The International Finance Corporation (IFC), a member of the World Bank Group, is investing up to IDR2.75 trillion (about $200 million) in the gender and green bonds issued by Indonesia’s Bank OCBC NISP.
The bank’s gender bond is the first in Indonesia and second in the Asia-Pacific region, following Bank of Ayudha’s gender bond issuance in 2019, which was also supported by IFC.
Bank OCBC NISP said the bonds are part of its sustainability bond program and proceeds from the issuance will be used to expand its green financing, particularly the development of green projects and financing of green mortgages.
The proceeds from the gender bond will enable the bank to increase lending to women entrepreneurs and women-owned small and medium enterprises (WSMEs), according to a statement.
In Indonesia, WSMEs play a central role in the economy, with women owning 34 per cent of medium enterprises and 50 per cent of small businesses. However, IFC’s MSME Financing Gap Study in 2017 found that WSMEs in the country are facing a $60-billion financial gap.
The same study also discovered that about 40 per cent of WSMEs are financially constrained and 17 per cent of them perceive financing as a major growth constraint.
“Investing in Bank OCBC NISP’s Sustainable Bond Program, which aims to empower women entrepreneurs and WSMEs in addition to catalyzing green projects, demonstrates IFC’s commitment towards Indonesia’s sustainable economic growth,” said Azam Khan, IFC Country Manager for Indonesia, Malaysia, and Timor Leste.
The gender bond is supported by the Women Entrepreneurs Finance Initiative (We-Fi) program and is aligned with the government of Indonesia’s development goals to reduce Indonesia’s gender gap.
Meanwhile, IFC estimates that Indonesia’s green financing opportunities could be as high as $274 billion between 2016 and 2030 as the country remains vulnerable to climate change impacts.
IFC and OCBC NISP will team up to provide training to the bank’s staff as well as Indonesian property developers on green buildings.
Since 2005, IFC has provided more than $24 billion in long-term financing for climate-related projects in addition to nearly $19 billion in core mobilization. Its climate investments last year were spread across 93 deals, helping avoid an equivalent of 15.5 million tons of carbon dioxide emissions.