Nusa Dua, Bali, November 11, 2022 - The Indonesian Chamber of Commerce and Industry (KADIN) signed a Memorandum of Understanding with the WWF Indonesia Foundation to support joint efforts to achieve the zero carbon emission target by facilitating the engagement of Financial Services Institutions (FSIs) at the Indonesia Net Zero Summit 2022, Nusa Dua, Bali. This cooperation includes technical assistance to debtor companies and potential debtors, supporting financing solutions, assisting in the preparation of low-emission FSI portfolio transitions, and connecting FSIs with demand for decarbonization/energy transition investment needs.

As financial intermediaries, FSIs play a crucial role in channeling finance to support businesses to achieve zero carbon emission targets and align portfolio emissions with the availability of national emission budget limits. This is in line with Article 2.1(c) of the Paris Agreement, which emphasizes the importance of channeling financial flows consistent with low-carbon development pathways that are resilient to the threat of climate change.

M. Yusrizki, Chairman of the Standing Committee on New and Renewable Energy of KADIN Indonesia said, "The national industry is now required to make the transition to net zero. This transition process requires enormous support from various parties. This partnership with WWF-Indonesia aims to help prepare and strengthen the company's ability to achieve the zero carbon emission target, especially through the involvement of the role of financial services institutions."

This partnership is in line with the government's program to achieve a carbon neutral target by 2060 or sooner. The Ministry of Finance (MoF) estimates that at least Rp28,223 trillion in funding is needed to achieve zero carbon emissions by 2060. According to the Ministry of Finance, the government needs funding sources outside state finances because the State Budget (APBN) so far can only cover one-third of the funding needs.

The composition of energy consumption for industry reaches 34.93% of the total national energy consumption (Ministry of Energy and Mineral Resources, 2021). Of the total energy consumption required by the industry above, 23.1% is electricity and 76.9% is other forms of energy such as heat generated by boilers (non-electricity). Energy needs other than electricity are still fully dependent on fossil energy and almost a third of them use coal. Aditya Bayunanda, CEO of WWF Indonesia Foundation, said, "Achieving carbon neutrality is not easy, and businesses need to be assisted - one of them with easy access and appropriate funding solutions. For this, there is a need for facilitation to connect the supply of funding and the need for companies to transition."

M. Yusrizki, who also serves as chairman of the Kadin Net Zero Hub (KADIN NZH) said, "National companies that make the energy transition need funding support that supports industrial decarbonization pathways that are in accordance with SBTi (Science Based Target Initiative) standards. This partnership will help KADIN NZH members to access sustainable-linked loans."

According to the WWF Sustainable Banking Assessment (SUSBA) Report 2021, ASEAN banks' efforts to improve the environmental and social impact of their portfolio companies are still at an early stage. Data from the report shows that the average progress of banks over the past four years in increasing positive impact is still below 40% compliance with relevant indicators.

Therefore, this collaborative effort in the early stage will focus on building the bank's ability to work with its portfolio companies in terms of achieving transition targets and developing appropriate product solutions. WWF-Indonesia, as the Secretariat of the Indonesian Sustainable Finance Initiative (IKBI)-a multi-stakeholder platform active in promoting sustainability in the financial sector, will help facilitate this process together with KADIN.