Indonesian Accountants Propose International Sustainability Assurance Standards

The Indonesian Public Accountants Institute (IAPI) is advocating for the adoption of a single international standard to guide sustainability information assurance within Indonesia. In addition to proposing clear standards, IAPI is urging regulators to establish a consistent oversight system for all service providers before the mandatory assurance of sustainability information takes effect.

These recommendations were put forth during a Business Morning Forum focused on building Indonesia's sustainability assurance ecosystem to enhance trust in sustainability reporting. The forum occurred as the Financial Services Authority (OJK) finalizes draft regulations that will require Financial Sector Business Actors (PUSK), Issuers, and Public Companies to disclose sustainability information.

IAPI highlights the growing need for clear assurance standards, noting that Indonesia's sustainability reporting ecosystem has not yet reached the maturity of financial reporting. This gap, IAPI warns, creates risks of misrepresentation, bias, and misleading sustainability claims, commonly known as greenwashing. To mitigate these risks, IAPI suggests adopting three international standards: SAKb 5000, which aligns with International Standards on Sustainability Assurance (ISSA) 5000; Quality Management Standards (SMM) 1 and 2, mirroring International Standards on Quality Management (ISQM) 1 and 2; and Ethics Standards for Sustainability Assurance, based on International Ethics Standards for Sustainability Assurance (IESSA).

These standards serve distinct but complementary functions. The ethics standard addresses practitioner conduct and independence, the quality management standards govern the quality systems within assurance firms, and the assurance standards dictate the execution of sustainability assurance engagements. IAPI points to the experiences of Malaysia and Australia as valuable lessons, noting Malaysia's profession-agnostic approach and Australia's integration of sustainability assurance into its established audit profession. Both nations, despite different methods, utilize the same core standard framework. IAPI emphasizes that standard consistency is crucial, regardless of which entities are ultimately permitted to provide sustainability assurance services. While IAPI confirms these standards will soon be available as professional infrastructure, it stresses that availability alone is insufficient to guarantee consistent quality in sustainability assurance.