RFI Foundation report highlights the interconnectedness of financed emissions risks within Indonesia’s financial system

RFI signs MOU with Indonesian Banking Development Institute (LPPI) to support capacity development around climate and other responsible finance risks

18 February 2021, London, United Kingdom – A new report from the Responsible Finance & Investment Foundation (RFI) highlights the significant interconnections between financed greenhouse gas (GHG) emissions in Indonesia’s financial sector.  The “Understanding Climate Risks in Indonesia’s Financial System” report provides a top-down analysis of the country’s GHG emissions which shows how financing of agriculture, utilities and transportation are concentrated in banking, fixed income and equity markets, respectively. 

Although some of the largest emissions sources being linked to discrete parts of the financial system, the problem is not one that can be tackled within siloes. Each of the large emissions sources is induced as a consequence of other economic activities.  As a result, financial institutions and investors need to dig deeper to find a more comprehensive picture about the risks they face from emissions they are financing.

The data presented in RFI’s report shows a top-down view about how these direct and indirect emissions are linked throughout Indonesia’s financial sector.  The recommendations included in the report relate to the identification and mitigation of financed emissions risk by Indonesian financial institutions, as well as policy changes that could support the process.  

The report was released during a joint webinar organized by RFI Foundation with LPPI and included senior executives of conventional and Islamic financial institutions, as well as the Indonesian Financial Services Authority (OJK).  The webinar was the first activity organized under an MOU that the two organizations signed to enable more responsible finance actions by Indonesian investors and financial institutions.

Blake Goud, CEO of the RFI Foundation, commented: “In order to take the recommendations forward and support development of capacity to address responsible finance risks in Indonesia, we’re signing a Memorandum of Understanding with the Indonesia Banking Development Institute (LPPI), and I look forward to sharing our expertise in joint collaborations to enhance LPPI's activities across Indonesia's financial sector.”

The report is available for download at http://rfi.foundation.