According to the Ministry of Finance (Kemenkeu)'s *2023 Green Sukuk Allocation and Impact Report*, the cumulative value of green sukuk financing in Indonesia reached US$6.9 billion from 2018 to 2022.
Green sukuk are Sharia-compliant investments used to finance projects with positive environmental impacts. The Kemenkeu describes these bonds as a Sharia-compliant investment alternative, distinct from conventional bonds, offering investors a way to invest in projects aligned with environmental values.
Funds from these green sukuk have been used to finance various climate-friendly projects, including renewable energy, energy efficiency, sustainable transportation, waste management, and climate resilience.
By sector, sustainable transportation had the largest cumulative share of green sukuk financing from 2018 to 2022, accounting for 32.39% of the total financing.
However, the report notes that the development of railway infrastructure and facilities has not significantly contributed to reducing greenhouse gas (GHG) emissions due to a downward trend in public transportation use.
The Kemenkeu attributed this to "social restriction policies and changes in lifestyle and movement patterns during the Covid-19 pandemic."
Next, the cumulative proportion of green sukuk financing in the food and climate resilience sector was the second largest at 28.09% over the past four years, followed by the sustainable water or waste management sector at 25%.
Other sectors had lower cumulative proportions of green sukuk financing: renewable energy (4.92%), energy efficiency (4.8%), waste-to-energy and waste management (4.58%), green buildings (0.22%), and sustainable natural resource management (0.01%).
Finance Minister Sri Mulyani stated that Indonesia was the first country to issue sovereign green sukuk. Indonesia's total green sukuk issuance over the past four years also makes it the world's largest issuer of green sukuk and a global green sukuk market leader.
According to Sri Mulyani, the Indonesian government is committed to issuing more green sukuk in the future.
"These sukuk will help Indonesia reduce GHG emissions, build a more sustainable economy, and create a better future not only for all Indonesians but also for the whole world," she said, as quoted in the report.