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Jakarta Post

Banks pledge to support green finance

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Tue, November 24, 2015   /  05:36 pm

The nation'€™s eight largest banks, representing 46 percent of national banking assets, have committed to implementing sustainable financing as part of global environment goals.

 Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA), Bank Negara Indonesia (BNI), Bank Muamalat, BRI Syariah, Bank Jabar Banten (BJB) and Bank Artha Graha Internasional signed the commitment with the Financial Services Authority (OJK) and the World Wildlife Fund (WWF) Indonesia on Monday.

 The commitment was manifested in a pilot project called '€œfirst step to becoming a sustainable bank'€, marking a big move taken by the banks less than a year after the OJK launched the 2014-2019 Sustainable Financial Roadmap, according to OJK head Muliaman D. Hadad.

'€œI hope these eight banks, which are the prime movers in this project, can encourage other banks and financial institutions to join the country'€™s implementation of sustainable finance,'€ Muliaman said in his speech.

Through the green banking pilot project, Muliaman said participating banks were expected to balance their pursuit of profits with willingness to conserve the environment, serving as examples to their peers.

WWF Indonesia CEO Efransjah said the commitment would increase banks'€™ power to encourage their clients to enact environmental, social and governance aspects in their business processes.

Efransjah said the pilot project would run for a year and a half starting in January 2016, with the first phase taking place in the palm oil sector, adding that the sector was selected because it was frequently associated with environmental issues.

The pilot project was also based on the OJKs roadmap, part of a partnership with the government through the Environment and Forestry Ministry. The roadmap is hoped to help the country meet the UN'€™s Sustainable Development Goals next year.

The OJK and the environment ministry, Muliaman said, were partnering in a task force identifying companies that implemented environmentally friendly principals and fully complied with the government'€™s Environmental Impact Analysis (Amdal) regulations.

'€œThrough investigation and monitoring efforts, we can ensure it is difficult for companies that damage the environment to obtain loans and financing,'€ he said, adding that banks'€™ credit quality would automatically decrease if the banks lent funds to environmentally damaging companies. '€œWe are in the process of following up the results of sustainability reports,'€ he said.

According to BRI president director Asmawi Syam, the project would allow the bank to gradually build sustainability partnerships with major companies, while also spreading awareness of green activities in the lower segments of the market.

Bank Mandiri president director Budi Gunadi Sadikin said the lender had started green finance projects in micro-hydro power plants and biomass and sustainable palm oil. As of September, Mandiri'€™s loans to palm oil plantations stood at Rp 49 trillion (US$3.57 billion), up by 8.8 percent year-on-year.

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