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Why sustainable finance matters
Sustainable development requires the involvement of the financial system and its alignment with the goals of the 2030 Agenda for Sustainable Development Goals and the Paris Agreement.
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Finance Minister Sri Mulyani Indrawati (left) and Bank Indonesia Governor Perry Warjiyo (right) brief the press after the Group of 20 Finance Ministers and Central Bank Governors Meeting in Washington DC, on Oct. 14, 2022. (Finance Ministry/Public Relation Team)
Indonesia succeeded in hosting the Group of 20 Leaders’ Summit in Bali in November and is assuming the ASEAN chairmanship this year. These two consecutive leadership forums have put Indonesia in the spotlight of international cooperation globally and regionally.
One issue that has been the center of attention in both leadership forums is sustainable finance. Sustainable finance is all forms of financial services that integrate environmental, social, development and governance criteria into business or investment decisions to gain both present and long-term benefits.
In sustainable finance, business decisions do not only consider profit but also pay attention to the environment of the surrounding community. Sustainable finance also requires financial markets to contribute to sustainable development and value creation in not only economic but also environmental and social terms.
Sustainable finance guarantees and improves current and long-term economic efficiency, prosperity and competitiveness, while contributing to protect and restore ecological systems and enhancing cultural diversity and social welfare. Activities that include a sustainable finance criteria are sustainable funds, green bonds, green investments, microfinance, credit and investment for sustainable projects and the financial system development in a more sustainable manner.
Why does sustainable finance matters globally? There are several important reasons why sustainable finance is a hot topic in the international forums.
