Interview

In Conversation With Mr Agus E. Siregar, Deputy Commissioner for Financial System Stability, Indonesia Financial Services Authority

Published on the 31st of December 2024

Find out more about the ndonesia Financial Services Authority's involvement with the NGFS.

1. When and why did your institution join the NGFS?

The Indonesia Financial Services Authority (OJK) joined the Network for Greening the Financial System (NGFS) in 2020. OJK is committed to fostering the development of green finance and sustainable investment practices within Indonesia’s financial sector, with the goal of supporting the country’s transition to a low-carbon economy. OJK acknowledged the need to ensure that the financial sector was resilient to the long-term impacts of climate change and that climate considerations were incorporated into financial decision-making processes. By joining the NGFS, OJK aimed to align Indonesia’s financial sector with global best practices for climate risk and sustainable finance, ensuring that the country remained in step with international efforts to address climate change. Furthermore, joining the NGFS allowed OJK to collaborate with international peers and contribute to global efforts to integrate climate risks into the financial system while enhancing its own regulatory frameworks for sustainable finance.

2. Can you share with us the key elements of the Indonesia Financial Services Authority (OJK)’s climate strategy and how it fits into the broader national strategy in your jurisdiction?

OJK’s climate strategy fits into Indonesia’s broader national climate commitment as outlined in Indonesia's Nationally Determined Contributions (NDCs). Our commitment to a sustainable economy must be compatible with the interests of our nation to ensure that all can prosper from this policy. In supporting the Government’s commitment, OJK as the regulator in the financial services sector has initiated the development of sustainable finance in stages and taking into account the readiness of the industries.


Since 2015, OJK has issued sustainable financing roadmaps with the objectives of building awareness on sustainable finance and later on expanded to establishing an ecosystem for sustainable financing; expanding the supply and demand for environmentally friendly funds; and increasing the sustainable finance implementation in the financial services industry. Currently, OJK has entered the second phase of the Sustainable Finance Roadmap (2021-2025)1, which served as a guideline in strengthening the sustainable finance ecosystem from policies, product and service development, awareness raising, market infrastructure, HR aspects, and non-government support to collaboration with relevant ministries and institutions.

In 2017, OJK issued OJK Regulation No 51/2017 on the Implementation of Sustainable Finance for Financial Services Institutions, Issuer Companies, and Public Companies2. OJK has introduced sustainable reporting and disclosure and require Financial Services Institutions, Issuer Companies, and Public Companies to submit of Sustainability Reports and Sustainable Finance Action Plans, which are implemented in stages. Reporting allows companies to disclose how they identify, assess, and manage physical and transition risks related to climate change. Going forward, OJK will respond by revising these regulations to align with the implementation of IFRS S1 and S2 in Indonesia, while considering the standards and infrastructure that support sustainability reporting in the jurisdiction.

OJK also issued OJK Regulation Number 18 of 2023 on Issuance and Requirements for Debt Securities and Sukuk Based on Sustainability3 to foster the mobilization of capital towards low-carbon and environmentally sustainable investments. This regulation not only regulate green bonds, but also green sukuk, social bonds/sukuk, sustainability bonds/sukuk, sukuk-linked waqf, and sustainability-linked bonds. The use of proceeds from the issuance of Debt Securities and Sukuk Based on Sustainability used for environmentally friendly business activities that in line with climate target.

To strengthen the implementation of climate risk management, OJK has mandated the integration of climate risk in the banking sector through the issuance of OJK Regulation Number 17 of 2023 on Commercial Bank Governance4 which regulates the obligation to implement climate risk in aspects of governance, strategy, and banking risk management. OJK also published Climate Risk Management & Scenario Analysis (CRMS) Guideline5 in March 2024, as an integrated framework covering aspects of governance, strategy, risk management and disclosure to assess the resilience of banks’ business models and strategies in the face of climate change in the short, medium, and long term. Not only can used by the banks, Financial Sector Business Actors (FBS), issuers, and public companies also are encouraged to adopt robust risk management frameworks to evaluate climate-related risks in their lending and investment portfolios. This is to avoid overexposure to sectors vulnerable to climate impacts or to the financial implications of the transition to a low-carbon economy.


In line with the issuance of Law No. 4 of 2023 on Financial Sector Development and Strengthening (P2SK Law), OJK introduced OJK Regulation Number 14 of 2023 on Carbon Trading through the Carbon Exchange6. This regulation, together with the launch of the Indonesian Carbon Exchange (IDX Carbon), plays a crucial role in advancing Indonesia’s broader climate strategy. These initiatives are strategically designed to reduce greenhouse gas emissions, foster sustainable economic development, and support the country’s transition to a low-carbon economy, positioning Indonesia as a key player in the global effort to combat climate change.


Indonesia already has a sustainability/green standard, which was initiated in 2022 with the publication of the Indonesian Green Taxonomy Edition 1.0. In 2024, OJK refined Indonesian Green Taxonomy Edition 1.0 into the Indonesia Taxonomy for Sustainable Finance (TKBI)7. TKBI is a classification of economic activities that supports Indonesia’s Sustainable Development Goals (SDGs) that include economic, environmental and social aspects. TKBI act as a main standard in defining/classifying business activities that support sustainable efforts and the achievement of Indonesia’s net zero emission target, and its implementation can integrate various other sustainable finance policies.


Sustainable finance policies and initiatives are interconnected, with the TKBI designed to align with these policies, both those that have been issued and those that will be issued. For example, the TKBI can be used as:
• An indicator of green/sustainable performance in the entity’s sustainability disclosure in line with the Metrics and Targets Pillar of IFRS S2 - Climate-related Disclosure Standard.
• A reference for establishing Debt Securities and Sukuk Based on Sustainability (EBUS) requirements.
• Data from the TKBI can support CRMS.
• A guide in the design of sustainable financial products/services (such as green/sustainable loans, green/sustainable insurance, financing for low-emission motor vehicles, etc.).
In the future, the establishment of a Sustainable Finance Committee will facilitate the advancement and implementation of sustainable finance in Indonesia.

3. To which extent did the Indonesia Financial Services Authority (OJK) leverage the work of the NGFS in its own domestic journey? Any concrete examples?


The NGFS scenarios offer a widely recognized foundation for conducting exploratory climate risk assessments relevant to the financial sector. In developing the CRMS as mentioned previously, the Bank is encouraged to explore the use of NGFS scenarios while tailoring them to the specificities of the Indonesian context. For example, the NGFS scenario can be supplemented with additional assumptions related to Indonesia’s published and planned climate policies such as those to support the government’s NDC targets and carbon tax plans, and other policies in support of achieving NZE targets. For macroeconomic data required by the bank in conducting Stress Tests related to the impact of climate risk, especially with transition risk, the data and methodology also use sources from NGFS which have been adapted to Indonesian conditions based on official releases from Ministries/Institutions.
Furthermore, OJK has also leveraged NGFS’s knowledge and tools to strengthen its internal capabilities in developing regulation and managing climate risks.

4. One last word?

We acknowledge that OJK’s participation in NGFS provides an opportunity to collaborate with central banks, financial regulators, policymakers, and institutions. It also allows OJK to gain insights from the experiences of other countries and apply successful strategies to the Indonesian context, while adopting more effective policies and frameworks to advance to contribute to NGFS discussions and working groups, helping to shape the development of financial sector regulations that also align with Indonesia’s sustainable development objectives.

Updated on the 14th of January 2025