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Sustainable living
Green Taxonomy is a classification system used to determine whether an economic activity can be considered as contributing to sustainable environmental objectives. This concept emerged in response to the global need to address climate change and accelerate the transition to a low-carbon economy.
This taxonomy differs from other environmental initiatives by providing a measurable, consistent, and scientific framework for classifying economic activities. It applies not only to large corporations but is also relevant for small and medium-sized enterprises (SMEs) seeking to adopt sustainability principles.
Green Taxonomy has various strategic goals, one of which is to create market transparency and prevent greenwashing practices. For companies, the presence of this taxonomy aids in responsible investment decision-making and enables businesses to assess and report the environmental impacts of their operations.
Investors gain clarity on whether their investments truly support a green economy. Regulators and the public also obtain a basis to objectively evaluate and monitor corporate environmental commitments. This taxonomy is an essential tool for achieving net-zero emissions targets and building a sustainable economy.
For an activity to be classified as green, it must meet several criteria, including:
In Indonesia, the Financial Services Authority (OJK) released the Indonesian Green Taxonomy in 2022. This document serves as a guideline for classifying sectors and economic activities that support environmental protection and sustainable development.
The Indonesian Taxonomy is aligned with international standards such as the EU Green Taxonomy but is tailored to national contexts. The government also plays an active role in providing policy support, fiscal incentives, and strengthening regulations.
Several priority sectors included in the Green Taxonomy are:
Companies aiming to adopt the Green Taxonomy should begin by:
Integrating taxonomy into business strategy requires adjusting business models and developing internal policies aligned with sustainability. Employee training and human resource capacity building are crucial so that the entire organization understands and supports the transformation process.
Some challenges faced by companies include:
PT Pertamina Geothermal Energy developed renewable geothermal energy projects classified as green by OJK's Taxonomy. The company is a pioneer in supporting Indonesia's energy mix through low-carbon technology.[Ref]
Enel, a multinational energy company based in Italy, adopted the EU Taxonomy to report green activities and increase transparency for investors. Enel is a leader in issuing green bonds and developing large-scale renewable energy.[Ref]
Companies that successfully implement the taxonomy demonstrate competitive advantages in the market, easier access to green financing, and a more positive brand image.
Financial institutions play a crucial role in promoting the adoption of the Green Taxonomy by:
Technology plays an important role in supporting reporting and monitoring processes, including:
Green Taxonomy in Indonesia will continue to evolve alongside regulatory strengthening and the growth of the green product market. Innovation in renewable energy, sustainable finance, and cross-sector collaboration will be key to accelerating adoption.
Green Taxonomy is not merely a classification tool, but a strategic framework to help companies transform toward sustainable business. The sooner a company takes action, the greater its opportunity to grow inclusively and remain competitive in the green economy era.
Jejakin’s green programs combine high-tech monitoring, biodiversity restoration, and community-led initiatives to deliver powerful, sustainable change across ecosystems.
