Dissecting the Content of Sustainability Reports in Indonesia: A Practical Guide According to OJK Regulations

I. Introduction: Understanding Sustainability Reports and Their Rules in Indonesia

Sustainability Report has become a crucial document for modern companies. More than just financial figures, this report presents a comprehensive picture of the economic, social, and environmental (ESG) performance of a business entity. Its preparation reflects the companys commitment to responsible and transparent business practices. In Indonesia, the preparation of Sustainability Reports is not only following global trends, but also an obligation officially regulated by the Financial Services Authority (OJK). The main basis for this obligation is Financial Services Authority Regulation Number 51/POJK.03/2017 concerning the Implementation of Sustainable Finance for Financial Services Institutions, Issuers, and Public Companies (hereinafter referred to as POJK 51). This regulation, which has been in effect since July 27, 2017, requires these entities to not only apply sustainable finance principles but also publish Sustainability Reports periodically. To provide more technical and detailed guidance, OJK then issued Financial Services Authority Circular Letter Number 16/SEOJK.04/2021 concerning the Form and Content of Annual Reports of Issuers or Public Companies (hereinafter referred to as SEOJK 16). SEOJK 16, which was stipulated on June 29, 2021, replaces previous provisions and specifically regulates the format and content of the Sustainability Report which is part of the Annual Report, with the aim of improving the quality of reporting to be in line with international standards such as the ASEAN Corporate Governance Scorecard (ACGS).

The presence of these two layers of regulation—POJK as a legal umbrella that stipulates "what" must be done, and SEOJK as technical instructions that clarify "how" to do it well—demonstrates OJKs seriousness in overseeing the implementation of sustainability reporting. This is not just a formality, but a systematic effort to encourage the transformation of business practices in Indonesia towards a more responsible and globally competitive direction. Companies are no longer sufficient to simply comply with reporting obligations, but are required to produce quality and informative reports.

The importance of the Sustainability Report is felt by both companies and the state. For companies, this report can enhance reputation, improve risk management, drive operational efficiency, and increase attractiveness to investors who are increasingly concerned about sustainability issues. For Indonesia as a whole, good sustainability reporting practices support the achievement of the Sustainable Development Goals (SDGs), increase transparency and accountability in the business sector, and have the potential to attract global investment that is now increasingly considering ESG aspects. The emphasis in SEOJK 16 on improving Indonesias corporate governance ranking on the international stage and attracting global investors implicitly acknowledges this shift in focus for global investors. The Sustainability Report becomes a kind of "showcase" that shows the companys ESG commitment and performance to investors who are aware of sustainability issues.

II. Dissecting the Components of Sustainability Reports Based on POJK No.51/2017 and SEOJK No.16/2021

The figure shows the structure of the Sustainability Report as regulated by POJK no.51/2017 and SEOJK no.16/2021. This structure consists of several main parts, from A to G, each of which has an important role in presenting the companys sustainability information comprehensively.

A. Sustainability Strategy

This section is the foundation of the Sustainability Report. Here, the company explains its vision, mission, and strategic direction in integrating sustainability principles into all aspects of its operations and business decisions. It is a “roadmap” that shows how the company intends to achieve its sustainability goals. Key contents of this section include the description of the vision and mission related to sustainability, the sustainability values ​​adopted by the company, the long-term and short-term targets to be achieved, the risk management approach related to sustainability issues, and the expected results from the implementation of the strategy. Ideally, the strategy disclosed is aligned with the Sustainable Finance Action Plan (RAKB) that the company may have prepared.

The importance of this section lies in its ability to demonstrate sustainability commitments that come from the company’s strategic level. This indicates that sustainability is not seen as a side program or merely a philanthropic activity, but as an integral part of the way the company does business. A good sustainability strategy should reflect the company’s deep understanding of the ESG issues that are most relevant and have a material impact on its business operations and its stakeholders. It should not be just a general statement, but should be based on a careful and specific analysis of the company’s context. Without a clear and measurable strategy, the information presented in the following sections risks becoming a collection of data without direction and strategic meaning.

B. Summary of Sustainability Aspect Performance

After presenting its strategy, the company then presents a summary of key achievements in economic, social and environmental aspects. This overview usually includes performance data over a certain period, usually the last three years if data is available, to provide an overview of trends. The information presented can be either quantitative data or qualitative narratives. For the economic aspect, for example, it can include data on revenue, net profit, or the contribution of sustainable products/services. The environmental aspect can include energy consumption, water, greenhouse gas emission levels, and waste management. Meanwhile, the social aspect can include employment data (such as gender ratio or occupational safety levels), impactful corporate social responsibility (CSR) programs, and community development.

This section is important because it provides readers with a quick overview (snapshot) of the companys sustainability performance trends. Presenting performance data over three years, as suggested , has a significant purpose. It allows stakeholders, including investors and analysts, to see trends over time: whether there is consistent improvement, stagnation, or even deterioration in the companys sustainability performance. A single data point, such as a decrease in emissions in the reporting year, may appear positive. However, without historical context, the assessment can be less accurate. If the decline is still higher than two or three years ago, then the story is different. Trends help assess the consistency and seriousness of a companys sustainability efforts.

Here is an example of a table that can summarize an overview of sustainability performance:

Table 1: Sustainability Performance Overview of the Last Three Years (Example)

Note: X, Y, Z, A, B, C, P, Q, R, M, N, O are illustrative numbers.

C. Company Profile

This section presents basic and essential information about the company’s identity, structure, and scope of operations. The goal is to provide readers with context to understand the scale and nature of the company’s business before they can assess its sustainability performance. Key information typically found here includes the company’s vision, mission, and sustainability values ​​(which may be a repetition or detailing of Section A), the company’s legal name, head office and branch addresses, phone numbers, email addresses, and website. In addition, the company profile includes an overview of the scale of the business, such as total assets and liabilities, number of employees categorized by gender, position, age, or employment status, percentage of share ownership, and areas of operation. A brief description of the company’s principal products, services, and business activities, membership in industry or professional associations, and information about significant changes in the company (e.g., branch openings or closings, changes in ownership structure) are also important parts of the profile.

The context provided by the company profile is crucial. It helps readers understand “who” the company is. For example, the environmental impact of a large manufacturing company will likely be significantly different than that of a company operating in the financial services sector. The profile provides the necessary baseline to assess the relevance and significance of the sustainability issues reported by the company. Without understanding the scale of operations (e.g., number of employees or total assets) or the type of industry in which the company operates, it would be difficult for readers to assess whether the company’s stated 5% emissions reduction target is ambitious or not. The company profile thus provides an essential “denominator” or basis for comparison.

D. Board Explanation (Management Statement/Board Explanation)

A statement from the companys top management, in this case the Board of Directors, is a vital component of the Sustainability Report. This section contains direct views and accountability from management regarding the companys sustainability performance, challenges faced, and strategies and commitments for the future. Key content of the Board of Directors explanation usually includes a summary of sustainability performance achievements compared to the targets that have been set, an analysis of the main challenges faced in implementing the sustainability strategy, and an explanation of the strategy to achieve targets in the future. Information on risk management related to economic, social, and environmental (ESG) aspects, as well as an affirmation of managements commitment to the sustainability agenda are also important parts.

The Board of Directors explanation is very important because it shows the "tone from the top" - the extent to which the companys leaders are actively involved and take responsibility for the sustainability agenda. The quality of the Board of Directors explanation can be an indicator of the companys commitment. If the Board of Directors explanation is only general, normative, and lacks depth, this could indicate that sustainability issues are not yet a top priority at the leadership level. On the other hand, a detailed, transparent explanation (including the courage to admit challenges and failures), and forward-looking oriented shows a stronger commitment and seriousness in managing sustainability issues. OJK regulations explicitly require an explanation from the Board of Directors, a mechanism that effectively encourages the involvement of top management in understanding, articulating, and ultimately being accountable for the companys sustainability strategy and performance. This ensures that sustainability is not just a matter for a particular department like CSR, but becomes a strategic agenda at the C-suite level.

E. Sustainability Governance

After the strategy and leadership commitment are presented, this section explains how the company internally manages sustainability issues. This includes the organizational structure, division of roles and responsibilities, and decision-making processes related to sustainability. Good governance is the backbone of effective sustainability strategy implementation. Without supporting systems and structures, no matter how good a strategy is, it will only be a document on paper. 

Referring to the sub-points seen in the explanation of the OJK guidelines in the supporting document, the key contents of Sustainability Governance include:

• E.1. Responsible for Sustainable Finance Implementation: Identification of the specific individual or work unit within the company that has primary responsibility for the implementation and oversight of the sustainable finance program.

• E.2. Competency Development Related to Sustainable Finance: Explanation of the companys efforts to improve the understanding and capacity of its human resources (including the Board of Directors, Board of Commissioners, and employees at various levels) related to sustainability issues, for example through training, workshops, or certification programs.

• E.3. Risk Assessment of Sustainable Finance Implementation: Description of the companys procedures and mechanisms to identify, measure, monitor, and control risks related to the economic, social, and environmental (ESG) aspects of its business activities.

• E.4. Stakeholder Relations: Explanation of how the company identifies its main stakeholders, how the company interacts and communicates with them, and how the company responds to their aspirations and needs related to sustainability issues.

• E.5. Issues in the Implementation of Sustainable Finance: Disclosure of specific issues, challenges, or obstacles faced by the company in implementing effective sustainability governance.

Having a clear sense of responsibility (E.1), investment in developing human resource competencies (E.2), and a structured ESG risk management process (E.3) are important indicators that a company is serious about its sustainability agenda. Stakeholder engagement (E.4) also demonstrates a more inclusive and responsive approach. A company may have a great-sounding sustainability strategy (as outlined in Section A), but without a clear governance structure to implement it (as outlined in this Section E), it is unlikely to be effective. Questions such as who ensures emissions reduction targets are met, how climate change risks are assessed and managed in investment decisions, or who is responsible for complaints from local communities regarding the company’s operations, should ideally be answered in this Sustainability Governance section.

F. Sustainability Performance

This section is the “heart” of the report, where the company presents detailed data and narratives regarding its actual performance in three main aspects of sustainability: economic, environmental, and social. This is concrete “evidence” of the implementation of the strategy and the effectiveness of governance that has been explained previously. The information in this section should provide a detailed and measurable picture of the company’s impact and contribution. 

Referring to the sub-categories in the OJK guidelines, Sustainability Performance includes:

• Economic Performance: Not only limited to conventional profitability, but also how the company contributes to a sustainable economy. This can include information on revenue from environmentally friendly products or services or those with positive social impacts, investment in sustainable business activities, involvement of local suppliers in the value chain, or positive economic impacts created for the surrounding community.

• Environmental Performance: Presents data and explanations on the companys environmental impact management. This includes the use of natural resources (such as energy and water), management of greenhouse gas emissions, waste management (both hazardous and non-hazardous waste), biodiversity conservation efforts, use of green technology, and other initiatives aimed at minimizing the companys environmental footprint.

• Social Performance: Reports the companys performance related to social aspects, both internal and external. Internally, this can include employment practices (such as gender equality and opportunity, occupational health and safety, employee development), while externally it can include community development programs, respect for human rights throughout the value chain, the impact of products or services on consumers, and relationships with local communities.

The separation of performance into three pillars—Economic, Environmental, and Social—reflects the principle of the “Triple Bottom Line” (Profit, Planet, People) that underlies the concept of sustainability. A good sustainability report will show balance in reporting these three aspects, not just focusing on one aspect (for example, only reporting CSR activities in the social aspect without discussing in depth the management of environmental impacts or sustainable economic contributions). OJK expects companies to report holistically. A company that only reports philanthropic activities (social) but ignores the management of its industrial waste (environmental) or fair labor practices (internal social) cannot be said to be truly running a sustainable business. Balance in reporting these three pillars is important to enable a comprehensive assessment of the companys sustainability performance.

G. Others

This last section serves to accommodate additional relevant information that can support the credibility and completeness of the Sustainability Report as a whole. Although called "Other", several sub-components in it have important roles. 

Based on the sub-points in the OJK guidelines, this section can include:

• G.1. Written Verification from Independent Party (if any): This is a statement or assurance report from an independent and competent third party, who has verified or attested to the reliability and accuracy of the information presented in the Sustainability Report.

• G.2. Feedback Sheet: Provides a mechanism or form for report readers (stakeholders) to provide input, suggestions, or questions related to the contents of the report.

• G.3. Response to Feedback on Previous Years Sustainability Report: If the company has received feedback on the previous years report, this section contains the companys response or follow-up to the input.

• G.4. List of Disclosures in Accordance with Financial Services Authority Regulation Number 51/POJK.03/2017...: This can be a checklist or index that cross-references the disclosure points required by POJK 51 with the specific page or section in the Sustainability Report where the information can be found.

The presence of these components, especially independent verification and feedback mechanisms, can significantly increase transparency, accountability, and demonstrate a companys openness to external evaluation and commitment to continuous improvement. Although and states "if any" for independent verification, its presence is highly recommended because it can substantially increase the credibility of the report. This shows that the company is brave and confident to have its performance information checked by a neutral external party, a practice that is globally recognized as best practice. Investors and other stakeholders tend to have more confidence in data and claims that have been verified. The statement "(if any)" may indicate that this is not yet an absolute requirement for all reporting entities at the initial stage, but companies that do so demonstrate a higher commitment to transparency and quality reporting, which can be an important differentiator in the eyes of investors.

Meanwhile, the presence of a feedback sheet (G.2) and, more importantly, responses to feedback from the previous years report (G.3) show that the company is listening to the voices of its stakeholders and is willing to continue learning and improving. This is a sign of a responsive and accountable company. The sustainability reporting process is ideally not a one-way communication. By providing a feedback mechanism, the company opens up a space for dialogue. Responding to feedback from the previous year shows that this process is not just a formality, but part of a continuous improvement cycle in the companys sustainability practices and reporting.

III. Why is this Standard Structure Important?

The existence of a standard sustainability reporting structure set by OJK, as visualized in the figure, brings a number of important benefits. First, a clear and systematic structure increases the transparency and accountability of companies. Companies are encouraged to regularly disclose information about the impact of their operations and how they manage ESG issues. This allows stakeholders to more easily find the information they need to make assessments.

Second, although each company is unique, the standard structure facilitates comparability or comparison of sustainability performance between companies, especially for companies operating in the same industry sector. This helps investors, analysts, and other stakeholders in the decision-making and benchmarking process. It should be noted that full comparability is still a challenge due to differences in measurement methodologies and levels of disclosure depth between companies, but the standard structure is an essential first step in that direction.

Third, the process of preparing reports according to this structure inherently encourages better risk management. Companies are required to identify, measure, and report ESG-related risks (as reflected in Section E.3 on Risk Assessment and Section D on Directors Explanation). This openness, in turn, encourages companies to develop more proactive and comprehensive risk management strategies.

Fourth, structured, comprehensive, and transparent reports can build and increase stakeholder trust. Investors will be more confident in investing their capital, consumers may be more loyal to the companys products or services, employees feel prouder and more motivated, and the wider community can have a more positive perception of the companys commitment to responsible business practices.

Fifth, the Sustainability Report becomes an effective strategic communication tool for companies to convey their vision, strategy, commitment, and achievements in the field of sustainability to all stakeholders.

The standardization of reporting by the OJK not only has an impact on individual reporting companies, but also has the potential to trigger a ripple effect throughout the business ecosystem. Large companies that are required to make detailed sustainability reports will begin to demand ESG data and information from their supply chains. This can indirectly "encourage" smaller companies, which may not be directly required by regulation, to start paying attention to and measuring their ESG performance in order to remain competitive or meet the requirements as business partners. This is one way in which regulation at the top level can trickle down and drive broader changes in business practices towards sustainability. Furthermore, the structure of the report designed by OJK, which explicitly requires disclosure of “Economic Performance” associated with sustainable products or services as well as details on “Sustainability Governance”, shows that OJK does not just want sustainability reports to be passive, retrospective documents. Instead, OJK seems to aim to make this reporting an active driver of the formation of a sustainable finance ecosystem in Indonesia. By requiring Financial Services Institutions, Issuers, and Public Companies to report on their green portfolios or sustainable products, as well as how they manage ESG risks and opportunities through good governance, OJK is indirectly encouraging capital flows to sectors and business activities that support sustainability principles. This is a concrete step towards integrating sustainability into the heart of the national financial system, rather than just making it a peripheral issue.

IV. Conclusion: Sustainability Reporting as a Compass Towards More Responsible Business

The Sustainability Report, with a standard structure as regulated by the Financial Services Authority and visualized in the image, is a very important tool for companies in Indonesia. This report not only serves as a medium to demonstrate the companys commitment and performance in economic, environmental, and social aspects, but also as an internal guide for continuous improvement. A deep understanding of each component of the report will help companies prepare reports that are more qualified, relevant, and meaningful, which can ultimately provide added value to the company itself.

For readers of the report—whether investors, consumers, employees, regulators, or the wider community—understanding the structure and content of this report helps in making a more objective assessment of the extent to which a company is truly implementing responsible and sustainable business practices. This is not just about image, but about substance and real impact.

A wise company will view the preparation of the Sustainability Report not just as a burden of regulatory compliance (compliance-driven exercise). Instead, this process can be seen as a strategic opportunity. The data collection, performance analysis, and reflection process required to complete each section of the report (from A to G) may reveal operational inefficiencies (e.g., wasteful energy use identified when compiling section F Environmental Performance) or reputational risks that may not have been well managed (e.g., from the evaluation results in section E.4 Stakeholder Relations). Proactive companies will use these findings as a basis for innovation, improving efficiency, strengthening risk management, and ultimately building long-term competitive advantage. It is important to remember that sustainability reporting is a journey, not a destination. Regulations and reporting practices will continue to evolve along with increasing global awareness, increasingly complex stakeholder demands, and a deeper understanding of sustainability issues. SEOJK 16 itself is an evolution of previous regulations, and global trends show increasingly detailed and stringent demands in ESG reporting, for example with the emergence of standards from the International Sustainability Standards Board (ISSB). Companies in Indonesia that want to remain relevant and competitive in the global market must be ready to continue to improve the quality of their reporting, even beyond the current minimum requirements. Understanding the current reporting structure is an important foundation, but flexibility, a willingness to continue learning, and adaptability to change are key to facing a future of business that increasingly demands responsibility and sustainability.