Green Financing/Islamic Financing
As a consequence of its geographical location, archipelagic characteristic and amount of natural resources of Indonesia, it is prone to climate change impact with negative aftermath to its economy and environment, hence its commitment to the Paris Agreement to reduce greenhouse emission. In light of this, UNDP Indonesia is assisting the Ministry of Finance in conducting climate budget tagging, in which six line ministries (Ministry of Agriculture, Ministry of Environment and Forestry, Ministry of Industry, Ministry of Transportation, Ministry of Energy and Mineral Resources and Ministry of Public Works and Housing) develop budget of climate change. The budget tagging process is being used to initiate new financial instruments to combat climate change in the form of Green Bond and Green Sukuk. In March 2018, Indonesia has issued USD 1.25 billion world’s first sovereign green sukuk which was reviewed by CICERO, an international independent reviewer, as medium green. The issued Green Bond and Green Sukuk finances a number of projects dedicated to climate change mitigation and adaptation, including sustainable transport (double tract railway project in North Java line) and renewable energy (solar power plant project in Sumba, East Nusa Tenggara).