SBFN Member Since:
2012
Member Organisations
Otoritas Jasa Keuangan (Indonesia Financial Services Authority)
Progress Against Pillars and Sub Pillars
This graphic can also be found within this country’s 2019 Country Progress Report.
Framework Documents
| Country | Policies/ Principles/ Guidelines | Year | Issuer |
|---|---|---|---|
| Indonesia | 2022 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | 2021 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | 2021 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | 2021 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | 2020 | Government of Indonesia | |
| Indonesia | 2017 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | Regulation on the Issuance and the Terms of Green Bond (No. 60/POJK.04/2017) | 2017 | Indonesia Financial Services Authority (OJK) |
| Indonesia | Regulation on application of Sustainable Finance to FSI, Issuer and PLC | 2017 | Indonesia Financial Services Authority (OJK) |
| Indonesia | 2017 | Indonesia Financial Services Authority (OJK) | |
| Indonesia | 2014 | Indonesia Financial Services Authority (OJK) |
Strategic Development - Alignment with global E&S standards and best market practices
S1.1 – Does the framework make reference to international E&S targets (SDGs, Paris Agreement, Global Compact)?
Yes
(1) – page 9 – III.3 – §1
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Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
S1.2 – Does the framework make reference to established international E&S risk management standards (IFC PSs, EPs)?
Yes
(3) – page 3 – §2
The Equator Principles (EP) which are observed by 70 financial institutions committed to not provide loans to projects worth USD 10 million or more if the prospective debtor does not comply with the prevailing social and environmental regulations and follow procedures established by the EP.
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
S1.3 – Does the framework make reference to established international sustainability reporting standards (GRI, SASB)?
Yes
(3) – page 3 – §2
The Global Reporting Initiative (GRI) is another international initiative.The GRI guidelines were adopted from the UN Environment Programme (funded by the UN Development Fund), and serves as one of the guidelines in developing sustainability reports.
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
S1.4 – Does the framework make reference to established international climate finance reporting standards (TCFD)?
No
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S1.5 – Does the framework ask to make E&S policies, practices and results externally verified (assurance, independent review)?
Yes
(2) – page 18 – I. 2. g.
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Sustainable Finance Umbrella Policy (OJK, 2017)
Strategic Development - Multi-stakeholder collaboration
S2.1 – Does the framework involve interagency collaboration between financial supervisors/regulators, industry association, and FIs?
Yes
S2.2 – Does this collaboration also include other public agencies (e.g., environmental agencies, ministries)?
Yes
(3) – page 24 and page 25
the implementation of the sustainable finance program requires coordination among the players to ensure effective integration and synergy among the ministries as well as between the national and sub national governments. Seamless inter agencies coordination will help prevent the occurrence of bottle necks that often comes hand in hand with development activities.The ministries and agencies relevant to the sustainable finance program includes, among others, Ministries (Industry, Agriculture, Cooperatives and SME, Energy and Mineral Resources, Finance, National Development Planning/BAPPENAS, Public Works), Indonesia Stock Exchange (BEI) and Law Enforcement Agencies.
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
S2.3 – Does this collaboration also include representatives of civil society (e.g., NGOs, associations, media)?
Yes
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Strategic Development - Alignment to NDCs and with National or Regional Climate Change Targets
S3.1 – Is the framework aligned with national NDCs or other national and regional policies on climate?
Yes
(3) – page 17 – §2
Contributes to the national commitment to address the global warming challenge by carrying out climate change mitigation and adaptation in business activities towards a competitive low carbon economy.
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
S3.2 – Has the SBN member identified the main climate risks (transition/physical) for their local financial sector?
No
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ESG Integration - Governance of E&S
Role of Governing Bodies on E & S
E1.1 – Does the country policy require one of the FI’s governing bodies (e.g., Board of Directors, Executive Committee, Supervisory Board, etc.) to approve an E&S strategy?
Yes
(2) – page 7 – Article 4 (4)
Sustainable Finance Action Plan shall be prepared by board of director and approved by board of commissioner.
Sustainable Finance Umbrella Policy (OJK, 2017)
E1.2 – Does the policy require management to report on E&S strategy implementation to the governing bodies?
Yes
(2) – page 21 – II – A -4. a & b
Description on Board of Directors that must include: a. policy to respond challenges in keeping up with the sustainability strategy, that must cover at least the following:
Sustainable Finance Umbrella Policy (OJK, 2017)
E1.3 – Does the policy require FI operational bodies to report to the governing bodies (or specific Board committee) on implementation of the E&S strategy?
No
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Organization
E1.4 – Does the framework ask FIs to define E&S roles and responsibilities?
Yes
(2) – page 22 – II. A. 5. a.
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Sustainable Finance Umbrella Policy (OJK, 2017)
E1.5 – Does the framework highlight the E&S roles of front office staff and second lines of defense (e.g. risk officers and/or compliance officers)?
No
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E1.6 – Does the framework ask FIs to define E&S competencies for each role?
Yes
(2) – page 22 – II. A. 5. b.
a. description of tasks performed by Board of Directors and Board of Commissioners, employee, official and/or work unit responsible for the application of Sustainable Finance;b. elaboration on competence development for members of Board of Directors and Boards of Commissioners, employee, official and/or work unit responsible for the application of Sustainable Finance;
Sustainable Finance Umbrella Policy (OJK, 2017)
E&S Risk Management
E&S Policy
E2.1 – Does the framework ask FIs to formalize an E&S or ESG policy?
Yes
(2) – page 7 – Section II Article 4 (1)
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Sustainable Finance Umbrella Policy (OJK, 2017)
E2.2 – Does the framework encourage FIs to go beyond E&S requirements of local laws and regulations?
No
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E2.3 – Does the framework ask FIs to set E&S objectives and targets?
Yes
(2) – page 21 – II. A. 4. c.
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Sustainable Finance Umbrella Policy (OJK, 2017)
E2.4 -Does the framework ask FIs to publicly disclose their E&S policy and its governance?
Yes
(2) – page 14 and page 22 – II. Executive Summary and II. A. 5. Sustainability governance
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Sustainable Finance Umbrella Policy (OJK, 2017)
Risk Assessment
E2.5 – Does the framework require FIs to carry out appropriate E&S due diligence at transaction level?
No
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E2.6 – Does the framework require FIs to carry out appropriate E&S due diligence at client level?
Yes
(1) – page 15 – IV 3) d
In this stage, banks may develop systems that integrate social risk, environmental risk, and governance into the overall risk management of the banks. The integration process is performed on credit/financing/funding assessments, corporate risk portfolios, SOP, and due diligence.
Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
E2.7 – Does the framework encourage FIs to categorize projects/clients according to their level of E&S risk?
Yes
(1) – page 19 – B, and page 20 – Table 5.1
the bank may categorize the credit facility to: 1. the most dominant category of sustainable business activities;
Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
E2.8 – For high-risk transactions, does the framework encourage site visits to be organized?
No
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E2.9 – In case of negative E&S impacts, does the framework invite FIs to engage with clients to implement mitigation measures?
No
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E&S Covenants
E2.10 – Does the framework ask FIs to incorporate E&S covenants and investment conditions into legal agreements with clients?
No
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Project Supervision & Portfolio Review
E2.11 – Does the framework ask FIs to develop processes to manage E&S risks during supervision?
No
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E2.12 – Does the framework encourage a periodic review of E&S risks at aggregate portfolio level?
No
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Training
E2.13 – Does the framework ask FIs to develop and maintain E&S capacity through regular training?
Yes
(3) – page 22
Workshop/training to enhance FSIs competencies to increase financing/investment activities in the sustainable finance priority economic sector;
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
E2.14 – Does the framework highlight the training of (i) front office staff, (ii) second lines of defense (risk officers and/or compliance officers), and (iii) E&S experts?
Yes
(1); (2) – Article 7 (2)
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Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018) | Sustainable Finance Umbrella Policy (OJK, 2017)
External Communication Mechanism
E2.15 – Does the policy require FIs to establish and maintain an inquiry/complaints/grievance mechanism in relation to E&S or ESG practices?
Yes
(2) – page 24 and page 25 – 3) b. and 3) e. 6)
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Sustainable Finance Umbrella Policy (OJK, 2017)
E & S Reporting
E2.16 – Does the policy require FIs to report regularly on E&S or ESG performance, including publicly, to investors or to regulators?
Yes
(1); (2)
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Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018) | Sustainable Finance Umbrella Policy (OJK, 2017)
E2.17 – Does the policy make E&S or ESG reporting and disclosure more consistent across financial institutions through principles, guidelines, or templates?
Yes
(3) – page 22 – A
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
Sustainable Finance Umbrella Policy (OJK, 2017)
E & S Integration - Enforcement
E3.1 – Is the implementation of the framework regularly verified or is information regularly collected from FIs?
Yes
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E3.2 – Is there any financial and/or non-financial incentive for establishing ESRM systems?
No
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E3.3 – Are there sanctions/penalties/warnings in case of noncompliance with the framework?
Yes
(2) – page 9 – Article 9 (2)
The incentive under paragraph (1) of this article hereof may take form of the following:a. engaging the FSI, Issuer and Publicly Listed Company in programmes ofhuman resources capacity building;b. awarding with Sustainable Finance Award; and/orc. other incentives.
Sustainable Finance Umbrella Policy (OJK, 2017)
Climate and Green Finance - Products and Services
Defining sustainable assets and financial products
C1.1 – Does the framework provide definitions and examples of green assets?
Yes
(3) – page 21
“Projects/activities/products/services that meet the principles of Sustainable Finance and are included under the criteria of sustainable projects/activities/products/ services
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
C1.2 – Does the framework provide a comprehensive taxonomy of green assets?
No
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C1.3 – Does the framework provide definitions, examples, or a taxonomy of social and/or sustainable assets?
Yes
(1) – page 25 – table 5.2
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Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
C1.4 – Besides debt products (loans, bonds), does the framework provide definitions and examples of different types of sustainable finance products/services (e.g., saving accounts, means of payment, insurance, private equity, etc.)?
Yes
(3) – page 8 §1, page 13 §3, page 14 §4
page 14 §4: In the Non Bank Financial Industry sector (IKNB), financing increase can be done by encouraging the industry players to insure their business within the framework of minimizing environmental risk. In addition, the industry players are also encouraged to design an environmentally friendly insurance product to provide greater variety of product options to the public.
OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
Green Finance Product Guidelines
C1.5 – Does the framework provide guidelines for green loan/green credit or other green financial assets (excluding green bonds)?
Yes
(1) – page 61 – 6 a 2) table 7.3
Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
C1.6 – Does the framework provide guidelines for issuance of green bonds?
Yes
(3) – page 21
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OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
C1.7 – Does the framework refer to existing standards (e.g., ICMA’s Green Bond Principles or CBI’s Climate Bonds Standard)?
No
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C1.8 – Does the framework recommend external party verification (e.g., second party opinion, assurance, certification)?
Yes
(3) – page 3, 6, 22
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OJK Regulation about Issuing Green Bond Guidelines (OJK, 2017)
Climate and Green Finance - Climate and Green Investment Reporting
Tracking and Disclosure of Climate & Green Finance
C2.1 – Does the framework ask FIs to report on climate/green finance flows (quantitatively or qualitatively)?
Yes
(1) – page 55 – C – 2. and page 61 – 6 a 2) table 7.3
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Technical Guidelines for Banks on the Implementation of OJK Regulation about Sustainable Finance (OJK, 2018)
C2.2 – Does the framework ask FIs to report on climate risk exposure at portfolio level?
No
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C2.3 – Does the framework encourage FIs to report publicly on their green finance activities (i.e. not only to the regulator)?
Yes
(2) – page 7 – Section II Article 6
FSI shall communicate Sustainable Finance Action Plan to:a. shareholders; andb. all organisational levels that it has.
Sustainable Finance Umbrella Policy (OJK, 2017)
Climate and Green Finance - Measurement
Calculation of Environmental Benefits
C3.1 – Does the framework ask FIs to calculate the environmental benefits of their investments? (e.g., CO2 emission reduction, water saving, etc.)
No
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C3.2 – Does the framework provide a taxonomy of potential environmental impacts?
No
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C3.3 – Does the framework provide methodologies, tools, and/or templates to measure and report these impacts?
No
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Climate Risk Exposure Assessment
C3.4 – Does the framework ask FIs to monitor climate risk exposure at portfolio level?
No
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C3.5 – Does the framework refer to specific climate risk exposure methodologies (e.g., climate scenario analysis, climate risk stress testing, calculation of carbon risk exposure, tracking of energy efficiency for real estate portfolio)?
Yes
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C3.6 – Does the framework encourage FIs to take mitigating steps on these risks?
No
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Climate and Green Finance - Incentives
Financial and Non-Financial Incentives
C4.1 – Does the framework provide any type of incentives for green financial products and services?
Yes
(2) – page 9 – Article 9 (1) b. c.
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Sustainable Finance Umbrella Policy (OJK, 2017)
C4.2 – More specifically, does the framework introduce financial incentives on green products and services?
No
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