MUFG and Danamon Host Inaugural MUFG Net Zero World (MUFG N0W) to Support Indonesia's Energy Transition

Press Release / 04 September 2024

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Jakarta,  September 4,  2024  — MUFG  Bank,  Ltd. (MUFG),  in  collaboration with  PT Bank Danamon Indonesia Tbk (Danamon), hosted the inaugural MUFG Net Zero World (MUFG N0W) 2024 in Jakarta at the Raffles Hotel. MUFG N0W is the bank’s flagship thought leadership and engagement event in Asia Pacific aimed at engaging stakeholders from policymakers, business leaders and industry experts in support of Asia’s sustainability agenda.

Masakazu Osawa, Managing Executive Officer and Chief Executive for APAC, MUFG Bank, Ltd during his  opening  remarks  said,  “The  event  takes  place  at  an  important  turning  point  in  Indonesia’s development.  As  it  takes on  a more  central  role  in global  affairs  through  the  hosting  of  the  G-20 presidency  and ASEAN chairmanship, the country  is also  at the forefront of global climate efforts, undertaking multiple pathways towards net zero including a focus on decarbonising its power sector. MUFG  N0W  represents  the  latest  push  towards  mobilising  public-and-private  sector  collaboration towards Indonesia’s energy transition.”

Five years into the strategic partnership that has firmly established MUFG and Danamon as one of Indonesia’s leading financial groups, both banks have consistently demonstrated a solid commitment to the country’s sustainable growth while strengthening bilateral business ties with Japan. The debut of the Jakarta session of MUFG N0W, which has travelled across key Asian markets to acclaim, also brings this partnership to the next level.

Juda Agung, Deputy Governor of Bank Indonesia during his keynote speech said “As Indonesia takes significant strides towards net zero emission, the role of our financial sector is crucial in driving this transformation. There are 4 key strategies for banks to support this transition: clear and objectives targets,  integrating  climate  risk  into  core  operations,  expanding  sustainable  finance  offerings,  and strengthening governance and accountability. The climate transitions are not only the environmental imperative, but also strategic opportunity for Indonesia Financial Sector. Banks have a crucial role to take part in this transformation.”

Around   200   C-level   clients   of   MUFG   and   Danamon   attended   MUFG   N0W,   as  well   as   key representatives  from  regulators  and  government  ministries.     It  included  two  significant  panel discussions:  "Indonesia’s  Energy  Transition:  Financial  and  Policy  Imperatives"  and  "From  Plans  to Actions:  Implementing  Net  Zero  in Corporate  Roadmaps."  These  panels  explored  the critical  steps required to mobilize capital, enhance policy frameworks, and implement corporate strategies which align with Indonesia’s goal of achieving net zero emissions by 2060.

Colin Chen, Head of ESG Finance APAC at MUFG Bank, Ltd., said "At MUFG, we recognize the financial sector’s pivotal role in supporting Indonesia’s energy transition.  With its fast economic rise and far- reaching net zero ambitions, Indonesia’s potential for driving global climate action is immense and aligned with MUFG’s group sustainability commitment. By leveraging our expertise and resources, we aim to support Indonesia's journey towards a sustainable future, ensuring that economic growth and environmental stewardship go hand in hand.”

Herry Hykmanto, Director of Syariah & Sustainability Finance at PT Bank Danamon Indonesia Tbk, echoed this sentiment: "Danamon’s commitment to sustainability is vital to our business strategy. As part of the MUFG Group, we are committed to support Indonesia’s goals for a greener future through various sustainable initiatives.”

MUFG  and  Danamon’s  Sustainability Commitment

MUFG’s focus on Asia’s energy transition is an extension of the group’s broader sustainability vision, which includes a commitment towards achieving net zero greenhouse gas emissions in its operations by 2030 and finance portfolio by 2050. In its current Medium-Term Business Plan (MTBP) for FY2024-2026, MUFG has raised its initial commitment into sustainability-related financing from JPY35 trillion to JPY100 trillion by 2030, equivalent to approximately USD640 billion. MUFG’s leadership in global sustainability is reinforced through its active involvement in global platforms such as the UN-convened Net-Zero Banking Alliance (NZBA) and the Just Energy Transition Partnerships (JETPs) in Indonesia and Vietnam.

In Asia, MUFG’s partnership in projects like GreenOn, Asia’s first agri-producers e-platform, and the release  of  influential  whitepapers  on  the  energy  transition  strategies  of  countries  like  Japan  and Indonesia reinforces the bank’s emphasis on engagement and thought leadership in advancing the regional climate agenda.

Indonesia is MUFG’s fourth largest market in Asia Pacific for ESG loans and bonds. The bank has played leading roles in several large, innovative and impactful sustainable finance transactions in Indonesia, such as the country’s first Blue Bond as well as the first Green Bond to be issued by a state-owned enterprise in Indonesia. In June, MUFG led the issuance of a USD2.35 billion Sukuk for the Indonesian government, a portion of which is a Green Bond, one of the larger sovereign issuances out of the region over the past year, and a month later, launched an ESG deposit in Indonesia, bridging a growing demand by corporates for low-barrier-to-entry sustainable products to contribute to environmental and societal causes.

Danamon, as a member of MUFG Group, also continues to strengthen its commitment to support the Indonesian government’s energy transition goals through various initiatives of Danamon’s Sustainable Finance Action Plan (SFAP). This initiative focuses on five pillars: Governance, Awareness and Capacity Building,   Sustainable   Financing,   Responsible, Workplace   Management,   and   Corporate   Social Responsibility.

Danamon’s Sustainability Finance Loan portfolio has seen consistent growth. In 2023, Sustainability loan portfolio was at IDR 31.3 Tn (Increased by 24% year-on-year) and reached at 21.6% of the total loan. Our sustainability finance loan growth in 2023 was mainly contributed by renewable energy, water management, and land use sectors.

Furthermore, Danamon is actively involved in several decarbonization initiatives, including energy- saving measures, solar panel installations, VRF air conditioning systems, mangrove planting projects, carbon credit programs, and the establishment of EV charging stations and electric motorbike rentals.

As Indonesia continues to navigate its path toward a sustainable future, MUFG and Danamon remain steadfast in their support. The MUFG N0W series and the broader partnership between MUFG and Danamon are central to this commitment, reflecting a shared vision of a brighter, more sustainable future for Indonesia and the world.

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