Sustainability reporting among Indonesian companies has grown rapidly. Many listed companies now publish ESG or sustainability reports outlining environmental initiatives, social programmes and governance practices.

But here is the real question: How many of those commitments are actually aligned with climate science and ready to withstand investor scrutiny?

Numerous companies have announced climate ambitions or ‘net zero’ aspirations. Yet many still lack clearly defined emissions baselines or measurable reduction targets. Even fewer have formalised science-based targets that align with internationally accepted climate pathways.

This contrast matters more than ever as climate accountability becomes a critical component of long-term business resilience.

What makes a target ‘science-based’
Science-based targets align corporate greenhouse gas (GHG) reduction pathways with the global goal of limiting warming to 1.5°C above pre-industrial levels, the benchmark of the Paris Agreement. The framework is developed by the Science Based Target initiative (SBTi), which provides robust methodologies for companies to determine:

• How much emissions should be reduced
• By when
• Across which categories (Scope 1, 2 and often Scope 3).

Unlike arbitrary commitments, science-based targets ensure that corporate climate strategies are grounded in climate science – not vague aspirations.

Why science-based targets matter for business leaders
Setting science-based targets is no longer just an ESG checkbox. For executives considering long-term competitiveness and stakeholder trust, science alignment delivers strategic value:

1. Enhanced credibility with investors
Investors increasingly expect transparency backed by science and verification. Based on a study conducted by the Centre for Governance and Sustainability (CGS), 53% of companies have set net zero commitments, but only 37% describe them as science-based, and just 18% have been verified by the SBTi, indicating a credibility gap in many corporate climate pledges in the Asia-Pacific region.

2. Better climate risk management
Science-based targets force companies to quantify emissions, analyse transition risk and align operational planning, enhancing resilience in the face of climate uncertainty.

3. Supply chain competitiveness
Many multinational buyers are beginning to require science-aligned climate targets from suppliers. Early adopters reduce the risk of being excluded from supplier pools.

4. Regulatory and market signal readiness
Based on a roundtable discussion conducted by the UN Global Compact Network Indonesia (IGCN), Indonesia aims to reduce national emissions and support a just transition towards net zero by 2060, a strategic backdrop for corporate climate action. Indonesia’s greenhouse gas emissions profile emphasises the urgency of credible climate strategies. In this context, science-based targets offer companies a way to go beyond voluntary sustainability disclosure and contribute to Indonesia’s broader climate goals, while strengthening internal decision making.

A practical example: BDO in Indonesia’s SBTi SME pathway journey
BDO in Indonesia has taken meaningful action to align its climate strategy with science-based principles through the SBTi SME Pathway. This pathway is designed for small and medium-sized enterprises or organisational units where full-scope SBTi approvals are still developing.

BDO in Indonesia’s 2025 climate strategy includes:

• Establishing a greenhouse gas emission baseline
• Defining near-term reduction targets aligned with a 1.5°C trajectory
• Embedding climate considerations into business planning and governance
• Submitting targets for validation under the SBTi SME framework.

This experience revealed practical insights that many Indonesian companies will face:

• Data complexity is real. Scope 3 emissions often represent the largest footprint but are hardest to measure
• Governance matters. Integration with finance and risk management functions accelerate credibility
• External validation enhances trust. The process brought external discipline that strengthened internal oversight.

As Ni Nyoman Sri Amandari, ESG Taskforce Lead and ESG Advisory Senior Manager at BDO in Indonesia, shares her thought: “A net zero statement is a commitment. A science-based target is a strategy”

Why many companies hesitate - and how to move forward
Despite clear benefits, many organisations hesitate to adopt science-based targets due to:

1. Insufficient emissions data or measurement systems
2. Uncertainty around Scope 3 boundaries
3. Limited technical expertise
4. Perceived complexity of validation standards
5. Less urgency needed and might be too costly for the company.

These barriers can feel daunting, but they are solvable with structured methodology and support.

Practical benefits of submitting to SBTi
Submitting and validating science-based targets delivers tangible advantages:

1. Independent validation enhances market credibility
2. Clear milestones drive internal accountability
3. Alignment with global frameworks improves investor relations
4. Better prioritisation of decarbonisation investments
5. Competitive readiness in global supply chains.

In an era where investors, customers and regulators are increasingly climate-savvy, these benefits matter for strategy, not just reputation. 

How BDO can support your SBTi submission
If your organisation is considering the next step in its climate journey, we can help you to structure the preparation from emissions measurement to SBTi submission, which can make the transition significantly smoother.

BDO in Indonesia supports companies in navigating sustainability reporting transformation in a practical and business-focused manner, helping to ensure alignment with emerging global standards while strengthening long-term resilience.

Please feel free to reach out to our experts for further information.