Green Financing Champion, Bank Mandiri Supports ASEAN-Indo-Pacific Forum (AIPF)

Bank Mandiri is one of the SOEs that supports the implementation of the ASEAN-Indo-Pacific Forum (AIPF) which will be held in Jakarta 5-6 September 2023. AIPF, which is a flagship event from the ASEAN Summit 2023, will focus on Sustainable and Innovative Finance.

Sustainable finance is an important part of the world's efforts to combat climate change and towards a green economy and sustainable development.

"In sustainable financing, the financial sector plays a role in mobilizing resources and capital to overcome climate change and support the transition to a low-carbon economy," said Bank Mandiri Deputy President Director Alexandra Askandar in Jakarta, Friday, September 1.

The potential for sustainable financing in Indonesia is very large. In the ASEAN Finance Ministers and Central Bank Government's Meetings and Related Meetings, Tuesday, August 22, Finance Minister Sri Mulyani stated, Indonesia needs at least 200 billion US dollars for sustainable development in the next 10 years.

As the largest state-owned bank in Indonesia, Bank Mandiri is committed to continuing to develop sustainable banking. For this reason, the bank codenamed BMRI consistently develops sustainable financial products, both in terms of green financing and in terms of sustainable funding instruments.

Bank Mandiri's distribution of green financing consistently continues to grow as a form of implementing sustainable finance and implementing the principle of Environment, Social and Governance (ESG). BMRI recorded growth in green credit distribution rose 10.2 percent year on year (yoy) to Rp115 trillion as of June 2023.

This realization makes Bank Mandiri a market leader for green financing in the country's banking industry. Until the first half of 2023, the distribution of green financing for state-owned banks contributed 11.7 percent of the total credit portfolio.

"This realization is clear evidence of the implementation of sustainable finance by Bank Mandiri as well as a form of our commitment to support Indonesia's transition to net zero emissions (NZE) in 2060 and the achievement of the United Nations Sustainable Development Goals (UN SDGs)," he added.

Alexandra added, as one of the First Movers on Sustainable Banking, Bank Mandiri continues to boost the distribution of green financing in the country. This credit disbursement is intended for environmentally and sustainable projects or business activities.

As a result, until the second quarter of 2023, the largest portion of Bank Mandiri's green financing was channeled to the sustainable agriculture sector amounting to Rp95.6 trillion. Followed by the distribution of financing for the renewable energy sector amounting to Rp8.9 trillion, eco-efficient products of Rp4.7 trillion and clean transport of Rp3.2 trillion, and other green sectors of Rp2.8 trillion.

In the distribution of green financing, the bank with the gold ribbon logo has a specific ESG policy for each sector in the form of an ESG Credit Policy. For debtors in the palm oil (CPO) sector, for example, Bank Mandiri requires a certificate or proof of ISPO/RSPO registration.

As for March 2023, 83 percent of debtors in the palm oil sector have pocketed or are currently processing ISPO/RSPO certificates. Through green financing and IAC criteria, Bank Mandiri encourages debtors to transition to a green and sustainable economy," said Alexandra.

If photographed in a longer time, Bank Mandiri consistently recorded an increase in financing to the renewable energy sector. Credit for renewable energy in 2020 is only IDR 2.5 trillion. Then it rose to IDR 6.15 trillion at the end of 2022.

Some of the renewable energy projects that received green financing from Bank Mandiri were Kerinci Hydro Power Plant with a total capacity of 2x45MW MW and Malea Hydro Power Plant in South Sulawesi. Bank Mandiri also distributed financing for the Poso Hydro Power Plant project with a total capacity of 515 MW.

"Bank Mandiri is committed to continuing to distribute green financing according to the electricity supply business plan set by the government, as a form of our consistency in implementing sustainable finance," said Alexandra.

Ahead of the commemoration of the 25th Anniversary (HUT) on October 2, 2023, Bank Mandiri will continue to consistently support the implementation of sustainable financing in accordance with POJK 51/2017, by targeting the distribution of Sustainable Portfolio in the range of 25 percent of total credit (Bank Only).

Bank Mandiri will focus on several sectors, such as Management of Sustainable Biological Natural Resources, New Renewable Energy (EBT), Eco-Efficient Products, and Environmentally Friendly Transportation.

To achieve that target, BMRI is committed to continuing to develop sustainable funding instruments in order to collect capital and then channel it through green financing.

Bank Mandiri has just issued a green bond worth IDR 5 trillion in June 2023. The issuance of green bonds is part of the plan for the Sustainable Public Offering of Sustainable Environmentally-Resistant Bonds I Bank Mandiri with a target fund of IDR 10 trillion.

Previously, in 2021 BMRI had issued a sustainable bond worth USD 300 million. And in 2022, BMRI will become the first bank in Indonesia to provide ESG Repo transactions worth USD 500 million.

The ASEAN Indo Pacific Forum (AIPF) is part of the 43rd ASEAN Summit and the East Asian Summit. Minister of State-Owned Enterprises (BUMN) Erick Thohir stated that AIPF was Indonesia's initiative as Chair of ASEAN 2023.

"AIPF is a platform for the private sector, and the public, including SOEs, from ASEAN and partners in the Indo-Pacific Region to discuss and produce inclusive, collaborative, and concrete business cooperation," Erick said on August 29.