New Funding Alternatives in Indonesia: Sustainability-Based Funding
Introduction
Are there new funding alternatives for companies in Indonesia?
Funding alternatives for companies in Indonesia are no longer limited to conventional financing and traditional bank loans. Along with the rapid development of sustainable finance in Indonesia and the growing attention to non-financial risks, companies now have access to various funding alternatives, including ESG-based sustainable financing in Indonesia as a strategic source of capital.
The specialist team of TGS AU Partners assesses that sustainable financing has become a strategic instrument for companies aiming to strengthen long-term business resilience while improving access to bank financing.
These instruments include green finance in Indonesia, sustainability-linked loans in Indonesia, and other ESG-based financing schemes that serve as sustainable financing alternatives in Indonesia for responsible business growth.
Why is sustainable financing becoming increasingly relevant?
Sustainable financing is based on the understanding that a company’s financial performance is closely linked to how it manages Environmental, Social, and Governance (ESG) aspects. The specialist team of TGS AU Partners explains that ESG frameworks are now widely used by banks as tools to assess risk, opportunity, and long-term business sustainability.
In the context of ESG and access to funding, companies that systematically manage environmental, social, and governance impacts are generally perceived by banks as having a stronger risk profile and better corporate ESG readiness.
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How are sustainability and access to funding connected?
Based on research conducted by the specialist team of TGS AU Partners, a company’s readiness to meet banking ESG criteria increasingly affects its access to sustainability-based funding, particularly sustainable bank financing in Indonesia. Banks no longer assess financial statements alone, but also evaluate ESG policies, governance structures, and sustainability performance monitoring systems.
Companies with mature ESG frameworks typically have a higher likelihood of accessing sustainable bank financing in Indonesia, including sustainability-linked financing and sustainability-linked loans in Indonesia.
What is a sustainability-linked loan?
A sustainability-linked loan (SLL) is a financing facility that is directly linked to the achievement of a borrower’s sustainability performance targets and ESG compliance for funding. The specialist team of TGS AU Partners notes that sustainability-linked loans in Indonesia differ from green loans, as the use of proceeds is not necessarily restricted to specific projects, but instead focuses on improving the company’s overall ESG performance.
Regulatory Framework for Sustainable Financing
What is the regulatory basis for sustainable financing in Indonesia?
The OJK sustainable finance regulatory framework serves as the foundation for implementing sustainable finance in Indonesia and regulating ESG-based financing activities. One of the key regulations is the POJK on Green Bonds, namely OJK Regulation No. 60/POJK.04/2017 on the Issuance and Requirements of Green Debt Securities.
The specialist team of TGS AU Partners observes that although this regulation specifically governs green bonds, the classification of Environmentally Sustainable Business Activities (KUBL) within it is frequently used by banks as a reference in assessing ESG-based financing, including sustainable bank financing in Indonesia and sustainability-linked financing structures.
Sustainable Financing Practices by Banks
What are the general requirements for sustainability-linked financing at Bank Mandiri?
Based on research by the specialist team of TGS AU Partners, Bank Mandiri’s sustainability financing generally requires clear sustainability objectives and measurable ESG indicators. Evaluations are conducted through creditworthiness assessments and alignment with the bank’s ESG and funding access framework.
What are the general requirements for sustainability-linked financing at Bank BNI?
BNI’s ESG financing integrates ESG aspects into its financing process. The specialist team of TGS AU Partners finds that companies are expected to demonstrate relevant sustainability commitments and be prepared to undergo periodic ESG performance monitoring and reporting.
What are the general requirements for sustainability-linked financing at Bank BRI?
Within BRI’s sustainable financing, environmental and social aspects form part of credit risk management and bank ESG criteria in Indonesia. According to the specialist team of TGS AU Partners, financing is provided to borrowers that meet ESG standards and are not included in excluded sectors.
What are the general requirements for sustainability-linked financing at Bank BTN?
BTN’s sustainability finance focuses on housing and basic infrastructure sectors that generate positive social and environmental impacts. The specialist team of TGS AU Partners notes that assessments consider project alignment, risk profile, and sustainability impact.
What is the role of national private banks and foreign banks?
National private banks, such as BCA, have integrated banking ESG criteria into their credit policies. The specialist team of TGS AU Partners observes that although financing is not always explicitly structured as SLLs, ESG-based financing principles have become standard practice.
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Meanwhile, foreign banks operating in Indonesia generally refer to sustainable finance in Indonesia frameworks as well as their global group ESG policies when extending sustainable financing.
How is sustainable financing implemented in Islamic banking?
According to research by the specialist team of TGS AU Partners, Islamic banking and ESG in Indonesia principles are applied in an integrated manner. Financing is directed toward business activities that generate social and environmental benefits while remaining compliant with Sharia principles and applicable regulations.
Conclusion
Sustainable financing, including sustainability-linked loans in Indonesia, represents a strategic funding alternative and a sustainable financing alternative in Indonesia for companies. The specialist team of TGS AU Partners emphasizes that success in accessing sustainable financing in Indonesia depends not only on financial performance, but also on a company’s ESG readiness and alignment with ESG compliance for funding.
Such readiness includes clear ESG policies and governance structures, the establishment of relevant sustainability indicators and targets, and consistent sustainability performance monitoring and reporting systems.
If a company seeks to assess its ESG readiness and improve access to sustainability-based funding, the specialist team of TGS AU Partners is ready to support companies through ESG evaluations, strategy enhancement, and alignment with prevailing banking ESG criteria.
Please contact our team at info@au-partners.com to discuss your needs with our business and ESG consultants. TGS AU Partners will ensure that your business operates in line with applicable compliance standards, supporting a smoother sustainability-based financing process.
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