Green pawn financing for MSMEs as an ESG-oriented transformation of pawnshop

Muhammad Rifky Apriansyah (Department of International Relations, Faculty of Social and Political Sciences, Universitas Sebelas Maret, Surakarta, Central Java 57126)
Ahadina Hanifati Amimah (Department of International Relations, Faculty of Social and Political Sciences, Universitas Sebelas Maret, Surakarta, Central Java 57126)
Aubry Fairuza Akifa Prabowo (Department of International Relations, Faculty of Social and Political Sciences, Universitas Sebelas Maret, Surakarta, Central Java 57126)

Journal of Entrepreneurial Economics
Vol. 3 No. 1: February (2026)

Background: The transformation of the national financial sector following the implementation of Law No. 4/2023 and its derivative regulations, marks a new phase in strengthening the institutional role of Pegadaian as a key actor in microfinance in Indonesia. In the context of sustainability and ESG (Environmental, Social, and Governance), there is no pawn-based microfinance scheme that proactively targets green MSMEs, even though the potential and demand for green financial products continue to increase. Methods: This article aims to analyze the institutional feasibility and concept of Green Pawn Financing, which is a pawn financing scheme based on ESG principles, while identifying the potential and challenges of its implementation. This study uses a descriptive-analytical approach with a normative institutional review. Institutional innovation theory, sustainable regulatory frameworks, and green financial inclusion literature are used as the basis for analysis. Findings: The results of the study show that Pegadaian already has an adequate initial foundation through gold savings, electric vehicle loans, and a corporate ESG roadmap. However, the integration of ESG into pawn services is not yet systemic and does not explicitly target green MSMEs. This creates a strategic gap that "Green Pawn Financing" can fill by bridging national climate targets with micro-level operational realities within a conducive regulatory framework. Conclusion: The Green Pawn Financing concept offered includes interest and loan tenor incentives, light environmental audits based on emissions calculations, and the potential development of carbon pawn and sustainability certificate-based collateral. Regulatory-wise, this scheme is compatible with the national sustainability framework and has the potential to support green financing targets. Novelty/Originality of this article: This article contributes to positioning Green Pawn Financing as an instrument for domestic commodity-based (gold) micro green finance transition, which not only expands financial inclusion but also increases public trust in Pegadaian as a sustainable financial institution.