IT has been two years since the Covid-19 pandemic. This global crisis has affected various aspects of society, not only health but also education and the economy.

       On the health side, there has been an increase in health expenditures, even deaths. Education is disrupted because face-to-face learning is restricted.

       On the economic side, growth has slowed as a result of reduced income, production and consumption that mainly affects the vulnerable and the poor.

       However, as the saying goes, “There is wisdom behind calamities,” and the pandemic has opened our eyes to the fact that environmental, social and governance (ESG) aspects have an impact on the economy and financial markets.

       Since the Covid-19 pandemic, there has been an increase in demand for investment products that take ESG into account, or sustainable investments.

       This should be welcomed, considering that sustainable investment will have a positive impact on the environment and long-term development.

       Indonesia, which holds the Group of 20 (G20) presidency this year, should take advantage of this moment to promote sustainable investment as a priority issue.

       There are three reasons why it is appropriate to support the G20 discussions on sustainable investment.

       First, sustainable investment pays attention to social and environmental aspects, so it can offer a solution to the current pandemic as well as and future pandemics.

       Sustainable investment is appropriate for Indonesia’s G20 presidency to pursue as a strategy to remove the impacts of the pandemic from the global economy toward a resilient economy and sustainable financing.

       In the spirit of “Recover Together, Recover Stronger”, G20 members are expected to make concrete steps by finding solutions to the global health and economic crisis so the economy can recover stronger.

       G20 members, development banks and international organisations in the Finance Track and Sherpa Track, and the working groups therein, will address the three priority issues of global health architecture, digital transformation and sustainable energy transition at several high-level and technical meetings.

       One of the seven priority items of the G20 Finance Track is the development of sustainable finance. This is to be followed up by the Sustainable Finance Working Group (SFWG).

       The SFWG has a mandate to mobilise sustainable finance as a means of ensuring global growth and stability in promoting the transition to greener, resilient and inclusive societies and economies.

       What is noteworthy is that the SFWG launched the G20 Sustainable Finance Roadmap under Italy’s presidency last year. This road map is a multi-year reference document for G20 members to voluntarily develop sustainable finance at home and globally.

       Second, the G20 represents 65% of the global population, 79% of global trade and 85% of the global economy, so its agreements can be widely applied. This is mainly in relation to long-term economic growth supported by a sustainable economy that is more resilient to any future shocks.

       In addition, the G20 meetings are crucial, considering that what is agreed among the G20 will affect long-term economic development starting this year, or at least with planning due to start this year.

       Although there are knowledge gaps and challenges to the standards in various countries, from standardised guidance on the implementation of sustainable tools, reporting standards, and to the unavoidable high costs, it is possible that the G20 can provide alternative tools for global standards that can be adjusted by each country.

       In future, it is hoped that the Indonesian government can take advantage of the milestones of its G20 presidency to voice the importance of encouraging sustainable and equitable investment, including for affected medium and small-scale economies toward stronger and more resilient economic recovery.

       Third, Indonesia appears to be ready to implement sustainable investment as one of the leading countries to issue green financial instruments at the global level.

       Recently, the Financial Services Authority launched the Indonesia Green Taxonomy, an important step to providing better understanding and ease for players to classify green activities in developing portfolios of financial products and/or services.

       On the other hand, the government is also continuing with implementing linear policies toward the green transition, including a number of policies and mechanisms to support investments in clean energy, such as the carbon market and carbon taxes regulated in the law on tax regulation harmonisation.

       Furthermore, Bank Indonesia has also provided macro-prudential policies to support automotive and property financing, namely loan-to-value incentives for green property and advances for green vehicles.

       It can be said that the status quo in Indonesia strongly supports green financing, from policy stimulus and fiscal policy to macro-prudential and banking regulations. — The Jakarta Post/ANN

       Aditya Very Cleverina is a junior economist at Bank Indonesia. The views expressed are the writer’s own.