Time: 11:30am – 2:30pm, June 23, 2015
Venue: Papua Room, Menara Thamrin Building
Menara Thamrin, 5th Floor
Jl. M.H. Thamrin Kav. 3
Jakarta 10250, Indonesia
Tel: +62 21 39830091
Agenda
11.45 – 12.15 Registration and lunch
12.15 – 14.30 Speakers:
Satya Tripathi, Director, UNORCID
Ria Sartika Azhari (TBC), Head of the Climate Change Division at the Fiscal Policy Office, Centre for Climate Change Financing and Multilateral Policy, Ministry of Finance, Republic of Indonesia
Sean Kidney, CEO, Climate Bonds Initiative
Background from UNORCID
Green investment is an essential catalyst for a green economy transition. The Government of Indonesia has clearly acknowledged this connection and is taking various actions to ensure its materialization.
In April 2015, the government organized its first ‘Tropical Landscapes Summit’ which sought to mobilize green investment to sustain Indonesia’s vast natural capital. The Summit saw some of the country’s and world’s top CEOs, as well as leaders of global development and research institutions, come together to affirm the opportunities that the country offered in this regard.
Following on from this success, the Indonesia Investment Coordinating Board (BKPM) announced its intention to attract at least US$100 billion in green investments into seven sectors by 2019.
At the global level, opportunities for green investors are rapidly increasing in terms of scope and scale. Climate finance is a powerful tool for increasing green investment, and more broadly is an area in which some of the most innovative and potentially transformative solutions for broader sustainability issues are emerging. To build and strengthen the momentum, coordinated action needs to be taken by governments and the financial sector, with development partners and research institutions playing an important facilitating role.
From Indonesia’s perspective, green investment can help to drive the green economy transition particularly through institutional capacity-building and sectoral financing. This transition requires structural changes that go far beyond finance per se, but for which finance is a key enabler. Climate financing to attract green investment in Indonesia requires the development of instruments and institutions that embed finance within a broader vision of sustainable tropical landscape management. As indicated in the National Medium-Term Development Plan for 2015 – 2019, the achievement of Indonesia’s development priorities requires a holistic 2020 whilst simultaneously achieving near to full national electrification, in substantially reducing deforestation and forest degradation whilst also ensuring food security and tenure security for rural communities.
According to UNDP’s Climate Public Expenditure and Institutional Review (CPIER), domestic public climate expenditure is growing- total budgetary expenditure in 2011 on climate change mitigation actions amounted to around USD 579 million, an average increase of 5% since 2008. Further, the rapid emergence and growth of green financial instruments presents exciting possibilities. The Tropical Landscapes Summit revealed a considerable degree of interest from potential investors, in the opportunities offered by Indonesia’s natural capital assets. At a global level, green bonds stand out as an example of how established financial instruments can be tailored to become ‘green’, hence meeting the criteria of both financiers and sustainability policy-makers. Very much still at an evolving stage, particularly in terms of investment grade and tenor, much anticipation has been generated about the potential of green bonds particularly where issued at a landscape or jurisdictional scale.
Despite the evident interest, there are key challenges that need to be resolved to secure and scale up climate finance. At a general level, the lack of agreement on what constitutes ‘green’ is widely recognized as a barrier to progress, and there are further questions about how investors would be repaid and how the sustainable use of their investments can be guaranteed.
Further, while the challenges and opportunities associated with climate finance are discussed abundantly in a qualitative sense, there is a lack of quantitative data to track financial flows for future investment opportunities. This lack of data inhibits the ability to policy-makers to make relevant, appropriate decisions and enabling frameworks.
Resolving these questions and dealing with challenges requires a dialogue between all concerned actors, particularly within government, the financial and private sector, development partners and research institutions.
