Sustainable Banking Initiatives

Initiatives for integrating sustainability criteria into the everyday business practices and governance structures of commercial banks have been around since the 1990s, but the field has long been dominated by voluntary and industry-driven initiatives. On their own, non-binding guidelines and recommendations are insufficient to create the change of the magnitude needed to deal with the social and environmental challenges of the 21st century. It is therefore heartening that banking regulators across the world have begun to address the issue of sustainability. In Indonesia, the Otoritas Jasa Keuangan (OJK) published its “Roadmap for Sustainable Finance in Indonesia” in 2014. Its goal is to achieve a transition to sustainable finance by 2024. This is a welcome initiative because motivating or forcing commercial banks to take into account the environmental and social consequences of the activities they finance and to assess the risks to themselves that arise because of their exposure to these industries could help to contain damaging practices like rampant deforestation, land grabbing and labour issues.This paperexplains what regulation for sustainability in banking does and presents some of the experiences that OJK can draw on in its work
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