligations.
Indonesian Taxonomy for Sustainable Finance (TKBI)
Launched in 2022 and expanded in 2024, the TKBI classifies economic activities as green, transitioning, or non-green — similar in structure to the EU Taxonomy. As of 2025, OJK is expanding TKBI coverage to include construction, agriculture, and forestry sectors. By 2026, the TKBI will extend to industrial processes and waste sectors, covering approximately 537 additional KBLI business classifications. If your PT PMA operates in any of these sectors, TKBI classification will become directly relevant to your financing and compliance posture.
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Corporate Social and Environmental Responsibility (CSER) under Company Law
Separate from OJK’s sustainability reporting framework, Article 74 of Indonesia’s Company Law (as amended) mandates CSER specifically for companies engaged in natural resource-related activities — including mining, agriculture, energy, forestry, and manufacturing. This is a distinct obligation from ESG reporting under POJK 51, and non-compliance carries its own legal consequences under the Company Law framework.
In practice, CSER has become an expected norm across all sectors with significant environmental or social impact, even where it is not strictly mandated by law.
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What Must a Sustainability Report Contain?
Under POJK 51 and SEOJK 16, a Sustainability Report must cover the following core areas at minimum:
- A summary of the company’s economic, financial, social, and environmental performance
- The company’s Sustainable Finance Action Plan (RAKB) and progress against it
- Governance structures related to sustainability oversight
- Industry association memberships relevant to sustainable finance
- A response to material feedback from the previous year’s report
- Environmental risk management and climate-related disclosures (increasingly expected in line with IFRS S2 direction)
The Sustainability Report may be submitted as a standalone document or integrated into the company’s annual report. Either way, it must be submitted to OJK annually and published publicly on the company’s website, as stipulated under Articles 10 and 12 of POJK 51.
What Is Changing: IFRS S1, S2, and the SPK Roadmap (2027 and Beyond)
Indonesia’s regulatory direction is firmly set toward alignment with international standards. The Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia, or IAI) finalized its Sustainability Disclosure Standards (Standar Pengungkapan Keberlanjutan, or SPK) in July 2025, based on IFRS S1 and IFRS S2 from the International Sustainability Standards Board (ISSB).
The SPK represents a fundamental shift in approach. Where POJK 51 uses an “inside-out” lens — measuring how the company impacts the world — IFRS S1 and S2 adopt an “outside-in” approach, requiring companies to assess how external sustainability risks (climate change, resource scarcity, social upheaval) affect the company’s own financial performance, governance, and long-term value.
The key timeline milestones for this transition are:
- 2025: Climate Risk and Management Scenario (CRMS) full implementation; TKBI expansion to construction, agriculture, and forestry sectors
- 2026: OJK plans to mandate SPK adoption, updating the current POJK 51/2017 framework; TKBI expansion to industrial processes and waste sectors
- 2027: Full annual reporting under SPK (IFRS S1 and S2) expected to begin; climate-related disclosures become mandatory, while other sustainability topics remain voluntary initially
- 2027-2029: Post-implementation review by IAI to assess the sustainability reporting ecosystem, particularly non-climate disclosures
The precise scope of entities required to adopt SPK — particularly whether private companies will be included — has not yet been confirmed as of mid-2025. However, the roadmap explicitly acknowledges a need for simplified standards for private entities and SMEs, signaling that the SPK will eventually apply more broadly than POJK 51.
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ESG and Investment Reporting: How LKPM Connects
For foreign-owned companies (PT PMA), there is a parallel reporting obligation that overlaps with ESG: the quarterly Investment Activity Report (Laporan Kegiatan Penanaman Modal, or LKPM), submitted via the OSS-RBA system. LKPM covers investment realization, workforce absorption, and partnership obligations with local businesses — all of which have social and governance dimensions that feed into a broader ESG picture.
Failure to submit LKPM on time can result in warnings, license suspension, or revocation — making it one of the most operationally critical compliance obligations for any PT PMA, regardless of whether the company is subject to OJK’s sustainability reporting rules.
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Does ESG Apply to Private Foreign-Owned Companies (PT PMA)?
Under the current framework, most private PT PMAs are not directly subject to mandatory sustainability reporting under POJK 51 — unless they are also classified as financial service institutions or have gone public. The existing OJK regulations target public companies and financial institutions specifically.
However, three practical realities mean that ESG is increasingly relevant even for private PT PMAs:
Investor and Partner Expectations
Global investors and multinational partners increasingly require ESG disclosures as a condition of financing or partnership — regardless of local regulatory requirements. Foreign companies operating in Indonesia whose parent entities are based in the EU, UK, or US may already be subject to home-country ESG reporting requirements that extend to their Indonesian subsidiaries.
Supply Chain Due Diligence Requirements
As the EU Corporate Sustainability Due Diligence Directive (CSDDD) and similar regulations take effect globally, Indonesian suppliers and subsidiaries of foreign companies are increasingly being asked to demonstrate ESG performance. This is especially relevant in manufacturing, palm oil, textiles, and natural resource sectors.
The Scope Will Expand
The SPK roadmap explicitly notes that the new standards will apply to both public and private companies, though the exact scope of private company inclusion is still being determined. Private PT PMAs should treat 2025 and 2026 as preparation years rather than waiting for a formal mandate.
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Practical Steps for Foreign Companies to Start ESG Compliance in Indonesia
Whether your company is currently subject to mandatory reporting or not, the following steps will position you ahead of the regulatory curve.
Step 1: Determine Your Current Regulatory Status
Identify whether your company is a public company, issuer, or financial service institution under OJK’s definitions. If yes, you are already subject to POJK 51 and SEOJK 16. If you operate as a private PT PMA, review your parent company’s home-country ESG obligations that may extend to your Indonesian operations.
Step 2: Assess Sector-Specific Obligations
If your PT PMA operates in mining, agriculture, energy, forestry, or manufacturing, Article 74 of the Company Law already requires CSER implementation — separate from OJK sustainability reporting. Additionally, check whether your KBLI codes fall within the current TKBI classification or the upcoming 2026 expansion. This determines your exposure to green taxonomy rules.
Step 3: Align Your Reporting Structure with IFRS S1/S2 Early
Even if full SPK compliance is not yet mandatory, aligning your internal data collection and reporting architecture with IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures) now will significantly reduce the compliance burden when the mandate arrives. This means tracking scope 1, 2, and 3 emissions, documenting governance structures for sustainability oversight, and identifying climate-related financial risks in your business model.
Step 4: Maintain Ongoing Investment Reporting (LKPM)
Ensure your PT PMA’s quarterly LKPM submissions are accurate and timely via OSS-RBA. Non-compliance with LKPM is one of the most common causes of business license complications for foreign companies — and it creates a compliance gap that will be harder to close as ESG scrutiny increases.
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Frequently Asked Questions
Does a PT PMA in Indonesia need to submit a Sustainability Report to OJK?
Not currently, unless the PT PMA is also classified as a public company, issuer, or financial service institution under OJK regulations. Private foreign-owned companies are not yet subject to mandatory sustainability reporting under POJK 51/2017. However, the incoming SPK framework (expected from 2027) may extend reporting obligations to private companies, and the scope is still being finalized by the IAI.
What is the difference between POJK 51/2017 and the new SPK standards?
POJK 51/2017 uses an inside-out perspective — it measures how your company impacts external stakeholders and the environment. The SPK (based on IFRS S1 and S2) uses an outside-in approach — it requires companies to assess how external sustainability risks affect their own financial performance and long-term resilience. The SPK is more aligned with how global institutional investors evaluate ESG risk.
When does Indonesia’s mandatory adoption of IFRS S1 and S2 take effect?
Annual reporting under the SPK framework (based on IFRS S1 and S2) is targeted to begin in 2027. OJK plans to update the current POJK 51/2017 framework to mandate SPK compliance by 2026, giving companies one preparatory year. Climate-related disclosures under SPK will be mandatory initially, while other sustainability topics remain voluntary pending a post-implementation review between 2027 and 2029.
Is CSER (Corporate Social and Environmental Responsibility) the same as ESG in Indonesia?
No. CSER, mandated under Article 74 of the Company Law, applies specifically to companies in natural resource-related sectors and is focused on community and environmental obligations within the company’s operational area. ESG reporting under OJK’s POJK 51 framework applies to public companies and financial institutions and covers a broader set of sustainability disclosures. In practice, many companies need to comply with both, depending on their sector and legal status.
What is Indonesia’s Green Taxonomy (TKBI) and how does it affect my PT PMA?
The Indonesian Taxonomy for Sustainable Finance (TKBI) classifies business activities as green, transitioning, or non-green. It directly affects access to sustainable financing and is increasingly used by banks and investors to screen borrowers and investees. If your PT PMA’s KBLI codes fall within a sector covered by TKBI — currently energy, transportation, waste, and construction, with agriculture and industrials being added in 2025-2026 — understanding your taxonomy classification is important for financing strategy and investor relations.
Where do I submit a Sustainability Report in Indonesia?
Sustainability Reports must be submitted annually to OJK and published on the company’s own website, as required under Articles 10 and 12 of POJK 51/2017. Companies subject to IDX listing rules also disclose ESG information through the stock exchange’s sustainability platform. The report may be submitted as part of the annual report or as a standalone document.
References
1. Otoritas Jasa Keuangan. (2017). Peraturan OJK No. 51/POJK.03/2017 tentang Penerapan Keuangan Berkelanjutan bagi Lembaga Jasa Keuangan, Emiten, dan Perusahaan Publik. OJK. Retrieved from
https://ojk.go.id/id/regulasi/Pages/Penerapan-Keuangan-Berkelanjutan-bagi-Lembaga-Jasa-Keuangan,-Emiten,-dan-Perusahaan-Publik.aspx
2. Otoritas Jasa Keuangan. (2021). Surat Edaran OJK No. 16/SEOJK.04/2021 tentang Bentuk dan Isi Laporan Tahunan Emiten atau Perusahaan Publik. OJK. Retrieved from
https://www.ojk.go.id/id/regulasi/Documents/Pages/Bentuk-dan-Isi-Laporan-Tahunan–Emiten-atau-Perusahaan-Publik/SEOJK%20-%2016%20-%202021.pdf
3. Chambers and Partners. (2025). ESG 2025 — Indonesia: Trends and Developments. Global Practice Guides. Retrieved from
https://practiceguides.chambers.com/practice-guides/esg-2025/indonesia/trends-and-developments
4. RSM Global. (2025). The Future of Business: Evolving Through ESG and Climate Reporting — Indonesia. RSM Australia. Retrieved from
https://www.rsm.global/australia/esg-and-climate-reporting-apac/indonesia
5. Slaughter and May. (2025). ESG in APAC 2025: Indonesia. Slaughter and May. Retrieved from
https://www.slaughterandmay.com/services/practices/environmental-social-and-governance/esg-in-apac-2025/indonesia
6. Indonesia Stock Exchange. (2025). Sustainability Regulation and Guidance. IDX Sustainability. Retrieved from
https://sustainability.idx.co.id/regulation-and-guidance
