Jakarta. Indonesian businesses have committed to taking the lead and pushing for developing and adopting a unified global sustainability disclosure standard to make it easier for companies worldwide to attract investments to sustainability projects.
Shinta Widjaja Kamdani, the chair of B20 Indonesia, said on Wednesday that uniformity in global sustainability standards should help developing countries attract investors to key projects crucial for mitigating or adapting to climate change.
"This year, Indonesia has the opportunity to lead the G20 presidency. We lead the sustainable efforts that tackle critical governance issues around the globe," Shinta said in a B20 Side Event webinar organized by Indonesia Chartered Accountants (IAI) on Wednesday.
"In this particular effort, we need to set a baseline to evaluate projects and business decisions. We need sustainability standards that all G20 members will recognize," Shinta said.
Instead of a unified standard, businesses around the world today need to deal with multiple guidelines for sustainability disclosure that varies between regions or jurisdictions.
Masamichi Kono, the trustee of the International Financial Accounting Standards (IFRS) Foundation, said the situation was far from ideal for most sustainability projects that need cross-border investment and collaboration.
He said multiple sustainability standards led to costly and complex reporting, limited transparency, and comparability. Moreover, Kono noted that a lack of capital market rigor could also diminish confidence and trust in the information presented in sustainability disclosure.
The IFRS Foundation has initiated developing a comprehensive global baseline of high-quality sustainability disclosure standards for its stakeholders. It established the International Sustainability Standards Board (ISSB) last year and published the exposure draft on IFRS Sustainability Disclosure Standard.
Haryanto T. Budiman, B20 Indonesia's task force and business action council chairman for integrity and compliance, said sustainability reporting has improved business over the past few years, but now is the time for improvement.
"To ensure alignment and sustainability governance as our top priorities, we need all policy recommendations. They are intended to standardize disclosures. We need the improvement of governance measures," Haryanto said.
Arsjad Rasjid, the chairman of the Indonesia Chamber of Trade and Industry (Kadin), said a uniform suitability standard should help more investments flow to sustainability projects.
"The world's asset managers who hold more than $7 trillion in funds are looking for the sustainability investments," Arsjad said.
Indonesian Businesses Push for Uniform Global Sustainability Standard
"Not only looking for profits, but they also search for investments for the people and the planet. Private sectors must be fully on board to implement concise sustainable standards," he said.
The government offered full support for the initiative to standardize the sustainability disclosure.
"Harmonizing sustainability reporting standards is one of our responsibilities as development agents. We are supporting these initiatives," Nawal Nely, the deputy of finance and risk management at the Ministry of State-owned Enterprises, said.
"I think the efforts to standardize the sustainability reporting will significantly reduce the greenwashing. It will also be subject to judgment and interpretation. But again, without standards, it will be worse, Nawal said.
Vera Eve Lim, the chief financial officer of Bank Central Asia, said the Indonesian banks would like to take in the initiative.
"In the future, these standards will affect the banks' capital allocations. It may change the future of the element of Environmental, Social, and Governance (ESG). The landing decision becomes more important for the bank's customers," she said.