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Faris Al-Fadhat
Professor, Department of International Relations, Universitas Muhammadiyah Yogyakarta
Social Sciences

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Sustainability Rhetoric and Financial Practice: Coal Investment by Indonesia’s State-Owned Banks Gufron Gozali; Faris Al-Fadhat
Journal of Governance Volume 11 Issue 1: (2026)
Publisher : Universitas Sultan Ageng Tirtayasa

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.62870/jog.v11i1.35229

Abstract

This study analyzes the contradiction between Indonesia’s climate policy commitments and the investment behavior of its state-owned banks. Climate change has emerged as a defining issue in global governance, with initiatives like the Paris Agreement and energy transition frameworks spearheading mitigation efforts. In Indonesia, the repercussions are severe, including escalating natural disasters and estimated economic losses of IDR 544 trillion between 2020 and 2024. To confront these challenges, the government has outlined ambitious targets of phasing out coal by 2030 and achieving Net Zero Emissions (NZE) by 2060. However, substantial funding from state-owned banks continues to flow into the coal sector, revealing a persistent misalignment between strategic environmental goals and institutional financial practices. This study adopts a qualitative methodology, drawing on primary sources such as official policy statements and secondary materials including academic literature, journalistic commentary, and institutional reports. The analysis demonstrates that short-term profit imperatives undermine the credibility of Indonesia’s NZE agenda, rendering it largely rhetorical. Ultimately, the investment patterns of state financial institutions not only contravene governmental pledges but also intensify the adverse impacts of climate change.
Co-Authors Gufron Gozali