OJK: Sustainable financial ecosystem must become an industry necessity

Jakarta (ANTARA) - The Financial Services Authority (OJK) assesses that a sustainable financial ecosystem must become an industry necessity to maintain economic order, rather than merely a regulatory demand.

OJK’s Director of Sustainable Finance, R Joko Siswanto, stated that various regulations issued by OJK, such as the Indonesian Sustainable Finance Taxonomy (TKBI) and the CRMS (Climate Risk Management and Scenario Analysis) Guide, are designed to change the paradigm of financial industry players.

“The market or public will ‘punish’ or appreciate business actors in implementing those sustainable practices,” said Joko during a discussion themed “Finance for Future: Giving the Green Shift a Lift,” as per a statement received in Jakarta on Friday.

OJK’s Deputy Commissioner for Regulation, Licensing, and Quality Control, Deden Firman Hendarsyah, also conveyed that active participation from various parties is needed in developing sustainable finance, both through green investments and policy advocacy.

The transition to sustainable finance, he said, is also a collective effort to mitigate climate risks involving many stakeholders. For financial industry players themselves, transitioning towards greater sustainability is an inevitability.

“Steps to mitigate climate risks are no longer voluntary practices, but an obligation for our financial industry,” said Deden.

He reminded financial industry players that the transition towards greater sustainability needs to be done carefully.

According to Deden, choosing not to transition does not mean being free from risks; on the contrary. The risks arising from stagnation can be far greater and harder to control compared to the risks present in the change process itself.