Indonesia’s Strategy for Sustainable Finance

Abstract

According to the 2030 Agenda for Sustainable Development, inclusive green growth is considered to be the pathway to sustainable development. The transition to a resource-efficient green economy is especially challenging for developing countries due to a huge funding gap to implement the Agenda. Governments can play a proactive role in this process by incorporating sustainability factors into national financial systems to channel capital flows into green projects. Indonesia has greatly advanced toward a more sustainable financial system. Its experience in this sphere is especially valuable for the Russian Federation, which is currently shaping its policy of financing sustainable development. The study aims to identify the key facets of Indonesia’s strategy for sustainable finance. The authors outline the major aspects of Indonesia’s action plan and examine its regulatory framework for sustainable finance, including the domestic green bond market. They also analyze Russia’s current initiatives to promote sustainable finance at the national level. The authors come to the conclusion that the Indonesian strategy for sustainable finance is distinguished by specific objectives and principles of sustainable finance closely tied to national development priorities; a clear-cut action plan with time-bound measures to create a conducive environment for sustainable finance; a comprehensive regulatory framework embracing the entire financial sector; a phased approach to the transition to sustainable financing; and strong regulatory support for financial institutions during the transition period.