Jakarta, INTI - The credibility of environmental, social, and governance (ESG) reports produced by publicly listed companies is considered a key factor for both domestic and international investors when making investment decisions.
This was highlighted by Hasan Fawzi, Acting Chief Executive for Capital Market, Derivatives, and Carbon Exchange Supervision at Otoritas Jasa Keuangan, during the Annual Report Award 2025 held at the Indonesia Stock Exchange in Jakarta on Friday, March 13, 2026.
ESG Reporting Becomes a Key Factor in Investment Decisions
According to him, global developments indicate that sustainability reporting has now become an integral component of corporate reporting systems. Information related to climate change and sustainability is no longer viewed as supplementary or non-financial disclosure, but rather as a factor that directly influences corporate performance and evaluation.
“Sustainability reporting is increasingly becoming an integral part of corporate reporting systems. Information related to climate conditions, climate change, and sustainability is no longer treated as additional or non-financial disclosure, but as a factor that is directly assessed and influences company performance,” Hasan said.
He explained that ESG issues are no longer simply an additional agenda in corporate governance practices. Instead, they have been integrated into corporate business strategies, affecting both investment decisions and corporate risk management.
Challenges and Risks in ESG Disclosure Implementation
However, Hasan acknowledged that several challenges still exist in preparing sustainability reports in Indonesia. Among them are variations in ESG disclosures across companies, a lack of standardized reporting practices, and differing levels of capability among report preparers.
He also highlighted the potential risk of greenwashing, which could undermine the credibility of sustainability information presented by companies to the public.
“We all recognize that there are still various challenges in the preparation and quality of sustainability reports, including inconsistent ESG disclosures among companies, varying capabilities of report preparers, and the potential for greenwashing practices that could affect the credibility of sustainability information presented,” he explained.
Furthermore, Hasan emphasized that sustainability reporting is a critical element in the broader implementation of sustainable finance, as mandated by Law No. 4 of 2023 on Financial Sector Development and Strengthening.
The regulation mandates Otoritas Jasa Keuangan, along with relevant ministries, to formulate further regulatory frameworks according to their respective authorities to strengthen Indonesia’s national sustainability reporting ecosystem.
He added that sustainability reporting plays a crucial role in implementing the broader sustainable finance agenda outlined in the law.
Conclusion
The growing emphasis on ESG reporting reflects a major shift in how companies are evaluated by investors. As highlighted by Otoritas Jasa Keuangan, credible and transparent sustainability reports are no longer optional but essential for building investor trust and ensuring long-term business resilience. Strengthening standards, improving reporting capabilities, and addressing risks such as greenwashing will be crucial in advancing Indonesia’s sustainable finance ecosystem.
Read more: Indonesia and Japan Strengthen Cooperation in Clean Energy Development