Sustainable Finance Becomes Key to Addressing Climate Risks
JAKARTA, KOMPAS.com — Climate change is no longer viewed solely as an environmental issue but has evolved into a risk with broad impacts on social and economic aspects, including the stability of the financial sector.
This was stated by the Deputy Commissioner for Regulation, Licensing, and Quality Control of the Financial Services Authority (OJK), Deden Firman Hendarsyah.
“Climate change is not merely an environmental risk, but has developed into an economic risk and a financial risk that threatens stability,” Deden said in his remarks at the Sustainable Finance Fest 2026, quoted on Friday (1/5/2026).
For the financial industry, such steps are no longer a choice.
“Steps to mitigate climate risks are no longer voluntary practices, but an obligation for our financial industry,” he added.
According to Deden, the transition process towards a more sustainable financial system needs to be carried out carefully. He warned that failing to transition could give rise to even greater risks.
In addition, Deden emphasised the important role of the public in driving change in the financial sector.
He stated that the climate change issue is an intergenerational one, with impacts that will be felt in the long term.
“Climate change is an intergenerational issue, and it is the younger generation that will bear the consequences for the longest time. Therefore, public pressure plays a crucial role in urging the financial and banking sectors to transform more quickly,” he said.
According to OJK, various regulations have been issued to encourage the implementation of sustainability principles in business activities, such as POJK, the Indonesian Sustainable Finance Taxonomy (TKBI), and the Climate Risk Management and Scenario Analysis Guide (CRMS).
OJK’s Director of Sustainable Finance, R. Joko Siswanto, stated that the issued regulations aim to change the paradigm of financial industry players.
He explained that in the medium and long term, OJK is pushing for the implementation of sustainability principles not only driven by compliance with rules, but also to become an industry need.