Indonesia: Green financing gets leg up via IFC's Bank OCBC NISP investment
Source: Asia Insurance Review | Sep 2018
Green financing in Indonesia to combat climate change has received a boost, with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, committing $150m in a green bond issued by Bank OCBC NISP.
This is said to be the first ever green bond issued by a commercial bank in Indonesia, delivering a new source of green financing to combat climate change. Proceeds from the bond will be used to finance climate related projects in accordance with the green bond principles.
The bond, with a five-year tenor, will see the bank fund climate smart projects, supporting the government of Indonesia’s priority of achieving sustainable economic growth, and will also contribute to the government’s target of 29% reduction in greenhouse gas emissions by 2030.
IFC estimates the potential opportunities in Indonesia for green financing are around $274bn until 2030.
In a bid to spur new sources of financing to help Indonesia meet its climate and infrastructure challenges, IFC has supported the government, including, OJK to develop a sustainable financing roadmap, along with green bond guidelines and a policy which obliges Indonesian banks to develop and report on their sustainable financing programmes.
The World Bank also supported the Indonesian government in issuing the first ever sovereign green sukuk. The World Bank Group estimates that by the end of this century, climate change could cost Indonesia between 2.5% and 7% of GDP. A