The global sustainability reporting landscape is undergoing a seismic shift, transitioning from a voluntary impact-based reporting model, pioneered by the Global Reporting Initiative (GRI), to a potentially mandatory financial risk-based framework, driven by the International Financial Reporting Standards (IFRS) Foundation through the International Sustainability Standards Board (ISSB). This change is not just a technical evolution, but a fundamental paradigm shift that places sustainability issues directly at the heart of corporate strategic and financial decision-making. For companies in Indonesia, this dynamic creates a critical juncture. On the one hand, they must continue to meet the expectations of a wide range of stakeholders-including governments, communities and employees-who have become accustomed to GRI-style comprehensive reporting, as indirectly mandated by the Financial Services Authority (OJK) Regulation. On the other hand, they must proactively prepare for the adoption of IFRS S1 and S2-based Sustainability Disclosure Standards (SDS), which the Indonesian Institute of Accountants (IAI) plans to make effective in 2027. Readiness studies show significant gaps, particularly in the ability to link Environmental, Social and Governance (ESG) data to measurable financial impact, which is a strategic risk that cannot be ignored. The report concludes that the choice between GRI and IFRS is not a binary decision, but a strategic spectrum. The main recommendation is for Indonesian companies to adopt a "dual-track reporting" approach. This approach suggests utilizing the strong impact-based reporting foundation that has been built using the GRI Standards, while simultaneously developing the capabilities required for investor-focused IFRS reporting. The key to successfully navigating this duality lies in three key pillars: 1. Close integration between finance (CFO) and sustainability (CSO) functions 2. Strengthened internal controls over ESG data with financial statement-like rigor 3. Utilization of advanced technology to manage the complexity of data and reporting. Companies that successfully do this will not only fulfill their compliance obligations, but will also unlock a significant competitive advantage in the global capital markets.
Leonard Tiopan Panjaitan (Mon,) studied this question.