Protecting the Coast and Improving Livelihoods: Unveiling the Transformative Impact of Green Sukuk in South Sulawesi
September 5, 2023
Over 150 youth, comprised of local community members and university students attended the “Climate Talks and Site Visit: Action for Climate and Sustainability”, held in collaboration between the United Nations Development Programme (UNDP) Indonesia and the Ministry of Finance. Hosted by Universitas Negeri Makassar on 30 August 2023, the event centered around Indonesia’s climate action strategies and the successful leverage of Green Sukuk in financing impactful green projects.
Dwi Irianti Hadiningdyah, Director of Sharia Financing, Ministry of Finance, and Muhammad Didi Hardiana, the Head of Innovative Financing Lab, UNDP Indonesia, provided the opening remarks and emphasized the urgency and need for innovation to achieve Indonesia’s climate targets. Muhammad Idkhan, Vice Chancellor for Student and Alumni Affairs, Universitas Negeri Makassar, welcomed the participants in attendance and noted the importance of students and academia in supporting the country’s ambitions.
Setting the event’s context, Yulia Suryati, the Director of Climate Change Mitigation at the Ministry of Environment and Forestry, reiterated the Government of Indonesia’s low carbon development commitments by quoting the country’s Enhanced Nationally Determined Contribution (ENDC). Indonesia has now increased its targets to reduce GHG emissions by 2030 from 29% to 31.89% and 41% to 43.20% under unconditional mitigation and conditional mitigation scenarios—respectively.
To achieve these targets, the Government employs several strategies, including through Program Kampung Iklim (ProKlim) or Climate Village Program, an innovative program designed to increase the participation of communities in climate change adaptation and mitigation efforts at the local level. In South Sulawesi alone, 119 ProKlim locations have successfully reduced over 200,000 tons of CO2eq between 2018 and 2022. Additionally, Yulia also emphasized the urgent need to develop and leverage innovative financing mechanisms to support the country’s climate ambitions.
During the talk show, Dwi Irianti Hadiningdyah highlighted how the Government of Indonesia has taken innovative approaches to bridge the financing gap through issuance of Green Sukuk since 2018, with support from UNDP. She added that the Sharia-based instrument has allowed for sustainable and impactful investments, and applauded the great interest shown by young investors to investing beyond profit—but also impact. In South Sulawesi, Green Sukuk issuances were able finance multiple, green-labelled projects, including on sustainable transportation, flood prevention and control, and coastal protection.
Completing the talk show lineup was Adi Prasetyo, Head of the River and Coastal Area Office, Ministry of Public Works and Housing, and Renaldi, member of Lima Putra Pesisir, where both expanded upon the real on-the-ground activities undertaken for climate change adaptation and mitigation. The Ministry constructs, among others, dams, flood warning systems and control, water retaining structures, as well as coastal protection structures across the country, while Lima Putra Pesisir—a local youth-led community—focuses on coastal flora and fauna conservation, especially sea turtles and mangroves, as well as community empowerment.
The talk show served as a prelude for a site visit, taking participants to tour a coastal protection project financed through the 2020 Green Sukuk issuance. The coastal abrasion protection project was completed by the Ministry of Public Works and Housing in 2021 and is one of many government projects focused particularly on climate change adaptation, which are of significant urgency and relevance due to the country’s vulnerability to the impacts of climate change.
The project is located in Aeng-Aeng Village, Takalar Regency, just south of Makassar, and has transformed a 400-meter strip of the coast of Galesong Beach via construction of coastal defense structures. Prior to its construction, houses along the beach were in constant danger of being damaged by waves and tidal floods. A series of groins, breakwaters, and seawalls now protect the coast against tides, currents, and waves, effectively preventing the loss of almost 100 meters of land from abrasion.
The now-protected area has not only had a positive impact on the environment but has also played a significant role in boosting the local economy. Sagala, a representative from the Village Family Welfare Movement (Pemberdayaan Kesejateraan Keluarga), shed light on how this protected area has ushered in a series of benefits for the community.
With the area's protection, local fishermen can now safely dock their fishing boats without the fear of damage to their vessels or depletion of marine resources. This not only preserves the livelihoods of the fishermen but also ensures the sustainability of the local fishing industry. In addition, the protected area has boosted the thriving tourism industry in the region. This development led to the establishment of new cafes and lodges to cater to the influx of tourists. This tourism-driven growth provides an alternative source of income for communities, diversifying their economic prospects beyond traditional industries.
Green Sukuk is one of the thematic debt instruments issued by the Government of Indonesia, focusing on financing green projects. Following its success, the Government also issued SDG Bond and Blue Bond in 2021 and 2023. These instruments follow the Republic of Indonesia SGDs Government Securities Framework, developed in 2021 and supported by UNDP through the UN Joint Programme ‘Accelerating SDGs Investments in Indonesia (ASSIST)’—funded by the UN Joint SDG Fund.
Muhammad Didi Hardiana – Head of Innovative Financing Lab
Garnadipa Gilang – Technical Associate for Sustainable Finance
Enggi Dewanti – SDG Campaigner
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