Adapting EU CSRD to Indonesia: A Regulatory Sandbox Approach
DOI:
https://doi.org/10.15575/adliya.v20i1.46294Keywords:
disclosure requirements, legal challenges, regulatory development, sustainability reporting, sustainable developmentAbstract
Mandatory sustainability reporting is an important method for evaluating and monitoring sustainable development. Therefore, this study aimed to explore the feasibility of adapting the principles underlying the EU's Corporate Sustainability Reporting Directive to enhance the sustainability reporting framework in Indonesia. A normative legal study method was used with a comparative approach to provide relevant analysis. The results showed that the direct modelling of the EU’s legal framework for mandatory sustainability disclosure was unrealistic for Indonesia due to the substantial disparity in legal development between the jurisdictions. This study contributed to the literature by proposing a novel regulatory sandbox framework as a transitional legal mechanism for Indonesia to adapt EU CSRD principles into the sustainability disclosure policy. Unlike direct transplantation approaches, this phased experimental model enabled evidence-based policy development while accounting for institutional capacity gaps and a fragmented regulatory landscape. The proposed framework offered a practical pathway for developing economies to bridge the developmental gap in sustainability disclosure requirements without imposing premature financial burdens on enterprises.
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