Enhancing Sustainable Finance Governance: The Role of the Sustainable Finance Committee in Policy Harmonisation and Cross-Institutional Coherence

The document outlines the operationalization of Indonesia's Sustainable Finance Committee (SFC) under Law No. 4/2023. It proposes a three-tier governance structure involving the Ministry of Finance, Bank Indonesia, and the Financial Services Authority (OJK) to bridge institutional silos and align national climate targets with financial market mechanisms. The paper emphasizes the need for a formal Government Regulation to ensure the SFC's authority, the creation of a centralized data platform for ESG transparency, and the use of sectoral coalitions to co-create bankable financial solutions for priority sectors like energy and transport.

• Indonesia requires an estimated USD 285 billion in investment between 2020 and 2030 to achieve its Enhanced Nationally Determined Contributions (ENDC) target of reducing greenhouse gas emissions by up to 43.2% by 2030 with international support.
• The Sustainable Finance Committee (SFC), established under Law No. 4/2023, is designed as a high-level policy coordination platform to align fiscal, monetary, and regulatory authorities rather than as a regulatory authority with binding powers.
• The proposed governance architecture for the SFC consists of a three-tier structure: a Core Body (Ministry of Finance, Bank Indonesia, and OJK), a technically capable Secretariat housed within the Ministry of Finance, and three Thematic Working Groups.
• The SFC's effectiveness depends on the issuance of a formal Government Regulation (Peraturan Pemerintah) to define its authority, decision-making protocols, and accountability mechanisms, otherwise it risks being a symbolic rather than structural institution.
• The SFC has five key responsibilities: mobilizing sustainable finance at scale, enhancing policy coherence, strengthening multi-level governance (national to subnational), promoting inclusive stakeholder engagement, and managing climate-related financial risks.
• A Sectoral Coalition Framework is proposed to co-create bankable financial solutions by bringing together public sector actors, financial institutions, industry associations, civil society, and development partners to address sector-specific investment gaps.
• The document recommends a centralized, interoperable data platform to harmonize reporting standards, monitor sustainable finance flows, and reduce greenwashing risks, drawing inspiration from Singapore's Project Greenprint.
• Climate-vulnerable countries, including Indonesia, faced an estimated USD 62 billion in additional borrowing costs between 2008 and 2018 due to elevated climate risk perceptions.
• The SFC is tasked with overseeing the development and application of a national sustainable finance taxonomy (TKBI), which is essential for distinguishing between green and brown assets and enhancing investment transparency.
• The SFC's coordination model includes both regular coordination (scheduled meetings for monitoring and planning) and ad-hoc coordination (triggered by urgent events like climate-related financial shocks or policy shifts).

APA

Ismalina, P., Horner, S., Larasati, L., Siagian, A. P., & Solagratia, H. (2025). Enhancing Sustainable Finance Governance: The Role of the Sustainable Finance Committee in Policy Harmonisation and Cross-Institutional Coherence. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/SFC-Whitepaper-English-Indonesian.pdf

Chicago

Ismalina, Poppy, Simon Horner, Luthfyana Larasati, Albertus P. Siagian, and Hari Solagratia. Enhancing Sustainable Finance Governance: The Role of the Sustainable Finance Committee in Policy Harmonisation and Cross-Institutional Coherence. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/SFC-Whitepaper-English-Indonesian.pdf.

Wikipedia

{{cite report |last1=Ismalina |first1=Poppy |last2=Horner |first2=Simon |last3=Larasati |first3=Luthfyana |last4=Siagian |first4=Albertus P. |last5=Solagratia |first5=Hari |title=Enhancing Sustainable Finance Governance: The Role of the Sustainable Finance Committee in Policy Harmonisation and Cross-Institutional Coherence |publisher=Climate Policy Initiative |date=June 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/SFC-Whitepaper-English-Indonesian.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ismalina2025enhancing, author = {Ismalina, Poppy and Horner, Simon and Larasati, Luthfyana and Siagian, Albertus P. and Solagratia, Hari}, title = {{Enhancing Sustainable Finance Governance: The Role of the Sustainable Finance Committee in Policy Harmonisation and Cross-Institutional Coherence}}, institution = {Climate Policy Initiative}, year = {2025}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/SFC-Whitepaper-English-Indonesian.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }