Sustainable Banking in Indonesia

In cooperation with WWF Indonesia and OJK, Indonesia’s financial regulator, GIZ’s Emerging Markets Dialogue on Finance (EMDF) implements a pilot project on Sustainable Banking in Indonesia. The project aims at the promotion of sustainable finance practice, mainly via training and capacity building in environmental, social and governance (ESG) risk management procedures, in the Indonesian banking sector.

The financial sector is a key actor for sustainable development. Financial institutions lend money to multiple industries in various countries and sectors. Once banks’ lending follows stringent ESG criteria, the leverage effect for positive impact can be tremendous. This logic is extendable to other capital markets instruments beyond classic loans.

The Sustainable Banking in Indonesia project is an implementation project of the country’s Financial Service Authority (FSA)’s Sustainable Finance Roadmap. The Roadmap was launched in conjunction with the Ministry of Environment and Forestry, and functions as the key guidance document for the finance industry and other parties involved in supporting sustainable development.

The project structure includes the following activities/elements:
  • Engagement of leading decision makers of the participating financial institutions representing over 50% of the national banking capital assets
  • Building of the necessary capacities on ESG risk management practices via workshops and technical assistance
  • Creation of a regular roundtable of first movers on sustainable banking

While the pilot project focuses on commodities industries, it may be adapted to other sectors later on.

Events

So far, the following workshops, supported by EMDF, have taken place with participation of eight first mover banks:

To create a level playing field for sustainable banking in Indonesia, from August 2017 onwards the pilot project will be extended to second mover banks.

For further information on the project, please contact nina.roth@giz.de.