Written by: Maurelitya DAYINTA
Verified by: Albert SUTANTO
Introduction
In today's world, sustainability is more than just a single trend for corporation. Not only in Indonesia but globally. Investor, consumers, and regulators are placing greater emphasis on transperency in environmental, social, and governance (ESG) practices. Sustainability report has become one of the way for companies to addressed those issues, which allows them to publically disclose their impact on these critical aspects.
On a global scale, sustainability reports are guided by well-established frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosure (TCFD). These standards provide companies with a structured approach to disclosure, ensuring they report relevant information such as economic, performance, employement, customer, privacy, even emissions, and waste management, which all aligned the three main pillars of environmental, social, and governance, This report will also help them in shaping and strengthening their sustainability performance and public trust.
Indonesia’s Regulatory Landscape
In Indonesia, sustainability reporting has become a crucial tool for promoting responsible business practices. The Financial Services Authority, known as Otoritas Jasa Keuangan (OJK), has recently introduced several regulations to improve transparency and accountability in ESG aspects. This is highlighted by OJK Regulation No. 51/POJK.03/2017, which mandates financial institutions, issuers, and public companies to publish a Sustainability Report. Additionally, the report must adhere to the prescribed format and content outlined in SEOJK No. 16/SEOJK.04/2021.
Challenges and How Companies can boost their ESG performance?
Although sustainability reporting is mandatory and offers numerous benefits to companies, its implementation in Indonesia has yet to reach its full potential. One of the main challenges is the lack of understanding and expertise in ESG reporting. Many businesses, especially small and medium enterprises (SMEs), struggle to grasp the complexities of ESG frameworks, reporting standards, and materiality assessments. This results in reports that are superficial and compliance-driven rather than strategic and impactful.
Among the 951 companies listed on the Indonesian Stock Exchange (IDX), not all have published their sustainability reports, with only 95% complying. In practice, significant challenges still hinder effective implementation. A study by the Center for Environmental, Social, and Governance Studies (CESGS) found that among the 95% of Indonesian companies that publish sustainability reports, only a small portion have a structured ESG strategy (31% have an ESG framework, 18% use a Materiality Matrix, and just 10% have an ESG Roadmap). This suggests that many companies still focus only on compliance rather than integrating ESG principles into their core business strategy.
Meanwhile, having a clear ESG strategy and roadmap through Sustainability Reporting is
essential for companies to achieve long-term benefits beyond mere regulatory compliance. A well-structured ESG framework serves as a benchmark for continuous growth, enabling companies to set clear targets and take strategic actions to meet their sustainability goals. This is why publishing a sustainability report is more than just a formality—it is a critical tool for demonstrating commitment, measuring progress, and driving business value.
In the other sights, according to PwC’s 2024 Global Investor Survey, three out of four investors see sustainability as a key factor in investment decisions. In terms of climate transition and adaptation, 50% of investors say that it is very or extremely important that companies change the way they create, deliver and capture value in response to climate change. Moreover, 71% of investors agree that companies should incorporate ESG/sustainability directly into their corporate strategy. This shift shows that investors are no longer just aware of climate and technological risks, but expect companies to take action, assess risks and opportunities, and make sustainability a core part of their strategy.
Another case study, Unilever Indonesia has integrated sustainability into its core business strategy through the Unilever Sustainable Living Plan (USLP). This proactive approach has positioned the company as a corporate sustainability leader, earning recognition in the lobeScan/SustainAbility Leaders Survey and achieving an "AA" ESG rating from MSCI. Such achievements highlight how companies that actively report on their ESG initiatives gain public trust, enhance their reputation, and attract long-term investments. This reinforces the idea that sustainability reporting is not just about disclosure—it is about securing a competitive advantage and ensuring long-term business resilience.
Conclusion
Despite challenges such as limited ESG expertise and fragmented implementation, companies that proactively develop structured ESG frameworks, set clear goals, and communicate their sustainability efforts effectively can unlock significant long-term benefits. Enhanced public trust, improved corporate reputation, and access to sustainable investments. Ultimately, sustainability reporting is not just about disclosure and regulatory requirement—it is about driving meaningful change.
By embracing ESG and Sustainability Reporting as a core business practice, companies can drive innovation, improve risk management, and contribute to a more sustainable future. The journey toward effective sustainability reporting may seem complex, but with the right framework, data management, and strategic alignment, businesses can unlock new opportunities and stay competitive in an evolving global market.
For more information about Sustainability and ESG Consultancy, do not hesitate to contact us at Mt. Stonegate. We are here to help you navigate the ESG landscape and achieve impactful, transparent, and strategic sustainability goals.
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