Green Finance and Sustainable Banking Towards a Green Economy in Indonesia

Abstract

Green finance and sustainable banking are increasingly becoming central pillars in the global financial system, particularly in supporting the transition toward sustainable development. This article examines global trends, the role of banking institutions, and the implementation of sustainable finance policies in Indonesia, with a specific focus on the practices of major banks such as Mandiri, BRI, and BNI. Although there has been a growing interest in green financial instruments, the proportion of green credit portfolios in Indonesia remains relatively small, constrained by limited fiscal incentives, the high cost of certification, and the low demand from business actors. This library research highlights the importance of integrating Environmental, Social, and Governance (ESG) principles, expanding innovative products such as green bonds and blended finance, and strengthening government regulatory support to enhance the green finance ecosystem. By combining global insights with local realities, the study underscores that the success of green banking in Indonesia critically depends on multi-stakeholder collaboration, enhanced financial literacy for businesses, and the proactive role of banks in mobilizing capital toward environmentally friendly projects.