OJK Forms Task Force to Develop Sustainable Finance Ecosystem

The Financial Services Authority (OJK) has established a sustainable finance task force in the financial services sector or SJK.

The formation is an effort to realize the development of a sustainable financial ecosystem, as well as efforts to mitigate and adapt to climate change as stated in the Nationally Determined Contribution (NDC).

Chairman of the OJK Board of Commissioners, Wimboh Santoso, explained that this task force aims to serve as an integrated coordination platform to build a sustainable finance ecosystem in Indonesia, including involvement in various international forums.

"OJK through the Sustainable Finance Roadmap, which has entered its second phase, hopes for the financial services sector to be prepared, understand the implications for business as well as domestic and global expectations as well as policy challenges that must be implemented in the financial services sector," said Wimboh at the Kick Off Meeting. Sustainable Finance Task Force in Jakarta, Tuesday (5/10/2021).

Previously, OJK had issued a Roadmap for Sustainable Finance Phase I (2015-2019) and Phase II (2021-2025) as a guide to accelerate the implementation of environmental, social and governance principles in Indonesia.

The guide focuses on creating a comprehensive sustainable finance ecosystem, involving all relevant parties and encouraging the development of cooperation with other parties.

In the process of establishing the task force, OJK involved the entire financial services sector (SJK), including banking, capital markets and the non-bank financial industry (IKNB). The membership of this task force consists of 47 financial service institutions.

In detail, banks sent 13 national commercial banks, 7 capital market issuers, 5 securities companies, and 3 investment managers. Meanwhile, IKNB involves 5 general insurances, 6 life insurances, 3 finance companies, 2 pension funds, BPJS Employment, BPJS Health, the Indonesian Export Financing Agency, and PT Sarana Multigriya Finansial. developments on issues at the international level, such as the United Nations Conference on Climate Change (26th COP) which will be held in Glasgow at the end of October 2021.

At the conference, all countries will reiterate more explicit commitments to support the reduction of greenhouse gas emissions, including commitments from the financial industry to support green finance.

Bank Mandiri President Director Darmawan Junaidi who was present at the meeting welcomed the OJK initiative in establishing this sustainable finance task force.

"Bank Mandiri is very welcoming of this initiative, because it is also imperative for us to adapt to international best practice," he concluded.

In line with this, currently lending to the renewable and renewable energy sector of Bank Mandiri has a share of 21 percent of total loans in the energy sector, or grew 18 percent in the last five years.

The President Director of the Indonesia Stock Exchange, Inarno Djajadi, expressed his appreciation for the OJK initiative which has created a task force and roadmap for sustainable finance 2021 - 2025.

The same thing was also expressed by the Director of Risk Management of PT Sarana Multi Infrastruktur (SMI) Faaris Pranawa. He appreciated OJK's efforts in establishing a task force as an effort to unify the understanding of sustainable finance.

"We are very happy to be present, because it shows that OJK leadership to encourage sustainable financing is very much needed, so that in the future we have a common language." said Faaris.

STRUCTURE

The structure of the Sustainable Finance task force in the Financial Services Sector consists of three pillars.

First, a steering team consisting of the Chairman of the Board of Commissioners and the Chief Executive of Banking Supervision, Capital Market and IKNB, the President Director of LJK, and the President Director of the IDX.

Second, the implementation team consisting of OJK officials from each relevant work unit, the OJK Technical team, the LJK Directors, and the LJK technical team.

Third, the secretariat task force organized by the OJK, under the coordination of the Integrated Financial Services Sector Policy Group (GKKT).

To strengthen the steps forward, OJK has also determined four strategic steps for implementing sustainable finance principles in dealing with climate issues, including the completion of a green taxonomy as a guideline in developing innovative products or sustainable finance, as well as sustainable financial disclosure.

This initiative is in line with the development of regulations regarding the reporting of the financial services industry to the OJK. In addition to the financial services system, the green taxonomy is expected to be used by investors, international institutions or organizations, as well as the government.

In developing a green taxonomy, OJK participates in the Financial Stability Council (FSB), particularly regarding sustainable financial disclosure for Financial Services Institutions in the FSB - Workstream on Climate Disclosures/WSCD as well as the ASEAN Taxonomy Board in the region.

The second step is to develop a risk management framework for the financial services industry and risk-based supervision guidelines for supervision in order to implement climate-related financial risks.

Third, developing innovative and feasible project financing or funding schemes, and finally increasing awareness and capacity building for all stakeholders.

 

bisnis.com