REESTABLISHING INDONESIA’S SUSTAINABLE FINANCE FRAMEWORK

Sustainable finance has the potential to serve as a framework for financing  Indonesia’s efforts to prove its climate commitment, be it the NDC, Net Zero Emission, or FOLU  NET Sink. However, the current sustainable finance framework in Indonesia is not yet  exhaustive and does not guarantee financing for sustainable activities/businesses. The  mandate of P2SK Law to provide more detailed regulations through Government  Regulations and OJK Regulations is an excellent opportunity to refine the sustainable finance  framework. 

Therefore, in order to strengthen Indonesia’s sustainable finance framework, the ICEL  recommends the following to policymakers: 

1. To the Indonesia Financial Services Authority  

a. to revise OJK Regulation 51/2017 as the basic framework for sustainable  finance and enabling conditions, to cover performance-based credit  agreements, impact assessments through ESG, and human rights due diligence; 

b. to draft a government regulation on TBI and consult it with the public; c. to revise the draft TBI by removing any false solutions. 

2. To the Indonesian Ministry of Finance  

a. to draft a government regulation on an inclusive sustainable finance committee,  especially by involving ministries overseeing the environment and energy and  mineral resources. 

3. To the Indonesian Ministry of Environment and Forestry  

a. to be involved in the sustainable finance committee;  

b. to supervise activities’/businesses’ compliance with environmental instruments; c. to verify businesses’ compliance with environmental commitment; and d. to share data of environmental instruments and compliance history.