Sustainable Accounting and Environmental, Social, and Governance (ESG) Reporting: Challenges and Implementation in Indonesian Companies

Tuti Setiatin

doi:10.54783/ijsoc.v7i1.1453

Tuti Setiatin Universitas Linggabuana PGRI Sukabumi, Indonesia

DOI: https://doi.org/10.54783/ijsoc.v7i1.1453

Keywords: Accounting, ESG (Environmental, Social, And Governance), Report.

Abstract

The implementation of sustainable accounting and ESG reporting in Indonesia has become a strategic issue that continues to grow in line with the increasing demand for transparency from both global and domestic stakeholders. However, its implementation still faces various obstacles, both within the company and due to complex external factors. The imbalance in readiness between sectors, limited infrastructure, and minimal data integration are real challenges in realizing comprehensive ESG reporting. This study aims to identify obstacles and accelerate the implementation of ESG in corporate accounting practices in Indonesia. The study was conducted using a qualitative approach and data collection through literature reviews, previous studies, and relevant documents. The data obtained were described descriptively and qualitatively to explore patterns, dynamics, and strategies that can be accepted by the company. The results of the study show that the role of leadership, desire literacy, regulatory support, and multi-party collaboration greatly determine the success of ESG reporting. The implementation of the acceleration strategy requires a comprehensive internal transformation and the use of digital technology. Public policy support and government incentives are key to creating an effective and sustainable ESG reporting ecosystem in Indonesia.

References

Abhayawansa, S., & Adams, C. (2021). Towards a conceptual framework for non-financial reporting inclusive of pandemic and climate risk reporting. Meditari Accountancy Research, 30(3), 710-738.

Ahmad, H., Yaqub, M., & Lee, S. H. (2024). Environmental-, social-, and governance-related factors for business investment and sustainability: A scientometric review of global trends. Environment, Development and Sustainability, 26(2), 2965-2987.

Annesi, N., Battaglia, M., Ceglia, I., & Mercuri, F. (2025). Navigating paradoxes: Building a sustainable strategy for an integrated ESG corporate governance. Management Decision, 63(2), 531-559.

Ardiana, P. A., Diantini, N. N. A., Sudirman, I. M. S. N., Sudana, I. P. G., Putri, N. P. A. W., & Yanthi, K. D. L. (2025). Institutional work in making sustainability reporting mandatory in Indonesia through sustainable finance. Journal of Accounting in Emerging Economies, 15(3), 645-669.

Arvidsson, S., & Dumay, J. (2022). Corporate ESG reporting quantity, quality and performance: Where to now for environmental policy and practice?. Business strategy and the environment, 31(3), 1091-1110.

Chopra, S. S., Senadheera, S. S., Dissanayake, P. D., Withana, P. A., Chib, R., Rhee, J. H., & Ok, Y. S. (2024). Navigating the challenges of environmental, social, and governance (ESG) reporting: The path to broader sustainable development. Sustainability, 16(2), 606.

Dimitrov, R., Jelen, A., & L’Etang, J. (2022). Taboos in health communication: Stigma, silence and voice. Public Relations Inquiry, 11(1), 3-35.

Dmuchowski, P., Dmuchowski, W., Baczewska-Dąbrowska, A. H., & Gworek, B. (2023). Environmental, social, and governance (ESG) model; impacts and sustainable investment–Global trends and Poland's perspective. Journal of Environmental Management, 329, 117023.

Edwards, M. G. (2021). The growth paradox, sustainable development, and business strategy. Business Strategy and the Environment, 30(7), 3079-3094.

Gunawan, J., Permatasari, P., & Fauzi, H. (2022). The evolution of sustainability reporting practices in Indonesia. Journal of Cleaner Production, 358, 131798.

Hermawan, M. S., & Handoyo, A. D. S. (2025). Harmonizing ESG in a local context; integrating social dimension and Kekeluargaan values in the context of Indonesia culture. Corporate Social Responsibility and Environmental Management, 32(2), 2225-2236.

Hossain, M. Z., Hasan, L., & Hasan, M. H. (2024). Corporate Governance as a Global Phenomenon: Evolution, Theoretical Foundations, and Practical Implications. Journal of Financial Risk Management, 13(2), 342-375.

Lisi, S., Mignacca, B., & Grimaldi, M. (2023). Non-financial reporting and SMEs: A systematic review, research agenda, and novel conceptualization. Journal of Management & Organization, 1-23.

Park, S. R., & Jang, J. Y. (2021). The impact of ESG management on investment decision: Institutional investors’ perceptions of country-specific ESG criteria. International Journal of Financial Studies, 9(3), 48.

Poiriazi, E., Zournatzidou, G., Konteos, G., & Sariannidis, N. (2025). Analyzing the Interconnection Between Environmental, Social, and Governance (ESG) Criteria and Corporate Corruption: Revealing the Significant Impact of Greenwashing. Administrative Sciences, 15(3), 100.

Prasad, S., Yadav, K. K., Kumar, S., Pandita, P., Bhutto, J. K., Alreshidi, M. A., ... & Cabral-Pinto, M. M. (2024). Review on biofuel production: Sustainable development scenario, environment, and climate change perspectives− A sustainable approach. Journal of Environmental Chemical Engineering, 12(2), 111996.

Putri, E. I. K., Dharmawan, A. H., Hospes, O., Yulian, B. E., Amalia, R., Mardiyaningsih, D. I., ... & Suradiredja, D. Y. (2022). The oil palm governance: challenges of sustainability policy in Indonesia. Sustainability, 14(3), 1820.

Setyowati, A. B. (2023). Governing sustainable finance: insights from Indonesia. Climate Policy, 23(1), 108-121.

Shaikh, I. (2022). Environmental, social, and governance (ESG) practice and firm performance: an international evidence. Journal of Business Economics and Management, 23(1), 218-237.

Toke, L. K., & Kalpande, S. D. (2024). Critical analysis of green accounting and reporting practises and its implication in the context of Indian automobile industry. Environment, Development and Sustainability, 26(2), 3243-3268.

Villiers, C. (2022). New directions in the European Union’s regulatory framework for corporate reporting, due diligence and accountability: the challenge of complexity. European Journal of Risk Regulation, 13(4), 548-566.

Wahab, M. Z. B. H., Mohamed Naim, A., & Abu Hassan, M. H. (2024). Developing Islamic-sustainable and responsible investment (i-SRI) criteria based on the environmental, social and governance (ESG) concept. Journal of Islamic Accounting and Business Research.

Widhiyani, N. L. S., Setiawan, P. E., Krisnadewi, K. A., Ardiana, P. A., Widiani, N. M. S., Pratama, E. A., & Yanthi, K. D. L. (2025). Navigating timeliness: Decoupling in corporate external reporting by Indonesian state-owned enterprises (SOEs). Public Money & Management, 1-9.

Wong, C. W., Wong, C. Y., Boon-Itt, S., & Tang, A. K. (2021). Strategies for building environmental transparency and accountability. Sustainability, 13(16), 9116.

Zumente, I., & Bistrova, J. (2021). ESG importance for long-term shareholder value creation: Literature vs. practice. Journal of Open Innovation: Technology, Market, and Complexity, 7(2), 127.