Indonesia is the first sovereign green bond issuer in Asia, but probably not the last

Green sukuk could fill a void in institutional investor portfolios Last month, Indonesia became the first sovereign green bond issuer in Asia, raising $1.25 billion in a five-year offering. In addition to the distinction of being the first sovereign issuer, Indonesia also made headlines because the product was a sukuk, or Islamic bond. The country’s finance ministry plans to use the proceeds of the green bond to invest in renewable energy projects, green tourism, and waste management. Although Indonesia is one of the world’s top emitters of greenhouse gases and the largest exporter of coal, it has committed to cutting emissions by at least 29% by 2030 and has set targets to reduce coal use in energy production. The country also aims for renewables to make up nearly one quarter of its energy mix by 2025, up from 12% currently. Plus, around 1,800 megawatts of wind projects are targeted for completion by that time. The green sukuk is expected to help advance these goals. Few governments have issued green bonds; Poland and France are the biggest. Most other issuers are corporate entities. In Asia, Chinese companies have led the way in tapping the green market to finance environmentally friendly projects,