Indonesia has a structured and evolving legal framework for ESG (Environmental, Social, and Governance) reporting, anchored in OJK Regulation No. 51/POJK.03/2017. Public companies, issuers, and financial service institutions are legally required to submit an annual Sustainability Report (Laporan Keberlanjutan) and a Sustainable Finance Action Plan (RAKB) to the Financial Services Authority (OJK). For foreign investors operating through a PT PMA, understanding where these obligations begin, what they require, and how Indonesia’s framework is shifting toward IFRS S1/S2 by 2027 is essential for long-term compliance.
This guide explains the current regulatory landscape, who is covered, what each disclosure involves, and what practical steps foreign companies need to consider.
What Is ESG Reporting in the Context of Indonesian Law?
ESG reporting in Indonesia refers to the systematic disclosure of a company’s Environmental, Social, and Governance performance. Under Indonesian law, this is framed within the broader concept of “sustainable finance” as defined by OJK Regulation No. 51/POJK.03/2017 (POJK 51).
The regulation defines sustainable finance as support from the financial services sector to create sustainable economic growth by aligning economic, social, and environmental interests. In practice, this means that covered entities must not only report ESG metrics but also integrate sustainability principles into their core business strategy.
POJK 51 was reinforced by OJK Circular Letter No. 16/SEOJK.04/2021 (SEOJK 16/2021), which provides detailed technical guidance on the form and content of annual reports, including the ESG disclosures required within them. This two-layer regulatory structure gives OJK both a legal foundation and an operational roadmap for enforcing transparency.
Read the complete guide of ESG Regulations in Indonesia
Who Must Comply With ESG Reporting Requirements in Indonesia?
Not every company in Indonesia faces mandatory ESG reporting obligations. The requirements under POJK 51/2017 apply specifically to three categories of entities:
Financial Service Institutions (Lembaga Jasa Keuangan)
This includes banks, insurance companies, multi-finance companies, pension funds, and other regulated financial institutions. Banks have been required to prepare and submit sustainability reports since 2019, and their obligations include both the Sustainability Report and the annual Sustainable Finance Action Plan (RAKB).
Issuers (Emiten)
Companies that have conducted public offerings of securities in Indonesia are classified as issuers. Their phased reporting deadlines are based on asset scale: large-scale issuers were required to file by April 30, 2021; medium-scale issuers by April 30, 2023; and small-scale issuers by April 30, 2025. Issuers that are not financial service institutions must implement sustainable finance in their operations, with those activities reflected in the Sustainability Report, but are not required to submit a full RAKB.
Public Companies (Perusahaan Publik)
A public company is defined as an entity with at least 300 shareholders and a paid-up capital of IDR 3 billion or more. Even without conducting a public offering, a company meeting these thresholds falls within the scope of POJK 51 and must submit a Sustainability Report.
For foreign investors entering Indonesia through a standard PT PMA that is privately held and below the public company threshold, mandatory ESG reporting under POJK 51 does not automatically apply. However, this does not mean the obligations are irrelevant. As investor expectations and future regulations expand, many foreign-owned companies are beginning to prepare voluntary sustainability disclosures proactively.
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What Must a Sustainability Report Contain?
OJK Regulation 51/2017 and SEOJK 16/2021 define a structured format for Sustainability Reports. The report is organized into several main sections, each addressing a different dimension of ESG performance.
Sustainability Strategy (Section A)
Companies must articulate their vision, mission, and strategic direction regarding sustainability. This includes long-term and short-term targets, risk management approaches related to sustainability, and how sustainability goals connect to business decisions.
Economic Performance (Section B)
This section covers financial performance in the context of sustainable business practices, including how the company’s economic activities align with sustainable development goals and generate value beyond short-term profit.
Environmental Performance (Section C)
Companies must disclose their environmental footprint, covering energy usage, water consumption, greenhouse gas (GHG) emissions, waste management practices, and any biodiversity considerations. Under the current framework, Scope 1 and Scope 2 GHG emissions are the primary focus; Scope 3 reporting is not yet explicitly mandated but is encouraged under IFRS-aligned frameworks coming in 2027.
Social Performance (Section D)
This encompasses labor practices, employee welfare, diversity metrics, health and safety records, and community impact. Companies operating in sectors with significant workforce or community exposure are expected to provide detailed disclosures here.
Governance Disclosures (Section E)
OJK requires clear disclosure of board and management roles in overseeing sustainability, the existence of ESG committees, and specific oversight policies. The two-tier corporate governance structure in Indonesia, with a Board of Directors and Board of Commissioners, is expected to demonstrate active board-level responsibility for ESG matters.
Report Verification and Feedback (Section G)
While independent assurance is encouraged, it is not currently mandatory under POJK 51. Reports must include a feedback mechanism for stakeholders and a company response to feedback received on the prior year’s report. A disclosure index cross-referencing the POJK 51 requirements with specific pages in the report is also required.
The Sustainable Finance Action Plan (RAKB)
Financial service institutions are required to submit a Sustainable Finance Action Plan (Rencana Aksi Keuangan Berkelanjutan, RAKB) annually to OJK. The RAKB outlines specific strategies and initiatives for integrating sustainability principles into business operations and financing activities.
Non-financial issuers and public companies are not required to submit a separate RAKB, but they must still ensure that their Sustainability Reports reflect how sustainable finance principles have been integrated into their operations. Under OJK Reg 51/2017, companies must also present this plan to shareholders through the Annual General Meeting of Shareholders (GMS), ensuring shareholder awareness and accountability.
Private Companies and Foreign-Owned PT PMA: What Applies?
For private companies, the ESG reporting framework is less prescriptive. The Company Law (Law No. 40 of 2007, as amended through the Job Creation Law) requires companies engaged in natural resource-related activities, such as mining, agriculture, and forestry, to implement Corporate Social and Environmental Responsibility (CSER) under Article 74. This obligation is sector-specific and applies to both domestic and foreign-owned companies operating in covered sectors.
Government Regulation No. 47 of 2012 provides the implementing framework for CSER requirements. However, these requirements are broadly considered basic compared to full ESG reporting standards. They do not impose the same structured disclosure framework as POJK 51.
For a PT PMA that does not qualify as an issuer or public company and does not operate in the natural resource sector, mandatory ESG reporting under current law does not apply. That said, there are two important practical considerations. First, many multinational parent companies require consolidated ESG reporting from all subsidiaries, regardless of local mandates. Second, as Indonesia aligns with IFRS S1 and S2 standards by 2027, the scope of mandatory reporting is expected to expand.
Foreign companies planning to list on the Indonesia Stock Exchange (IDX) face a different picture. An IPO in Indonesia brings full OJK regulatory oversight, including mandatory sustainability reporting as part of ongoing post-listing compliance obligations.
Managing the overlap between LKPM investment activity reporting, tax compliance, and ESG disclosures can be complex for foreign-owned companies. InvestinAsia’s tax compliance and reporting support services help foreign companies structure their regulatory obligations efficiently under Indonesia’s integrated compliance framework.
International Frameworks and How They Interact With Indonesian Rules
Indonesian ESG reporting regulations allow companies to reference international standards when preparing their Sustainability Reports under POJK 51. The most commonly referenced frameworks include:
Global Reporting Initiative (GRI) Standards
GRI is the most widely used international framework in Indonesia. Many listed companies use GRI as the structural backbone for their Sustainability Reports, providing internationally comparable disclosures on environmental, social, and economic performance.
TCFD principles are incorporated into Indonesia’s Climate Risk Management and Scenario Analysis (CRMS) guidance, which was piloted with 18 banks in 2024. TCFD-aligned climate risk disclosures are increasingly expected in both banking sector sustainability reports and broader corporate reporting.
Sustainability Accounting Standards Board (SASB)
SASB standards are used by some companies for sector-specific financial materiality disclosures, particularly those with international investor audiences seeking ESG data comparable to global peers.
Indonesia’s Sustainability Report disclosures are also required to reference the 17 United Nations Sustainable Development Goals (SDGs) in the section designated under Appendix II, Section F.25 of OJK Circular Letter 16/2021.
What Is Changing: Indonesia’s 2027 Transition to IFRS S1 and S2
Indonesia’s sustainability reporting landscape is undergoing its most significant transformation since POJK 51 was issued in 2017. The Institute of Indonesia Chartered Accountants (IAI), through its Sustainability Standards Board (DSK), adopted both IFRS S1 and IFRS S2 in December 2024, issuing them as Sustainability Disclosure Standards (Standar Pengungkapan Keberlanjutan, SPK).
The two standards are designated as PSPK 1 (General Requirements for Disclosure of Sustainability-related Financial Information, adopted from IFRS S1) and PSPK 2 (Climate-related Disclosures, adopted from IFRS S2). Both are expected to become effective on January 1, 2027, with early adoption permitted. OJK plans to update POJK 51/2017 to incorporate these standards by 2026.
The implementation follows a “climate first” approach, reflecting Indonesia’s national priorities around energy transition and carbon reduction. PSPK 2 will require companies to disclose Scope 1, Scope 2, and relevant Scope 3 GHG emissions, as well as climate-related risks and opportunities aligned with the TCFD framework.
In February 2025, OJK also launched the Indonesia Taxonomy for Sustainable Finance (Taksonomi Keuangan Berkelanjutan Indonesia, TKBI) Version 2, expanding coverage to 192 additional business classifications across multiple sectors including manufacturing and transportation. TKBI Version 3.0 is planned for 2026, expanding coverage further to agriculture, industrial processes, and waste sectors.
Also Read: LKPM Reporting in Indonesia: Definition, Legal Basis, and Compliance Guide
Consequences of Non-Compliance
Entities subject to POJK 51/2017 that fail to submit a Sustainability Report or RAKB face administrative sanctions. Under Article 13 of POJK 51, OJK can issue written warnings as a first-level sanction. Additional sanctions can follow for continued non-compliance.
The current enforcement regime is largely principle-based, with OJK emphasizing guidance over punitive action. However, this is shifting. With the 2027 IFRS S1/S2 transition, the regulatory framework is expected to introduce stricter enforcement mechanisms and mandatory independent assurance requirements for covered entities.
For companies already subject to LKPM reporting under BKPM and annual PT PMA tax obligations, sustainability reporting adds a third reporting layer. Failure to coordinate these obligations can create inconsistencies across government systems that trigger regulatory scrutiny.
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Benefits of ESG Reporting for Foreign Companies in Indonesia
While the immediate legal trigger for ESG reporting is regulatory compliance, the strategic benefits extend well beyond avoiding sanctions. For foreign investors in Indonesia, a well-prepared sustainability report can serve as a competitive asset.
Improved Access to Capital
Global investor surveys consistently show that a majority of institutional investors factor ESG performance into allocation decisions. Indonesian companies with strong sustainability disclosures are better positioned to attract ESG-linked financing, green bonds, and sustainability-linked loans, instruments that have grown significantly in the Indonesian market in recent years.
Stronger Corporate Governance Credibility
OJK requires ESG disclosures to demonstrate board-level accountability for sustainability risks. For foreign-owned companies, this aligns with international governance expectations and builds credibility with regulators, auditors, and business partners in Indonesia.
Risk Management and Operational Efficiency
The process of preparing an ESG report forces companies to identify, measure, and manage environmental and social risks that might otherwise go unnoticed. Companies that proactively address these risks tend to show better operational resilience and lower long-term compliance costs.
Alignment With Parent Company Requirements
For PT PMA subsidiaries of multinational groups, voluntary ESG reporting in Indonesia supports consolidated group-level sustainability reporting. It also ensures that the Indonesian entity’s disclosures are consistent with parent company commitments to net-zero targets, human rights due diligence, or global ESG frameworks such as GRI or TCFD.
Frequently Asked Questions
Is ESG reporting mandatory for all companies in Indonesia?
No. Mandatory ESG reporting under POJK 51/2017 applies specifically to financial service institutions, issuers (companies that have conducted public offerings), and public companies with at least 300 shareholders and IDR 3 billion in paid-up capital. Private foreign-owned companies (PT PMA) that do not meet these thresholds are not currently required to file a Sustainability Report, though this may change with the 2027 IFRS S1/S2 transition.
What is the difference between a Sustainability Report and a Sustainable Finance Action Plan (RAKB)?
A Sustainability Report discloses a company’s actual ESG performance over the reporting period, covering environmental, social, governance, and economic dimensions. A RAKB is a forward-looking document that outlines specific strategies and targets for integrating sustainability into business operations. Financial service institutions must submit both; issuers that are not financial institutions must submit a Sustainability Report only.
Can a PT PMA voluntarily prepare an ESG report even if not legally required to?
Yes, and many foreign-owned companies choose to do so. Voluntary reporting is particularly common for PT PMAs that are subsidiaries of multinational companies required to consolidate ESG data at the group level, or those seeking ESG-linked financing from international investors and development finance institutions.
What international frameworks can be used for sustainability reporting in Indonesia?
OJK regulations permit companies to reference internationally recognized frameworks including GRI Standards, TCFD, and SASB when preparing their Sustainability Reports. Reports must also reference Indonesia’s 17 UN Sustainable Development Goal indicators as specified in SEOJK 16/2021. Starting 2027, the Indonesian Sustainability Disclosure Standards (PSPK 1 and PSPK 2) aligned with IFRS S1 and S2 will become the primary framework.
What penalties apply for failing to submit a required Sustainability Report in Indonesia?
Under Article 13 of OJK Regulation No. 51/2017, non-compliant entities face administrative sanctions starting with written warnings from OJK. Continued non-compliance can result in additional enforcement actions. The current regulatory approach is largely guidance-based, but Indonesia’s transition to IFRS-aligned standards by 2027 is expected to introduce stricter enforcement mechanisms.
How does the 2027 IFRS S1 and S2 transition affect companies in Indonesia?
Indonesia’s Sustainability Standards Board (DSK IAI) adopted PSPK 1 and PSPK 2, based on IFRS S1 and S2, in December 2024. Mandatory reporting under these standards is expected to begin January 1, 2027, primarily targeting public companies and financial institutions. The standards require disclosure of sustainability-related financial risks and climate-related information including Scope 1, Scope 2, and relevant Scope 3 GHG emissions. OJK plans to revise POJK 51/2017 to mandate these new standards by 2026.
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. 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). SEOJK No. 16/SEOJK.04/2021 tentang Bentuk dan Isi Laporan Tahunan Emiten atau Perusahaan Publik. Retrieved from
https://www.ojk.go.id/id/regulasi/Documents/Pages/Bentuk-dan-Isi-Laporan-Tahunan–Emiten-atau-Perusahaan-Publik/SEOJK-16-2021.pdf
3. SSEK Law Firm. (2024, July 31). ESG Reporting Requirements in Indonesia. Retrieved from
https://ssek.com/blog/esg-reporting-requirements-in-indonesia/
4. Chambers and Partners. (2025, November). ESG 2025: Indonesia Trends and Developments. Retrieved from
https://practiceguides.chambers.com/practice-guides/esg-2025/indonesia/trends-and-developments
5. RSM Global. (2025). Indonesia: The Future of Business — Evolving Through ESG and Climate Reporting. Retrieved from
https://www.rsm.global/australia/esg-and-climate-reporting-apac/indonesia
