Associate Professor of Sustainable Investment, SBM ITB, Yunieta Anny Nainggolan, said implementing Green Financing is crucial in encouraging sustainable development. She conveyed this when presenting at the third workshop entitled “Environmental, Social, and Governance (ESG)” at the 2024 International Conference on Management in Emerging Markets (ICMEM) held by SBM ITB on Thursday (29/8).
“Green Financing is essential to promote sustainable development, but this is not easy,” said Yunieta.
According to Yunieta, the government’s support is crucial. Policymakers, including taxonomies, play a key role in classifying companies for green financing and providing different approaches to incentives and subsidies. This reassures us that the government is a key player in supporting other stakeholders in implementing ESG.
Yunieta emphasized that investment in environmentally friendly projects, such as renewable energy and energy efficiency, is not just a step, it’s a necessity. According to her, there is no other way; ESG must be a top priority, especially in the environment. While social and governance aspects are already present in organizations, the environment is most affected by disruption.
However, Yunieta also acknowledged the significant challenges faced by Green Financing in developing markets. Many people still do not fully understand and adopt Green Financing in developing markets, making promotion efforts and attracting investors more difficult. Other challenges are the lack of universal standardization, transparency, accountability, and high costs and accessibility.
Reviewing the conditions in Indonesia, Yunieta noted that the USD 1.25 billion fund raised from Indonesia’s first Green Sukuk in 2018 was fully invested in green projects by the country’s Green Framework. The Sukuk has attracted the interest of various investors, with 32% from the Islamic market, 25% from Asia, 15% from the European Union, 18% from the US, and 10% from within the country.
“The Environmental Fund Management Agency (BPDLH) has also supported the Indonesian Environmental Fund with thematic programs covering grants, loans, and endowments totaling USD 1.6 billion, supported by UNDP,” she added.
Yunieta is optimistic about the future of Green Financing, with projections of continued growth and the increasingly strong integration of ESG criteria in financial decisions. Research shows that the millennial generation is more interested in sustainable companies. Closing the session, Yunieta called for broad collaboration to encourage Green Financing.
“Let’s work together in Green Financing for sustainable future development,” she said.
