Introduction

The world is moving toward sustainability at an unprecedented pace, reshaping how businesses operate and communicate their responsibilities to the environment and society. Transparency in sustainability practices is no longer optional—it has become a critical expectation from investors, regulators, and the public. Recognizing this shift, the Dewan Standar Keberlanjutan Ikatan Akuntan Indonesia (DSK IAI) has released draft exposures for two key standards: PSPK 1 and PSPK 2. 

PSPK 1 (General Requirements for Disclosure of Sustainability-Related Financial Information) sets the foundation for sustainability reporting by establishing principles and guidelines that ensure businesses disclose relevant and material information to stakeholders. PSPK 2 (Climate-Related Disclosures), on the other hand, focuses specifically on climate-related risks and opportunities, requiring organizations to assess and report their vulnerabilities and strategies for resilience in the face of climate change. Together, these standards represent Indonesia’s commitment to aligning with global practices such as IFRS S1 and S2 while addressing local needs. 

This article provides a comprehensive review of these standards, highlighting their purpose, key features, areas for improvement, and recommendations to ensure they are both effective and practical for organizations of all sizes. 

PSPK 1: Establishing the Foundation for Sustainability Reporting 

PSPK 1 serves as a comprehensive framework that guides organizations in disclosing material sustainability-related financial information. The standard emphasizes that organizations must focus on issues that are material—those that significantly affect their financial performance and stakeholder decision-making. By aligning its materiality concept with Standar Akuntansi Keuangan (SAK), PSPK 1 ensures consistency with existing financial reporting practices. 

A cornerstone of PSPK 1 is the requirement for connected information. Organizations are expected to integrate sustainability considerations into their governance, strategy, risk management, and performance metrics. This approach encourages businesses to present a cohesive narrative, linking their sustainability efforts to their financial outcomes. For instance, a company reporting on energy efficiency measures must also highlight how these measures impact their cost savings, risk mitigation, and overall strategy. 

Additionally, PSPK 1 mandates that sustainability disclosures align with financial reporting timelines. This ensures stakeholders receive timely information, enabling them to assess an organization’s sustainability performance alongside its financial results. 

However, while PSPK 1 provides a strong foundation, its implementation may present challenges, particularly for small and medium-sized enterprises (SMEs) that lack the resources or expertise to navigate complex reporting requirements. Practical examples of material sustainability issues—tailored to specific industries—would significantly enhance the usability of the standard. For instance, a manufacturing company may need guidance on reporting emissions from production processes, while a financial institution might focus on green investments. 

Moreover, capacity building is essential for widespread adoption. Many organizations, especially SMEs, may struggle to meet the requirements of PSPK 1 without proper training and tools. Simplified templates, workshops, and online resources can play a vital role in helping businesses understand and implement the standard effectively. 

PSPK 2: Focusing on Climate-Related Disclosures 

PSPK 2 takes a deeper dive into one of the most pressing global challenges: climate change. This standard requires organizations to disclose climate-related risks and opportunities across four key areas: governance, strategy, risk management, and metrics and targets. By doing so, PSPK 2 enables businesses to communicate how they are addressing climate change and preparing for its impacts. 

One of the standout features of PSPK 2 is its emphasis on scenario analysis. Organizations must assess their resilience under various climate scenarios, such as 1.5°C, 2°C, and 4°C warming. This allows stakeholders to evaluate how well-prepared an organization is for different climate-related risks, including extreme weather events, regulatory changes, and shifts in market demand. 

Another critical requirement is the disclosure of greenhouse gas (GHG) emissions. Organizations must report their Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased electricity), and Scope 3 (indirect emissions from their value chain). This comprehensive approach ensures that businesses account for their total carbon footprint, providing a clear picture of their environmental impact. 

To support businesses in adopting these requirements, PSPK 2 includes a three-year grace period for reporting Scope 3 emissions and adopting the Greenhouse Gas Protocol. While this flexibility is helpful, early adopters may face challenges due to the complexity of Scope 3 emissions reporting. Detailed guidance and practical tools, such as step-by-step methodologies, are crucial for helping organizations navigate these requirements. 

As with PSPK 1, PSPK 2 would benefit from tailored guidance for different industries. For example, energy companies may need support in reporting transition risks and renewable energy investments, while agricultural entities might require guidance on emissions from livestock and fertilizer usage. Additionally, scenario analysis tools and templates would make this critical requirement more accessible, particularly for organizations with limited resources. 

Shared Challenges in PSPK 1 and PSPK 2 

While PSPK 1 and PSPK 2 have distinct focuses, they share common challenges that need to be addressed for successful implementation. One major challenge is the need for sector-specific guidance. Different industries face unique sustainability risks and opportunities, and tailored frameworks would ensure that disclosures remain relevant and actionable. For instance, manufacturers might prioritize reporting on energy consumption and emissions, while financial institutions might emphasize the environmental impact of their loan portfolios. 

Capacity building is another critical area. Both standards require organizations to adopt new processes, tools, and methodologies. Without adequate support, many organizations, especially SMEs, may struggle to comply. Developing workshops, e-learning modules, and simplified reporting templates can bridge the knowledge gap and empower businesses to meet the standards’ requirements. 

Aligning with international standards is also essential. By harmonizing PSPK 1 and PSPK 2 with global frameworks such as IFRS S1, IFRS S2, and the Greenhouse Gas Protocol, Indonesia can enhance the comparability and credibility of its sustainability disclosures. Clear explanations of any deviations from these standards would help organizations navigate the reporting process more effectively. 

Recommendations for Successful Implementation 

To ensure the effective adoption of PSPK 1 and PSPK 2, the following recommendations should be considered: 

1. Develop Sector-Specific Guidance: Tailored guidance for industries such as agriculture, manufacturing, and financial services would address unique challenges and ensure disclosures are meaningful and relevant. 
2. Provide Practical Tools and Templates: Organizations need practical resources to navigate the complexities of sustainability reporting. Templates for materiality assessments, scenario analysis, and emissions reporting would be invaluable, particularly for SMEs. 
3. Invest in Capacity Building: Collaboration with professional bodies, universities, and industry associations can help develop training programs that equip organizations with the skills and knowledge needed to comply with the standards. 
4. Align with Global Standards: Ensuring consistency with international frameworks will enhance the credibility of PSPK 1 and PSPK 2. Clear guidance on how these standards align with or deviate from global practices will provide clarity for businesses. 
5. Encourage Early Adoption: Incentivizing early compliance through recognition programs or reduced reporting requirements would motivate organizations to integrate sustainability practices more quickly. 
6. Create Feedback Mechanisms: Establishing platforms for organizations to share their experiences and challenges during implementation can help refine the standards and address emerging issues. 

Conclusion 

The release of PSPK 1 and PSPK 2 by the Dewan Standar Keberlanjutan Ikatan Akuntan Indonesia (DSK IAI) represents a significant milestone in Indonesia’s journey toward sustainability. These standards provide a robust framework for addressing both general sustainability issues and climate-specific risks, ensuring transparency, accountability, and alignment with global practices. 

However, the successful implementation of these standards requires a collective effort. By addressing challenges such as sector-specific guidance, capacity building, and support for SMEs, Indonesia can unlock the full potential of PSPK 1 and PSPK 2. These standards are not merely compliance tools; they are strategic enablers that can drive long-term value creation, resilience, and sustainable development. 

As the world moves toward a greener future, Indonesia’s proactive approach to sustainability reporting demonstrates its commitment to being a leader in the region. PSPK 1 and PSPK 2 offer organizations the opportunity to contribute to this vision while enhancing their own competitiveness and reputation in a rapidly changing global economy. 

Writer:  

Taufikurrahman, Prominent Lecturer at the International Business Management Program, Binus Business School, Binus University 

*) Taufikurrahman is Prominent Lecturer at the International Business Management Program, Binus Business School, Binus University. The views expressed in this article is his own and do not represent the institution.