ESG Framework Assessment in Green Finance: A Case Study of the Indonesian Banking Sector

Abstract

Currently ESG (Environmental, Social, and Governace) and green finance concept are becoming popular in banking industry. Banking used to focus on how to generate net income margin from being an intermediary party between lending and funding needs. Nowadays, there is a growing trend in banking industry to move beyond purely financial considerations to incorporate environmental, social, and governance considerations into the decision-making process. Green finance disbursement in Indonesia banking industry is still classified as low compared to conventional financing though they have had ESG framework in place which should have been effective in promoting sustainable investments. The study is to identify internal and external factors affecting green finance disbursement in banking industry, analyze customer views on green finance, evaluate the role of Indonesia's Financial Services Authority (Otoritas Jasa Keuangan) in promoting green finance, and provide insights to improve green finance disbursement. The study will use a mixed-methods approach, including interviews and review of the literatures.