Jakarta, Indonesia Sentinel – During the 2023 International Monetary Fund and World Bank Group (IMF-WBG) Spring Meetings, the Coalition of Finance Ministers for Climate Action held its 9th Ministerial Meeting under the co-chairmanship of Indonesia’s Minister of Finance, Sri Mulyani Indrawati, and Finland’s Minister of Finance, Annika Saarikko, represented by Pekka Moren as Special Representative for Climate Action in Washington, April 15, 2023.
In the opening session, Minister of Finance Sri Mulyani conveyed points about the global problems currently faced, namely the economic downturn in 2023 and the potential for not achieving the target of 1.5º Celsius limiting the rate of global warming, between 2030-2035. “In facing these two challenges, we must realize that climate and development are like two sides of a coin, separating the two will only limit resources and hamper efforts to achieve the Paris Agreement targets,” the Minister said.
The finance ministers emphasized the importance of having a strategy to accelerate the achievement of the 1.5º Celsius target while maintaining the momentum of post-pandemic economic development, especially in low-income and developing countries. Considering these conditions, Finland, Indonesia and the Coalition Secretariat chose to discuss guidance on strengthening the role of finance ministers in promoting climate change action and financial transition as an extension of the green transition program.
Finance ministers play a crucial role in addressing climate change challenges by setting policies and making decisions that shape the economic landscape. “Policies made by finance ministers will have significant implications in responding to climate change, including how to allocate resources, invest in innovation, and prepare for the risks associated with climate change,” the Minister explained.
The Minister also said that during Indonesia’s term as ASEAN Chairman in 2023, The ASEAN Taxonomy for Sustainable Finance (ATSF) Version 2 was released in March 2023. ATSF Version 2 can accommodate the need for a more thorough assessment of “how and where” the contribution of the coal phasing out program to be placed as a decarbonization effort in support of the Paris Agreement. In transition finance, taxonomies alone are not enough.
“Of course, preparing interoperable institutions and regulations, such as reliable disclosures and globally accepted reporting and verification bodies, is necessary to develop high-integrity and highly credible transition finance,” the Minister emphasized.
The meeting also saw the handover of the Co-Chair position from Finland to the Netherlands after Finland’s four-year term. Meanwhile, Indonesia will still serve as Co-Chair of the Coalition of Finance Ministers for Climate Change Action with a one-year extension from April 2023 to 2024.
In the final session, Sigrid Kaag as the new Co-Chair said that in climate change action, especially transition financing, a country needs adequate fiscal capacity. Therefore, to be able to carry out various policy maneuvers, fiscal resources are one of the main components. For example, incentivizing the private and public sectors can be a policy option to smooth the transition process, especially in developing countries. In addition, regulation is also important to be able to regulate the dynamics in the transition process in the desired direction.