As global demands for transparency and sustainability increase, large companies are now facing the obligation to prepare sustainability reports (SR), both listed and non-listed companies. Many countries are beginning to implement regulations that require non-listed companies to report on their social, environmental, and economic impacts. In light of this trend, companies in Indonesia need to start preparing themselves to remain relevant and comply with regulations that may be imposed in the future. The influence of ESG reports on company value is increasingly evident, with companies that proactively disclose their sustainability performance being more valued by investors and stakeholders. With efficient solutions like Reporthink.AI, companies can quickly and accurately prepare their Sustainability Reports, ensuring compliance with global standards such as GRI and POJK while optimizing the communication of ESG impacts to stakeholders.
Global Trends on the Obligation for Non-Listed Companies to Publish SR
Public companies have long been required to publish sustainability reports (SR), but non-listed companies, especially large ones, should not feel secure. Global trends show that this obligation is expanding, with countries like Singapore planning to require large non-listed companies to prepare SRs starting in 2027. In Japan and Europe, similar regulations have already been implemented, where non-listed companies of a certain size are also required to report their sustainability performance. This indicates that large companies, whether listed or not, must be prepared to face increasingly stringent transparency demands. Given the influence of ESG reports on company value, a credible and transparent sustainability report can enhance a company’s reputation, attract investors, and even influence the market valuation of the company.
In Indonesia, while this obligation has not yet been imposed, large non-listed companies must begin preparing. Considering global trends, there is a possibility that similar regulations will be enacted in the country. Early preparation will provide an advantage for companies that want to remain relevant and competitive in the global market. A sustainability report is not only about compliance but also demonstrates a company’s responsibility towards the future of the world, with a direct impact on financial performance and company value in the eyes of investors.
Challenges in Preparing SR
Preparing a Sustainability Report (SR) is not an easy task, even for large companies. Many companies, both big and small, face various challenges when trying to prepare this report. One of the main issues is the difficulty in following the guidelines set by POJK and global frameworks like GRI. These guidelines often seem confusing because they have different structures and formats, while companies are required to convey similar information. As a result, many reports become redundant, with repetitive narratives only to fulfill two different guidelines.
Additionally, companies often have to deal with simultaneous deadlines. Annual reports and financial reports must be completed alongside sustainability reports, which naturally takes more time. The process of preparing an SR, which is complex and data-heavy, requires significant effort, and for smaller companies with limited resources, this challenge can be particularly overwhelming. Even for large companies, completing an SR with high quality often takes considerable time and resources.
Not Easy to Follow Guidelines from POJK and Global Frameworks Like GRI Standards
Aligning with existing guidelines, such as POJK and GRI, is not an easy task. These two standards often ask for similar information but with different structures, causing confusion in the reporting process. GRI, for example, requires companies to provide highly detailed reports on their environmental and social impacts, while POJK focuses more on fulfilling the company’s obligations regarding transparency and accountability in Indonesia. For companies, these difficulties often slow down the report preparation process, which could otherwise be done more quickly.
Moreover, companies also need to align their reports with evolving standards, which often lead to significant revisions and updates in data. This process requires a deep understanding of sustainability and takes a considerable amount of time to ensure that all the information included complies with the established guidelines. With the increasing demands from stakeholders, companies must be ready to adapt and follow these developments.
Limited SR Writers
One of the major challenges in preparing an SR is the limited availability of writers with expertise in this area. Although sustainability reporting is becoming increasingly important, the number of professionals who possess the necessary skills to prepare such reports is still limited. This makes it difficult for companies to find writers who can deliver reports of the expected quality. Not all companies have large enough internal teams to handle sustainability reporting, so they rely on external consultants.
However, hiring consultants to prepare the SR is not always an effective solution. The costs associated with hiring consultants are often quite high, while companies’ resources are limited. Additionally, external report writers may not have a deep understanding of the company’s long-term vision and strategy, which requires intensive and time-consuming communication. Therefore, companies need to seek more efficient solutions for preparing sustainability reports.
Simultaneous Deadlines
For many companies, one of the biggest problems in preparing an SR is the tight schedule. Annual reports, financial reports, and sustainability reports often have simultaneous deadlines, making it difficult for companies to complete everything on time. The process of preparing an SR requires deeper data collection and more complex analysis, which naturally takes more time compared to annual or financial reports, which are more structured.
The time pressure often forces companies to sacrifice the quality of the report in order to meet the deadlines. Additionally, many companies also struggle to maintain consistency and quality of information across various reports. With increasing demands for transparent and accurate reports, hurried SR preparation can affect the credibility and accuracy of the report.
Expensive, Only Large Companies Can Afford
Creating a high-quality SR also requires a significant investment. For large companies with abundant resources, this cost might not be an issue. However, for medium and small companies, the costs of preparing sustainability reports that meet GRI and POJK standards can be very burdensome. The process of preparing these reports involves costs not only for consultants and internal teams but also for software and systems needed to process the data.
Many small and medium-sized companies find themselves overwhelmed by these costs and eventually delay or even neglect their obligation to prepare an SR. This creates a significant gap between large companies that can fulfill this obligation and small companies that may not yet be fully prepared. Therefore, there is an urgent need for companies to find more affordable yet effective solutions to meet their reporting obligations.
What is a Sustainability Report (SR) and Why is It Important?
A Sustainability Report (SR) is a document prepared by a company to inform its stakeholders about the social, environmental, and economic impacts of its operations. This report provides information on how the company contributes to sustainable development, including efforts made to reduce negative impacts on the planet and society. In the SR, the company records actions taken to comply with sustainability principles and the achievements it has made towards these goals.
The SR is increasingly regarded as an important communication tool for companies to connect with stakeholders, including consumers, investors, and regulators. By having a sustainability report, a company can demonstrate its commitment to sustainability principles, improve transparency, and strengthen its credibility. Therefore, the SR is very important as part of the company’s strategy for responsible and sustainable operations.
Why Should Companies Create SRs?
Creating a Sustainability Report has become an increasingly urgent obligation, particularly with the rising global focus on sustainability issues. Many countries are now regulating and requiring companies to prepare SRs as part of their transparency and more open reporting policies. In fact, in some developed countries like the European Union and Singapore, large companies—both listed and non-listed—are now required to report their environmental and social impacts through SRs.
For companies, an SR is not just about meeting legal obligations. Furthermore, the report serves as a way to demonstrate social and environmental responsibility to stakeholders. By reporting sustainability performance openly, companies can improve their image, build trust with customers, and attract investors who are increasingly considering environmental, social, and governance (ESG) factors when making investment decisions. The impact of ESG reporting on a company’s value is becoming more evident, as companies with credible and transparent sustainability reports are valued more highly by the market and tend to gain easier access to funding and long-term investment opportunities.
Signs That Your Company Needs to Prepare an SR
If your company has experienced significant growth or operates in an industry facing strict regulations related to the environment or sustainability, it is a sign that it is time to prepare an SR. Another sign is the demand from stakeholders such as consumers, investors, or governments who are requesting more information regarding the social and environmental impacts of your company’s operations. If your company is involved in activities that have a large impact on the environment or society, a sustainability report becomes a tool to show your company’s commitment to managing those impacts.
Additionally, if your company is planning steps to meet global sustainable development goals or has significant corporate social responsibility (CSR) practices, preparing an SR will help to document and report these achievements in a more structured and organized manner. The SR provides space to demonstrate the company’s commitment and success in this area, ensuring that the company can meet the increasing transparency obligations.
Solutions for Efficient SR Preparation
Preparing an SR can be a complicated process, especially for companies that are doing it for the first time or for smaller companies that lack sufficient resources. However, with technology-based solutions like Reporthink.AI, the preparation of SRs can be done more efficiently and effectively. Reporthink.AI helps companies automate the preparation of sustainability reports in accordance with international standards like GRI (Global Reporting Initiative) and POJK (OJK Regulations), without compromising data quality or accuracy.
By using Reporthink.AI, companies can quickly map and prepare sustainability reports, reduce the risk of errors, and ensure that each section of the report complies with the guidelines. Additionally, Reporthink.AI also allows companies to easily update their sustainability reports, providing flexibility in adjusting the reports in accordance with evolving policies or regulations. A credible sustainability report not only improves the company’s reputation but also has an impact on the ESG report’s effect on the company’s value, as it shows commitment to social and environmental responsibility, which is increasingly valued by investors and the market.
Prepare Your Sustainability Report Now!
For companies that have not yet prepared an SR, now is the time to start preparing. Given the growing obligations to report on social, environmental, and economic impacts, having a well-structured SR will help your company maintain relevance and compliance with applicable regulations. If you need help preparing a sustainability report that meets international standards, Reporthink.AI is the right solution.
By using Reporthink.AI, companies can start their sustainability journey more efficiently and with more direction. Don’t wait until this obligation is enforced in Indonesia—schedule a free demo or consultation with our team to start preparing the SR that suits your company’s needs. Now is the right time to prepare for a more sustainable future.