As Indonesia accelerates its net-zero ambitions and green finance agenda, a new regional study offers a timely mirror for the country's banks, insurers, and asset managers to assess how they measure up against regional peers — and where local realities demand a different playbook.
PwC's newly released Asia Pacific Financed Emissions Benchmarking Study takes a deep dive into how 28 leading financial institutions across Australia, Indonesia, Japan, Malaysia, and Singapore are measuring, managing, and disclosing their financed emissions: the greenhouse gas emissions embedded in the loans and investments they make. Together, the institutions studied represent over United States dollar (USD)11.4 trillion in balance sheet assets, underscoring just how central financial institutions are to the region's climate transition. As Indonesia’s banks and financial institutions face growing pressure from regulators, including through the Financial Services Authority’s (OJK) Climate Risk Stress Testing (CRST) initiative, as well as from investors and international counterparties, this benchmark offers a valuable reference point for where the industry currently stands and highlights the challenges and potential paths forward that are unique to this market.
A region still finding its footing
Across Asia Pacific, financial institutions are increasingly measuring financed emissions, though disclosure quality varies significantly from one institution to the next. Data quality remains a persistent challenge, particularly in sectors where reliable emissions information is difficult to obtain, while assurance over sustainability information is growing in importance as stakeholders demand greater confidence in reported numbers. Many institutions are also still developing consistent approaches to Scope 3 emissions and full portfolio coverage. Encouragingly, financed emissions data is beginning to influence business decisions, though its integration into strategy and risk management remains at an early stage. These are regional patterns but applying them to Indonesia surfaces a set of challenges specific to this market, each with a practical way forward.
Where the global standard meets local reality
A recurring local concern is whether the Partnership for Carbon Accounting Financials (PCAF) standard, built around asset classes like listed equity, corporate bonds, mortgages, and motor vehicle loans, genuinely fits the structure of Indonesian bank balance sheets, which are shaped instead by working capital facilities, syndicated financing for captive power and smelters, sharia-based structures, and microcredit. The answer isn't to set the standard aside, but to apply it while being explicit about the departures, presenting exclusions as a stated roadmap for future coverage rather than a silent gap in disclosure.
This same tension runs through the data challenge, which for many Indonesian institutions is structural rather than technical. While the availability of emissions data continues to improve, challenges remain in certain sectors due to varying levels of registration, reporting maturity, and access to locally relevant emission factors. Consequently, banks often draw on sector averages and other recognised estimation approaches to support their calculations. Building emission factor libraries in partnership with industry associations, drawing on evidence borrowers already produce such as Roundtable on Sustainable Palm Oil (RSPO) PalmGHG data for palm oil-linked lending, and publishing data quality scores alongside a stated plan to improve them, can help close this gap without waiting for perfect data before disclosing anything at all.
Assurance expectations, meanwhile, are shifting quickly from a mark of good practice towards something closer to obligation. Yet few institutions today can clearly explain the basis on which previously reported emissions figures were restated, a gap that risks undermining stakeholder trust just as scrutiny increases. A dry-run limited assurance exercise, a documented evidence trail behind each reported figure, and a written restatement policy would go a long way towards ensuring that a revised number reads as the product of maturing methodology rather than a moving goalpost.
Coverage presents a further complication, as Indonesian banks typically begin their financed emissions journey with corporate and commercial lending, leaving micro, small, and medium enterprise (MSME) portfolios, off-balance-sheet exposures, and government securities only partially covered. This matters most where it counts: Scope 3 emissions are especially material for sectors like coal, where downstream combustion dominates, and palm oil, where land-use change can dwarf a company's own operational footprint. Rather than making a broad, unqualified claim of full portfolio coverage, the more credible approach is to state plainly which portfolios are in scope today, which are not, and the sequence for bringing the rest in overtime.
Much of the architecture for integrating financed emissions into real business decisions is already in place. Indonesia's sustainable finance taxonomy, which classifies economic activities as green, transition, or not meeting the classification, gives institutions a ready-made framework, though local commentators have warned it risks becoming another tick-the-box exercise if left as a disclosure label alone. Turning classification into consequence means wiring taxonomy outcomes into credit origination and pricing decisions, setting sector-level exposure limits informed by climate risk, and developing transition finance solutions aligned with OJK's sustainable finance framework for clients in hard-to-abate sectors that require credible pathways towards lower-carbon operations.
The opportunity ahead
Taken together, these observations point to a clear opportunity for Indonesian banks, insurers, and asset managers: not to wait for perfect data or a perfectly fitting global standard, but to disclose transparently about where they are today, while building the infrastructure of data partnerships, assurance readiness, and taxonomy integration needed to close the gap over time. Institutions that move early won't just be meeting rising regulatory and investor expectations. Institutions that move early won't just be meeting rising regulatory and investor expectations. Over time, this could help enhance their ability to manage climate-related risks, ensure resilience of its portfolio, support clients through the transition, and respond to opportunities arising from Indonesia's low-carbon economy.
Reference: PwC Asia Pacific financed emissions benchmarking report
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Yuliana Sudjonno
Partner, PwC Indonesia
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