Indonesia’s IFRS S1 and S2 convergence: implications for Bali businesses

Denpasar — Indonesia has formally adopted national sustainability disclosure standards based on IFRS S1 and IFRS S2, with application set to begin from 1 January 2027, but the precise scope of companies and enforcement arrangements is still being finalised by regulators.

The Indonesian Sustainability Standards Board under the Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia, IAI) approved Sustainability Disclosure Standards (Standar Pengungkapan Keberlanjutan, SPK) comprising PSPK 1 and PSPK 2 on 1 July 2025, aligning them with IFRS S1 and IFRS S2 issued by the International Sustainability Standards Board, according to IAI and international accounting bodies.

PSPK 1 covers general requirements for sustainability-related financial disclosures, while PSPK 2 focuses on climate-related information, adopting the structure and concepts of IFRS S1 and S2.

For businesses in Bali – including hotels, property developers, suppliers and service operators – the main implication is that sustainability information connected to financial risks and opportunities will increasingly be expected by investors, lenders and regulators, even though local mandates have not yet been tailored specifically to the province.

According to an explainer in NOW! Bali, the convergence with IFRS S1 and S2 is intended to make sustainability disclosures more consistent, comparable and verifiable across industries, and to serve the needs of investors, other creditors, assurance providers and the wider public.

Key figures and dates currently confirmed in public materials include:

• Effective date for PSPK 1 and PSPK 2 in Indonesia: 1 January 2027.
• Jurisdictions that have adopted or are taking steps to introduce ISSB standards, including IFRS S1 and S2: at least 33 by mid‑2025, with later IFRS snapshots indicating 39 jurisdictions and around 60% of global GDP.
• Climate-related disclosures under PSPK 2 and IFRS S2: greenhouse-gas emissions and related information, with scope and transition provisions for items such as Scope 3 emissions in the first three years of implementation.

What IFRS S1 and S2 require

IFRS S1 sets out general requirements for disclosing sustainability-related risks and opportunities that could reasonably affect an entity’s cash flows, access to finance or cost of capital over the short, medium or long term, and for explaining how these matters are governed and managed.

IFRS S2 is narrower and climate-focused, covering governance, strategy, risk management and metrics and targets for climate-related risks and opportunities, including greenhouse-gas emissions across Scopes 1, 2 and, subject to jurisdictional decisions and transition rules, Scope 3.

Indonesia’s PSPK 1 and PSPK 2 adopt the substance of IFRS S1 and S2, meaning companies that fall under the national framework will need to integrate sustainability and climate considerations into mainstream financial reporting rather than treating them as separate corporate social responsibility documents.

Implications for Bali businesses

Policy materials and legal analyses indicate that entities subject to the Financial Services Authority (Otoritas Jasa Keuangan, OJK) – including listed companies and public companies – are expected to prepare sustainability reports using SPK standards from 2027, although detailed implementing regulations and the final list of covered entities remain under development.

For Bali-based hotels, property companies and suppliers that are listed or otherwise publicly accountable, this points toward a need to map existing environmental, social and governance data, strengthen internal controls over non-financial information and link key indicators to financial risk, performance and strategy.

Analysts note that early adopters of SPK and IFRS-style disclosures may benefit from streamlined reporting processes and improved access to capital markets, but these are potential advantages rather than guaranteed outcomes for individual companies.

What remains uncertain in Indonesia

Regulatory snapshots by the IFRS Foundation and independent research indicate that while the effective date for PSPK 1 and PSPK 2 has been set at 1 January 2027, the OJK is still expected to specify which entities must comply, how existing sustainability-reporting rules will be revised and what assurance and enforcement mechanisms will apply.

Current roadmaps and commentary generally focus on publicly accountable entities, including listed companies and financial-sector institutions, and foresee climate-related disclosures as the initial mandatory component, with broader sustainability topics remaining voluntary during a three-year transition period.

For Bali’s tourism and property sectors, this leaves practical questions about the treatment of value-chain emissions, how climate scenario analysis will be tailored to local conditions and whether smaller, unlisted businesses will face indirect pressure from lenders, investors and large customers to align with SPK and IFRS-style reporting.

A prudent near-term step for Bali operators is to review what sustainability information is already collected, how it is verified and whether it can be connected to financial risks and opportunities, while monitoring future announcements from OJK and IAI for binding requirements and sector-specific guidance.

Sources

• Ikatan Akuntan Indonesia – "Standar Baru IAI Perkuat Posisi Indonesia di Panggung Keberlanjutan Global"
• Greenwise – White Paper Vol.14 on Indonesia’s sustainability disclosure standards
• International Federation of Accountants – "How Ikatan Akuntan Indonesia Strengthened Indonesia’s Role in the Global Sustainability Reporting Landscape"
• Priviet Management Journal – "Why Southeast Asia's sustainability reporting mandates are ..."
• BWD Strategic – "Local adoption of IFRS S1 / S2 (ISSB Standards): Indonesia"
• IFRS Foundation – "Jurisdictional Snapshot: Indonesia"
• ERM / Sustainability – "ISSB’s IFRS S1/2: Laying the foundation for global mandatory disclosures"
• VietnamPlus – "Indonesia launches global-standard sustainability reporting system"
• Warta Ekonomi – "Indonesia Luncurkan Standar Pelaporan Keberlanjutan Sejalan Praktik Global"
• RMOL – "Pelaporan ESG Tahun 2026 Indonesia"
• Slaughter and May – "ESG in APAC 2025: Indonesia"
• NOW! Bali