OJK Calibrates Directors’ Fiduciary Duties Through Sustainable Finance Regulations

The Financial Services Authority (“OJK”) is currently finalizing a Draft OJK Regulation on Sustainable Finance, which is scheduled for issuance by the end of the third quarter of 2026. The regulation will refine the standards of legal accountability applicable to boards of directors (fiduciary duties) of Financial Services Institutions (Lembaga Jasa Keuangan - “LJK”), issuers, and public companies in the governance of risk management strategies.

“In the new OJK Regulation, we will adopt the global standards under International Financial Reporting Standards (“IFRS”) S1 and S2 to produce sustainability reports that are comparable at both the national and international levels,” said Retnia Wulandari, Manager of OJK’s Sustainable Finance Directorate.

The RPOJK will replace OJK Regulation No. 51/POJK.03/2017 (“POJK 51/2017”) on the implementation of sustainable finance by financial services institutions, issuers, and public companies. The new regulation will incorporate a double materiality approach, combining the perspective of the impact of business operations on the environment and surrounding nature (inside-out) with the financial impact of climate change on corporations (outside-in). The new policy will take full effect for reporting data periods commencing on 1 January 2027.