Are banks ready to account for climate-related issues?

This report by the Climate Policy Initiative evaluates the readiness of major commercial financial institutions in Indonesia to assess and disclose climate-related risks and opportunities. Based on a survey conducted between September 2021 and June 2022, the report finds that while banks show high compliance with national sustainability reporting mandates (POJK 51/2017), they lack the depth of disclosure required by international benchmarks like the Task Force on Climate-related Financial Disclosures (TCFD). The report highlights a gap between the growth of green portfolios and the actual integration of climate risk into financial statements and risk management frameworks.

• Indonesian banks demonstrate high compliance with the OJK regulation on Sustainable Finance Implementation (POJK 51/2017), but their climate-related disclosures remain superficial. While 100% of surveyed banks submitted sustainability reports, only 23% met the benchmarking criteria for climate-related disclosure when measured against TCFD recommendations.
• There is a significant gap in the adoption of TCFD's four pillars (Governance, Strategy, Risk Management, and Metrics and Targets). No surveyed entity has fully adopted all four pillars, and only 23% are in the initial development stage of TCFD-aligned disclosure.
• Banks have not yet integrated climate-related risks into their formal financial statements or core risk management processes. Climate risk is not accounted for in annual stress tests, the Internal Capital Adequacy Assessment Process (ICAAP), or the measurement of Expected Credit Loss (ECL).
• While green portfolios are increasing, the metrics used to track them are limited. 85% of sampled banks have set targets for the portion of their green portfolio, but targets and metrics for financing emission reductions remain unclear and are generally limited to the banks' own day-to-day operations rather than their investment products.
• Private sector contribution to Indonesia's 2030 climate goals is suboptimal, covering only 9% (USD 21.3 billion from 2015-2019) of the total USD 285 billion investment needed. The report suggests that improving sustainability disclosure practices could optimize this contribution.
• There is a disparity in green finance allocation between different types of banks, with private banks allocating a higher portion of green finance compared to state-owned enterprise (SOE) banks.

APA

Climate Policy Initiative (2022). Are banks ready to account for climate-related issues? https://www.climatepolicyinitiative.org/wp-content/uploads/2022/12/Green-Banking-Survey-2022_FINAL.pdf

Chicago

Climate Policy Initiative. Are banks ready to account for climate-related issues? 2022. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/12/Green-Banking-Survey-2022_FINAL.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Are banks ready to account for climate-related issues? |date=December 2022 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2022/12/Green-Banking-Survey-2022_FINAL.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022are, author = {{Climate Policy Initiative}}, title = {{Are banks ready to account for climate-related issues?}}, institution = {Climate Policy Initiative}, year = {2022}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2022/12/Green-Banking-Survey-2022_FINAL.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }