Indonesia’s Financial Services Authority plans to limit private loans to environmentally damaging projects by 2018, a move that “may eventually help the nation curb the forest fires that choke parts of Southeast Asia with thick haze for months each year,” Bloomberg reports.
“We can’t ban banks from lending to any non-sustainable projects, as the economy would grind to a halt, but that’s something we’re moving towards,” said Edi Setijawan, the FSA’s deputy director for banking architecture. “Later on, banking can also be used to prevent what happened a few months ago, the terrible haze.”
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The draft regulations, to be released in 2016, will focus on the agriculture, energy, fishery, and microfinance sectors and “build on guidelines for sustainable financing in the palm oil industry that the nation’s eight largest banks will test starting in January,” Chanjaroen and Ho write. “The regulator in the next two to three years may ask banks to invest in companies and projects deemed sustainable, to offset any funds given to non-environmentally friendly activities.”
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