The banking sector has a role in supporting projects focused on renewable energy, energy efficiency and good corporate governance
Jakarta (MidLand) – Andhyta Firselly Utami, environmental economics researcher and founder of Think Policy, encourages the country’s banks to increase financing for new renewable energy (EBT) projects to support their implementation. zero carbon emissions by 2050.
“The banking sector has a role in supporting projects focused on renewable energy, energy efficiency and good corporate governance,” Andhyta said at the “Casual Chat with Experts” event in Jakarta on Tuesday.
He said Indonesia is currently moving towards sustainable financing with various initiatives by the government and private companies.
Some banks have adopted sustainable finance practices, including issuing green bonds or green bonds to support sustainable projects.
He gave an example, such as PT Bank HSBC Indonesia which distributed green term loans (green term loan) in the amount of US$20 million or the equivalent of IDR 307 billion to the yarn and polyester company PT Indo-Rama Synthetics Tbk, which is a subsidiary of Indorama Corporation Pte. Ltd.
He said that in efforts to achieve sustainable financing, the banking sector plays a central role. The banking sector is not only a provider of funds, but also an agent of change that encourages environmentally friendly and sustainable business practices.
However, Andhyta continued, there are challenges in integrating sustainable financing on a larger scale.
One of the key challenges is expanding sustainable finance practices beyond large, immediate impact projects such as renewable energy.
In addition to this, increasing sustainable financial inclusion is also a challenge yet to be addressed, especially in rural areas.
Andhyta added that climate change is the main driver behind sustainable finance initiatives and the transition to zero emissions.
In the World Bank report “Turn Down the Heat: Confronting the New Climate Normal”, it is stated that climate change has caused an increase in global average temperatures, which impacts extreme weather patterns, sea level rise and various threats to society and the environment.
According to Andhyta, all parties must work together to minimize the global temperature increase in 2040 to a maximum of less than 1.5% or even lower.
“Without concerted action, the planet will continue to warm, and extreme weather events that currently occur occasionally could become the new climate normal,” he said.
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Reporter: Aloysius Lewokeda
Publisher: Citro Atmoko
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