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OJK launches green finance taxonomy
The taxonomy helps financiers decide how environmentally damaging a business' operations are.
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The Financial Service Authority (OJK) chairman Wimboh Santoso gives a speech at the Indonesia Stock Exchange (IDX) opening ceremony in Jakarta on Jan. 3. (Courtesy of IDX/-)
T
he Financial Services Authority (OJK) has launched a green finance taxonomy, the much-awaited guidelines for financiers wanting to invest in Indonesia's green economy, as the government seeks to bump up the country's green credentials.
Launched on Jan. 20, the taxonomy lays out the terms to determine how environmentally damaging a business's operations are in Indonesia. The OJK classifies environmental damage into three tiers: green meaning the operations either protect or improve the environment, yellow meaning they do no significant harm and red meaning they are harmful.
OJK chairman Wimboh Santoso said this first version of the taxonomy covered 919 business sectors and subsectors, but the regulatory body aimed to eventually cover 2,733 sectors and subsectors listed under the Indonesia Standard Industrial Classification (KBLI).
“The Green Taxonomy, which will be launched by the President, will serve as a guide for policy-making, including incentives and disincentives, from various ministries and institutions including the OJK,” he said during a launch ceremony, referring to President Joko "Jokowi" Widodo.
Eight ministries helped the OJK compile the taxonomy including the Energy and Mineral Resources Ministry, the Agriculture Ministry and the Environment and Forestry Ministry.
Read also: Jokowi signs carbon-pricing regulation
The launch of the rulebook makes Indonesia the second ASEAN country after Malaysia to have a green taxonomy. Currently, only a few countries such as China and those in the European Union have such taxonomies.
