IFC Launches First Sustainability-Linked Loan in Indonesia to Advance Green Building Initiatives

The $53 million loan, jointly financed by IFC and PT Bank OCBC NISP with equal contributions, marks a significant milestone in advancing sustainable financing solutions in Indonesia.

In a landmark effort to promote sustainable development and drive Indonesia’s transition to a low-carbon economy, the International Finance Corporation (IFC) has introduced its first sustainability-linked loan in the country. This initiative aims to bolster green building certification and improve energy efficiency within the portfolio of PT Nirvana Wastu Pratama (NWP), a leading player in Indonesia’s retail and logistics property sector.

Financing Indonesia’s Low-Carbon Transition

The $53 million loan, jointly financed by IFC and PT Bank OCBC NISP with equal contributions, marks a significant milestone in advancing sustainable financing solutions in Indonesia. With an 11-year tenure, the loan will enable NWP to decarbonize its property portfolio, achieve substantial reductions in greenhouse gas (GHG) emissions, and secure international green building certifications through IFC’s EDGE (Excellence in Design for Greater Efficiencies) program. EDGE is recognized globally as a standard for resource-efficient buildings, focusing on energy, water, and material efficiency.

Clear Performance Targets and Sustainability Goals

As part of this financing arrangement, NWP will work closely with IFC to refine its sustainability-linked finance framework, ensuring alignment with global green building and investment standards. Two key performance targets anchor the loan’s sustainability focus:

• For existing buildings that have been operational for over three years, NWP must achieve an absolute emissions reduction of 42 percent by 2030 compared to a 2019 baseline.
• For new projects or significant retrofits, NWP must achieve the EDGE Advanced certification, signifying outstanding environmental performance.

Since 2017, NWP has demonstrated a strong commitment to sustainable development, obtaining EDGE certifications for 11 properties and registering six more for certification by 2027. These efforts underscore NWP’s proactive approach to adopting green building practices, setting a new benchmark for the Indonesian property industry.

Addressing a Key Sector’s Carbon Footprint

The building and construction sector is both a cornerstone of Indonesia’s economic development and a substantial contributor to national GHG emissions. In 2021, the sector accounted for 23 percent of Indonesia’s energy consumption, a figure expected to climb to 40 percent by 2030. By implementing advanced green building standards, NWP’s initiatives aim to not only reduce emissions but also enhance climate resilience and economic benefits for local communities.

Strengthening Green Finance in Indonesia

Euan Marshall, IFC’s Country Manager for Indonesia and Timor-Leste, highlighted the significance of this investment. “Financial barriers are widely seen as the biggest obstacle to adopting green building practices in Indonesia,” Marshall said. “To overcome these, there is a pressing need for more specialized financing tools, including sustainability-linked financing. This investment aligns with IFC’s strategy to support Indonesia’s decarbonization and urban climate resilience goals through innovative financial solutions.”

Through this pioneering sustainability-linked loan, IFC is paving the way for broader access to green financing in Indonesia, helping to address the challenges that have traditionally limited the adoption of green building practices. By catalyzing the transition to a low-carbon economy, this initiative reinforces Indonesia’s commitment to achieving sustainable, inclusive growth in the face of a changing climate.