Law as a Catalyst for A Sustainable Society: Analyzing Indonesia’s Mandatory Sustainability Reporting Framework in the Capital Market

DOI

10.2991/978-94-6239-785-9_48How to use a DOI?

Keywords

Corporate Governance; ESG; Legal Framework; Mandatory Disclosure; Sustainability Report

Abstract

This study provides a normative legal analysis of Indonesia’s sustainability reporting framework, examining both the legal architecture and its practical implementation. This study employs a normative legal research method, using statutory and conceptual approaches. The statutory analysis scrutinizes the foundational OJK Regulation No. 51/POJK.03/2017 and Technical OJK Circular Letter No. 16/SEOJK.04/2021 to establish legal norms. This is supplemented by a substantive quality analysis of Sustainability Reports from 20 of Indonesia’s largest public companies (2024 reports) to analyze the practical application of these norms. The findings confirm that Indonesia’s legal framework creates a robust, multi-layered bridge between ethical principles and concrete disclosure obligations. However, an analysis of the reports indicates a significant gap between regulatory intent and corporate practice. While structural compliance is near-perfect, the analysis reveals wide variations in the depth, quality, and transparency of ESG disclosures, marked by qualitative narratives and cherry picking. In conclusion, although Indonesia’s legal framework is conceptually sound, its real-world effectiveness varies. It has succeeded in changing formal behavior but not substantive mindset. The paper’s significant contribution is its dual analysis, identifying this gap as a conflict between the law’s Stakeholder Theory intent and the firms’ Agency Theory response, highlighting implementation challenges and greenwashing risks in fostering an ethically grounded capital market.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Ahmad Fachri Faqi
AU  - Eka Suci Mauliyani
PY  - 2026
DA  - 2026/10/07
TI  - Law as a Catalyst for A Sustainable Society: Analyzing Indonesia’s Mandatory Sustainability Reporting Framework in the Capital Market
BT  - Proceedings of the UUM 13th International Legal Conference 2025 (UUMILC 2025)
PB  - Atlantis Press
SP  - 688
EP  - 705
SN  - 2667-128X
UR  - https://doi.org/10.2991/978-94-6239-785-9_48
DO  - 10.2991/978-94-6239-785-9_48
ID  - Faqi2026
ER  -