On October 9th, 2018 Puskas BAZNAS attended Green Finance for Sustainable Development Seminar in Bali. This event is a parallel event to the IMF-WBG Annual Meeting 2018. Green finance including green sukuk and bonds is an initiative to support projects in order to decrease the impact of climate change. As a nation with archipelago, Indonesia is vulnerable to climate change impact, for instance a degree increase in temperature could rise vector borne-disease, decline in agricultural productivity up to 60% and greater vulnerable to disaster.

In addition, through Paris Agreement, Indonesia has pledges to reduce greenhouse gasses emission by 29% and up to 41% with international support. Indonesia required a huge financial support to achieve the targets, therefore, Indonesia initiate to issue a sovereign green sukuk and bonds. The issuance of green sukuk/bond is guided by the Green Bond and Green Sukuk Framework, reviewed by CICERO (Center for International Climate Research) and awarded medium green shade. There are 9 eligible green sectors to receive proceeds of green sukuk/bond which are: (1) renewable energy; (2) sustainable management of natural resources; (3) energy efficiency; (4) green tourism; (5) resilience to climate change for highly vulnerable area and sectors/disaster risk reduction; (6) green buildings; (7) sustainable transport; (8) sustainable agriculture; and (9) waste to energy and waste management.

In March 2018, Indonesia issued the world’s first sovereign green sukuk. This issuance amounted to $1.25 billion which 51% is refinancing of 2016 project and 49% is new financing of 2018 project. In addition, according to Mr.Thomas Beloe, Head of Governance, Climate Change Finance and Development Effectiveness, UNDP, other than green sukuk and bonds, we also can use the other funds to support sustainable development for example using zakat funds which is one of collaboration between the National Board of Zakat of the Republic of Indonesia (BAZNAS) and UNDP in building micro hydro power plant for underprivileged people in Jambi.

Rep: Tita