“If we pollute the air, water and soil that keep us alive and well, and destroy the biodiversity that allows natural systems to function, no amount of money will save us.” – David Suzuki, scientist and environmentalist.
In March 2019, the National Development Planning Agency (Badan Perencanaan Pembangunan Nasional-Bappenas) launched a milestone document: the Low Carbon Development Initiative (LCDI). It will be integrated into the National Medium-Term Development Plan (RPJMN) 2020-2025 and to ensure that Indonesia will apply a sustainable approach in her development plan.
In the development context, there are two schools that always in dispute. The first school views the environment as a burden to development, while the other one includes the environment for the benefits of the development in the long term.
However, the wheels of the economy will stop turning if natural resources depleted, deforestation keeps happening, and water sources drained. Environment degradation will harm the ecosystems and cause natural disasters and new diseases, and it will threaten humans as well. Without political will and commitment, we will reach a point where the economy will crash since there is nothing left to offer. Can life exist without water, land, and forests?
Indonesia realizes that its natural wealth will also erode if it ignores sustainable management. Indonesia has ratified the Paris Agreement and joined the NDC (Nationally Determined Contribution), an action by committed countries to reduce greenhouse gas emissions. 196 countries join the initiative to limit the rise of the average global temperature to 1.5o Celsius. Increasing temperature exceeding the target will cause, let’s say, the rising of sea levels and sinking of the islands that lead to losing habitat, including for humans.
Green Bond as Financing Instrument that Sustains Environment
To achieve the target and deliver its contribution, Indonesia implements some strategies. One of them is through the green bond initiative, a financial instrument to fund environmentally friendly, sustainable development.
In 2017, the Financial Services Authority (Otoritas Jasa Keuangan-OJK) issued regulations concerning the Issuance and Requirements of Environmental-Based Debt Securities. This regulation allows the government and private sectors to issue bonds to finance environmentally friendly developments. It requires a minimum of 70% of the proceeds of the bond to finance green projects, including renewable energy, public transportation, sustainable waste management, and biodiversity conservation.
In February 2018, Indonesia issued the first green sukuk (sharia bond) in Asia. This success continued with the issuance of another green sukuk in the following year, which is used to finance LRT, hydroelectric power plant, and water management. Indonesia will also issue a blue bond, which focuses on the funding of the protection of the coastal environment, coral reefs, and mangroves rehabilitation.
A few years ago, we could not imagine that investment can go hand in hand with the vision of protecting the environment. Now investors can save the planet while gaining yield in the capital market.
Some companies—private and state-owned—also issued green bonds, for example, PT Sarana Multi Infrastruktur (Persero)-SMI, and PT Star Energy. SMI even allocates 100% of proceeds of the bonds to finance the environmentally friendly projects, exceeding the minimum requirement set by the government, which is 70%.
Just last year, the government has issued the Sovereign Sukuk Series ST006 which was the first Green Sukuk Retail in the world that is available online for Indonesian people. Green Sukuk Retail not only has a mission to reduce carbon emissions, but also targets five areas of the global campaign "Sustainable Development Goals" (SGDs), including, clean and affordable energy, decent work, industry, innovation and infrastructure, sustainable cities and communities, as well as climate change.
Let’s invest and save the environment at the same time!
You only need one single step to channel your vision as a green investor by buying investment products that are environmentally oriented.
It’s the MOST App by Mandiri Sekuritas that makes the step increasingly easy and convenient. This single platform allows customers to invest and do transactions not only in bonds but also stocks and mutual funds. It’s very possible to invest in securities, government retail or corporate green bonds.
Mandiri Sekuritas facilitates prospective investors through multiple methods to enable them to start transactions. Customers can open an account on www.most.co.id, MOST App on laptop and computer, or MOST Mobile on smartphones.
Optimizing online technology for transactions in the capital market is also a commitment of Mandiri Sekuritas in saving energy. Customers do not need to come to the branch office to open a customer fund account (RDN). Mandiri Sekuritas provides an online account opening facility that can be accessed anywhere.
On top of that, the Mandiri Sekuritas research team conducts comprehensive studies and analysis. Its analysis also includes macroeconomics and stocks (equity research). The extensive research and in-depth analysis provide information on how green the commitment of an issuer is; or which companies are issuing green bonds. This review and consideration positively help prospective investors to make choices according to their goals.
So, are you ready to be an environment defender?
