Apindo: Financial Innovation Needs To Accelerate Transition Towards Net Zero Emission In 2030

JAKARTA - Chairman of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani stated that sustainable finance innovation is needed to accelerate the ability of corporations to achieve the transition target towards the target of zero carbon emissions (net zero emission) in 2030.

"Besides that, sustainable finance can also reduce the cost of capital and build company resilience", he said during the Breakfast Roundtable themed "Unlocking Sustainable Finance to Drive The Transition to Net Zero and Business Growth" at Permata Kuningan Building, Jakarta, quoted from Antara, Thursday, September 1.

As is known, the Indonesian government is committed to reducing Greenhouse Gas (GHG) emissions by 29 percent by using domestic resources and by 41 percent with international assistance including financial matters, technology transfer, and increasing business capacity by 2030.

It is stated that this will affect corporations that need to adjust their strategy and corporate governance in doing business as well as setting up capital for future business development.

"To reduce carbon emissions and achieve the goal of net zero emissions by 2050, stakeholders including the private sector need to work together to implement business sustainability practices", said Hariyadi.

Based on research conducted by the Boston Consulting Group and the Global Financial Market Association, he continued, that achieving the carbon reduction target on a global scale by 2050 requires the funding of US$150 trillion over the next three decades. Meanwhile, financing in the Asian region is estimated at US$66 trillion.

Now, he said, awareness among the private sector to achieve zero carbon emissions is very visible. Therefore, a larger supporting ecosystem is needed, especially from banks and policymakers to make the transition to sustainable development.

According to Hariyadi, various new products for financial service providers are often launched by various public and private parties. However, not all companies understand how to access these facilities.

"Sustainable projects will be constrained by inadequate policies and unregulated frameworks. The supply and demand gap, as well as the lack of tools to overcome these barriers, require collaboration between businesses, banks, and policymakers", said the Apindo Chair.