Climate-aligned investments in Indonesia’s financial sector

This report by the Climate Policy Initiative analyzes climate-aligned investments within Indonesia's financial sector from 2015 to 2021, highlighting a significant financing gap and the differing roles of public and private financial institutions in supporting the country's net zero goals.

• Between 2015 and 2021, Indonesia's financial sector committed USD 41.7 billion in climate-aligned investment, which represents 15% of the total climate finance needed to meet the country's net zero goals. To meet these objectives, this level of investment must increase by at least 4.5 times over the rest of the decade.
• Public and private financial institutions contribute nearly equal amounts to climate finance, with public FIs averaging USD 3.5 billion and private FIs averaging USD 3.4 billion annually. However, climate-aligned investments account for only 3% of the total investments made by private financial institutions.
• Investment targets differ by actor: public finance is dominated by Development Finance Institutions (DFIs) focusing on renewable energy and dual-benefit projects, while private finance—led by commercial FIs—is concentrated in the AFOLU sector, specifically certified sustainable palm oil.
• Indonesia faces a climate financing gap of approximately USD 145 billion to reach its 2030 targets, as the government budget can only cover 34% of the estimated USD 285 billion required investment. The report notes that a small fraction of the country's stock market capitalization (USD 600 billion at the end of 2022) and bank loan cash flow (USD 385 billion) could close this gap.
• In the power sector, 67% of the USD 35.6 billion total investment over the last six years was directed toward renewable energy, primarily geothermal and hydropower. Meanwhile, the mining sector saw the highest growth in investment loans, spiking 43% in 2022, driven by government plans to boost domestic processing of raw materials.

APA

Climate Policy Initiative (2023). Climate-aligned investments in Indonesia’s financial sector. https://www.climatepolicyinitiative.org/publication/climate-aligned-investments-in-indonesias-financial-sector/

Chicago

Climate Policy Initiative. Climate-aligned investments in Indonesia’s financial sector. 2023. https://www.climatepolicyinitiative.org/publication/climate-aligned-investments-in-indonesias-financial-sector/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Climate-aligned investments in Indonesia’s financial sector |date=20 December 2023 |url=https://www.climatepolicyinitiative.org/publication/climate-aligned-investments-in-indonesias-financial-sector/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023climatealigned, author = {{Climate Policy Initiative}}, title = {{Climate-aligned investments in Indonesia’s financial sector}}, institution = {Climate Policy Initiative}, year = {2023}, month = dec, url = {https://www.climatepolicyinitiative.org/publication/climate-aligned-investments-in-indonesias-financial-sector/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }