Joining the mainstream – sustainability reporting in Indonesia

Reporting on social and environmental activities by Indonesian companies has been evolving for many years already.  Some leading Indonesian companies have over ten years of sustainability reporting ‘history’ and have clearly stated that they see this type of transparency and disclosure as an essential way to maintain the trust of stakeholders. 

 Librian Angraeni, Deputy Director, Sustainability & Stakeholder Engagement Division, Asia Pulp & Paper (APP) Sinar Mas, comments:

“There is an ever-closer relationship between core financial success and issues such as climate change, forest protection and community welfare. At APP we are addressing these issues and engaging with our stakeholders every day. We use our sustainability reports to summarise in a concise way how we are addressing these challenges, our progress and the some of the many ways in which we are contributing towards the UN Sustainable Development Goals (SDGs)”

In 2012, when Challenge Sustainability first started working with Indonesian companies like APP to develop and publish GRI compliant reports, only 34 companies produced a 2012 Sustainability Report, according to the GRI Sustainability Disclosure Database. Last year the number stood at just under 100, demonstrating clear growth, however the question remains – when will sustainability reporting become more mainstream, and integrated with companies’ other legal and financial disclosures?

In 2017 the Indonesia Financial Services Authority (Otoritas Jasa Keuangan) published rule number 51/POJK.03/2017: Implementation of Sustainability Finance for Financial Services Institutions, Issuers and Public Companies.  This required all listed companies to publish sustainability reports, starting with banking sector companies (from 2019), and broadening to a wider range of listed companies (from 2020).

Even though for most companies, this means that the first legal deadline to publish an ‘OJK Report’ is not until April 2021, some companies will publish reports that comply with the OJK requirements in 2020.  Challenge Sustainability has been developing two of these first OJK Reports. From this experience we offer the following observations:

• Start planning now, as the deadline for April publication will be a challenge
• Get familiar with the OJK indicators, understand where the most significant gaps are and where data and content will be a challenge to collect
• Identify internal stakeholders that will be providing you with the data
• Ensure data collection systems for energy, emissions, water and waste are in place and able to produce data for the previous year in good time ahead of the deadline. Be prepared to disclose targets and discuss progress against those targets
• Develop the key sustainability messages now, as they are unlikely to change significantly. This should cover clear descriptions of company mission and vision, sustainability challenges and opportunities and governance arrangements 

Shanti Shamdasani, President at ASEAN International Advocacy, advisor to Governments and leading companies across Southeast Asia, comments:

 “Companies that take a lead in responding to these new social and environmental reporting regulations have an opportunity to demonstrate their support towards the Indonesian Government’s programs on sustainability.  Now more than ever, a company’s sustainability is not measured solely in terms of financial success and direct impacts on the environment and employees.  Best practice shows that companies need to demonstrate their contribution to the challenges of social and economic development, through a responsible approach to the environment, business with suppliers, local communities, and other stakeholders.”

For both first time and experienced sustainability reporters, Challenge Sustainability draws upon over 15 years of sustainability report experience to offer unique insight into how to develop and improve Indonesian companies’ sustainability reporting, and how to prepare for OJK reporting.  Our bespoke benchmark service includes; 

• Clear analysis of how your report compares on level of disclosure and effectiveness of sustainability communications, with prioritised improvement recommendations
• Benchmark conducted against sector and regional peers, as well as global reporting leaders that display sustainability reporting best practice
• Gap analysis against OJK requirements and/or GRI compliance
• Insight into global and regional sustainability reporting trends

For more information please contact: Jon Woodhead (jon.woodhead@challengesustainability.com); for enquiries in Bahasa Indonesia please contact Jerry Winata (jerry.winata@challengesustainability.com) and for ASEAN International Advocacy please contact Shanti Shamdasani (shanti@ventureadvisory.asia).  Challenge Sustainability and ASEAN International Advocacy are working together to promote best practice in tackling social and environmental challenges in Southeast Asia.