Corporate transition plans are gaining momentum as essential tools to support a credible and orderly shift toward a low-emissions and climate-resilient future. Indonesia is among the countries actively setting standards and requirements for these plans, which aim to align business models and activities across both the financial sector and the real economy with environmental objectives.
Although policies from Indonesia’s regulatory bodies have promoted the development of a sustainable finance market, research indicates that financial institutions are still in the early stages of creating their transition plans. High-level net-zero pledges are valuable only when backed by clear, actionable, and verifiable measures, which help prevent greenwashing, delayed action, and continued reliance on high-carbon activities. However, the adoption of transition plans across financial and non-financial corporates in Indonesia remains slow and uneven, with many entities setting net-zero targets without detailed or credible implementation plans. Issues with existing plans include limited alignment of capital and operational expenditures with targets, reliance on carbon credits, and scarce public disclosure.
To address these gaps, policymakers, regulators, supervisors, and standard-setters globally are increasingly requiring or encouraging corporates to develop and disclose credible transition plans. The OECD’s 2022 Guidance on Transition Finance outlines key elements of credible plans, highlighting their importance for robust transition finance approaches and instruments. Indonesia’s move toward transition plans builds on prior sustainable finance policies issued by the Financial Services Authority (OJK), including a taxonomy, climate risk management guidelines, and scenario analysis requirements.
In August 2025, the Indonesian Institute of Accountants launched Sustainability Disclosure Standards, comprising PSPK 1 for general sustainability-related financial disclosures and PSPK 2 focused on climate-related information. Reporting based on these standards is expected to begin on 1 January 2027, with larger entities adopting the requirements first. Draft climate-related disclosure standards include mandatory reporting on transition plans, covering assumptions, dependencies, and uncertainties. OJK is drafting amendments to integrate these standards into financial sector regulations, sustainable finance taxonomy, and transition plan requirements for public companies and issuers.
A 2024 joint survey by OJK and OECD revealed that Indonesian financial institutions are still in the early stages of transition planning compared to OECD peers. Only 30% of respondents had public climate commitments, 20% had set net-zero targets, and just over a quarter had developed a transition plan, with only 11% publicly available. Barriers included lack of preparedness, perceived irrelevance, insufficient regulatory requirements, and limited urgency. Key constraints were limited human resources, competing priorities, inadequate IT infrastructure for climate data, and insufficient monitoring capacity. While over half reported medium to high capacity for implementing transition plans, the remainder indicated zero to low capacity.
To accelerate adoption, policymakers and regulators are encouraged to develop robust standards for credible transition plans, ensuring they articulate detailed implementation strategies, disclose core metrics and methodologies, and identify assets exposed to physical and transition risks. Streamlining reporting obligations under a unified framework, creating science-based sector-specific transition pathways, enhancing climate data and methodologies, and providing capacity-building support are critical steps. Support for small enterprises through financial incentives and technical assistance, along with developing assurance, verification standards, and a centralized climate database, will strengthen credibility and trust.
With forthcoming regulation and guidance from OJK, the development and disclosure of transition plans in Indonesia is expected to accelerate. Capacity building will be essential to equip developers, investors, lenders, and corporates with the tools to plan and implement low-emission and climate-resilient strategies successfully. As more jurisdictions follow this approach, transition planning could ensure that net-zero pledges are accompanied by transparent, accountable, and actionable plans, turning climate promises into measurable progress.
