Social and Environmental Accounting

Seminar 3
1

Social and Environmental Reporting

Practices in Indonesia

Generally, there is a low level of social and (particularly)

environmental disclosures in Indonesian companies annual
reports.
In 2005, there was only one company produced a stand-alone
sustainability report.
In 2012, 40 companies produced stand-alone sustainability
reports (mostly state-owned enterprise)
At present, almost all banks produce stand-alone sustainability
reports
In 2015, 15% of Indonesian listed companies produce standalone sustainability report
It has been claimed that OJK has an authority to require
companies to provide stand-alone sustainability reports. Do you
agree if OJK makes this report publication become mandatory?

Social and Environmental Reporting

Practices in Indonesia

From 7 December 2006, under the Indonesian Capital Market and

Financial Institution Supervisory Agency (BAPEPAM-LK)s
regulation, all listed companies are required to report any CSR
activities in their annual reports
The main purpose of this new regulation is to increase the quality of
listed companies transparency.
The regulation is then strengthened by Act No. 40/2007 which
requires limited liability companies in and/or related to the area of
natural resources, regardless of whether they are listed or not, to
perform social and environmental responsibility activities (effective
from 16 August 2007)
More recently, Government Regulation No 47/2012 was released on
4 April 2012, explaining in a more detail how companies must
implement or fulfil the CSR-related requirements in Act No. 40/2007
PSAK 24 Employee Benefits

Social and Environmental Reporting

Practices in Indonesia

BAPEPAM-LK (Keputusan Ketua BAPEPAM-LK No: KEP134/BL/2006:

Emiten wajib menyampaikan laporan tahunan, yang
didalamnya termasuk uraian mengenai aktivitas dan biaya
yang dikeluarkan berkaitan dengan tanggung jawab
sosial perusahaan terhadap masyarakat dan lingkungan
UU 40/2007 Pasal 66
.Laporan tahunan sebagaimana dimaksud pada ayat (1)
harus memuat sekurang-kurangnyaa), b), .c) laporan
pelaksanaan tanggung jawab sosial dan lingkungan,
d),

PP 47/2012 Pasal 6
Pelaksanaan

tanggung jawab sosial dan lingkungan dimuat

dalam laporan tahunan Perseroan dan
dipertanggungjawabkan kepada RUPS

Social & environmental reporting practices

around the globe
France: Regulations require companies to
disclose social and environmental issues
affecting performance. Reports on use of
water, air, raw materials etc.
Sweden, Holland, US, Denmark, Norway and
Belgium each has legislation requiring certain
companies to report the impact of
environmental issues.
Canada: Public corporations required to report
how environmental protection requirements
will impact current and future operations.

Social & environmental reporting practices

around the globe
France: Regulations require companies to
disclose social and environmental issues
affecting performance. Reports on use of water,
air, raw materials etc.
Sweden, Holland, US, Denmark, Norway and
Belgium each has legislation requiring certain
companies to report the impact of
environmental issues.
Canada: Public corporations required to report
how environmental protection requirements will
impact current and future operations.
China: threatens death penalty for serious
polluters
6

VOLUNTARY OR MANDATORY?
Until now, most companies around the world essentially disclose social
& environmental information in their annual reports on a voluntary
basis. This includes Indonesia.
However, it is important to note that Under PSAK No. 24, Indonesian
companies are required to disclose employee benefit information in
their annual reports (IAIGlobal 2006).
Other social disclosure items such as Training and Education are
voluntary although the social activities in relation to some of those
items are mandatory.
E.g. Under Undang-undang no. 13 th 2003, Companies must exclude
child labour aged under 13 years.

Stakeholders
Political
Groups
Customers

Governments

Investors

Communities

Firm
Labour
Unions

Creditors

Employees

Suppliers
Trade
Associations

Source: Cahaya et
al. (2006); Deegan
(2009), etc.