Indonesia Receives IFC Green Loan to Decarbonise Retail Properties

Indonesia's building sector is expected to jump from 21% of the country's total energy consumption in 2021 to 40% by 2030. To help the company mitigate environmental concerns and push for sustainable development, the International Finance Corporation, a member of the World Bank Group, has granted PT Nirvana Wastu Pratama (NWP) a $53 million sustainability-linked loan. It is IFC's first such loan in Indonesia.

Loan Objectives and Sustainability Targets

The loan has required NWP to meet particular environmental targets: a 42% reduction in greenhouse gas (GHG) emissions related to buildings older than three years by 2030, when compared to the base year of 2019. New buildings and major renovations should be EDGE Advanced-certified for high standards in energy efficiency.

NWP is one of the leading developers in Indonesia's retail and logistics property sector. It will utilize the financing to decarbonize its properties, enhance energy efficiency, and obtain green building certification through IFC's EDGE program. The certification allows real estate companies to design and develop buildings that meet sustainability standards by efficiently reducing water and energy consumption.

Current Green Building Efforts

NWP has EDGE-certified 11 of its properties and committed to certifying six more before 2027. The action taken by NWP fits into Indonesia's broader aspirations, which include emission reduction and the management of the growth in energy demand within the building sector. The sustainable efforts by NWP will encourage other industry players to take on a similar green strategy.

Financial Barrier of Green Construction

The adoption of green building practices in Indonesia has been hindered by financial challenges. Sustainable financing solutions, such as the IFC-backed sustainability-linked loan, aim to provide companies with the necessary capital to implement energy-efficient and environmentally friendly construction methods.

IFC’s investment aligns with its broader strategy for Indonesia, which focuses on decarbonizing the urban environment and improving climate resilience. By offering sustainability-linked financing, IFC aims to support companies in overcoming financial obstacles and integrating green solutions into their operations.

The Future of Green Buildings in Indonesia

With the building sector's energy consumption expected to soar, investments in green construction and sustainability initiatives become more crucial by the day. The support of IFC represents a step towards achieving Indonesia's climate goals and reducing emissions in the real estate sector.

NWP is also setting a benchmark for other developers in the industry by implementing EDGE certification and reducing emissions. With more companies now realizing the economic and environmental benefits of sustainable building practices, Indonesia's transition to a greener economy is likely to speed up.

Source: IFC