Indonesia, in adherence to the Paris Agreement as ratified by Law 16/2016, demonstrates its commitment to reducing greenhouse gas emissions by determining the Nationally Determined Contribution (NDC) which sets the course for their ambitious climate goals.
In order to meet its NDC goals, Indonesia released the Indonesia Green Taxonomy 1.0, which is aligned with the NDC's sectoral objectives. The initial rollout of the Indonesia Green Taxonomy will be in the financial services sector, where it will be used to improve the reporting systems already in place. The Green Taxonomy classifies economic sectors based on their environmental support, aiding in measuring the portfolio sizes of financial institutions and issuers. The outcomes will help shape sustainable finance policies and promote a greener economy. Indonesia's resolute actions highlight their leadership in climate action and sustainable finance, inspiring global transformative efforts toward a more sustainable future
1. The document discusses Indonesia's energy transition mechanisms and taxonomy standards. It outlines Indonesia's climate change agenda including emission reduction targets and transitioning to net zero by 2060.
2. It describes Indonesia's energy transition mechanism, which establishes funds and financing mechanisms to accelerate renewable energy investments and retire coal power plants. This includes a country platform to mobilize funding and implement projects.
3. It provides an overview of transition finance standards in the EU, ASEAN, and other frameworks. Transition finance supports activities moving to lower emissions. The ASEAN taxonomy uses color classifications and transition finance can help activities improve their classification.
Proposition for a Definition of Sustainable Finance in Indonesia GIZ PRIME 12...Volker Bromund
This document provides a proposed definition of sustainable finance for Indonesia. It begins with an overview of existing definitions of sustainable and green finance from international standards. It then examines sustainable finance activities in other emerging economies before analyzing the concept of sustainability in the Indonesian context. The document concludes by recommending a definition of sustainable finance for Indonesia and how it could be operationalized through a sustainable finance project classification and reporting system. The goal is to provide guidance for the Indonesian banking sector to play a greater role in addressing climate change by financing renewable energy, energy efficiency, and green products and production methods.
The Financial Services Authority (OJK) has issued Regulation Number 51/POJK.03/2017 concerning the Implementation of Sustainable Finance to support clean energy. [1]
Financial institutions are required to implement sustainable finance in their business activities and prepare annual Sustainable Finance Action Plans (RAKB) on priorities like sustainable products/services, capacity building, and risk management. [2]
A timeline is set for different financial institutions to comply with the regulation between 2019 and 2025. Insurers must submit their first sustainability report for 2020 activities. RAKBs must be socialized internally and may allocate social/environmental responsibility funds. [3]
This document provides an overview of ESG principles and sustainable finance. It discusses key ESG factors including environmental, social and governance issues. It also outlines major international agreements and regulatory developments driving sustainable finance. Examples of sustainable financing instruments like green bonds, loans and sustainability-linked bonds are presented. The document concludes with two case studies, one on an ADB clean technology fund financing a geothermal plant, and another on a sustainability-linked corporate bond and credit facility.
Financing Industry Decarbonization: Marcia Yu, IFC.pdfOECD Environment
This document summarizes a workshop on financing industry decarbonization held in April 2022. It discusses two main categories of sustainable finance - "use of proceeds" instruments and "target driven" sustainability-linked financings. For the latter, pricing is linked to achieving sustainability performance targets which are verified and can result in interest rate adjustments. The document also outlines strategic, transactional, and implementation support the International Finance Corporation can provide clients in developing decarbonization strategies and executing sustainable finance deals.
This case study analyzes Mizuho Bank's green project financing of a natural gas development project in Indonesia. Mizuho adopted the Equator Principles to fully assess the social and environmental risks. It required the borrower to mitigate risks and committed to environmental protection in the financing contract. More broadly, Mizuho promotes green credit, innovates green financing products, and supports carbon trading to improve the environment. It provides lower interest financing to green projects and assesses customer environmental performance to encourage sustainability.
1. The document discusses Indonesia's energy transition mechanisms and taxonomy standards. It outlines Indonesia's climate change agenda including emission reduction targets and transitioning to net zero by 2060.
2. It describes Indonesia's energy transition mechanism, which establishes funds and financing mechanisms to accelerate renewable energy investments and retire coal power plants. This includes a country platform to mobilize funding and implement projects.
3. It provides an overview of transition finance standards in the EU, ASEAN, and other frameworks. Transition finance supports activities moving to lower emissions. The ASEAN taxonomy uses color classifications and transition finance can help activities improve their classification.
Proposition for a Definition of Sustainable Finance in Indonesia GIZ PRIME 12...Volker Bromund
This document provides a proposed definition of sustainable finance for Indonesia. It begins with an overview of existing definitions of sustainable and green finance from international standards. It then examines sustainable finance activities in other emerging economies before analyzing the concept of sustainability in the Indonesian context. The document concludes by recommending a definition of sustainable finance for Indonesia and how it could be operationalized through a sustainable finance project classification and reporting system. The goal is to provide guidance for the Indonesian banking sector to play a greater role in addressing climate change by financing renewable energy, energy efficiency, and green products and production methods.
The Financial Services Authority (OJK) has issued Regulation Number 51/POJK.03/2017 concerning the Implementation of Sustainable Finance to support clean energy. [1]
Financial institutions are required to implement sustainable finance in their business activities and prepare annual Sustainable Finance Action Plans (RAKB) on priorities like sustainable products/services, capacity building, and risk management. [2]
A timeline is set for different financial institutions to comply with the regulation between 2019 and 2025. Insurers must submit their first sustainability report for 2020 activities. RAKBs must be socialized internally and may allocate social/environmental responsibility funds. [3]
This document provides an overview of ESG principles and sustainable finance. It discusses key ESG factors including environmental, social and governance issues. It also outlines major international agreements and regulatory developments driving sustainable finance. Examples of sustainable financing instruments like green bonds, loans and sustainability-linked bonds are presented. The document concludes with two case studies, one on an ADB clean technology fund financing a geothermal plant, and another on a sustainability-linked corporate bond and credit facility.
Financing Industry Decarbonization: Marcia Yu, IFC.pdfOECD Environment
This document summarizes a workshop on financing industry decarbonization held in April 2022. It discusses two main categories of sustainable finance - "use of proceeds" instruments and "target driven" sustainability-linked financings. For the latter, pricing is linked to achieving sustainability performance targets which are verified and can result in interest rate adjustments. The document also outlines strategic, transactional, and implementation support the International Finance Corporation can provide clients in developing decarbonization strategies and executing sustainable finance deals.
This case study analyzes Mizuho Bank's green project financing of a natural gas development project in Indonesia. Mizuho adopted the Equator Principles to fully assess the social and environmental risks. It required the borrower to mitigate risks and committed to environmental protection in the financing contract. More broadly, Mizuho promotes green credit, innovates green financing products, and supports carbon trading to improve the environment. It provides lower interest financing to green projects and assesses customer environmental performance to encourage sustainability.
Overview on the European Regulatory Context on ESG matters.
The EU wants to: i) redirect capital flows towards sustainable investment; ii)manage financial risks arising from climate change, environmental and social issues; iii) promote transparency. How the EU is doing this? there are different activities and different players involved.
1) The document summarizes the OECD guidance on transition finance, which aims to ensure the credibility of corporate climate transition plans. It outlines key challenges in transition finance and elements that make transition plans credible.
2) Over half of global greenhouse gas emissions come from energy and industry. Transition finance is mainly provided through sustainability-linked bonds and loans to help companies implement net-zero plans.
3) Credible transition plans should set science-based net-zero targets, outline strategies to meet interim goals, and integrate climate metrics into financial reporting to ensure accountability.
Integrating green into the budget cycle: A primerOECD Governance
This paper considers how green budgeting can be integrated into budget processes. It is a primer for the
development of a paper based on the presentations and discussions at the OECD Paris Collaborative on
Green Budgeting meeting the 17 and 18 April 2023.
OECD Green Talks LIVE: Moving the world economy to net zero: the role of tran...OECD Environment
To meet the temperature goals of the Paris Agreement, decarbonisation measures will need to be financed across all sectors of the economy — most importantly in energy-intensive and hard-to-abate sectors in emerging markets and developing economies. As governments and the private sector ramp up their net-zero pledges, grapple with the ongoing energy crisis and face rising inflation, how to achieve those goals is increasingly put into question.
In the midst of these challenges, market actors and jurisdictions have ramped up efforts around transition finance, such as developing taxonomies and guidelines. But transition finance is often criticised for opening the door to greenwashing and risking emission-intensive lock-in. How can we ensure the development of robust corporate transition plans to support credible and meaningful transition investments towards net zero? And how can emission-intensive lock-in and greenwashing be avoided?
Experts on transition finance and transition planning will present and discuss their importance for moving to net-zero pathways in hard-to-abate sectors and emerging markets and developing economies, as well as outstanding challenges in this space. The presentation will draw from the recent report OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans (Find the report here: https://oe.cd/transition-fin), which proposes 10 key elements to help corporates in developing transition plans, financiers to identify credible investment opportunities, and policymakers to develop strong policy frameworks.
More information: https://www.oecd.org/env/green-talks-live.htm
"Policy Development, Implementation, & Review", presented by Ms Jihei Song (Korea Institute for International Economic Policy) at the 2022 ProSPER.Net Leadership Programme, 6 December, 2022.
The document discusses the need to redefine financial sector action to achieve global climate goals. It argues that while financial institutions have engaged in many bottom-up climate initiatives, meaningful progress in aligning finance with climate targets has been limited. It urges financial institutions to clearly define climate-related goals, strategies, and metrics. It also proposes that to contribute more, financial institutions should stop lobbying against climate policy, shift new finance to support the 1.5°C pathway, and use their influence to support companies' transitions to low-carbon business models. The report recognizes challenges for financial institutions given uncertainties, but argues they can help address gaps to better achieve climate goals.
Indonesia is committed to reducing its greenhouse gas emissions by 26% below business-as-usual levels by 2020 and potentially 41% with international assistance. The Green Paper outlines economically sound policy strategies for cost-effective climate change mitigation in Indonesia. It proposes a carbon tax/levy on fossil fuels coupled with energy subsidies reform and access to carbon markets. It also recommends incentivizing regional governments to reduce emissions from land use change and forestry through fiscal transfers. The Green Paper argues for attracting international carbon finance to support Indonesia's transition to a low-carbon economy while ensuring adequate returns, and continuing engagement in international climate negotiations.
This presentation was made by Kunta Nugraha, Indonesia, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
What You Need to Know: The EU Non-Financial Reporting Directive and what its ...CDSB
Speakers: Michael Zimonyi, Policy & External Affairs Director and Nontokozo Khumalo, Corporate Engagement Manager at CDSB.
The EU Non-Financial Reporting Directive (NFRD) came into effect in 2018 and requires listed companies and other public interest entities to disclose information on the way they operate and how they manage social and environmental challenges. In June 2019 the European Commission published guidelines on reporting climate-related information which included the integration of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. These guidelines supplement the existing Non-Financial Reporting Guidelines released in 2017.
The EU is now set to publish a fitness check of corporate reporting to assess the appropriateness of existing legislation, with a special focus on NFRD, giving way to a possibility of a reopening of the current regulation. In advance of these updates, there is a tremendous opportunity for companies to get ahead of the curve to ensure that they are complying with the EU reporting guidelines and prepared for potential new regulations.
During this webinar briefing, you’ll gain insight into:
Current requirements of the NFR Directive and Guidelines;
The state of corporate climate change reporting;
Potential impacts of a reopened NFR Directive and CDSB’s expectations going forward.
This document discusses financing options to support a global deal on climate change at the upcoming UN climate conference (COP15) in Copenhagen. It proposes six areas where financial sector involvement could be enhanced: 1) Reducing risks of low-carbon investments in developing countries through mechanisms like debt guarantees. 2) Improving carbon markets and mechanisms like the CDM. 3) Establishing funds for low-carbon technology development and deployment. 4) Creating an international carbon insurance vehicle. 5) Enabling more investment in low-carbon buildings. 6) Expanding insurance mechanisms for climate change adaptation. The document argues that an ambitious global agreement is needed to provide incentives for the private sector to finance long-term mitigation and adaptation activities.
Environmental, Social, and Governance (ESG) refers to a set of principles that guide the sustainable practices for businesses and individuals. ESG has become a greater concern for governments, investors, and the public. Integrating ESG factors into investment strategies is one solution to measure the contribution of an institution’s or company's sustainable investment to its stakeholders. In the past few years, Indonesian government has shown its commitment to cope with the development of global ESG topic in many sectors. This publication is designed to give an overview and keynotes regarding ESG implementation in Indonesia
Ethiopia's updated Nationally Determined Contributions JULY 2021 Submission_.pdfAbraham Lebeza
This document presents Ethiopia's updated nationally determined contribution (NDC) for reducing greenhouse gas emissions and adapting to climate change impacts from 2020-2030. Key points include:
- Ethiopia commits to an ambitious 68.8% reduction in emissions below the business-as-usual scenario by 2030 through unconditional and conditional contributions across sectors like agriculture, energy, and waste.
- Adaptation contributions include over 40 priority interventions across sectors through 2030 with progress measured by indicators.
- The update is informed by extensive economic modeling and stakeholder engagement, and builds on Ethiopia's Climate Resilience Green Economy Strategy and development plans.
- Implementation will require domestic and international support for financing, capacity
The Delhi State Action Plan on Climate Change (SAPCC) was formulated according to India's National Action Plan on Climate Change to address Delhi's climate change concerns and impacts. It integrates adaptation and mitigation strategies into ongoing development programs across sectors like energy, transportation, and water resources. Stakeholders from the government and other groups participated in working groups to develop the SAPCC. The SAPCC assesses Delhi's vulnerability to climate change and outlines a monitoring plan to track implementation of priority actions.
This presentation was delivered during the 6th Meeting of the OECD Southeast Asia Regional Programme’s Regional Policy Network on Sustainable Infrastructure, which took place on 25-26 April 2022 in Manila, the Philippines. The OECD’s Public Governance Directorate and Environment Directorate teamed up with the OECD Korea Policy Centre to organise the event. The National Economic and Development Authority (NEDA) of the Philippines co-chaired the event alongside the United States, and the Public Private Partnership Centre of the Philippines graciously provided the venue. For more details about the meeting, including the agenda and a short summary record, please visit: https://www.oecd.org/site/sipa/events/sipa-searp-philippines-2022.htm.
The document summarizes the Just Energy Transition Partnership (JETP) in Indonesia. JETP aims to develop a comprehensive investment and policy plan to achieve joint targets by 2030 and 2050, including peaking power sector CO2 emissions by 2030, 34% renewable energy by 2030, and net zero emissions by 2050. The investment plan identifies five focus areas and will require $20 billion mobilized over 3-5 years. A Just Transition framework has also been developed to manage the social, economic, and environmental impacts, building on existing safeguards. Key implementation steps include risk assessment, mitigation planning, and enhancing opportunities.
Green budgeting - Andrew Blazey, OECD Secretariat,OECD Governance
This presentation was made by Andrew Blazey, OECD Secretariat, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
Fair Finance Asia - Recommendations to the G20 JapanNirnita Talukdar
As the G20 Summit commences in Osaka today, Fair Finance Asia (a regional network of civil society organisations in Asia) calls on the G20 to strengthen its leadership and actions in implementing socially and environmentally sustainable finance and responsible investments.
In line with the Civil 20 (C20) policy recommendations submitted to the leaders of the G20 in April this year, Fair Finance Asia (FFA) urges the leaders of these countries to boost policies and regulations, and bolster quality investments in a way that addresses climate change, helps achieve the Sustainable Development Goals (SDGs) and inclusive economic development, and promotes human rights for all.
The commitment of the jordanian industrial companies in applying environmenta...Alexander Decker
This document provides an overview of environmental accounting and its importance. It discusses how accounting practices are expanding to include environmental costs and impacts. The document also examines the general framework of environmental accounting and relevant legislation. It analyzes Jordanian industrial companies' commitment to environmental accounting principles and how their financial departments address environmental aspects. The study found that Jordanian industrial companies generally commit to environmental accounting and keep pace with developments in the field. Their environmental accounting functions also keep up with global changes in the area.
Indonesian Manpower Regulation on Severance Pay for Retiring Private Sector E...AHRP Law Firm
Law Number 13 of 2003 on Manpower has been partially revoked and amended several times, with the latest amendment made through Law Number 6 of 2023. Attention is drawn to a specific part of the Manpower Law concerning severance pay. This aspect is undoubtedly one of the most crucial parts regulated by the Manpower Law. It is essential for both employers and employees to abide by the law, fulfill their obligations, and retain their rights regarding this matter.
Regulatory Updates on Mineral and Coal Mining: Understanding the Latest Amend...AHRP Law Firm
In 2021, the Indonesian Government introduced Government Regulation Number 96 of 2021 on the Implementation of Mineral and Coal Mining Business Activities ("GR No. 96/2021"), which aimed to regulate various aspects of mineral and coal mining business activities comprehensively. However, recognizing the need to streamline bureaucracy, enhance legal and investment certainty, the Indonesian Government enacted Government Regulation Number 25 of 2024 on 30 May 2024, amending several provisions of GR No. 96/2021. Find out more about our insights on this topic in our Legal Brief publication.
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Overview on the European Regulatory Context on ESG matters.
The EU wants to: i) redirect capital flows towards sustainable investment; ii)manage financial risks arising from climate change, environmental and social issues; iii) promote transparency. How the EU is doing this? there are different activities and different players involved.
1) The document summarizes the OECD guidance on transition finance, which aims to ensure the credibility of corporate climate transition plans. It outlines key challenges in transition finance and elements that make transition plans credible.
2) Over half of global greenhouse gas emissions come from energy and industry. Transition finance is mainly provided through sustainability-linked bonds and loans to help companies implement net-zero plans.
3) Credible transition plans should set science-based net-zero targets, outline strategies to meet interim goals, and integrate climate metrics into financial reporting to ensure accountability.
Integrating green into the budget cycle: A primerOECD Governance
This paper considers how green budgeting can be integrated into budget processes. It is a primer for the
development of a paper based on the presentations and discussions at the OECD Paris Collaborative on
Green Budgeting meeting the 17 and 18 April 2023.
OECD Green Talks LIVE: Moving the world economy to net zero: the role of tran...OECD Environment
To meet the temperature goals of the Paris Agreement, decarbonisation measures will need to be financed across all sectors of the economy — most importantly in energy-intensive and hard-to-abate sectors in emerging markets and developing economies. As governments and the private sector ramp up their net-zero pledges, grapple with the ongoing energy crisis and face rising inflation, how to achieve those goals is increasingly put into question.
In the midst of these challenges, market actors and jurisdictions have ramped up efforts around transition finance, such as developing taxonomies and guidelines. But transition finance is often criticised for opening the door to greenwashing and risking emission-intensive lock-in. How can we ensure the development of robust corporate transition plans to support credible and meaningful transition investments towards net zero? And how can emission-intensive lock-in and greenwashing be avoided?
Experts on transition finance and transition planning will present and discuss their importance for moving to net-zero pathways in hard-to-abate sectors and emerging markets and developing economies, as well as outstanding challenges in this space. The presentation will draw from the recent report OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans (Find the report here: https://oe.cd/transition-fin), which proposes 10 key elements to help corporates in developing transition plans, financiers to identify credible investment opportunities, and policymakers to develop strong policy frameworks.
More information: https://www.oecd.org/env/green-talks-live.htm
"Policy Development, Implementation, & Review", presented by Ms Jihei Song (Korea Institute for International Economic Policy) at the 2022 ProSPER.Net Leadership Programme, 6 December, 2022.
The document discusses the need to redefine financial sector action to achieve global climate goals. It argues that while financial institutions have engaged in many bottom-up climate initiatives, meaningful progress in aligning finance with climate targets has been limited. It urges financial institutions to clearly define climate-related goals, strategies, and metrics. It also proposes that to contribute more, financial institutions should stop lobbying against climate policy, shift new finance to support the 1.5°C pathway, and use their influence to support companies' transitions to low-carbon business models. The report recognizes challenges for financial institutions given uncertainties, but argues they can help address gaps to better achieve climate goals.
Indonesia is committed to reducing its greenhouse gas emissions by 26% below business-as-usual levels by 2020 and potentially 41% with international assistance. The Green Paper outlines economically sound policy strategies for cost-effective climate change mitigation in Indonesia. It proposes a carbon tax/levy on fossil fuels coupled with energy subsidies reform and access to carbon markets. It also recommends incentivizing regional governments to reduce emissions from land use change and forestry through fiscal transfers. The Green Paper argues for attracting international carbon finance to support Indonesia's transition to a low-carbon economy while ensuring adequate returns, and continuing engagement in international climate negotiations.
This presentation was made by Kunta Nugraha, Indonesia, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
What You Need to Know: The EU Non-Financial Reporting Directive and what its ...CDSB
Speakers: Michael Zimonyi, Policy & External Affairs Director and Nontokozo Khumalo, Corporate Engagement Manager at CDSB.
The EU Non-Financial Reporting Directive (NFRD) came into effect in 2018 and requires listed companies and other public interest entities to disclose information on the way they operate and how they manage social and environmental challenges. In June 2019 the European Commission published guidelines on reporting climate-related information which included the integration of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. These guidelines supplement the existing Non-Financial Reporting Guidelines released in 2017.
The EU is now set to publish a fitness check of corporate reporting to assess the appropriateness of existing legislation, with a special focus on NFRD, giving way to a possibility of a reopening of the current regulation. In advance of these updates, there is a tremendous opportunity for companies to get ahead of the curve to ensure that they are complying with the EU reporting guidelines and prepared for potential new regulations.
During this webinar briefing, you’ll gain insight into:
Current requirements of the NFR Directive and Guidelines;
The state of corporate climate change reporting;
Potential impacts of a reopened NFR Directive and CDSB’s expectations going forward.
This document discusses financing options to support a global deal on climate change at the upcoming UN climate conference (COP15) in Copenhagen. It proposes six areas where financial sector involvement could be enhanced: 1) Reducing risks of low-carbon investments in developing countries through mechanisms like debt guarantees. 2) Improving carbon markets and mechanisms like the CDM. 3) Establishing funds for low-carbon technology development and deployment. 4) Creating an international carbon insurance vehicle. 5) Enabling more investment in low-carbon buildings. 6) Expanding insurance mechanisms for climate change adaptation. The document argues that an ambitious global agreement is needed to provide incentives for the private sector to finance long-term mitigation and adaptation activities.
Environmental, Social, and Governance (ESG) refers to a set of principles that guide the sustainable practices for businesses and individuals. ESG has become a greater concern for governments, investors, and the public. Integrating ESG factors into investment strategies is one solution to measure the contribution of an institution’s or company's sustainable investment to its stakeholders. In the past few years, Indonesian government has shown its commitment to cope with the development of global ESG topic in many sectors. This publication is designed to give an overview and keynotes regarding ESG implementation in Indonesia
Ethiopia's updated Nationally Determined Contributions JULY 2021 Submission_.pdfAbraham Lebeza
This document presents Ethiopia's updated nationally determined contribution (NDC) for reducing greenhouse gas emissions and adapting to climate change impacts from 2020-2030. Key points include:
- Ethiopia commits to an ambitious 68.8% reduction in emissions below the business-as-usual scenario by 2030 through unconditional and conditional contributions across sectors like agriculture, energy, and waste.
- Adaptation contributions include over 40 priority interventions across sectors through 2030 with progress measured by indicators.
- The update is informed by extensive economic modeling and stakeholder engagement, and builds on Ethiopia's Climate Resilience Green Economy Strategy and development plans.
- Implementation will require domestic and international support for financing, capacity
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This presentation was delivered during the 6th Meeting of the OECD Southeast Asia Regional Programme’s Regional Policy Network on Sustainable Infrastructure, which took place on 25-26 April 2022 in Manila, the Philippines. The OECD’s Public Governance Directorate and Environment Directorate teamed up with the OECD Korea Policy Centre to organise the event. The National Economic and Development Authority (NEDA) of the Philippines co-chaired the event alongside the United States, and the Public Private Partnership Centre of the Philippines graciously provided the venue. For more details about the meeting, including the agenda and a short summary record, please visit: https://www.oecd.org/site/sipa/events/sipa-searp-philippines-2022.htm.
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As the G20 Summit commences in Osaka today, Fair Finance Asia (a regional network of civil society organisations in Asia) calls on the G20 to strengthen its leadership and actions in implementing socially and environmentally sustainable finance and responsible investments.
In line with the Civil 20 (C20) policy recommendations submitted to the leaders of the G20 in April this year, Fair Finance Asia (FFA) urges the leaders of these countries to boost policies and regulations, and bolster quality investments in a way that addresses climate change, helps achieve the Sustainable Development Goals (SDGs) and inclusive economic development, and promotes human rights for all.
The commitment of the jordanian industrial companies in applying environmenta...Alexander Decker
This document provides an overview of environmental accounting and its importance. It discusses how accounting practices are expanding to include environmental costs and impacts. The document also examines the general framework of environmental accounting and relevant legislation. It analyzes Jordanian industrial companies' commitment to environmental accounting principles and how their financial departments address environmental aspects. The study found that Jordanian industrial companies generally commit to environmental accounting and keep pace with developments in the field. Their environmental accounting functions also keep up with global changes in the area.
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2. Ministry of
Environment and
Forestry
The ratification of the Paris Agreement, through Law 16/2016, has required all
relevant countries including Indonesia to present their commitment on the efforts
to reduce greenhouse gas (“GHG”) emissions. As a follow up action, Indonesia
through Article 2 (3) PR 98/2021 has committed in reducing GHG by 41% (forty-
one percent) with international assistance or 29% (twenty-nine percent) with
business as usual, which is submitted through the Nationally Determined
Contribution or Kontribusi yang Ditetapkan secara Nasional (“NDC”).
As an overview, the following illustration presents the timeline of Indonesia’s
contribution as a subsequent action to the Paris Agreement regarding efforts to
reduce GHG emissions over the years:
The Issuance of Sustainable
Finance Roadmap phase I
(2015-2019) by OJK.
OJK Regulation No. 51/POJK.03/2017
concerning the Implementation of
Sustainable Finance for Financial
Institutions, Issuers, and Public
Companies.
OJK Regulation No.
60/POJK.04/2017 concerning
the Issuance and the Term of
Green Bond.
The Issuance of Sustainable Finance
Roadmap phase II (2021-2025) by OJK,
which several of the main focus includes:
(i) finalizing the Green Taxonomy; and (ii)
developing the FSS reporting system
including green financing/instruments in
accordance with Green Taxonomy.
The issuance of the Indonesia
Green Taxonomy Edition 1.0.
Establishment of a Sustainable
Finance Task Force, which aims
to serve as a forum for
cooperation and coordination
with industries to respond on the
development of sustainable
finance at national, regional, and
global forum.
2017
2017
2021
2022
2022
Specifically, the Indonesia Green Taxonomy Edition 1.0 will be used as:
1. The basis for the development of incentive and disincentive policy for various
ministries and institutions, including OJK; and
2. Guidelines for information openness, risk management, and development of
innovative sustainable finance products and/or services for Financial Services
Sector and issuers.
Furthermore, it shall be understood that this Indonesia Green Taxonomy Edition 1.0
document is a dynamic/living document that will be revised should there by any
addition or reduction of economic sectors that meet the green criteria.
Ministry of
Industry
Ministry of Marine
Affairs and
Fisheries
Ministry of
Energy and
Mineral
Resources
Ministry of
Transportation
Ministry of
Agriculture
Ministry of Tourism
and Creative
Economy
Ministry of Public
Works and
Housing
Grup Kebijakan Sektor Jasa Keuangan Terintegrasi (“GKTT”)
The completion of the Indonesia Green Taxonomy Edition 1.0 composed by
OJK through integrated Financial Services Sector Policy Group or Grup
Kebijakan Sektor Jasa Keuangan Terintegrasi (“GKTT”) and has involved 8
(eight) relevant ministries, among others:
Definition
Green Taxonomy is an economic activity classification that supports
environmental protection and management efforts, as well as mitigation and
adaptation to climate change.
Responsible Investment Principle
An approach that considers economic, social, environmental and
governance factors in economic activities.
Sustainable Business Strategy and Practice Principle
Obligations to set and implement sustainable business strategies
and practices in every decision-making.
Social and Environmental Risk Management Principle
Includes precautionary prudential principles in assessing social and
environmental risks through identification, measurement, mitigation,
supervision, and monitoring processes.
Governance Principle
Enforcement of Financial Services Sector through business
management and operations which include, among others: (i)
transparency; (ii) accountability; (iii) responsibility; (iv) independence;
(v) professionalism; and (vi) fairness.
Implementing Principles
01
02
03
04
Green Taxonomy is based on 4 (four) principles as follows:
BACKGROUND (1/2)
2015-2019
A H R P L e g a l B r i e f
3. BACKGROUND (2/2)
The Indonesia Green Taxonomy 1.0 is developed to enhance
the reporting conducted by the Financial Services Industry
and other relevant institutions by providing criteria/thresholds
to categorize economic sectors based on their support for
environmental protection and management, as well as
mitigation and adaptation to climate change.
The reporting outcomes are expected to provide a more
granular and consistent overview of the portfolio size of
Financial Service Institutions, issuers, and public companies
(credit/financing/investment) across economic sectors based
on their environmental support. This information can then
be used as a basis for developing related Sustainable
Finance policies.
Reference: Material on the Implementation and Reporting Plan of Indonesian
Green Taxonomy dated 20 September 2022 prepared by OJK, pg. 2.
Green Taxonomy follows the established government policies and the development of
other relevant references. The threshold of screening criteria to determine the
feasibility of an economic activity, can generally be based on several aspects,
including:
1. Clear definition is set; the threshold must clearly stipulate whether or not an
activity is eligible, specific, and measurable. Thresholds must also be able to
distinguish between activities that can minimize potential of environmental damage
and those that are consistent with the environmental objectives.
2. Other science-based references and the best regional and international
standards:
a. Science-based: thresholds should be chosen based on scientific information
that has been put in place, aimed at achieving global goals and are not limited
by national policies and plans.
b. Revision: thresholds must be revised periodically to achieve the selected goal
during the specified period.
Reference: Indonesia Green Taxonomy Edition 1.0 – 2022, pg. 32.
Due to the dynamic nature of the Indonesia Green Taxonomy 0.1, which is considered as a living document, any policy or information changes can be
accommodated in the subsequent editions of the Indonesia Green Taxonomy. Proposed updates or suggestions can be communicated in advance through
channels such as email at sektorhijau@ojk.go.id.
Furthermore, the following illustration outlines the stages involved in mapping the green taxonomy:
1. Conceptual
framework (principle,
objectives, definition
standardization of
taxonomy)
2. Taxonomy
requirements
mapping
3. Determination of
users: FSI and other
related stakeholders.
Analysis of applicable
environmental
plans, objectives,
and regulations;
including commitment to
international agreements
in order to meet the
climate change mitigation
and adaptation goals.
1. Determination of sectors and
activities category based on the
applicable standards (i.e.: ISIC,
KBLI, etc).
2. Confirmation to internal work
units and related stakeholders. Document Finalization
Define the Strategic Goal and Users
Define the Environmental Objectives
Specify Sectors and Categories
Assessment and Threshold Determination
Assessment and Threshold Determination
Reference: Indonesia Green Taxonomy Edition 1.0 – 2022, pg. 27.
Key Takeaways Methodology and Threshold in Determining the Green Sectors’ Category
A H R P L e g a l B r i e f
4. USERS AND APPLICABILITY OF GREEN TAXONOMY
Green Taxonomy purposes are to develop standard definition and green criteria from economic sector activities that support the climate change
mitigation and adaptation agenda in Indonesia by implementing a science-based approach and to encourage innovations and investments in
economic activities that have positive impacts on the environment by implementing science-based approaches.
The Green Taxonomy is targeted but not limited to the following:
International Institutions
and International and
Regional Cooperative
Purpose: To disclose
information related to
standard definitions issued
by the government on
green economic activities.
Actors of Indonesian
Financial Services Sector
o Banking
o Capital Market,
o Non-Bank Financial Industry
Purpose: To expand funding,
financing, or investment activities.
National and International
Investors
Purpose: To determine of
investment criteria, especially for
environmental aspects.
Government
Purpose: To formulate fiscal policies
and development planning, as well
as to plan and oversee the delivery
of Indonesia’s commitments in
mitigating climate change and
improving sustainable development.
Financial services and
monetary authorities
Purpose: To create policies as
well as monitor and supervise the
implementation of sustainable
finance policies.
The use of Indonesia Green Taxonomy Edition 1.0 is not yet mandatory, but the guidelines can already serve as a reference for Financial
Services Sector. The implementation of the Green Taxonomy will gradually be applied in the context of reporting for the financial services industry
under the supervision of the OJK. It is also possible that the Green Taxonomy may become mandatory in the future, similar to other countries like
Tiongkok. Further information regarding the implementation plan will be provided in the next slide.
In addition to that, reporting based on the green taxonomy can also be used to complement the disclosure requirements mandated by OJK Reg.
51/2017. According to Article 10 (1) OJK Reg. 51/2017, it is mandatory for users to issue a sustainability report, which is a public disclosure that
encompasses the economic, financial, social, and environmental performance of a financial service institution, issuer, or public company engaged
in sustainable business practices. Moreover, the sustainability report is prepared separately from the annual report or as an integral part of the
annual report. On another note, it is also known that OJK Reg. 60/2017 governs the Environmental Friendly Business Activities or Kegiatan
Usaha Berwawasan Lingkungan ("KBLU").
Article 1 (13) OJK Reg. 51/2017 jo. Article 10 (2) OJK Reg. 51/2017
Hence with that being said, with the enforceability of The Indonesia Green Taxonomy, the implementation of OJK Reg. 51/2017 and OJK Reg.
60/2017 is currently still in effect and no amendments or changes have been made to these provisions. Indonesia Green Taxonomy Edition 1.0
primarily focuses on environmental objectives. Therefore, it will cover the KBLU category with more detailed classifications and broader scope. In
conclusion, currently there are plans by the OJK to implement the Green Taxonomy in relation to OJK Reg. 51/2017. However, there is no further
statement from the OJK regarding the implementation of the Green Taxonomy with respect to OJK Reg. 60/2017.
A H R P L e g a l B r i e f
5. THE IMPLEMENTATION OF CARBON ECONOMIC VALUE
TO ACHIEVE NDC TARGETS
NDC is a national commitment for the handling of global climate change in
order to achieve the objectives of the Paris Agreement to the UN Framework
Convention on Climate Change. As previously mentioned above, the NDC
target shall includes:
1. Establishing policies and measures as well as implementation of activities
in accordance with the commitment of the Government in the form of GHG
emissions reduction of 29% (twenty-nine percent) up to 41% (forty-one
percent) in 2030 compared to the GHG Emission Baseline; and
2. Developing national, regional, and community resilience from various risks
over climate change conditions or climate resilience.
The GHG Emission Baseline as referred above is the GHG Emission Baseline
in 2030 amounting to 2.869 (two thousand eight hundred and sixty-nine)
million tons of CO2e and the climate resilience baseline as well as the climate
resilience target. Furthermore, such target shall be adjusted to NDC review at
least once every 5 (five) years.
Article 1 (1) jo. Article 2 (3) PR No. 98/2021
Article 2 (6) jo. Article 3 (1) PR No. 98/2021
Efforts to achieve the NDC target shall be implemented through the
organization of: (i) climate change mitigation; and (ii) climate
change adaptation. Moreover, such efforts shall refer to the NDC
implementation strategies which are the directive for the implementation
of NDC.
The NDC implementation strategy shall includes:
• Development of ownership and commitment;
• Capacity development;
• Creation of enabling conditions;
• Formulation of communication frameworks and networks;
• Single data policy on GHG emissions and climate resilience;
• Formulation of policies, plans and programs;
• Formulation of guidelines for NDC implementation;
• Implementation of NDC; and
• Monitoring and review of NDC.
Efforts to achieve the NDC target through the organization of climate
change mitigation shall be conducted through: (i) planning on climate
change mitigation actions; (ii) implementation of climate change
mitigation actions; and (iii) monitoring and evaluation of climate
change mitigation actions.
Article 6 (1) PR No. 98/2021
Efforts to achieve the NDC target through the organization of climate
change adaptation shall be conducted to: (i) increase the climate
change adaptation capacity; (ii) reduce the level of vulnerability and/or
risk of climate change; (iii) take advantage of climate change
opportunities; and (iv) reduce potential losses and damages due to
climate change.
Energy
Food
Waste Industrial processes and
product use
Agriculture Forestry Others
Water Energy
Others
Ecosystem
Health
Sectors in Climate Change Mitigation
Sectors in Climate Change Adaptation
1
2
Efforts to Achieve NDC Targets Climate Change Adaptation
Article 5 (1) & (2) PR No. 98/2021 Article 31 (1) PR No. 98/2021
Climate Change Mitigation
A H R P L e g a l B r i e f
6. CLASSIFICATION OF GREEN TAXONOMY:
IDENTIFICATION OF ECONOMIC SECTOR FRAMEWORK
Energy
1. Procurement of Electricity,
Gas, Steam or Hot Water,
and Cold Air
2. Transportation and
Warehousing
Forestry
1. Arts, Entertainments, and
Recreation
2. Agriculture, Forestry, and
Fisheries
Agriculture
1. Procurement of Electricity, Gas,
Steam or Hot Water, and Cold
Air
2. Agriculture, Forestry, and
Fisheries
Waste
Water Management, Wastewater
Management, Waste Management
and Recycling, and Remediation
Activities
Industrial Processes and
Product Use
Processing Industry
Others
1. Government Administration, Defense
and Mandatory Social Security
2. Other Services Activities
3. Rental and Leasing Activities Without
Option Rights, Employment, Travel
Agent and Other Supporting Business
4. Professional, Scientific, and Technical
Activities
5. Information and Communication
6. Arts, Entertainment, and Recreation
7. Construction
8. Education
9. Procurement of Electricity, Gas, Steam or Hot
Water, and Cold Air
10. Water Management, Wastewater Management,
Waste Management and Recycling, and
Remediation Activities
11. Provision of Accommodation, Food, and Beverages
12. Wholesale and Retail Trade; Car and Motorcycle
Reparation and Maintenance
13. Mining and Extraction
14. Agriculture, Forestry, and Fisheries
15. Real Estate
A H R P L e g a l B r i e f
Green Taxonomy requires the classification of
economic activities in the business sector as a
reference point. Currently, the sector and subsector
identification in the Green Taxonomy corresponds
to the NDC sector targets stipulated in PR 98/2021
and the 2017 KBLI. Given that the Indonesia Green
Taxonomy Edition 1.0 is a living document, it will be
updated to reflect the KBLI 2020.
7. CLASSIFICATION OF GREEN TAXONOMY:
IDENTIFICATION OF GREEN TAXONOMY’S THRESHOLD
The Green Taxonomy can be used to determine the proportion of activities that significantly contribute to environmental goals,
such as climate change mitigation and adaptation efforts. To identify the sector thresholds, the Green Taxonomy uses policies
that have already been determined by the government in addition to the development of other references that are related.
Development on the yellow to green threshold can be based on activities that can serve as references for policy targets that
are no longer enforced, among other justifiable arguments.
With the Green Taxonomy's classifications and threshold information connected to each activity, it is hoped that it will be able
to provide information for all relevant stakeholders in formulating policies, especially in the process of financing or investing in
sectors that are included in the green sector and/or vice versa.
Green Category
Business activities that do no significant harm, apply minimum safeguard, provide
positive Impact to the environment and align with the environmental objective of
the taxonomy.
Business activities that protect, restore, and improve the quality of environmental
protection and management, as well as climate change mitigation and adaptation,
and comply with the governance standards by government, and apply best
practices at both the national and international level.
Yellow Category
Business activities that do no significant harm.
Business activities that meet several green criteria or thresholds.
Determination of the benefits of this business activity for environmental
protection and management must still be determined through measurement
and support from other best practices.
Red Category
Business activities that are harmful activities.
The business activities that do not meet the yellow and/or green criteria or
threshold.
Reference: Indonesia Green Taxonomy Edition 1.0 – 2022, pg. 34-35.
A H R P L e g a l B r i e f
8. Green Category palm oil plantations meet
the environmental, economic, and social
criteria of the Indonesian Sustainable
Palm Oil (ISPO) standard and other
international standards, such as the
Roundtable on Sustainable Palm Oil
(RSPO).
Yellow Category palm oil plantations meet the following criteria:
o Have implemented ISPO certification.
o Have a plantation business assessment (garden class
document) issued by the regent or governor in accordance with
their authorities.
o Have understood the good agriculture and good handling
practices .
o Have attended integrated pest control training.
o Have acquired an agreement document based on Free, Prior
and Informed Consent Process/Persetujuan dengan Informasi
Awal Tanpa Paksaan (PADIATAPA).
o Have developed commodity standar operational procedure
and/or certificate from competent officer (i.e. Plant Destruction
Organism Control (POPT) and Agricultural Product Quality
Supervisor (PMHP)) stating the level of pesticide use and
contamination of water sources according to food safety
standards.
o Have acquired a High Conservation Value (HCV) area
assessment or identification document.
o Have a workbook/recording-keeping.
Red Category palm oil plantations
do not meet any of criteria under
Yellow Category and Green
Category.
Identification of Green Taxonomy’s Threshold
ILLUSTRATION OF GREEN TAXONOMY:
PALM OIL PLANTATION
Identification of Economic Sector Framework
KBLI Level 1 Agriculture, Forestry and Fisheries
KBLI Level 2 Crop Farming, Livestock, Hunting and related activities
KBLI Level 3 Annual Crop Farming
KBLI Level 4 Oil-Producing Fruit Plantation (Oleaginous)
KBLI Level 5 Palm Oil Plantation.
*This group includes plantation businesses ranging from land management activities, seeding, nurseries, planting,
maintenance and harvesting of oil palm fruit. Including the activities of seeding and seeding of oil palm fruit trees.
KBLI Code: 02162 NDC Forestry
Reference: Indonesia Green Taxonomy Edition 1.0 – 2022,
pg. 38-39.
A H R P L e g a l B r i e f
9. IMPLEMENTATION OF GREEN TAXONOMY:
REPORTING STRATEGY PLAN
Pilot Project
1. Objective: Aims to obtain preliminary information on the Reporter’s
portfolio.
2. Reporting Mechanism: Manual (excel-based file).
3. Reporter: (Art. 147 (1) OJK Reg. 12/2021)
a. Bank KBMI 3: Banks with core capital of more than
Rp14,000,000,000,000.00 (fourteen trillion rupiah) up to
Rp70,000,000,000,000.00 (seventy trillion rupiah).
b. Bank KBMI 4: Banks with core capital of more than
Rp70,000,000,000,000.00 (seventy trillion rupiah).
4. Data Coverage: Productive and Consumptive Credit
5. Types of Report: THI Report and Thematic Report
The Green Taxonomy aims to improve reporting by the financial services industry and other related institutions by providing information on criteria and
thresholds for classifying economic sectors based on their support for environmental protection and management as well as mitigation and adaptation to
climate change. These categories include the green, yellow, and red categories that were elaborated on earlier.
Through the classification of green economic sectors and thresholds within the Green Taxonomy, it is anticipated that the Green Taxonomy will serve as a
reference in the creation of a reporting system for the financial industry that involves green financing or green instruments. The results of report that basing
on Green Taxonomy are expected to provide a more granular and consistent picture regarding the size of the banking portfolio in the economic sector
based on its carrying capacity to the environment to then be used as a basis for formulating policies related to sustainable finance. Furthermore, in the
context of carrying out the intended reporting, it is necessary to develop an appropriate strategy so that the implementation can run smoothly and in
accordance with the expectations of stakeholders.
Long-Term Strategy
1. Objective: Aims to complementing the currently running
reporting system.
2. Reporting Mechanism:
a. Performed systematically.
b. Fully embedded with the existing reporting system
c. Further data processing by OJK’s application
3. Reporters:
a. Financial Services Institutions: Institutions that carry out
activities in the banking sector, capital market, insurance,
pension funds, financing institutions, and other financial
service institutions based on the provisions of laws and
regulations in the financial services sector. (Art. 1 (10)
Law 4/2023)
b. Issuer: Parties who make public offering. (Art. 1 (17) OJK
Reg. 3/2021)
c. Public Companies: Companies whose shares are owned
by at least 300 (three hundred) shareholders and have
paid-up capital of at least Rp3,000,000,000.00 (three
billion rupiah) or a number of shareholders and paid-up
capital determined by OJK. (Art. 1 (18) OJK Reg. 3/2021)
4. Data Coverage: Productive and Consumptive Credit, both
small medium enterprises and non-small medium enterprises
from individual debtor.
5. Types of Report: Enhanced with Sustainability and Work Plan
and Budget Report
Short-Term Strategy
1. Objective: Aims to be a "temporary solution" until the ideal version of
the report (realized long-term strategy) is available.
2. Reporting Mechanism: APOLO OJK system.
3. Reporter:
a. Bank KBMI 1: Banks with core capital up to
Rp6,000,000,000,000.00 (six trillion rupiah).
b. Bank KBMI 2: Banks with core capital of more than
Rp6,000,000,000,000.00 (six trillion rupiah) up to Rp
14,000,000,000,000.00 (fourteen trillion rupiah).
c. Bank KBMI 3: Banks with core capital of more than
Rp14,000,000,000,000.00 (fourteen trillion rupiah) up to
Rp70,000,000,000,000.00 (seventy trillion rupiah).
d. Bank KBMI 4: Banks with core capital of more than
Rp70,000,000,000,000.00 (seventy trillion rupiah).
• As a note, Bank KBMI 3 and 4 will begin fully reporting through
APOLO, while Bank KBMI 1 and 2 will first conduct piloting through
APOLO.
Art. 147 (1) OJK Reg. 12/2021
4. Data Coverage: Productive and Consumptive Credit
5. Types of Report: THI Report and Thematic Report
Reference:
1. Material on the Implementation and Reporting Plan of Indonesian Green
Taxonomy dated 20 September 2022 prepared by OJK, pg. 10.
2. Indonesia Green Taxonomy Edition 1.0 – 2022, pg. 36-37.
3. Material on the Implementation and Reporting Plan of Indonesian Green
Taxonomy dated 20 September 2022 prepared by OJK.
01
02
03
A H R P L e g a l B r i e f
Pilot Project
Short-Term Strategy
Long-Term Strategy
10. We will continue to follow the developments on this topic and provide additional information as it becomes
available. If you have any questions on this topic, please contact:
Aryangga Pradana Febrianto
aryangga@ahrplaw.com
Cut Hasri Nabila
nabila@ahrplaw.com
Merina Elfian
merina@ahrplaw.com
This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not
intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning
the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your
circumstances before deciding to take any action.
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