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BOBC Revealed The Roles of Big Banks in Deforestation and Environment Damages in Indonesia

Special doc./BOBC: Revealed the big banks in deforestation and environment damages in Indonesia
BOBC Revealed The Roles of Big Banks in Deforestation and Environment Damages in Indonesia

InfoSAWIT, JAKARTA – In the recent days, TuK INDONESIA and the coalition of Forests and Finance released their report,, "Banking on Biodiversity Collapse (BOBC)". It revealed the impacts of massive fund in deforestation, diversity losses, human rights violation in tropical forest regions in Indonesia. The report also delivered comprehensive description about the roles of big banks, such as, Bank Mandiri, BRI, BCA, and BNI that supported palm oil, pulp and paper, rubber and wood industries in Indonesia.

According to the report, ever since Paris Agreement was made, banks in Indonesia have been the biggest fund supplier in Southeast Asia for the industries that are risky to forests in Indonesia. With the market capital up to USD 30,5 billion (40% of the total credit), the banks played their significant roles to support the companies in the potential sectors that damage the environment.

Executive Director of TuK INDONESIA, Linda Rosalina told that the report revealed the failure of big banks to implement their commitment in environment, social, and governance (ESG) sectors.

“These banks should actually confirm that the companies that the banks funded, should obey no deforestation, peat and exploitation (NDPE) policy. But the realization was not as it was hoped,” she said, as in the official statement to InfoSAWIT, Tuesday (2/4/2024).

One factor of the failure is the inability of financial sector in Indonesia to solve the risks that have something to do with shadowed companies that are in connection with big producer groups in Indonesia. Besides, the weak regulation(s), for instance, Taksonomi Hijau of Otoritas Jasa Keuangan (OJK) that has been substituted to be Taksonomi untuk Keuangan Berkelanjutan Indonesia (TKBI) makes it more complicated in environmental guidelines, deliver confused signals for financial actors/institutions.

BOBC also identified the companies that got credits, such as, Sinar Mas Group (SMG) and Royal Golden Eagle (RGE) Group. The two significantly have something to do with deforestation and human rights violation. The villagers’ complained about the plasma program with the companies, as Director of Wahana Lingkungan Hidup (Walhi) Central Kalimantan Province, Bayu Herinata said, that the companies negatively delivered impacts from the practices.

Besides, the massive investments in palm oil plantation sector in Papua Province, just like Korindo Group has done, led to indigenous forest use change and the conflicts got escalated with the local villagers, just like Director of Pusaka, Franky Samperante mentioned.

TuK INDONESIA and the coalition of Forest and Finance emphasized it is significant to get action for financial institutions and regulators to harmonize their cash flow with the public policy goals in international level. This includes to stop and recover biodiversity losses, respect indigenous people’s human rights, encourage fair energy transition, confirm ecosystem integrity, harmonize institutional goals among sectors to support sustainable environment. (T2)