Indonesian banks are under increasing regulatory pressure to scrutinise their loan portfolios for exposure to carbon-intensive sectors. Last month, Indonesia’s financial services authority (OJK) announced that all banks need to factor climate risks into their lending decisions by 2026. Previously, only banks that were part of OJK’s climate task force had to participate in climate stress testing.
“For the Indonesian context, I think we’re looking at a significant shift within the next two-to-five years in how financial risks associated with climate change are reported and managed,” says Yuliana Sudjonno, sustainability leader at PwC Indonesia.
