Green Taxonomy Isn’t Green: TuK INDONESIA Calls for Genuine Change

Press Release

Jakarta, November 29, 2024 — TuK INDONESIA has called for more consistent changes in OJK’s green taxonomy revision, stating it should push for tangible progressive goals rather than be used as a pretense for greenwashing. This statement was made during Ecofest 2024, organized by Bloomberg Technoz at the Four Seasons Hotel, Jakarta (November 28). With the overarching theme “Building the Future: Create a Sustainable Green Ecosystem,” the event served as a platform to discuss government policies and stakeholder readiness in building a sustainable green economy ecosystem. However, the question remains—how effectively is the concept of sustainability being implemented?

During a panel discussion titled “How a Sustainable Finance Taxonomy Can Help Prevent Greenwashing,” Henry Rialdi, Head of the Surveillance and Policy Department for Financial Services at the Financial Services Authority (OJK), acknowledged Indonesia’s continued dependence on coal. “For the financial system, if financing is entirely halted, it would be disruptive,” he stated. Similarly, the banking sector still supports the palm oil industry, with the cessation of funding seen as a potential threat to economic stability. Henry also explained that the current taxonomy continues to use three classifications but with updated terms—green, transitioning, and unqualified. “So, it’s not that red [classification] falls under [the category of] transitioning, but rather it falls under unqualified,” he clarified.

Responding to OJK’s statements, TuK INDONESIA’s Executive Director, Linda Rosalina, stressed that the focus should not be on an outright halt to financing but rather on measured restrictions. Financial institutions should adopt a more selective and cautious approach in providing funding, she asserted. “The taxonomy needs to draw clear and robust classifications. Unfortunately, the current ‘green category’ classification only references sustainability certifications. In fact, companies with certifications often still cause environmental damage, violate human rights, and in some cases, operate illegally,” said Linda. She cited certified RSPO companies as examples of such companies that continue to be involved in serious issues, when their comparing their certifications with practical reality.

Maria Trifanny Fransiska, Head of Sustainability at Maybank Indonesia, highlighted the challenges in implementing the green taxonomy, such as validating and verifying creditors’ classifications, which are often self-declared by debtors. “This makes it difficult for banks to determine which projects are eligible for funding,” Maria noted. Therefore, it is crucial for OJK to establish a list of problematic companies.

To stop the normalization of greenwashing, TuK INDONESIA has urged for the green taxonomy to be legally binding, not to merely serve as inconsequential guidelines. The organization has advocated for the creation of a multiparty task force involving relevant ministries and agencies. Additionally, Linda emphasized the importance of involving the communities affected by transgressing companies. “There needs to be a clear platform for sharing information and communication, so any challenges can be discussed collaboratively. This includes providing transparent information and a clear, accessible complaint mechanism,” Linda concluded.

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