Heaptalk, Jakarta — As a part of Indonesia’s G20 Presidency of Indonesia series, the Minister of Finance of the Republic of Indonesia has established an Environmental, Social, and Governance (ESG) Framework and Manual to support Indonesia’s government related to infrastructure financing. In collaboration with PT Indonesia Infrastructure Finance (PT IIF), the launch of this ESG Framework and Manual policy aims to broaden green investment and sustainability in the country.
Multiple international parties attended to the launch momentum, spanning the United Nations Development Programme (UNDP), the Canada Government, SOE under the Ministry of Finance, multinational institutions, and private sectors.
Implementing this ESG framework is a concrete manifestation of following up on the G20 infrastructure agenda related to sustainable infrastructure and Quality Infrastructure Investment. This initiative has become the first ESG enforcement regulation issued by the Ministry of Finance to simplify infrastructure financing matters.
Furthermore, with support from UNDP and the Government of Canada, the Ministry of Finance, through a grant program managed by the World Bank, has developed the ESG Framework and Manual for managing government support in infrastructure financing in 2022.
As delivered by the General Director of Financing and Risk Management at the Ministry of Finance, this move reflected the significance of sustainable development, resident, inclusive, and transparent in the country, exclusively on infrastructure financing.
The ESG adoption in the business process to bolster infrastructure financing is expected to generate positive socio-economic impacts while minimizing potential risks in several aspects, covering environment, social, and governance.
During the Policy Dialogue session between the Ministry of Finance and Resident Representative UNDP Indonesia, the Minister of Finance, Sri Mulyani Indrawati, revealed the ESG policy would provide guidelines vividly devoted to the entire infrastructure project stakeholders, specifically related to the mandatory action to ascertain the projects are equivalent with the ESG aspects.
Minister Sri added that the ESG implementation would increase stakeholder compliance with applicable environmental regulations and standards, improve the positive impact of infrastructure development, open access to more comprehensive financing, and elevate public acceptance of ongoing project developments.
The ESG implementation will be performed periodically until 2025 by focusing on housing and water resources infrastructure, which started this year. This initial implementation will be reviewed to provide room for improvement and implementation opportunities in more comprehensive infrastructure financing support products.
“An ESG scheme implementation will be the beginning of a journey that will continue to be improved towards green and sustainable financing, reflecting one of the primary discussions at the G20 conference,” affirmed Sri Mulyani.
As part of the ESG policy launch event, PT IIF also performed an MoU signing with PT Angkasa Pura I (PT AP I). This agreement indicates that PT IIF will become PT AP I’s ESG advisor in establishing and establishing the ESG framework as part of the Angkasa Pura transformation. The signing of this agreement activity also manifests the Ministry of Finance and its policy tools’ readiness to apply ESG aspects in their business processes.
