Bank Indonesia's Green Calculator Transformation: From Emissions Calculation to Climate Risk Management
The global transformation of the financial system toward a low-carbon economy has placed climate change at the top of the agenda for monetary authorities and financial services regulators worldwide. In Indonesia, this urgency is actualised through the mandate of Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (the PPSK Law), which grants Bank Indonesia (BI) the authority to regulate and develop a sustainable finance framework.
This step is a systemic response to climate risks that could disrupt the stability of the national financial system due to their wide-ranging and irreversible nature.
BI Green Calculator emerged from the urgent need to close the data gap in inventories of greenhouse gas (GHG) emissions across the real sector and the financial services sector. After an initial limited release covering Scope 1 and Scope 2 emissions in October 2024, Bank Indonesia is now undergoing a significant update by developing Green Calculator Version 2 (V.2).
This development aims to unify various emission calculation methodologies into a single digital platform that is accessible and has a strong legal basis.
Strategic Benefits and Implementation Challenges
The Green Calculator application is not merely a technical calculation tool; it is a green macroprudential policy instrument. By using national emission factors (Tier 2), the application yields far more accurate results than using global emission factors (Tier 1), which often do not reflect the characteristics of Indonesia’s local energy mix.
For banks, the Version 2 feature covering financed emissions makes it easier to identify emission concentrations within their loan portfolios without having to develop a calculation system from scratch.
Additionally, the mobile-based application promotes inclusivity by enabling MSMEs to remain involved in global supply chains that require carbon transparency.
Nevertheless, the journey toward full adoption of Green Calculator Version 2 faces a range of complex challenges. Integrating the standalone Green Calculator with the bank’s core banking system requires automated data flows via APIs to avoid imposing a heavy administrative burden.
Moreover, the effectiveness of the calculation results depends on the quality of activity data entered by customers. There is a risk of ‘garbage in, garbage out’ if customers enter inaccurate data, especially amid low energy data literacy at the MSME level.