Climate-aligned investments in Indonesia’s financial sector

Between 2015 and 2021, Indonesia's financial sector committed USD 41.7 billion in climate-aligned investments, representing 15% of the country's total climate finance needs. Public and private financial institutions contributed nearly equal annual averages (USD 3.5 billion and USD 3.4 billion, respectively), though private contributions represent only 3% of their total investments. While public finance is dominated by Development Finance Institutions targeting renewable energy, private finance is concentrated in the AFOLU sector, particularly certified sustainable palm oil. To meet 2030 targets, Indonesia faces a climate finance gap of approximately USD 145 billion, requiring climate-aligned investment to scale by at least 4.5x this decade.

• Indonesia's financial sector provided USD 41.7 billion in climate-aligned commitments from 2015 to 2021, which is 15% of the total climate finance needed to meet net zero goals. This investment level must increase by at least 4.5x for the rest of the decade to be sufficient.
• There is a significant financing gap for Indonesia's 2030 climate targets, with an estimated USD 285 billion investment required. Because the government budget covers only 34% of this need, a gap of approximately USD 145 billion remains.
• Public and private financial institutions contribute nearly equal annual amounts to climate finance, but their targets differ. Public FIs average USD 3.5 billion annually, led by Development Finance Institutions (DFIs) focusing on renewable energy. Private FIs average USD 3.4 billion annually—only 3% of their total investments—with a primary focus on the AFOLU sector and certified sustainable palm oil.
• In the power sector, 67% of the USD 35.6 billion total investment over the last six years was directed toward renewable energy, specifically geothermal and hydropower. Conversely, the mining sector saw the highest loan growth in 2022, increasing by 43% due to government efforts to boost domestic processing and high commodity prices.
• The Indonesian government is implementing several policy reforms to close the investment gap, including the Taxonomy for Sustainable Finance, the mandatory Emission Trading System (ETS) covering 99 coal-fired power plants (81.4% of national capacity), and the USD 20 billion Just Energy Transition Partnership (JETP).

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} }