<![CDATA[Transfer Pricing (TP) remains a central and contentious issue in international taxation due to its close association with profit shifting and the ongoing challenges of Base Erosion and Profit Shifting (BEPS). The traditional Function–Assets–Risk (FAR) framework, which supports the arm’s length principle, captures mainly financial and operational risks but overlooks sustainability-driven exposures that increasingly shape business models. This paper introduces Sustainable FAR, a framework that integrates environmental, social, governance (ESG), supply-chain, and reputational risks into transfer pricing analysis. Using a qualitative exploratory design, the study combines a PRISMA-guided literature review, regulatory mapping, and a risk-linkage protocol to operationalize ESG risk quantification under the OECD’s “returns follow risks” principle. Findings show that sustainability obligations materially influence value creation and profit allocation, justifying a sustainability risk premium. By aligning OECD comparability factors with Indonesia’s sustainability disclosure regime, POJK 51/2017, Perpres 98/2021, and PSPK 1–2 (aligned with IFRS S1–S2), Sustainable FAR provides a governance-oriented model for integrating fiscal and sustainability objectives. It reframes TP documentation as a strategic instrument linking transparency, accountability, and circular economy governance.]]>
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