ESG in Indonesia is driven by a few binding rules and a growing set of investor and lender expectations. A new PT PMA is not subject to a general ESG reporting mandate, but social and environmental responsibility duties, sector licences and, for financial institutions and listed companies, OJK sustainability reporting can apply.
Does Indonesian law require ESG reporting from a new company?
No single law requires every company to publish an ESG report. Obligations depend on the sector and on whether the company is regulated or listed.
Three layers matter. First, companies in natural-resource-related business have a legal duty of social and environmental responsibility. Second, financial services institutions, issuers and public companies must prepare sustainability reports under OJK rules. Third, lenders, customers and parent companies may impose ESG requirements by contract even where the law does not. A foreign-owned company should map which layer applies before it sets targets.
What does the Company Law say about social and environmental responsibility?
Article 74 of Law 40 of 2007 requires companies whose business relates to natural resources to carry out social and environmental responsibility.
Under Law 40 of 2007 on Limited Liability Companies, Article 74 treats the cost of that responsibility as a company expense to be budgeted with regard to propriety and reasonableness, provides for sanctions where the duty is not met, and delegates detail to a government regulation. Implementing detail sits in a government regulation, so confirm its current status on the JDIH BPK portal before relying on it. For a PT PMA in mining, plantations, energy or related activities, budget for this duty in the financial model and keep evidence for reporting to shareholders.
Which companies must publish sustainability reports?
Financial services institutions, issuers and public companies must prepare sustainability reports under OJK Regulation 51/POJK.03/2017.
The OJK regulation applies to those categories and sets minimum report content, including strategy, governance and performance. It does not impose the same duty on private operating companies. Indonesia is also moving towards sustainability disclosure standards aligned with international (ISSB) standards, and OJK has signalled a review of its rules. Check the current OJK position and any effective dates before planning reporting for a listed or regulated group entity.
How do ESG and licensing connect at setup?
Environmental and social conditions can sit inside sector licences, so ESG planning starts with the KBLI code and licence level, not after operations begin.
Under risk-based licensing (Government Regulation 28 of 2025), activities that are medium or high risk need further certificates or licences beyond the NIB, and sector agencies set the conditions. Confirm in OSS what your activity requires, including any environmental approvals. For the registration sequence, see company registration in Indonesia. For how the NIB and other identifiers fit together, see the company registration number guide.
| ESG area | What to build in at setup | Evidence to keep |
|---|---|---|
| Governance | Board oversight, delegation of authority, anti-corruption policy | Policies, board minutes |
| Environment | Licence conditions per KBLI, waste and energy tracking | Permits, monitoring records |
| Social | Employment contracts, BPJS enrolment, safety practices | Registers, training records |
| Reporting | Data collection aligned with group or lender requirements | Data dictionary, sign-offs |
How should a foreign investor build ESG into the structure?
Choose the entity and capital plan with ESG costs in mind, assign ownership of the data, and keep controls proportionate to the business.
- Entity and capital. Budget ESG compliance costs within the PT PMA capital plan. The minimums of IDR 2.5 billion in paid-up capital and above IDR 10 billion in total investment come from BKPM Regulation 5 of 2025.
- Policies. Adopt governance, anti-corruption, procurement and workplace policies that match the business size.
- Data and controls. Assign owners for energy, waste, workforce and supplier data. Internal audit or an independent review can test controls before any external assurance.
- Group alignment. Reconcile Indonesian requirements with the parent's reporting framework, since a group may report on a different standard.
The wider entry decision is covered in start a business in Indonesia and the pros and cons of establishing a business in Indonesia. If you are structuring a new entity with ESG expectations from a parent or lender, see our PT PMA setup service.
What are the common ESG mistakes at setup?
The common mistakes are treating ESG as marketing, ignoring licence conditions, and collecting no data until a lender or parent asks for it.
Claims in sustainability communications should be supported by records; unsupported claims create reputational and, for regulated entities, regulatory risk. Licence conditions should be tracked from the first day, and the people responsible for data should be named in the organisation chart. Where an Indonesian entity reports to a foreign parent, agree early which framework and calendar apply.
Frequently asked questions
Is ESG reporting mandatory in Indonesia?
Not for every company. OJK Regulation 51/POJK.03/2017 requires sustainability reports from financial services institutions, issuers and public companies. Other companies may face contractual ESG requirements from lenders or parents, and some sectors carry social and environmental duties under Law 40 of 2007.
Does a PT PMA have to run CSR programmes?
Article 74 of Law 40 of 2007 requires social and environmental responsibility from companies whose business relates to natural resources. Other companies are not caught by that article, though they may choose to run programmes. Check your KBLI and sector rules to see if the duty applies.
What is the difference between CSR and ESG?
CSR describes a company's social and environmental responsibility, which in Indonesia has a legal basis in Article 74 of Law 40 of 2007 for natural-resource-related businesses. ESG is a broader reporting and risk framework covering environment, social and governance, mostly driven by regulators, investors and lenders.
Which standards should an Indonesian company follow for sustainability reporting?
For OJK-regulated entities, follow the content requirements in OJK's rules. Indonesia is moving towards standards aligned with ISSB, so confirm current OJK and Indonesian Institute of Accountants announcements. Groups should also reconcile with the parent's framework.
When should ESG be planned for a new Indonesian company?
At setup. The KBLI code, licence level, capital plan and policies determine which environmental and social conditions apply, and it is easier to design data collection and controls from the start than to add them after operations begin.
General information only; not legal advice. Confirm current requirements with OJK, the relevant ministry and Indonesian counsel.
General information only, not legal or tax advice for your specific facts. Regulations change; confirm the current position with JCSS Indonesia before acting.