Spotlight on Indonesia
Posted on December, 15 2023
In order to maintain global financial and monetary stability, it is increasingly acknowledged that governments, central banks and financial supervisory and regulatory authorities working on climate risk issues need to widen their focus and encompass nature-related risks such as biodiversity loss.
According to the Indonesian Biodiversity Strategy and Action Plan (IBSAP, 2015), Indonesia is a country blessed with unique and rich biodiversity that serves as the backbone for the lives of hundreds of ethnic groups within the country’s territory. Planning biodiversity management as an asset to sustainable development should be an important part of this. On the other hand, Indonesia is also recognized as a particularly vulnerable country to climate change where biodiversity management is essential to help increase the country’s resilience towards climate change.
Since 2021, WWF has been engaging with the Central Bank of Indonesia (Bank of Indonesia) on the relevance of integrating climate change and biodiversity loss in national financial regulation and monetary policy. Initial collaboration led to a Finance Track side event and joint campaign on green finance held by WWF-Indonesia and the Bank of Indonesia during the G20 Presidency in 2023. Furthermore, WWF-Indonesia contributed to a green taxonomy developed by the Indonesia Financial Services Authority (OJK) and collaborated with the Bank of Indonesia in a climate stress test, which is expected to be published in 2024.
Building on these developments, the Bank Indonesia Institute and WWF in Indonesia, supported by the Greening Financial Regulation Initiative, organised a workshop in June on “nature, the economy and the financial system”, in collaboration with the ASEAN +3 Macroeconomic Research Office (AMRO) and the LSE Grantham Research Institute on Climate Change and the Environment. The aim of the workshop was to discuss the importance of biodiversity loss for the financial system. Participants included high-level staff from the Bank of Indonesia, the Ministry of Finance and OJK.
@WWF/Bank of Indonesia
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Key takeaways from this workshop include, among others:
a) the need for a centralised, credible and open-source environmental database that compiles useful data to inform decision making. Such a database could be developed from corporate disclosures as well as data integration from various data owners;
(b) that climate scenario analysis and other assessment tools designed for central banks, regulators and financial institutions need to be augmented to gauge the significance of climate and nature risks on the financial health of both individual institutions and the overall financial system, while also better reflecting local context and priorities of the country and its regions;
c) the importance of hands-on environmental analytical tools and methodologies that central banks, financial supervisors and financial institutions can apply in a harmonised manner; and
(d) coordination amongst financial and non-financial stakeholders is needed to fully integrate actions taken by central banks and financial supervisors, ministries and government agencies as well as private sector players.
Further exchanges are planned to take place with the above stakeholders to discuss opportunities for increased collaboration and capacity building sessions on nature, while we continue to also address climate challenges.
More information, contact: Rizkia Sari Yudawinata, Sustainable Finance Program Lead, WWF-Indonesia. Email at rjoedawinata@wwf.id
Since 2021, WWF has been engaging with the Central Bank of Indonesia (Bank of Indonesia) on the relevance of integrating climate change and biodiversity loss in national financial regulation and monetary policy. Initial collaboration led to a Finance Track side event and joint campaign on green finance held by WWF-Indonesia and the Bank of Indonesia during the G20 Presidency in 2023. Furthermore, WWF-Indonesia contributed to a green taxonomy developed by the Indonesia Financial Services Authority (OJK) and collaborated with the Bank of Indonesia in a climate stress test, which is expected to be published in 2024.
Building on these developments, the Bank Indonesia Institute and WWF in Indonesia, supported by the Greening Financial Regulation Initiative, organised a workshop in June on “nature, the economy and the financial system”, in collaboration with the ASEAN +3 Macroeconomic Research Office (AMRO) and the LSE Grantham Research Institute on Climate Change and the Environment. The aim of the workshop was to discuss the importance of biodiversity loss for the financial system. Participants included high-level staff from the Bank of Indonesia, the Ministry of Finance and OJK.
@WWF/Bank of Indonesia
Key takeaways from this workshop include, among others:
a) the need for a centralised, credible and open-source environmental database that compiles useful data to inform decision making. Such a database could be developed from corporate disclosures as well as data integration from various data owners;
(b) that climate scenario analysis and other assessment tools designed for central banks, regulators and financial institutions need to be augmented to gauge the significance of climate and nature risks on the financial health of both individual institutions and the overall financial system, while also better reflecting local context and priorities of the country and its regions;
c) the importance of hands-on environmental analytical tools and methodologies that central banks, financial supervisors and financial institutions can apply in a harmonised manner; and
(d) coordination amongst financial and non-financial stakeholders is needed to fully integrate actions taken by central banks and financial supervisors, ministries and government agencies as well as private sector players.
Further exchanges are planned to take place with the above stakeholders to discuss opportunities for increased collaboration and capacity building sessions on nature, while we continue to also address climate challenges.
More information, contact: Rizkia Sari Yudawinata, Sustainable Finance Program Lead, WWF-Indonesia. Email at rjoedawinata@wwf.id