Supporting Green Banking Sustainable development related to the environment aims for Economic Sustainability

Green Banking in the Credit Business to Avoid Environmental Damage 

The credit business has indirect impacts and risks on the environment. This risk arises from the impact of bank-financed business activities that can damage the environment. To avoid this effect, banks must apply green banking when providing credit. In this article, we will examine the extent to which green banking agreements have been included in the Indonesian banking law and how many banks can impose sanctions on creditors who damage the environment. In writing this article, normative legal methods are used, namely using secondary data. The conclusion of this article explains that banking laws and regulations have regulated the implementation of green banking, and banks are still unable to impose sanctions on creditors who damage the environment. 

The rapid development of the world of science and technology as well as the rapid development and changes in values ​​increasingly create a situation where humans are a system that is higher than the whole environment. This situation achieved some success in people's lives, but on the other hand, this development was followed by increasingly large environmental changes. These changes cause damage to the natural environment. 

Environmental pollution is now known to be closely related to technology, mechanisms, industrialization and business models. Such a situation is the result of human behavior towards the exploitation and use of natural resources that are not balanced (overstrain). Activities that harm the environment are as follows: 

Industrial activities as waste as hazardous waste, such as heavy metals, radioactive substances, hot water waste. Also in the form of smoke (fog), noise (noise pollution), and others.

Mining in the form of crop damage; repatriate; mining waste pollution; air pollution and damage to minefields.

Transportation activities in the form of chimneys; increase in urban air temperature; motor vehicle noise; fuel spills, especially oil from tankers; and others. 

Agricultural activities, mainly due to residues resulting from the use of chemicals that kill harmful animals/plants, such as insecticides, pesticides, herbicides or fungicides. Also the use of inorganic fertilizers; and others. 

In contrast to this situation, people have realized that the environment must receive serious attention to prevent ecological damage that will get worse and may interfere with the sustainability of mankind in the future. Therefore, it is necessary for the world's role to participate globally in environmental development and improvement. 

Therefore, in 1972, the United Nations convened a global community conference in Stockholm to discuss important environmental issues. Twenty years after the Stockholm Conference, the United Nations (UN) again convened the Environment and Development Conference in 1992. This conference came with the understanding that the goal of development is not only to improve the welfare of the population, but also to improve the welfare of the population. to pay attention to environmental survival in the future. After several meetings, an agreement was reached on the establishment of the United Nations Environmental Program (UNEP), which was followed by the establishment of an environmental protection agency at the national level. 

Then the World Commission on Environment and Development (WCED), an agency established by the United Nations, published the document Our Common Future, which contains a diagnosis and analysis of environmental conditions. The World Environmental Policy paradigm has undergone a fairly basic change, in the name of the concept of ecologically sustainable development (development capacity), which emphasizes “intergenerational equality” in various development activities, into a concept that also pays attention to. for “equality of the next generation”, developing the environment in such a way that future development occurs, which is known as the concept of sustainability. 

The Brundtland Commission explained that the notion of sustainable development is the ability to make sustainable development , which aims to ensure that current development needs take into account future development needs. Thus, the concept of sustainable development emphasizes two main things. something what should be done, that is what should be maintained and what should be developed. 

Conservation is divided into three broad categories, namely: 

1. Nature, consisting of soil, biodiversity and ecosystems; 
2. A life support system consisting of ecosystems, natural resources, and the environment and; 
3. A community consisting of a culture, a group of people and a place to live. 

 Development includes: 

1. Population consists of child survival, life expectancy, education, justice and equal opportunity 
2. The economy consists of the production and consumption sectors. 
3. Society consisting of institutions, public relations, countries and regions.
4. Susan Smith then stated that the achievement of sustainable development can be achieved in the following ways: 
5. By maintaining the results achieved with continuously renewable natural resources;
6. To conserve and replace exhausted natural resources;
7. Maintenance of ecological support systems; and
8. Conservation of biodiversity. 

In its development, sustainable development is   applied and developed in various fields, including the economic sector, government, non-governmental organizations, companies and the financial sector.

To support the implementation of the concept of sustainable development , several international-scale institutions were called upon to support and implement this concept. Some of these institutions are the World Bank, which in 2010 reaffirmed its commitment to economic growth with due regard to the environment, the International Monetary Fund (IMF), its commitment to sustainable economic growth, and the World Trade Organization (WTO), which aims to promote sustainability through activities across borders and the reduction of trade barriers.

The admin focuses more on the author's writing on the role of the financial sector, discussing the role of banking in implementing the concept of sustainable development .

The banking sector is usually not aware of environmental developments and does not have a direct impact on environmental damage. Banking is considered as a financial sector that is considered environmentally friendly in terms of emission and pollution indicators. The aforementioned fact is now confirmed by the results of a study conducted in 1990, which stated that banks are not as interested in environmental issues as customers are. But over time the situation changed. The financial sector, particularly the banking sector, has increased its awareness and understanding that the financial sector can also play a role in the threat of environmental damage. Banks in the United States were the first to implement environmental policies, particularly with regard to credit risk. Banks in European countries have also taken similar steps, including environmental policies in conducting banking operations. However, the existence of this policy is not focused on analyzing the risk of environmental impacts arising from the provision of credit, but on the development of new products in the form of environmentally friendly investment products. 

Now one of the environmental factors of banking policy has become credit risk and environmental impact. The United Nations Environment Program (UNEP) banking survey revealed that 80 survey respondents analyzed the impact of environmental damage on loans. Also, a survey conducted in 1997 revealed that many banks created environmental divisions and developed ecological banking products. 

The countries of Asia, South America and Eastern Europe are also starting to change. This change is usually due to the influence of multilateral development banks such as the World Bank, International Finance Corporation, Andean Development Corporation (ADC) and European Bank for Reconstruction and Development (EBRD). The September 1999 Dow Jones Sustainability Group Index provides further evidence that environmental development concerns have extended to the financial sector. This index is an index that provides information about the sustainable development of companies in the world. 

The implementation of the concept of sustainable development in the financial sector in Indonesia is starting to be realized slowly, the implementation of this concept can be seen: 

Law Number 32 of 2009 on environmental protection and care, which regulates the responsibilities of various industries to protect the environment.

Stock Law Number 40 of 2007, which requires the environmental responsibility of every company. 

Indonesia's commitment to reduce greenhouse gas emissions by 26% based on the actions of the Indonesian government and further reduce emissions by 41% by 2020 with international support.

Improving the quality of risk management for financial service providers.

Increased competition between financial institutions with the aim of making financial institutions environmentally friendly. 

In the Indonesian banking sector, the concept of sustainability is also applied using a green banking approach . On May 26, 2010, the Ministry of Environment and the Financial Services Authority (OJK) signed a memorandum of understanding (MoU) on increasing the role of financial institutions in environmental protection and protection. This collaboration is a follow-up program between the Ministry of Environment and Bank Indonesia, which was first started in 2010.

The application of green banking is therefore one of many government efforts to change the greedy development paradigm. green economy system. Greed economy is a term used in economic growth as measured by gross domestic product which leads to exploitation of natural resources. Green economy is a way to achieve economic growth by paying attention to the balance of third parties (people, profit, and planet). 

The 3P concept is the basic concept of  sustainable development . This concept emphasizes development that not only prioritizes maximum economic benefits, but also pays attention to environmental protection and social issues. With the making of this policy, it is hoped that harmony between national development policies and the national development budget will be achieved. 

With the memorandum of understanding between OJK and the Ministry of Environment, the Green Bank Program is one of the programs that has been approved by the OJK to be implemented in state banks. As a result of the memorandum of understanding between the Ministry of Environment and OJK, several agreements were reached between the parties to enhance their role in environmental protection, namely:

1. Harmonization of financial services sector policies with environmental protection and management policies.
2. Harmonization of environmental and environmental protection policies with the policies of the financial services sector.
3. Provision and use of environmental information for the development of sustainable financial services.
4. Study/research on the framework of reference for the preparation of operating principles for sustainable financial institutions.
5. Capacity building and expertise of financial services personnel in the field of environmental protection and management.

Based on points of clarification regarding the sustainable development of the financial sector, namely through the application of the Green Bank concept, it is necessary to immediately make regulations for the implementation of the Green Bank concept in the state banking system. This concept is expected to increase the role of national banks in protecting and managing the environment. This study is deemed necessary as an effort to analyze how the green banking concept is applied in the banking sector so that the implementation of the concept can maximize the role of banks as financial service institutions in participating in protection and governance.