IssueTracker

Problem you have encountered:
As per this Google documentation [1] the custom role can be applied at organization and project level at this moment:
[1]:https://cloud.google.com/iam/docs/creating-custom-roles#:~:text=You%20can%20create%20custom%20roles%20for%20an%20entire%20organization%2C%20or%20for%20a%20specific%20project%20in%20that%20organization

What you expected to happen:
Be able to create folder level custom role

Steps to reproduce:
NA

Other information (workarounds you have tried, documentation consulted, etc):

Using gcloud command we only can specify project or organization:
cloud iam list-testable-permissions FULL_RESOURCE_NAME \
    --filter="customRolesSupportLevel!=NOT_SUPPORTED"
Replace FULL_RESOURCE_NAME with one of the following values:
Project: //cloudresourcemanager.googleapis.com/projects/PROJECT_ID (for example, //cloudresourcemanager.googleapis.com/projects/my-project)
Organization: //cloudresourcemanager.googleapis.com/organizations/NUMERIC_ID (for example, //cloudresourcemanager.googleapis.com/organizations/123456789012)
https://cloud.google.com/iam/docs/creating-custom-roles#viewing-resource-permissions