Sustainable Brilliance: Elevating Your Business Through Strategic Reporting

Let's dive into the vibrant world of Indonesia, where the economy is like a rollercoaster of exports and local splurges. Picture this: Indonesia, the reigning champion in palm oil production, not to mention a heavyweight player in the global market for agricultural goodies, coal, and minerals. The stage is set, and the spotlight is on Indonesian commodities, dancing their way into global supply chains. But wait, there's a twist! Big-shot multinational enterprises (MNEs) are feeling the heat – the kind that comes from governments, consumers, NGOs, CSOs, and even the media – all rallying for responsible and traceable products.

Enter Nestlé, Mars, and Mondelēz International, among others, waving their demand flags for transparency and accountability. It's a high-stakes game for MNEs sourcing from Indonesia, and they're turning the spotlight on giants like the Wilmar Group and Sinar Mas, holding them accountable from top to bottom, down to the tiniest contributors in their value chain – the smallholders.

But how do you bring a dash of accountability and sustainability to this dynamic dance? Well, the answer lies in the glittery world of transparency and relevant sustainability data. Indonesia has a few rules up its sleeve, like Law No. 40/2007, nudging companies, especially the big shots, to sprinkle a bit of social and environmental responsibility into their annual reports. Yet, enforcement is playing hide-and-seek, giving these regula

tions more of a casual stroll than a power walk.

Now, enter the cool cats of sustainability reporting! Riding the global wave, large Indonesian companies are catching the sustainability bug. According to KPMG's 2015 survey, a whopping 99% of the top 100 companies in Indonesia are shouting about corporate responsibility in their annual reports. And guess what? Half of them are going all-in, publishing full-on sustainability reports using the GRI standard.

But, (drumroll, please) there's a twist in this plot! To turn up the volume on sustainability reporting and make it a chart-topper, we need to groove a bit further down the value chain. Cue the small and mighty SMEs, the unsung heroes supplying to the big shots but not yet flaunting their impact on the sustainability stage. It's time to turn up the music, spotlight the SMEs, and let the sustainability party really get started!

Alright, let's sprinkle some magic on the tale of Indonesia's SMEs and the CSMRCB program. Imagine a land where SMEs reign supreme – over 99.9% of all businesses are these little dynamos, a whopping 48.9 million of them! Picture this: 96.18% of the workforce, a cool 85.4 million people, clock in at SMEs, making them the true MVPs of the job scene. And guess what? They're not just punching in, but also contributing 53.3% to Indonesia's GDP. Now that's what we call small but mighty!

Fast forward to the end of 2015, and only 15 SMEs decided to rock the sustainability boat by publishing reports. On the government front, sustainability reporting is still playing hide-and-seek – not quite the headliner in the policy playlist. But here's the plot twist: the first phase of the CSMRCB program didn't exactly set the stage on fire. Why, you ask? Well, it was a bit like trying to fit a square peg into a round hole – not exclusively aimed at SMEs.

But hold onto your hats, folks! The story takes a thrilling turn. The first phase may not have been a blockbuster, but it left everyone itching for more sustainability knowledge in Indonesia. Cue the entrance of the second phase, strutting in with a whole new vibe! This time, it's all about a radically different approach, a groove that focuses on reaching SMEs through the value chains.

Can you feel the excitement in the air? It's like a sustainability carnival, and the SMEs are the stars of the show. Get ready for a wild ride as the CSMRCB program gears up to make sustainability reporting the coolest trend in Indonesia!

Embarking on the global stage, small and medium-sized enterprises (SMEs) in developing nations find themselves at the crossroads of boundless opportunities. This global interconnectivity not only opens doors to uncharted markets but also holds the key to fostering sustainable growth and alleviating poverty. Picture SMEs as the unsung heroes in emerging economies, wielding the power to create jobs and generate income, contributing a whopping 45% to total domestic employment and 33% to national income (GDP). However, these formidable players face a formidable foe – the ever-rising bar of global expectations for sustainable business practices, a make-or-break factor for competitiveness and market ent

ry.

On the flip side, multinational enterprises (MNEs) are under increasing scrutiny from diverse stakeholders, being held accountable for sustainability impacts in their production cycles. Even if these impacts are not directly inflicted by the MNEs themselves, but by entities in their supply chains, the responsibility rests on their shoulders. To navigate these turbulent waters, MNEs adopt a strategic shield by demanding sustainability information from their suppliers. Giants like Nestle, Walmart, Unilever, and Microsoft are at the forefront of this trend, recognizing the significance of sustainability in their global operations.

Yet, the narrative takes a twist when we delve into the realm of small players within global value chains (GVCs). A stark reality unfolds – many SMEs are yet to catch up with the evolving sustainability landscape. In 2015, a mere 10% of sustainability reports worldwide hailed from the SME domain. The reasons are manifold; lack of knowledge, reluctance to allocate resources, and an unclear business case for sustainability reporting. However, a paradigm shift is underway. Recent years spotlight sustainability reporting as the secret weapon for SMEs to enhance their competitive edge and gain entry into coveted GVCs.

A telling revelation emerges from a 2014 study conducted by the Global Reporting Initiative (GRI), the maestro behind the world's leading sustainability reporting framework. For SMEs that have taken the plunge into reporting, the benefits are nothing short of transformative. Productivity soars, costs dwindle, competitiveness solidifies, and new markets unfurl before them like a tapestry of opportunity. In this evolving landscape, sustainability reporting is not merely a checkbox but a critical differentiator, a beacon guiding SMEs towards a future of heightened competitiveness and expanded market access.

Welcome to the thrilling sequel, Theory of Change Phase II – where the mission is to weave small and mighty SMEs into the intricate tapestry of Global Value Chains (GVCs). Brace yourselves for an impact that goes beyond the ordinary, aiming to spark a revolution in sustainability reporting and, in turn, unleashing a cascade of jobs and income opportunities in our target countries. This ain't your average theory – it's a three-pillar powerhouse:

Pillar I: Enter the SME Jedi Training Grounds. Picture this – SMEs gearing up, lightsabers in hand (well, metaphorically), ready to conquer GVCs. How? By boosting their reporting prowess! We're not talking generic reports; we're talking about laser-focused, sector-specific sustainability impacts. It's a boot camp for SMEs, ensuring they're not just players but MVPs in the sustainability reporting game.

Pillar II: The Reporting Wonderland. Now, let's set the stage for a reporting wonderland! We're not here to simply dream; we're here to make it happen. Cue the policy dialogue, outreach extravaganza, and awareness-raising spectacle. We're sculpting an environment where policies and regulations dance to the sustainability beat. It's not just about reporting; it's about creating the perfect stage for sustainability reporting to shine.

Pillar III: Data Avengers Assemble. Hold onto your capes – it's time to assemble the Data Avengers! Civil society, governments, media – they're the superheroes wielding the power of data. We're not just providing information; we're creating demand. These data Avengers will hold both the big shots (MNEs) and the unsung heroes (SMEs) accountable for their sustainability practices. It's not just data; it's a call to action!

Welcome to the blockbuster sequel where theory transforms into action, and the heroes are none other than the small players making a big impact in the world of sustainability reporting. Get ready for the Theory of Change Phase II – the saga continues!