Only 2 banks apply sustainability principle

11 Maret 2016

Indonesian banks have yet to include social sustainability and environment responsibility in their policies or to publicly explain how these two issues are taken into consideration when making their corporate decisions, a report has said.

According to Responsibank Indonesia’s ranking guide report for 2015, only two of 12 banks, BNI and Danamon, in the survey apply sustainability principles such as climate change, human rights, biodiversity and labor rights.

“Other banks are yet to consider these aspects in their core business, such as in disbursing loans and investment,” said Victoria Fanggidae, a researcher at Perkumpulan Prakarsa in Jakarta on Thursday, adding that the other banks were Mandiri, BCA, BNI, BRI, CIMB-Niaga, OCBC-NISP, Panin Bank, HSBC, Citibank and Mitsubishi-UFJ.

Those 10 banks tended to report social and environmental activities that they were financing, she said, but not as an integral part of their decision making, such as in loan disbursement and investment, in a bid to create sustainable financial industry.

National banks, she continued, generally scored better in operational scope such as good corporate governance (GCG), as this was underlined by the Financial Services Authority (OJK) regulations. "These themes include taxes and corruption as well as transparency and accountability," she said.

The strict GCG regulations mean banks pay more attention to complying with them rather than to sustainability aspects. This was disappointing as the world has moved to sustainable economics and finance, according to Victoria.

In September 2015 the UN endorsed Sustainable Development Goals (SDGs), which should be implemented globally. The OJK has published a sustainable financial roadmap as a guide for banks in drafting loan and investment policies that carry sustainable and responsibility paradigms.

National banks like Mandiri, BCA, BRI and BNI are still far behind multinational banks such as HSBC, Citibank and Mitsubishi. HSBC got the highest score, 37.8 percent on a scale of 0-100 percent, while Indonesia’s top scorer Bank Danamon only attained 10.98 percent.

Bank Danamon managed to surpass BNI in the report since the state-owned bank did not clearly elaborate its form of lending and investment. On the other hand, Danamon clearly outlined black-listed clients such as those who harm the environment.

"But on certain information such as climate change and human rights, BNI has published information related to this, while Danamon does not report these topics," said Victoria.

A banking expert from the Indonesia Banking School, Samasta Pradhana, added that Indonesia was too late in implementing green banking and green financing. China already had a roadmap for a mandatory sustainable banking policy since 2007, Brazil in 2009, Bangladesh in 2011, Colombia and Nigeria in 2012.

"Indonesia is equivalent to Mongolia, which recently created a framework of sustainable banking in 2014," he said, adding that the regulator must draft a clear legal basis to encourage bankers in implementing green banking and financing.

The Responsibank coalition consists of seven NGOs; Perkumpulan Prakarsa, the International NGO Forum on Indonesian Development (INFID), Indonesia Corruption Watch (ICW), Publish What You Pay (PWYP) Indonesia, Indonesian Forum for the Environment (Walhi), Indonesian Consumers Foundation (YLKI) and Transformation for Justice (TuK).

Sumber: Kontan

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