The energy transition has become a global commitment in response to the climate crisis.
However, behind the green rhetoric and sustainability campaigns lies a stark irony in Indonesia. A number of banks that publicly declare their support for the energy transition are, in reality, still financing activities that worsen pollution and deepen dependence on fossil fuels.
Contradictory Climate Commitments
A recent study by the environmental advocacy group Market Forces reveals that six out of twelve banks that have pledged climate and energy transition commitments continue to finance companies heavily reliant on coal.
The main recipients of this financing are affiliated companies under the Harita Group, one of Indonesia’s largest nickel industry conglomerates. While these banks may not directly fund coal operations, they are extending credit to Harita’s subsidiaries that operate smelters powered by coal-fired power plants (CFPPs).
The twelve banks highlighted in the study include the following:
OCBC Bank
UOB
Maybank
BNP Paribas
DBS
CIMB
Bank Mandiri
BCA
BNI
Indonesia Eximbank
KEB Hana Indonesia
China Eximbank
It is worth noting that most of these banks have made public commitments to Environmental, Social, and Governance (ESG) principles. These commitments are supposed to steer them away from financing high-emission activities.
Fossil Fuel Dominance in Harita’s Operations
While the Harita Group has announced plans to build a 300 MW solar power plant by 2025, recent data shows that the company continues to rely heavily on coal.
At present, Harita operates coal-fired power plants with a total capacity of 890 MW and is constructing an additional 1,200 MW. In addition, the company has plans to build 25 more coal-fired power plants with a combined capacity of 2.54 GW. This figure far exceeds its planned solar energy capacity of only 1.3 GW.
“This gap underscores the limited role of renewable energy in Harita’s overall energy strategy,” said Bin Bin Mariana, Asia Energy Finance Campaigner at Market Forces.
This indicates that Harita’s decarbonization strategy remains far from ideal and is not aligned with the principles of a just energy transition.
Emissions Surge and Climate Threats
According to greenhouse gas emission data compiled by the Institute for Energy Economics and Financial Analysis (IEEFA), emissions from Harita’s operations have increased significantly:
2022: 3.01 million tons CO₂e per year
2023: 7.98 million tons CO₂e per year
2028 (projected): 22.45 million tons CO₂e per year
To put this into perspective, Harita’s emissions in 2023 were equivalent to the annual emissions of approximately 1.8 million conventional vehicles. This amount also approaches one percent of Indonesia’s total greenhouse gas emissions, which is a substantial figure for a single business group.
If there is no significant change in emission intensity, Harita could become one of the largest industrial contributors to emissions in Indonesia. In this context, continued financial support from banks will only worsen the situation.
“Withholding financial support in this situation would push Harita to reduce and eventually eliminate its dependence on fossil fuels. At the same time, it would encourage the company to develop a clear and measurable decarbonization roadmap in line with the Paris Agreement,” emphasized Market Forces.
Trillions in Fossil-Based Industrialization
The inconsistency in supporting the energy transition is not limited to the banking sector. It is also evident in government policies.
In early 2025, the Indonesian government issued Presidential Decree No. 1 of 2025 to accelerate industrial downstream development, including in the mineral and coal sectors.
As a follow-up, three state-owned banks—Bank Mandiri, BRI, and BNI—are reportedly preparing to join an investment company named Danantara. This company is expected to manage a fund of IDR 1,000 trillion to finance downstream industrial projects.
Although downstream industrialization is often promoted as a way to create new jobs and increase regional income, evidence from the field suggests otherwise. Several regions that host such industries, such as North Sulawesi, Central Sulawesi, and North Maluku, have seen increases in poverty rates.
In addition, the environmental and social impacts of these industries are highly concerning:
Pollution of coastal and marine areas caused by mining waste
Damage to clean water sources used by local communities
Decline in agricultural and fishery productivity
Prevalence of foreign workers and low wages for local laborers
Reports published by Mongabay (18 April 2025) and Katadata (11 February 2025) describe how residents have voiced concerns that industrial development has displaced them from productive lands and deprived them of their right to a healthy environment.
Energy Transition or Greenwashing?
A key question arises: are the energy transition commitments made by banks and the government sincere, or are they merely a form of greenwashing?
Greenwashing occurs when institutions or companies project an environmentally friendly image for reputational purposes, while continuing to engage in practices that harm the environment.
If banks that claim to support climate action continue to fund high-emission projects, then the promised energy transition will remain an illusion. Without a comprehensive evaluation of financing portfolios and investment strategies, achieving net-zero emissions by 2060 will be extremely difficult.
Solutions and Recommendations
To promote a fair and genuine energy transition, the following measures are recommended:
Ensure transparency and public reporting of bank financing portfolios, particularly in the energy and heavy industry sectors
Enforce ESG principles strictly and not just as a formality
Reevaluate downstream industrial projects that still rely on fossil energy
Require coal-dependent companies to develop and implement clear decarbonization roadmaps
Strengthen local community participation in decision-making related to industrial development
Conclusion
The energy transition must go beyond slogans and written commitments. It must be implemented through concrete actions, especially by financial institutions that have a strategic role in shaping the direction of national development.
As long as banks continue to finance pollution, sustainability will remain only a surface-level concept—green on the outside, but gray within.
