As Indonesia's largest listed companies and financial institutions prepare for mandatory sustainability-related financial disclosures, a new guidance document offers palm oil growers a practical bridge between a certification standard they already know and a reporting framework they are only beginning to navigate.
The Roundtable on Sustainable Palm Oil (RSPO), with support from PwC, has released new guidance on Leveraging RSPO Principles and Criteria for IFRS Sustainability Disclosure Standards, addressing a question increasingly on the minds of Indonesian palm oil producers: how does years of investment in RSPO certification translate into the disclosures now being demanded by capital markets and regulators under International Financial Reporting Standards (IFRS) S1 and IFRS S2? The answer, this guidance argues, is that it translates a great deal, provided companies understand where the two frameworks align and where they genuinely diverge.
Two standards, one underlying story
IFRS S1 and S2, issued by the International Sustainability Standards Board (ISSB), have become the global baseline for sustainability-related financial disclosure, requiring companies to communicate the risks and opportunities that could reasonably affect their cash flows, financing costs, and access to capital. For Indonesia, this is no longer a distant international development. The Financial Services Authority (OJK) has proposed that publicly accountable entities, meaning listed companies and financial institutions, begin climate-first reporting from financial year (FY)2027, with the full scope and timeline for both standards still to be finalised. Given that Indonesia is the world's largest palm oil producer, the implications for the sector are significant, and the runway to prepare is shorter than it may appear.
The guidance is built on a simple but useful premise: RSPO P&C certification and IFRS SDS serve different purposes but draw on overlapping evidence at certain points. RSPO P&C is a performance-based certification standard assessed at the level of a mill and its supply base, evaluating compliance with the RSPO Principles and Criteria across palm oil production operations. IFRS SDS, by contrast, is a disclosure standard assessed at the level of the reporting entity, concerned with how sustainability issues affect financial performance. A company does not need to build a new reporting system from scratch to satisfy both. Much of the evidence generated through RSPO certification, from supplier documentation and traceability records to GHG emissions data captured through the RSPO PalmGHG calculator, can be repurposed to support IFRS SDS disclosures on risk management and metrics and targets, provided that evidence is genuinely relevant to a financially material risk or opportunity.
Where the fit is imperfect, and why that matters for Indonesian groups
The guidance is candid about the limits of this alignment, and two of those limits are particularly relevant to the structure of Indonesian palm oil businesses. The first concerns boundaries. RSPO certification is granted at the level of a mill and its associated supply base, not the corporate group, whereas IFRS SDS reporting follows the same boundary as a company's financial statements, including its full value chain. For a large Indonesian conglomerate with multiple mills at different certification stages, or with operations spanning palm oil alongside other commodities, this means RSPO evidence may only ever cover a subset of what needs to be disclosed at group level. The guidance is explicit that RSPO P&C compliance for multi-commodity operations cannot be reported as though it applies to the entire entity, a caution particularly relevant to Indonesia's diversified agribusiness groups.
The second concerns materiality. IFRS Sustainability Disclosure Standards (IFRS SDS) is not a checklist of sustainability topics, but a filter for what could reasonably affect financial prospects. RSPO indicators generate rich operational evidence, but not all of it will meet that financial materiality threshold, and companies will need to exercise judgement in connecting certification data to genuine sustainability-related risks and opportunities rather than reporting activity for its own sake.
The view from financial institutions
For Indonesia's banks and financial institutions, this guidance carries a second, equally important audience in mind. Palm oil financing in Southeast Asia has historically been large in scale and uneven in oversight. Research cited in the guidance found that between 2016 and 2020, fifteen major regional financial institutions extended over thirteen billion dollars in new credit to palm oil clients, representing close to half of global sector financing, at a time when sustainability policy coverage was inconsistent and Indonesian banks in particular had not measured or disclosed portfolio-level palm oil sustainability indicators. Issues such as deforestation, peatland clearing, and weak traceability translate directly into credit, market, and reputational risk for lenders, not just reputational concern for growers. By connecting RSPO certification evidence to IFRS SDS-aligned disclosures, the guidance can provide Indonesian financial institutions with clearer and more comparable information to support due diligence, risk assessment, and informed engagement with palm oil clients.
A foundation, not a finish line
What makes this guidance useful for the Indonesian market is its restraint. It does not claim that RSPO certification satisfies IFRS SDS on its own, nor does it introduce new obligations on top of existing certification requirements. It offers a structured starting point for growers who are certified or pursuing certification to organise disclosures more efficiently, and for financial institutions to read those disclosures with greater confidence. As OJK finalises the scope and timeline for IFRS SDS adoption, Indonesian palm oil companies that begin this mapping exercise now, understanding clearly what RSPO evidence can support and where genuine gaps remain, will be far better positioned when mandatory reporting arrives than those who wait for the deadline to force the exercise.
Reference: Roundtable on Sustainable Palm Oil and International Financial Reporting Standards technical guidance
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Yuliana Sudjonno
Partner, PwC Indonesia
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