Financial Crime World

Title: Indonesian Banks Brace for Tighter Climate Risk Scrutiny Amid Regulatory Pressure

Subheader: Indonesia’s Financial Regulator Tackles Climate Risks in the Banking Sector

Indonesia’s financial institutions are facing increased pressure to disclose and manage climate risks related to their carbon-intensive loan books, as the country’s financial watchdog, the Financial Services Authority (OJK), steps up regulatory oversight.

New Measures to Assess Carbon Footprint

  • OJK encourages banks to assess carbon footprint of their assets
  • Tightens internal reporting requirements
  • Shifting towards climate risk disclosure and management
  • Approximately 75% of Indonesian lenders face difficulty quantifying GHG emissions data

Overcoming Data Challenges

Guidance and Support from OJK

  • Providing guidance and support for data collection
  • Harmonizing reporting framework

Long-Term Benefits and Challenges

  • Increased transparency for investors and stakeholders
  • Necessary resources, knowledge, and data for accurate measurement and reporting

Regulatory Developments in Context

Concerns from Investors

  • Increasingly concerned about financial impacts of climate change
  • Large fossil fuel projects and investments pose significant risks

Importance of the Financial sector

  • Largest contributor to Indonesia’s carbon emissions
  • Regulators aim to mitigate climate risks

Climate Risk Disclosure Regulations

  • Already implemented in the European Union and China
  • Essential consideration for both domestic and international banks

Preparing for the New Regulations

Addressing Challenges

  • Gearing up to meet new disclosure requirements
  • Establishing robust frameworks for climate risk management

Setting a New Standard

  • New standard for climate transparency
  • Building confidence among regulators, investors, and the public