THE Financial Services Authority’s (OJK) long journey in supporting the sustainable finance ecosystem in Indonesia is entering a new chapter.
After establishing the foundation through OJK Regulation (POJK) Number 51 of 2017 on the Implementation of Sustainable Finance for Financial Services Institutions, Issuers and Public Companies – which governs the mandatory sustainability disclosure known as the sustainability report – OJK is now ready to implement Sustainability Disclosure Standards.
Currently, OJK is drafting a Revision to POJK 51/2017 through the Draft POJK and Draft Regulations of the Board of Commissioners (RPOJK and RPADK) on the Implementation of Sustainable Finance in the Financial Services Sector.
This revision follows up on Act Number 4 of 2026 on the Development and Strengthening of the Financial Sector (UU P2SK).
Joko Siswanto, head of the Sustainable Finance Directorate at OJK, stated that the RPOJK and RPADK adopt Statement of Sustainability Disclosure Standards (PSPK) 1 General Requirements for Disclosure of Sustainability-related Financial Information and PSPK 2 Climate-related Disclosures.
Both align with global accounting standards, specifically International Financial Reporting Standards (IFRS) S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 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,” he said.
By adopting global disclosure standards, Indonesia can demonstrate serious commitment to driving sustainable development efforts to the global community.
Joko hopes the POJK and PADK adopting the Sustainability Disclosure Standards will be issued within this year.
The implementation of sustainable finance in Indonesia does not start from scratch.
POJK 51/2017 and OJK Circular Letter Number 16 of 2021 regarding the Form and Content of the Annual Report of Issuers or Public Companies served as the initial foundation requiring financial sector actors, including issuers and public companies, to release Sustainability Reports and submit Sustainable Finance Action Plans.
To support sustainable finance implementation, OJK issued several bridging policies, including the Taxonomy for Indonesian Sustainable Finance (TKBI) and Climate Risk Management and Scenario Analysis (CRMS).
TKBI serves as the national reference framework for classifying green and transition economic activities aligned with national development priorities and international standards.
A pilot project implementing TKBI was conducted across all commercial banks in Indonesia as an industry practice run.
CRMS will strengthen climate risk management by developing methodologies to increase the resilience of the financial services sector.
OJK also conducted a pilot project with all commercial banks to implement CRMS.
OJK also issued the Banking Sustainability Maturity Assessment Report (SMART) and Climate Risk and Banking Resilience Assessment (CBRA), detailing banks’ maturity levels in implementing sustainable finance policies and the impact of climate risks on business continuity.
OJK continues to coordinate, collaborate and synergise with stakeholders to build a sustainable finance ecosystem capable of supporting Sustainability Disclosure Standards – encompassing policy, infrastructure, data and human resource capacity building.
Sustainability reporting is expected not just to meet regulatory compliance, but to become an integral part of good corporate governance, enhancing long-term company value and investor trust.
Implementing global Sustainability Disclosure Standards sends a positive signal to investors, opening new opportunities and potentially benefiting the investment climate – especially for global investors with a high interest in sustainability-focused activities.
“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 added.
Phases and penalties await
Regulations adopting the Sustainability Disclosure Standards will soon be released, backed by the RPOJK on the Implementation of Sustainable Finance, which mandates standard adoption starting January 2027.
However, not all financial sector players, issuers and public companies will face mandatory compliance next year.
OJK plans to implement the standard in phases. The authority has established four groups of financial sector actors, issuers and public companies.
Group 1, which will implement first in 2027, includes commercial banks in core capital groups 4 and 3, foreign bank branch offices, issuers and public companies on the main and new economy boards, as well as the stock exchange.
Administrative sanctions, such as written warnings or notices, await non-compliant entities.
Those penalised who still fail to meet provisions face further sanctions, including bans on launching new products or activities, cancellation of approvals and registrations, revocation of registration statements and downgraded soundness ratings alongside other measures determined by OJK.
Indonesian Issuers Association executive director Gilman Pradana Nugraha noted that mandatory implementation of Sustainability Disclosure Standards in 2027 marks an important milestone to gradually improve reporting quality while giving all issuers adequate time to adapt.
For today’s investors, particularly institutional and global players, sustainability information has become a vital consideration in the investment decision-making process.
However, for investors, disclosure quality, year-on-year consistency and how information reflects a company’s ability to manage risk and generate long-term value matter far more.
“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.
Over the long term, high-quality sustainability reporting can potentially broaden the investor base, boost corporate credibility and expand access to funding that increasingly prioritises ESG factors.
Effective implementation of these obligations is expected through several forms of OJK support, including:
- Detailed, practical and sector-specific implementation guidelines to assist issuers in applying standards while addressing material and data differences across industries,
- Consistent, ongoing awareness campaigns and capacity-building programmes for issuers and
- Regulatory harmonisation among regulators and related institutions to prevent duplicate reporting.
“Implementation should also consider the principle of proportionality, allowing room for adjustments according to the scale, complexity and characteristics of each company,” Gilman added.
PT Wika Tirta Jaya Jatiluhur began releasing sustainability reports in 2024. The company’s director Rendy Ardiansyah shared that his company secured green financing in 2025.
EY Indonesia climate change and sustainability services associate director Ika Merdekawati stated that based on EY Indonesia’s research last year covering companies listed on the Kompas100 index for six consecutive years, sustainability reporting has become mainstream reporting in Indonesia.
“From 2019 to 2024, companies beginning to align with IFRS standards – even if not fully adopted yet – have been steadily increasing,” she said.
Meanwhile, legal and sustainability expert Rio Christiawan said Sustainability Disclosure Standards that only adopt the Indonesian Financial Accounting Standards (PSAK) 1 and PSAK 2 is insufficient, emphasising that OJK needs to formulate comprehensive regulations.
“What needs to be disclosed? What should the contents of the report look like? Who supervises it? What are the penalties for noncompliance? What are the sanctions if it is done incorrectly? We must prevent this from devolving into issues similar to past corporate social responsibility implementations,” he said.
