Nov 7, 2023 – During a recent 39th Chairs’ meeting of the ASEAN Capital Markets Forum hosted by the Financial Services Authority of Indonesia (OJK) focusing on sustainable capital markets, several key actions were taken to enhance sustainability practices in the financial sector. The meeting attendees endorsed the ASEAN Transition Finance Guidance, establishing a common standard for transparent and inclusive transition finance. Additionally, they approved the revised ASEAN Corporate Governance Scorecard, aligning it with the updated G20/OECD Principles of Corporate Governance, emphasizing sustainability-related governance. A protocol was also signed for the ACMF-IFRS Foundation Dialogue, facilitating ongoing engagement and feedback regarding IFRS Sustainability Disclosure Standards to promote consistent and comparable sustainability disclosures across jurisdictions. These actions represent significant steps in advancing sustainable finance and governance practices in the ASEAN region.
Separately, Bank Indonesia (BI) hosted the 2023 Central Bank Finance International Seminar under the theme “Challenges for Central Banks on Sustainability Reporting and Scaling Up Sustainability Investments,” taking place in Bali. The meeting covered efforts to strengthen transparency, including by integrating the publication of sustainability reports with financial reports to build stakeholder trust and encourage the strengthening of institutional value by integrating Environmental, Social and Governance (ESG) as an aspect of institutional performance information.
BI has been instrumental in efforts to assess, mitigate and manage the impact of climate-related risks on the economy and financial system within the scope of its monetary policy and system stability mandates. BI also has introduced measures to encourage green financing and eco-friendly investments. At the opening of the Seminar, Senior Deputy Governor of BI, Destry Damayanti, conveyed the steps that BI had taken to encourage a sustainable economy. Among its key actions, BI issued provisions related to green Loan to Value (LTV) to encourage investment in green buildings and electric vehicles; the policy allows clients to borrow the full value of the property or 100 percent LTV.
BI also issued regulations related to the Macroprudential Inclusive Financing Ratio (RPIM), which allows banks to fulfill their inclusive financing ratio requirements by purchasing green bonds. Consequently, these regulations have sparked significant demand for domestic bonds linked to green initiatives. Additionally, a new policy, the Macroprudential Liquidity Policy, has been implemented as of October 2023. This policy offers extra incentives, up to IDR 50 trillion, to promote green financing, further solidifying Bank Indonesia’s commitment to fostering environmentally responsible financial practices.