Developing Sustainability Disclosure Indicators Based on IFRS S1 & S2: Are We Ready?

Abstract

Introduction: Sustainability issues have gained global attention, driving the need for standardized and comparable sustainability reporting across countries. The IFRS Sustainability Standards—particularly IFRS S1 and IFRS S2—introduce a unified framework for disclosing sustainability matters as well as climate-related risks and opportunities. In Indonesia, current sustainability disclosures still follow POJK 51/2017, indicating a significant gap with the IFRS standards in terms of structure and scope.

Objectives: This study aims to (1) develop sustainability disclosure indicators based on IFRS S1 and IFRS S2, and (2) assess the readiness of Indonesian companies, the Indonesian Institute of Accountants (IAI), public accountants, and academics in adopting these standards.

Methods: Using a qualitative approach, this study combines document analysis and semi-structured interviews. The development of indicators was carried out in two stages: first, mapping the content of IFRS S1 and IFRS S2 using additional references (SASB, TCFD, CDSB, and corporate reports); and second, conducting thematic analysis of the interviews to identify financial impacts, risks, and opportunities. The quality of disclosure was evaluated using information quality theory (relevance, accuracy, completeness, timeliness, understandability, consistency, and reliability). Triangulation of indicator development was conducted using information quality theory, while triangulation for assessing the readiness of companies, IAI, academics, and public accountants was based on organizational change theory.

Results: This study proposes relevant sustainability disclosure indicators classified by accounting categories and transaction types, including practical examples. These indicators facilitate the mapping of sustainability issues to their financial impacts and align them with PSAK standards. The level of readiness among stakeholders varies, categorized as: (1) early-stage readiness, (2) moderately ready, and (3) ready for adoption.

Conclusions: This research contributes practical guidance for structured sustainability disclosures aligned with IFRS S1 and S2. It highlights implementation opportunities and challenges, and offers strategic insight for technical adoption. Limitations include access to quantitative accounting data and reliance on interviews, suggesting the need for deeper corporate data analysis in future research.