Embedding Climate-related Risk Mitigation in Project Finance​

As Indonesia scales up infrastructure investment to support renewable energy deployment, financial institutions face increasing and largely unpriced exposure to climate risk. Indonesia ranks among the world’s top three countries for climate-related disasters, while tightening regulations (including POJK 51/2017, POJK 17/2023, and other evolving disclosure standards) are raising the bar for how banks identify, assess, manage, and disclose climate-related risks.

This report, developed by the Sustainable Banking Hub and Climate Policy Initiative through direct technical assistance to Indonesia Infrastructure Finance (IIF), offers financial institutions a practical, deal-level framework for embedding climate risk mitigation directly into the project finance cycle.​

What’s inside:

• A three-step framework: Identify, Assess, Mitigate for both transition risks (policy, technology, market, and reputational shifts) and physical risks (acute and chronic climate hazards)
• Ready-to-use tools, including sectoral heatmaps, project-level screening questions, and risk-scoring matrices to prioritize where climate risk is most material
• Concrete deal structuring guidance: covenants, conditions precedent, risk allocation terms, and monitoring mechanisms that translate climate risk into standard credit agreement terms
• A roadmap for scale, showing how lessons from bespoke project finance deals can be adapted into standardized tools for corporate lending portfolios

Read the full report to explore the framework and tools.