MUFG And Danamon Hold MUFG Net Zero World Perdana To Support Indonesia's Energy Transition

Photo: Special

JAKARTA - MUFG Bank, Ltd. (MUFG), in collaboration with PT Bank Danamon Indonesia Tbk (Danamon), held the inaugural MUFG Net Zero World (MUFG N0W) 2024 event in Jakarta, located at the Raffles Hotel. MUFG N0W is the flagship event of this bank in terms of leadership and engagement in Asia Pacific, which aims to involve stakeholders from policy makers, business leaders, to industry experts in supporting Asia's sustainability agenda.

Managing Executive Officer and Chief Executive for APAC, MUFG Bank, Ltd Masakazu Osawa, in his speech said that this event took place at an important momentum in Indonesia's development. When this country takes a more central role in global affairs through leadership in the G-20 presidency and chairman of ASEAN, Indonesia is also at the forefront of global climate efforts, with various routes to net zero, including focusing on decarbonizing its electric power sector.

"MUFG N0W represents the latest efforts in encouraging public and private sector collaboration towards Indonesia's energy transition," he said, in a written statement, Wednesday, September 4.

Five years into a strategic partnership that has solidified MUFG and Danamon as one of the leading financial groups in Indonesia, the two banks have consistently demonstrated a strong commitment to the country's sustainable growth while strengthening bilateral business relations with Japan. Jakarta's session debut from MUFG N0W, which has successfully penetrated Asia's main market, has also brought this partnership to its next level.

Juda Agung, Deputy Governor of Bank Indonesia, in his main speech said, along with Indonesia's significant efforts towards net zero emissions, the role of our financial sector is very important in encouraging this transformation.

"There are 4 main strategies for banks to support this transition through clear targets and objectives, integrate climate risks into core operations, expand sustainable financial offerings, and strengthen governance and accountability. Climate transition is not only a must in the environment, but also a strategic opportunity for the Indonesian Financial Sector. Bank has an important role to play in taking part in this transformation," he explained.

About 200 C-Level clients from MUFG and Danamon attended the N0W MUFG, as well as key representatives from regulators and ministries. There were two important panel discussions at this event: "Indonesian Energy Transition: Financial and Imperfective Policy" and "From Plan to Action: Implementing Net Zero in the Corporate Roadmap." These panels discuss the important steps needed to drive capital, improve policy frameworks, and implement corporate strategies that are in line with Indonesia's goal of achieving net zero emissions by 2060.

Colin Chen, Head of ESG Finance APAC at MUFG Bank, Ltd., said that at MUFG, his party was aware of the important role of the financial sector in supporting Indonesia's energy transition. With its fast economic growth and broad net zero ambition, Indonesia's potential to encourage global climate action is very large and in line with the MUFG group's sustainability commitment.

"By utilizing our expertise and resources, we aim to support Indonesia's journey towards a sustainable future, ensuring that economic growth and environmental management run hand in hand," he explained.

MUFG's focus on the Asian energy transition is an extension of the wider vision of sustainability of this group, which includes a commitment to achieve net zero greenhouse gas emissions in its operations by 2030 and its financial portfolio by 2050.

In the Medium-Term Business Plan (MTBP) for the fiscal year 2024-2026, MUFG has increased its initial commitment to financing related to sustainability from JPY35 trillion to JPY100 trillion in 2030, equivalent to around 640 billion US dollars. MUFG's leadership in global sustainability is strengthened through its active involvement in global platforms such as Net-Zero Banking Alliance (NZBA) organized by the United Nations and Just Energy Transition Partnerships (JETPs) in Indonesia and Vietnam.

In Asia, MUFG partnerships in projects such as GreenOn, Asia's first agri e-produsen platform, and the issuance of influential whitepapers on energy transition strategies in countries such as Japan and Indonesia, reinforce the bank's emphasis on engagement and mind leadership in advancing regional climate agendas.

Indonesia is the fourth largest MUFG market in Asia Pacific for ESG loans and bonds. The bank plays a major role in several large, innovative, and impacted sustainable financing transactions in Indonesia, such as the country's first blue bonds and the first green bonds issued by state-owned companies in Indonesia.

In June, MUFG led the issuance of USD 2.35 billion Sukuk for the Indonesian government, some of which are green bonds, one of the largest sovereign issuances of the region in the past year, and a month later, launching ESG deposits in Indonesia, bridging increasing demand from corporations for sustainable products with low barriers to contribute to environmental and social causes.

Danamon, as a member of the MUFG Group, also continues to strengthen its commitment to support the goals of the Indonesian government's energy transition through various initiatives in Danamon's Sustainable Financial Action Plan (RAKB). This initiative focuses on five pillars: Governance, Awareness and Capacity Improvement, Sustainable Financing, Management of Responsible Workplaces, and Corporate Social Responsibility.

Danamon's Sustainable Financial Loan Portfolio has experienced consistent growth. In 2023, the Sustainable Financial Loan Portfolio reached IDR 31.3 trillion (an increase of 24 percent year-on-year) and was 21.6 percent of the total bank loan distribution. Danamon's Sustainable Financial Loan Portfolio in 2023 is dominated by the renewable energy sector, water management, and land use.

Furthermore, Danamon is also actively involved in several decarbonization initiatives, including energy saving measures, solar panel installations, VRF air conditioning systems, mangrove planting projects, carbon credit programs, as well as procurement of EV charging stations and leasing electric motors.

As Indonesia continues to navigate its path towards a sustainable future, MUFG and Danamon remain steadfast in their support. The N0W MUFG series and the broader partnership between

MUFG and Danamon are at the heart of this commitment, reflecting a common vision for a brighter and more sustainable future for Indonesia and the world.