Sustainability reporting in Indonesia has officially entered a new era. For years, many organizations have relied on flexible, standalone frameworks to showcase their environmental, social, and governance (ESG) initiatives. Now, the regulatory landscape is shifting toward mandatory, financially connected disclosures. At the center of this transformation is PSPK 1 (Pernyataan Standar Pengungkapan Keberlanjutan 1), a new standard that redefines how Indonesian companies must communicate their sustainability risks and opportunities to investors and the public.
 

What is PSPK 1?

Issued by the Sustainability Standards Board of the Indonesian Institute of Accountants (DSK IAI) in July 2025, PSPK 1 establishes the general requirements for the disclosure of sustainability-related financial information. Based on the globally recognized IFRS S1 framework, PSPK 1 aims to bridge the gap between traditional financial reporting and sustainability performance.

The standard becomes fully effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted for companies that want to establish a competitive edge. Rather than outright replacing existing Financial Services Authority (OJK) regulations like POJK 51/2017, PSPK 1 provides a rigorous, standardized framework that regulators will use to align future compliance mandates.
 

The Four Core Pillars of PSPK 1

To ensure reporting consistency and comparability across industries, PSPK 1 requires companies to structure their sustainability disclosures around four core pillars:

• Governance: How the company’s board and executive management oversee, monitor, and govern sustainability-related risks and opportunities.
• Strategy: How material ESG risks and opportunities directly affect the company's business model, strategic planning, and overall financial position.
• Risk Management: The specific processes the organization uses to identify, assess, prioritize, and mitigate sustainability-related risks.
• Metrics and Targets: The precise metrics used to measure sustainability performance and the targets the company has set to track its progress over time.

A Paradigm Shift: From Standalone Reports to Financial Connectivity

The most significant change introduced by PSPK 1 is the strict requirement for financial connectivity. Previously, companies often produced sustainability reports as standalone PDF documents, primarily focusing on an "inside out" perspective highlighting how the company's operations impacted the environment and society.

PSPK 1 introduces a critical "outside in" perspective. It requires organizations to transparently disclose how external sustainability factors materially impact the company's financial value and enterprise creation. This means ESG disclosures can no longer be treated merely as marketing exercises or symbolic compliance. They must provide decision-useful information that is directly linked to the financial statements, enabling investors to accurately assess the company's long term financial viability and risk exposure.
 

How BDO Can Help Your Company

Our SPK 2027 readiness support is built around where you are in your journey. A natural starting point could be a gap analysis against the requirements of PSPK 1, but we can equally support you on individual pieces, whether that is identifying material sustainability risks, preparing your data and reporting systems, or establishing the robust governance structures the standards call for. Whether you are doing a dry run for early adoption or moving toward full regulatory compliance, we provide the guidance needed to bring your disclosures to a level that meets the expectations of local regulators and global investors.