Rationale
Agriculture and forestry play a crucial role in Indonesia’s food security and economy as well as mitigating the greenhouse gas (GHG) and maintaining the ability of ecosystem to provide its services to the economy to sustainably thrive. According to Indonesia’s Second National Communication of 2010, national GHG emissions were estimated to be 1.8 GtCO2e in 2005. This represents an increase of 0.4 GtCO2e compared to 2000. Most emissions (63%) are the result of land use change and peat and forest fires. As agricultural demand increases, land expansion and conversion are expected to increase, if not responsibly managed, it would enhance GHG emissions, and threaten the ability of ecosystem to provide its services that underpin the productivity and its sustainability of the sector itself.
Companies within Forest Risk Commodities supply chains in Southeast Asia rely primarily on bank lending for financing needs (CDP, 2020). As such, incorporating the impact of the company’s activities on climate change and the environment as well as on the FIs bottom line are two sides of a coin that FIs, in particular banks are critical to manage.
The sectors and sub-sectors selected under the Indonesia Green Taxonomy has been classified in accordance with the target sectors set out in the NDC to achieve the Paris Agreement. Land-use sector (Agriculture and Forestry) are among the key target sectors herein. The green category definition used as a framework to define whether a project considered as green.
Green category: do no significant harm, apply minimum safeguard, provide positive impact to the environment and align with the environmental objective of the taxonomy. (THI/ Indonesia Green Taxonomy, 2022)
To articulate this into implementation, this training program will be supporting the FIs to have a better understanding on the fundamental concepts of land-use risks, land-use risks identification and assessment, as well as the mitigation actions of the land-use risks, and the opportunities lie in this sector.