Testing Indonesian companies’ readiness for new ESG reporting rules

JAKARTA, 25 SEPTEMBER 2026 —

Jakarta – Indonesia’s Financial Services Authority (OJK) is set to roll out mandatory Sustainability Disclosure Standards for the country’s financial‑sector participants, issuers and public companies, with the first tranche of entities required to comply from January 2027, the regulator said on Monday.

The regulator is now drafting a revision of that rule – the Draft POJK and Draft Regulations of the Board of Commissioners (RPOJK and RPADK) – to embed the Statement of Sustainability Disclosure Standards (PSPK 1 and PSPK 2), which mirror the International Financial Reporting Standards (IFRS) S1 and IFRS S2 on general sustainability‑related financial information and climate‑related disclosures.

“​One of OJK’s main goals in adopting PSPK 1 and PSPK 2 is to enhance the quality, transparency, consistency and interoperability of sustainability information disclosed by companies in Indonesia,” said Joko Siswanto, head of OJK’s Sustainable Finance Directorate. He added that aligning with global standards would allow Indonesia to demonstrate a serious commitment to sustainable development to the international community. Joko said he expects the revised POJK and PADK to be issued within the year.

The forthcoming standards will not be introduced in a single sweep. OJK has divided the regulated entities into four groups and will phase implementation. Group 1, slated to start in 2027, comprises commercial banks in core‑capital groups 3 and 4, foreign bank branches, issuers and public companies listed on the Main and New Economy Boards, and the Indonesia Stock Exchange itself.

Entities that fail to meet the new requirements will first receive written warnings or notices; persistent non‑compliance could trigger bans on new products, cancellation of approvals, revocation of registration statements, downgrades of soundness ratings and other sanctions determined by OJK.

Gilman Pradana Nugraha, executive director of the Indonesian Issuers Association, welcomed the phased approach, noting that mandatory adoption in 2027 “marks an important milestone to gradually improve reporting quality while giving all issuers adequate time to adapt.” He stressed that investors now view sustainability information as a core factor in decision‑making, but that the value of disclosures lies in their quality, year‑on‑year consistency and the extent to which they reveal a company’s risk‑management and long‑term value‑creation capabilities.

“A sustainability report is not the ultimate end goal; it is a medium to enhance transparency, strengthen corporate governance and build market trust,” he said.

The regulatory push builds on a series of earlier OJK initiatives. POJK 51/2017 and OJK Circular Letter No 16/2021 already required issuers and public companies to produce sustainability reports and submit Sustainable Finance Action Plans. To support those mandates, OJK introduced the Taxonomy for Indonesian Sustainable Finance (TKBI), a national framework for classifying green and transition activities in line with development priorities and international standards.

A pilot of TKBI was run across all commercial banks as an industry‑wide practice run. OJK also issued the Climate Risk Management and Scenario Analysis (CRMS) guidelines, and piloted their application with the same set of banks to strengthen climate‑risk resilience. The regulator’s Banking Sustainability Maturity Assessment Report (SMART) and Climate Risk and Banking Resilience Assessment (CBRA) have since mapped banks’ maturity levels in implementing sustainable‑finance policies and gauged climate‑risk impacts on business continuity.

Stakeholders see the adoption of global standards as a catalyst for deeper market integration. “Global investors will obtain more transparent, consistent and comparable information, thereby boosting investor confidence in the Indonesian market, reducing information gaps and assisting investors in making investment decisions,” Joko said. The expectation is that clearer disclosures will open new funding avenues, especially for foreign investors with ESG mandates, and improve the overall investment climate.

Companies are already moving toward the new regime. PT Wika Tirta Jaya Jatiluhur began issuing sustainability reports in 2024, and its director Rendy Ardiansyah disclosed that the firm secured green financing in 2025. Ika Merdekawati, associate director of climate change and sustainability services at EY Indonesia, noted that EY’s research on Kompas 100‑listed firms over six years shows sustainability reporting becoming mainstream.

“From 2019 to 2024, companies beginning to align with IFRS standards – even if not fully adopted yet – have been steadily increasing,” she said.

Legal and sustainability experts caution that the standards must be comprehensive to avoid past pitfalls. Rio Christiawan, a legal and sustainability specialist, warned that relying solely on Indonesian Financial Accounting Standards (PSAK 1 and PSAK 2) would be insufficient. He called for clear guidance on what must be disclosed, the report’s structure, supervisory responsibilities and penalties for non‑compliance, stressing the need to prevent a repeat of earlier corporate‑social‑responsibility implementations that suffered from vague enforcement.

The regulatory timeline ties to broader legislative reforms. The revision of POJK 51/2017 follows the enactment of Act No 4 of 2026 on the Development and Strengthening of the Financial Sector (UU P2SK), which provides the legal backbone for OJK’s sustainable‑finance agenda. By embedding the PSPK standards into the revised POJK and PADK, OJK aims to create a cohesive framework that covers policy, infrastructure, data and human‑resource capacity building across the financial ecosystem.

As OJK finalises the draft regulations, the next steps will involve stakeholder consultations and the formal issuance of the revised POJK and PADK. Once in force, the standards will set the baseline for sustainability reporting in Indonesia, shaping how companies disclose climate‑related risks and opportunities and influencing the flow of capital into the country’s green and transition projects.