On April 27, 2026, the Institute of Indonesia Chartered Accountants (IAI) brought together key stakeholders for a Focus Group Discussion (FGD) to shape the strategic direction of the Indonesia Sustainability Reporting Forum (ISRF, or the Forum). The discussion reflected a broader shift taking place—not only in Indonesia, but globally—where sustainability is becoming central to how organizations operate, make decisions, and create long-term value.

At its core, ISRF recognizes a simple but important truth: sustainability reporting is no longer just about disclosure. It is about integration. Companies are increasingly expected to embed environmental, social, and governance (ESG) considerations into their business strategies, risk management frameworks, and governance practices.

Why ISRF Matters

The strengthening of ISRF comes at a critical time. Globally, the introduction of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB) has raised the bar for consistency and transparency in sustainability reporting. In response, IAI has issued PSPK 1 and PSPK 2 as foundational steps to align Indonesia with these global developments.

However, while standards provide direction, implementation remains a challenge. Many companies are still navigating how to move from compliance-driven reporting toward meaningful integration. Sustainability efforts are often fragmented, reactive, or treated as separate from core business strategies.

The Forum is designed to help bridge this gap. It serves as a platform where regulators, businesses, investors, and professionals can collaborate—not only to discuss challenges, but to develop practical solutions.

From Strategy to Execution

One of the key themes emerging from the April FGD is the importance of addressing sustainability at the executive level. Integration must start from the top, influencing long-term strategy, investment decisions, and enterprise risk management.

Some organizations have already begun this journey, embedding sustainability into corporate plans and risk frameworks. Yet, a common challenge remains: how to align internal stakeholders. Without shared understanding and commitment across management and employees, even well-designed strategies can struggle in execution.

Another issue raised is the difficulty of quantifying sustainability opportunities. While sustainability reporting has made certain risks—particularly climate-related risks—easier to identify, linking sustainability initiatives directly to financial performance remains complex.

In Indonesia, for example, plantation or mining companies operating in areas vulnerable to floods, extreme rainfall, or forest fires can now identify these climate-related risks more clearly through sustainability reporting. These risks may disrupt operations, damage infrastructure, reduce production, and increase rehabilitation or insurance costs. As a result, they also affect financial reporting through impairment assessments, higher operating cost estimates, revised cash flow projections, and disclosures related to material business risks. This highlights the need for more practical methodologies that reflect local conditions and business realities.

Adapting Global Standards to Local Context

Participants in the Forum also noted that global frameworks do not always translate seamlessly into local contexts. Metrics and tools such as financed emissions measurement and climate risk stress testing are still evolving and may not fully capture the dynamics of emerging markets like Indonesia.

This creates a need for locally relevant methodologies that balance global alignment with domestic priorities. In Indonesia, for example, companies and professional bodies are beginning to adapt sustainability implementation approaches by considering sector-specific exposures such as coal mining, palm oil, agriculture, fisheries, and energy transition readiness.

Methodologies may include integrating climate and biodiversity risks into enterprise risk management for plantation and extractive industries, incorporating local regulatory requirements from Otoritas Jasa Keuangan and the Indonesia Stock Exchange, and using phased materiality assessments that reflect Indonesia’s economic structure and varying levels of reporting maturity.

In addition, there is still variation in how key concepts—such as green finance and sustainable finance—are understood at the executive level. Building a shared understanding between all executives will be essential for consistent implementation.

In the Indonesian context, these two concepts are often used interchangeably, although they have different scopes. Green finance is generally understood more narrowly, focusing on financing activities that deliver direct environmental benefits, such as renewable energy, energy efficiency, waste management, or low-carbon infrastructure. Sustainable finance, meanwhile, has a broader meaning, encompassing not only environmental considerations but also social and governance factors in financing and investment decisions.

At the executive level, many business leaders still associate sustainability primarily with environmental or compliance-related initiatives. As a result, green finance is often viewed as project-based environmental funding, while sustainable finance is increasingly understood as a broader strategic approach linked to long-term value creation, risk management, governance, stakeholder trust, and business resilience.

Regulation will also play an important role. A supportive ecosystem, where policies enable carbon measurement and sustainable investments, can help companies move beyond risk mitigation and toward value creation.

Leadership and Culture as Key Drivers

A central insight from the Forum is that the biggest barriers to sustainability integration are not technical—they are organizational.

Leadership commitment, often described as “tone at the top,” is critical. Without it, sustainability initiatives risk becoming symbolic rather than transformative. Leaders set priorities, shape culture, and drive accountability.

Equally important is the need to shift perceptions. Sustainability should not be viewed simply as a cost, but as a long-term investment that enhances resilience and competitiveness. This requires aligning sustainability goals with organizational performance metrics, which requires building awareness across all levels of an organization.

ISRF as a Platform for Collaboration

In this context, the Indonesia Sustainability Reporting Forum is positioned as a catalyst for change. Its role goes beyond facilitating discussions—it aims to drive real impact with three key functions:

1. Bridging the gap between regulation and corporate readiness
2. Enabling collaboration across sectors
3. Promoting the integration of sustainability into business strategy

Members expect the Forum to deliver practical outcomes, including engagement with regulators, dialogue with global standard setters and investors, and sharing of real-world case studies. Ultimately, ISRF is expected to help define a common baseline for sustainability practices in Indonesia—one that is both globally credible and locally relevant.

Looking Ahead

The FGD marked an important step in strengthening Indonesia’s sustainability ecosystem. It highlighted both the progress made and the challenges that remain.

As the accounting profession continues to evolve, its role will be critical in connecting financial and sustainability information, ensuring that reporting reflects real business decisions and outcomes.

The journey ahead will require collaboration, innovation, and a willingness to rethink traditional approaches. But it also presents a significant opportunity for Indonesia to lead in developing high-quality, integrated sustainability practices.