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Indonesia Encourages Sustainable Investment in G20 Summit

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By: Alfisyah Dianasari )*

Investment is something that is still being predicted by the government to improve the national economy, now the government is also finalizing preparations for sustainable investment.

The G20 Presidency of Indonesia, through the Forum on International Policy Levers for Sustainable Investment, which was held on 13 June 2022, has drawn up supporting policies that can encourage sustainable financing and investment.

The forum, which was held hybridly in Bali, was attended by G20 members, invitees and international organizations with 64 delegates participating offline and 54 delegates participating online. The forum aims to discuss supporting policies that encourage sustainable financing and investment.

These supporting policies will encourage sustainable investment that supports the transition to reducing greenhouse gas emissions and an economy that is resilient to climate change.

There were four issues discussed in the forum, namely the consideration of formulating an effective emission pricing mechanism and tool that supports the transition to a low-carbon economy with presentations from Canada, the European Union and the Netherlands. Furthermore, non-price tools that support the transition to a low-carbon climate with presentations from China, the United States and South Korea.

Then, financing policies for sustainable energy transitions and to bridge the gap in financing transformative technologies with speakers from Argentina, Germany and Indonesia.

Finally, the discussion at the forum also discussed issues related to understanding the distribution implications of general policy advocates directed at the movement of transition finance with presentations from Brazil and the UK as well as the experiences of each country.

Along with sharing the experiences of countries and their best practices, several international organizations and knowledge partners also shared presentations on related issues.

The core messages from the forum were summarized as input for the 3rd G20 Finance Ministers and Central Bank Governors meeting to be held in July in Bali.

The G20 Presidency of Indonesia is committed to ensuring joint action and bringing concrete results within the Sustainable Finance Working Group (SFWG) to achieve the 2030 Agenda for the Sustainable Development Goals and the Paris Agreement.

Previously, we need to know that the term sustainable investment or what is known as sustainable investment has started in developing countries, especially Europe. This seems to have attracted the interest of many investors, both institutional and individual.

The value of assets under management with the theme of sustainability in Asia was recorded to have doubled from the previous year to 71 billion US dollars in the first quarter of 2022, although this figure is still quite far when compared to Europe which has reached 2.2 trillion US dollars in the previous period. same.

In fact, millennials around the world are more interested in investing that is sustainable or has a positive social and environmental impact. One of the reasons that attract investors, especially the younger generation, to sustainable investment is the hope that companies and business activities can manage natural resources in an environmentally friendly manner and pay attention to the welfare of human resources, so that in the future this generation is expected to continue to enjoy natural resources that exist with the same or even better quality.

Today’s young investors find it easier to choose investment instruments based on the sustainable concept, because this concept has become available in the market. Novice investors can also start investing through environment, social, and governance (ESG)-based mutual funds.

The demand for ESG-based investment in Indonesia is also starting to show an upward trend. As of December 2021, the ESG-based mutual fund managed funds at BNP Paribas AM reached Rp. 5.2 trillion, a significant increase compared to 2019 which was only around Rp. 1 Trillion. Growth has also occurred on the product side of the mutual fund industry in Indonesia, where in 2021 there will be 15 ESG-based mutual fund products. This ESG criterion is used to select issuers with the application of business practices according to good ESG standards.

The government does not play around with investment regulations, because investment is one of the driving forces of the national economy, so large or small investors must still be served, so that the government that prepares sustainable investment must get support from the community.

)* The author is a contributor to the Press Circle and Cikini Students

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