OJK Boss Says Sustainable Taxonomy Revision Will Be Completed This Year

JAKARTA - The Financial Services Authority (OJK) is revising the sustainable taxonomy regulations. The article will be completed this year.

Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar said this was an effort to accelerate support for energy transition financing in Indonesia.

"OJK is finalizing a sustainable taxonomy as a substitute for green taxonomy, which we will complete this year," Mahendra said at the 2023 Networking CEO event entitled 'Achieving Sustainable Growth through Cohesive Collaboration' in Jakarta, Tuesday.

He continued, the OJK will focus on energy transitions and critical minerals, as an effort to harmonize economic growth with sustainable development goals or SDGs.

"This taxonomy will introduce the concept of environmentally friendly business and energy transition to decarbonization, which will be used as a guide for financial institutions or investors in making funding decisions that support climate change management," Mahendra said.

Continuing taxonomy is expected to help the financial services sector (SJK) in the periodic monitoring process in the implementation of lending/financing/investment to the green sector, and prevent potential reporting of inappropriate green activities or greenwashing.

Previously, the OJK together with related ministries/agencies (K/L) had issued the 1.0 edition of the green taxonomy in 2022, which only covered environmental issues.

Meanwhile, the 2.0 edition of the taxonomy, which was published this year, balances three aspects, including the environment, social and economic and encourages transitional efforts.

On this occasion, Mahendra said that the OJK had also issued OJK Regulation (POJK) Number 18 of 2023 concerning the issuance and requirements for debt and sukuk effects based on sustainability.

The issuance of the regulation is an OJK's response to global and regional issues in Southeast Asia, in order to mitigate the impact of climate change which is also Indonesia's commitment to the Paris Agreement.

In addition, at the end of September this year, OJK together with the Indonesia Stock Exchange (IDX Carbon) launched the Carbon Exchange (IDX Carbon).

"Regarding the aspect of transitional energy and decarbonization, the OJK will improve the existing regulatory framework by referring to the ISSB-IFRS S2 which requires the company to disclose the physical risks of transitions due to climate change by developing their respective transitional plans," said Mahendra.