Towards a sustainable financial system in Indonesia

Abstract

To place the economy onto a sustainable development pathway requires an unprecedented shift in investment; away from greenhouse gas (GHG), fossil fuel, and natural resource intensive industries and toward more resource efficient technologies and business models. Funds for this investment will need to come from both the private and public sectors, including both domestic and international sources. This study is intended to contribute to the exploration of the state of green investment in Indonesia within the wider economic and financial sector context. Its aims are: to examine how and to what extent different types of investors and lenders currently finance green investments in Indonesia in order to better understand the drivers and subsequent impacts on capital flows; to identify and analyze gaps in financing, regulatory barriers, and potential financial policy innovations in order to increase green finance in Indonesia; to enhance the dialogue on increasing the flow of green finance to steer the transition to a low carbon economy in Indonesia and coordinate closely with related initiatives; and to contribute to growing international experience on aligning financial systems to sustainable development.