GBPN and the Green Finance Institute (GFI) recently convened a multi-stakeholder forum on green building financing in Jakarta, Indonesia, bringing together policymakers, financial sector leaders, and developers to discuss how private finance can accelerate the adoption of sustainable buildings in Indonesia.
The buildings and construction sector is Indonesia’s fourth-largest economic sector, contributing 10.43 percent of GDP in 2024. At the same time, buildings account for around 60 percent of national electricity consumption, making them one of the largest and most cost-effective opportunities to reduce emissions, lower energy demand, and improve indoor comfort and health for millions of Indonesians.
“Sustainability should be seen as an integral part of development. Environmental, climate, and nature-related risks are not ‘additional’ risks, but embedded risks that shape overall economic stability,” said Arnita Rishanty, Senior Economist, Central Bank of Indonesia.
Yet Indonesia’s climate investment currently faces a finance gap of 84 percent to achieve its Nationally Determined Contribution. In this context, the construction sector offers a powerful pathway to mobilize private capital through green building portfolios, supporting sustainable economic growth while helping close the climate finance gap.
Despite this potential, only a small share of national green financing currently flows to the building sector. According to Bank Indonesia, green building loans amount to just around IDR 33 trillion (USD 2 million) out of more than IDR 2,000 trillion (USD 119 billion) in total lending—less than 2 percent, underscoring the vast untapped opportunity to scale investment where it can deliver high economic, social, and climate returns.
A multi-stakeholder forum to accelerate financing for green buildings
At the multi-stakeholder forum on Green Building Financing in Jakarta, representatives from Bank Indonesia, the Financial Services Authority, the Ministry of Finance, the Indonesia Chamber of Commerce, private banks (e.g. Mandiri, CIMB Niaga, SMBC), and several major developers joined the discussion to explore how financing can unlock faster, wider adoption of sustainable buildings across Indonesia.
The forum was designed to align perspectives across three key groups:
- Demand side: developers seeking cost-effective solutions, accessible financing and better incentives.
- Supply side: banks expanding their sustainable finance portfolios
- Regulators: institutions shaping policies, fiscal and non-fiscal incentives, and national standards
Its objectives included presenting cost-efficient design approaches, introducing feasible financing instruments such as Sustainability-Linked Loans, identifying barriers and opportunities, and exploring potential project pipelines ready for green financing.
The need for direct, tangible fiscal incentives
Developers shared a common challenge: upfront capital. Even when long-term operational savings are clear, higher initial investment remains a major barrier. Further, it was emphasized that developers are willing to adopt greener practices but need stronger, more predictable local government incentives, such as property tax reductions, simplified permitting, and additional floor-area ratio allowances. Without direct, tangible fiscal incentives, uptake will remain modest.
The Ministry of Finance discussed ongoing tax expenditure reforms and the potential of carbon markets, where verified emissions reductions from green buildings could serve as a new value stream for project developers.
“Green buildings are not a cost; they’re an investment in resilience, lower emissions, and long-term affordability,” said Irwan Dharmawan, Policy Analyst at the Ministry of Finance.
The forum concluded with a shared recognition that the building sector plays a key role in achieving Indonesia’s climate and development goals. Financing–supported by stronger policies, market incentives, and collaboration–will be a key to unlocking the transformation of the building sector.
Participants expressed optimism about the way forward, including to advance the GBPN–GFI Green Finance Accelerator to support policy development, market awareness, and capacity building. Regulators, financial institutions, local governments, and developers will work together to drive Indonesia’s transition toward greener, more resilient buildings.
About the Green Finance Accelerator
Since 2022, GBPN has worked with the Ministry of Finance to strengthen financing for sustainable buildings, drawing on international best practices for green building incentives. Building on this foundation, the Green Finance Accelerator (GFA) project aims to unlock public and private capital to scale sustainable buildings nationwide.
Through GFA, GBPN supports municipalities, starting with Denpasar, Bali, to pilot local incentives; helps developers and financial institutions apply Indonesia’s Sustainable Finance Taxonomy (TKBI 2); explores financing options for sustainable buildings; and convenes a Green Building Finance Coalition to align policies, mobilize finance, and accelerate market transformation.