NEW REGULATION ON SUSTAINABLE FINANCE IMPLEMENTATION FOR FINANCIAL SERVICES INSTITUTION, ISSUERS AND PUBLIC COMPANIES

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NEW REGULATION ON SUSTAINABLE FINANCE IMPLEMENTATION FOR FINANCIAL SERVICES INSTITUTION, ISSUERS AND PUBLIC COMPANIES

 

On 18 July 2017, the Financial Services Authority of the Republic of Indonesia (“OJK”) issued the Financial Services Authority Regulation No. 51/POJK.03/2017 concerning the Sustainable Finance Implementation For Financial Services Institution, Issuers, and Public Companies (“POJK 51/2017”).

Sustainable Finance Implementation

Sustainable Finance is the overarching support from the Financial Services Sector to create sustainable economic growth by harmonizing economic, social and environmental interests. POJK 51/2017 requires Financial Services Institution, Issuers and Public Companies to implement the sustainable finance in conducting business activities using the following principles:
 
a. Responsible investment principles;
b. Sustainable business strategy and practice principles;
c. Social and environmental risk management principles;
d. Good governance principles;
e. Informative communication principles;
f.  Inclusive principles;
g. Priority sector development principles; and
h. Coordination and collaboration principles.
 

The implementation of sustainable finance shall be made subject to the following conditions:

 

Category Efective Date
 Bank which are included in BUKU 3, BUKU 4, and  Foreign  Bank 1 January 2019

 Bank which are included in BUKU 1, BUKU 2, financing  company, sharia financing company, venture capital  company, sharia venture capital company, infrastructure  financing company, insurance company, sharia insurance  company, reinsurance company, sharia reinsurance  company, Indonesia Export Financing Institution, secondary  housing finance company, Issuers other than issuers with  smale-scale assets and issuers with medium scale assets,  and Public Company

1 January 2020

 Rural Bank based on business activities (BPRKU) 3 including  Sharia Rural Bank which have core capital equivalent to  BPRKU 3, securities company which administers the client's  securities account, and Issuers with medium scale assets

1 January 2022

 BPRKU 1, BPRKU 2, and Sharia Rural Bank which have    core capital equivalent to BPRKU 1 or BPRKU 2, Issuers with  small-scale assets, securities company which do not  administrers the client’s securities account, pawn  shops  company, the guarantee company, and sharia guarantee  company

1 January 2024

 Pension fund with minimum total assets Rp  1.000.000.000.000,- 

1 January 2025

 

Based on POJK 51/2017, to implement Sustainable Finance, Financial Services Institution required to prepare the Sustainable Finance Action Plan in the form as attached in POJK 51/2017. Sustainable Finance Action Plan is a written document describing a short term (1 year) and long term (5 years) of Financial Services Institution Work Plan in accordance with the principles to implement the sustainable finance. The Sustainable Finance Action Plan should be submitted every year to OJK at the same time with submission of business plan for Financial Services Institution which required to submit the business plan, as an integral part of business plan and at the latest 31 January for Financial Services Institution which not required to submit the business plan. The Sustainable Finance Action Plan should be prepared by the Board of Directors and approved by the Commissioners.

 

Furthermore, POJK 51/2017 regulates that Financial Services Institution, Issuers and Public Companies required to prepared the Sustainability Report separately or as an integral part of Annual Report. Sustainability Report is a report which contains the economic, financial, social and environmental performance of a Financial Services Institution, Issuer, and Public Company in conducting a sustainable business and published to public. The sustainability report shall be submitted to OJK every year no later than the deadline for submission of annual report of each Financial Services Institution, Issuer and Public Company. If the Sustainable Report submitted separately from annual report, it shall be submitted to OJK every year on the 30 April of the following year. Publication of Sustainablity Report shall be done through the website of Financial Services Institution, Issuer and Public Company on the 30 April of the following  year at the latest. For Financial Services Institution which does not have a website, the sustainability report shall be published through printed media or other public announcement media on the 30 April of the following year at the latest.

Should you have any questions relating to this article, please contact:

Maylanie N. Priscilla
Partner, Hermawan Juniarto
Tel +62 21 2995 9057
mpriscilla@hermawanjuniarto.com

 

 

Posted in News and Media on Aug 22, 2017