Pushing A Green Economy, OJK Requires Financial Institutions To Have A Sustainable Framework

Chairman of the OJK Board of Commissioners Wimboh Santoso/ Antara

JAKARTA - The Financial Services Authority (OJK) is committed to accelerating the implementation of sustainable finance in the midst of public enthusiasm and optimism in the capital market. This opens up space for development for financing instruments that meet sustainable principles.

Chairman of the OJK Board of Commissioners, Wimboh Santoso, said that the national economic recovery will continue to be encouraged through a transition of the economic sector to greener energy sources or green economics and more sustainable business processes.

To support this, OJK has compiled a Phase II Financial Roadmap which is valid from 2021 to 2025. One form of implementation is that OJK requires financial service institutions to prepare a Sustainable Finance Action Plan and submit a Sustainability Report for financial service institutions, issuers, and public companies.

"This can be started from synergy and support for funding the business activities of issuers in the capital market based on sustainable finance principles," he said at the 44th Anniversary of the Capital Market, quoted from YouTube IDXChannel, Wednesday, August 11.

Furthermore, Wimboh said that sustainable finance will be one of OJK's strategic initiatives with several programs. First, the completion of the green taxonomy as a guide in the development of innovative products.

"So that we have a common language about this program," he said. Second, the development of a risk management framework in the financial services industry and risk-based supervision guidelines in the context of implementing climate-related financial risks. Third, the development of innovative and feasible financing or funding schemes.

Lastly, OJK will also increase awareness and capacity building for all stakeholders.

According to Wimboh, market participants responded well to the OJK's policy with the absorption of around US$1.9 billion in global sustainability bonds or green bonds on the Singapore Exchange by PT Bank Rakyat Indonesia Tbk, PT Bank Mandiri Tbk and PT Barito Pacific Tbk.

In addition, said Wimboh, Bank OCBC NISP also issued green bonds and gender bonds with a value of US$4.15 billion through a private placement mechanism with IFC.

In addition, Wimboh emphasized that all efforts to build optimism for national economic recovery through the capital market sector must be accompanied by increased literacy. This is because there are still many novice investors who do not understand the risks of investing in the capital market.