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The role of businesses in attaining climate goals
The burden of achieving the ambitious climate goals is indeed impossible to be just handled by governments.
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President Joko "Jokowi" Widodo. (President Secretariat/BPMI Setpres/Lukas)
T
he United Nations Climate Conference (COP26) in Glasgow, Scotland, ended in mid-November with an agreement that covered many aspects of the global efforts against climate change. The Glasgow Climate Pact as the final outcome of COP26 negotiation covers a wide range of issues, from climate science development, mitigation and adaptation to economic transition, and, most importantly, climate finance.
As stated in the pact, all parties acknowledged that financial resources for tackling climate change impacts in developing countries remain insufficient.
In Glasgow, President Joko “Jokowi” Widodo questioned the financial contribution of developed nations to the net-zero emissions target. In the end, COP26 participating nations made some important endeavors in addressing this financial requirement, such as urging developed countries to increase their monetary contribution and calling on multilateral banks, other relevant financial institutions and the private sector to enhance financial mobilization to the global climate efforts.
The burden of achieving the ambitious climate goals is indeed impossible to be just handled by governments. A variety of climate solutions, like energy transition, no-deforestation and a circular economy, require the active involvement of businesses or the private sector. Governments may have the political tools through policies and national climate regulations, but we must admit that businesses have more room for innovation and financial resources.
Politically, the government under the leadership of President Jokowi is committed to a greener, more sustainable economy and to raising its efforts against climate change. However, the government can not work alone.
In Indonesia, the Finance Ministry has issued sovereign global green sukuk annually to finance energy efficiency, renewable energy and sustainable transportation projects. The government also established the Environmental Fund Management Agency (BPLDH) and Climate Change Fiscal Framework (CCFF) to attract more private funding in environmental management. The BPLDH acts strategically and flexibly as a “funding hub” both for state funds, international and business financing.
In short, through those initiatives, the government is currently prioritizing four strategies: greening fiscal policies, attracting private sector’s investment, establishing innovative financing instruments and improving access to global finance.
