Banking Affirms Strengthening of ESG Principles Aligned with Corporate Strategy

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As one of the banks that is the driving force behind the implementation of Sustainable Finance in Indonesia, PT Bank Negara Indonesia (Persero), Tbk (“BNI”) continues to mobilize the strength of all BNI personnel to be at the forefront of implementing sustainable finance. For this reason, esg banking is mobilizing with sustainable finance which makes it the main mover.

We believe that what we are doing is in line with and supports sustainable development, in addition to increasing BNI’s resilience and competitiveness. BNI’s commitment to sustainability is marked by the implementation of sustainable finance.

Banking Affirms Strengthening of ESG Principles Aligned with Corporate Strategy

As an umbrella for values ​​(Values), attitudes and work culture, Corporate Strategy, operational policies as well as the Company’s operational platforms and mechanisms. Therefore, esg banking continues to seek opportunities for cooperation with various parties, to unite with BNI to unite resources for the sustainability of the earth and all its contents.

To become a financial forum that excels in service and performance in a sustainable manner is BNI’s Vision and is supported by BNI’s Mission in conjunction with Sustainable Finance. BNI continues to develop the Company based on the Five Pillars of Sustainability, namely BNI for Indonesia, BNI for Customers, BNI for Employees, BNI for Residents, and BNI for the Environment.

As of June 2021, BNI has an investment in a green portfolio of IDR 139.4 trillion or 24.5 percent of BNI’s total lending, consisting of loans disbursed to sectors that meet the Sustainable Business Activity Criteria.

(KKUB) includes socio-economic empowerment, management of biological natural energy resources and sustainable use of human resources, renewable energy, efficiency in preventing power pollution and water and waste management along with sustainability aspects.

BNI strives to provide products and services that have a good impact on environmental sustainability. Currently BNI has 3,243 ATM units equippe with tone services to help customers with special needs, promote financial inclusion assistance programs through banking agents (Agen46), and also increase the intensity of digital development to strengthen the #Bnitudigital motto.

During the pandemic era that we are currently facing, BNI has carrie out the distribution of protection to various parts of Indonesia in order to help ease the burden on the population affecte by Covid-19. BNI focuses on running an environmentally friendly business by paying attention to the use of materials, power and water, and handling emissions and waste.

BNI also continues to increase employee awareness regarding environmental issues, and also provides training that pays attention to environmental and social aspects. National banks ensure that, to strengthen commitment to implementing the principles of Environmental, Social and Governance or ESG, the company aligns them with Corporate Strategy.

This was state by the Compliance Director of BRI in the G20 Indonesia Presidency side event held by Bank Indonesia (Bi) with the theme Green and Sustainable Instruments as Alternative Financing and Investment Indonesia’S SF Future Direction.

Solichin explaine that at BRI, the implementation of ESG principles has been broadly implemente in terms of assets, liabilities, operations, and human energy resources. He also emphasize the point of implementing the sustainable business principle, namely that the company must be aware of and be aware of its framework.

“Then the framework must be part of the company’s strategy, so it’s not just a trend. So, first of all, we have to sit down that what we do in ESG initiatives must be part of the company’s strategy,” he said.

He gave an example that this was the background for BRI in releasing sustainability bonds last year and not choosing green bonds or social bonds. This is also done through the identification of projects carrie out by the company in the future according to Corporate Strategy, namely to become an MSME bank.

Moreover, he said, currently 84 percent of the company’s loan portfolio is for the MSME segment. Through the application of ESG principles along with Corporate Strategy, the US$500 million bond manage to attract world investors, let alone oversubscribe 8 times.

Then, the investment must also be understand. Almost 70 percent of the Sustainability Bond is use for social projects and the rest is for green projects regarding LRT. As for social projects, most of them are use for financing relate to the empowerment of the MSME segment.

The sustainability bond is on the liability side. This is one of BRI’s initiatives in the context of responding to the concerns of stakeholders, especially world investors because we are a public company, regarding the issue of ESG and we will gradually add its implementation.

On the other hand, after applying the Esg principle, to maintain investor confidence, the company regularly and continuously includes its performance and results in the company’s year report, sustainability report and annual sustainability bond report.

It is the responsibility of investors that the bonds purchase are investe in the projects that we promise. In the case of the BRI LRT, if it is running, it can reduce carbon emissions by approximately 8,000 tons of Co2 per year. From the credit we provide to MSMEs, especially micro and ultra-micro, it has been able to create new jobs and also maintain business continuity for approximately 400,000 MSMEs in Indonesia. So that’s what we include in the annual sustainability bond report,” he explaine.

BRI’s commitment to implementing ESG coincides with the G20 Indonesia Presidency in 2022 which carries the theme Recover Together, Recover Stronger, in order to encourage inclusive, people-centere, and environmentally friendly and sustainable development in Indonesia.

BRI continues to be committe to implementing the principles of ESG or Environmental, Social, and Governance or corporate governance that is environmentally and socially oriente. In the long term, the implementation of financial governance base on ESG is one of the answers to sustainable banking finance business.

BRI’s Risk Management Director reveale that business sustainability base on ESG or sustainable finance is one of the main concerns of investors to invest in large corporations, including BRI at this time. “Not only that, the company understands the ESG principle as a standard use by the company in carrying out business and operational activities to achieve sustainable performance.

As for sustainable finance, citing the Financial Services Authority (Ojk) defines it as the complete protection of the financial services industry for sustainable development resulting from harmony between economic, social and environmental interests.

As a bank that seems to have had its DNA at the start of MSMEs, among these ESGs, the biggest focus could be on social and governance. Because since BRI came into existence, from the very beginning it was devote to helping small people, and we were there together with sustainable finance.

The implementation of ESG in BRI’s current financial portfolio does not only use the traditional approach to fundamental financial performance. However, it has begun to include elements of an assessment evaluation of these principles.

In carrying out sustainable finance, BRI as a corporation has develope a business strategy regarding the implementation of business processes in four sectors, namely the asset, liability, operational and human capital sectors which must be in line with the ideals of realizing the Esg business model.

Agus said that BRI’s assets were almost Rp940 trillion, of which, together with the ESG principle, it reache more than 64.5 percent of the total portfolio or equivalent to Rp588.6 trillion. Most of them are the micro, small, and medium segments which amount to Rp500 trillion.

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When the category of green financing is outside this value, starting from energy renewal of Rp. 16.1 trillion, then there is also pollution prevention of Rp. 2.4 trillion, clean power-base transportation such as electric vehicles which reach Rp. trillion of the total BRI portfolio.

As for the liability side, the company has issue a sustainability bond liste in Singapore with a value of US$500 million. BRI became the first in Southeast Asia to issue sustainability bonds and at that time BRI bonds were oversubscribe up to 8 times.

At that time, in the operational field, BRI carrie out a digital transformation. As a result, the digitalization pursue by the bank with the widest network in Indonesia can reduce the use of paper. Not only that, in the management of human capital, BRI also exemplifies that it always implements policies that provide additional rights for every employee, both male and female.

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