Independent Observer – Economy Business

Friday, December 19-25, 2025

The Indonesian Working Group on Forest Finance (IWGFF) has re leased its Green Investment Index III 2025, an independent report that assesses the Environmental, Social, and Governance (ESG) per formance of 13 national and foreign banks operating in Indonesia.

This year’s results indicate a significant shift: national banks for the first time excelled in most cat egories, surpassing foreign banks that had dominated the index since 2018.

The index ranks the follow ing banks as having the highest scores: Panin, Mandiri, BCA, BNI, CIMB Niaga, Danamon, BSI, and BRI. Foreign banks such as OCBC and DBS occupy the middle ranks, while the report noted that “one major foreign bank is in the red category.”

IWGFF executive director Wil lem Pattinasarany acknowledged this achievement as “important progress for Indonesia’s sustain able financial transformation,” but cautioned that vigilance is still re quired.

“National banks have shown progress in sustainability report ing, but they must also have ad equate red flag standards in the environmental and forestry sec tors, which can identify invest ments and suspected damage or even crime resulting from their investments in the environmental and natural resources sector,” he said Monday.

He further asserted that the minimal number of Suspicious Transaction Reports (STR) filed by financial service providers, in cluding banks, to the Financial Transaction Reports and Analysis Center (PPATK) in the forestry and environmental sectors “confirms the weakness of banks’ red flag reporting.”

PPATK data shows that STRs in the forestry sector amounted to only 0.05 percent, and in the envi ronmental sector only 0.33 percent, out of a total of 428,021 reports submitted to PPATK between Jan uary 2023 and February this year.

IWGFF researcher Marius Gu nawan acknowledged that ESG policies “are already better on pa per, showing that banks’ green in vestment indexes are aligned with pro-environmental investment pathways.”

However, he stressed that banks must urgently improve their risk assessments and “enhance due diligence regarding their investment support in environmental sectors that have the potential to cause environmental damage and natu ral resources, hydrometeorological disasters, and social unrest on the ground.”

“Environmental risk must be a mandatory part of the anti-money laundering (AML) and credit due diligence processes,” said IWGFF researcher Derry Wanta, warning that without comprehensive inte gration, “Banks will remain vul nerable to financing activities that can pose legal, reputational, and financial risks.”

IWGFF assesses that the Indo nesian banking sector is moving “on the right track toward sustain able finance practices,” but recom mends several key steps be taken by banks and regulators to achieve national climate targets and foster a “stronger and more resilient green economy”: (1) Integrate the Green Investment Index as part of the Financial Ser vices Authority (OJK) supervisory system and bank risk assessments. (2) Ensure transparency in high risk sector credit, including publicly accessible regular reports. (3) Stop new financing for unsus tainable activities such as fossil fu els and activities that do not meet environmental permits. (4) Strengthen OJK-PPATK integra tion, making environmental risk a critical component of the AML sys tem. (5) Accelerate the implementation of the Indonesian Green Taxono my, including an exclusion list for non-financeable activities. (6) Implement free prior and in formed consent (FPIC) in invest ment assessments in the land based industrial sector. (eka)

Source: https://observerid.com/