The climate crisis has become a global issue. Almost no one denies that the climate crisis has caused numerous ecological disasters. These ecological disasters have disrupted the economic growth of nations. It's no surprise that the business sector is beginning to portray itself as part of the push to reduce greenhouse gases (GHG), the cause of the climate crisis.

One business sector that identifies its companies as playing a role in driving greenhouse gas (GHG) reduction is banking. Currently, the term "green banking" has emerged in the banking world. Green banking refers to banks' efforts to protect the environment through lending or operational activities. While banks are not directly involved in environmentally destructive activities, such as plantations, mining, or other industries, banking cannot be separated from the problem of increasing environmental damage. Bank policies regarding lending or financing can trigger activities that impact the environment.

In this regard, banks that identify themselves with green banking must be careful in distributing their loans. Are they channeling their loans to environmentally friendly industries or to industries that are damaging the environment?

Nearly all of us are bank customers. However, most of us don't know where our money is being spent. The next question is, where can we find out if a bank is considered green banking?

If the bank where we keep our money were listed on the stock exchange, we would have easier access to information about where our money is being lent. Whether our money is being lent to environmentally friendly industries or those that threaten environmental sustainability.

First , we can obtain information from the Bank's Annual Report (AR). An Annual Report (AR) is a financial summary of a company's activities over a one-year period. The AR also includes management's analysis of the current financial condition and future plans. Who are external users? An external user is someone who does not manage or work for a company and only uses the company's financial information.

Second, we can also find information in the Sustainability Report Bank. The Sustainability Report Bank is a report containing information on a company's performance across economic, environmental, and social aspects over a one-year period. In addition to shareholders, this report is also intended for the public as a form of corporate responsibility, conveyed transparently.

The purpose of preparing a Sustainability Report Bank is typically to communicate a company's commitment to sustainable business practices. It can also provide a broader and more transparent overview of the company's sustainable development activities to all stakeholders.

Typically, the Sustainability Report and Annual Report are prepared simultaneously, although they are presented as two separate reports. However, the information in the Sustainability Report and Annual Report often contains one-sided claims from the bank. Therefore, we need to seek additional information.

Third, we can seek information from the mass media. Banks typically have a media relations team that regularly updates the media. This information often relates to the bank's funding support for a development project.

Fourth , if our bank happens to be a state-owned enterprise (BUMN), we can also seek information by requesting Public Information under the Public Information Disclosure Law (UU KIP). We can request information about where customer funds are being lent. For example, we can ask what percentage of customer funds are being lent to dirty energy projects like coal. Although Article 1 of the UU KIP (Public Information Disclosure) does not explicitly define a Public Body as a BUMN/BUMD, the definition does include other bodies whose primary functions and duties are related to state administration, whose funds are partially or entirely sourced from the APBN/APBD. BUMN/BUMD are Public Bodies included in this definition.

In some cases, the information officially published by a bank often differs from the information provided outside the bank. For example, in its official Sustainability Report and Annual Report, a bank may claim to support environmentally friendly projects, but in reality, the bank is involved in financing projects that are not environmentally friendly. If this occurs, it's no longer green banking but greenwashing.

Greenwashing is a form of deceptive marketing practice that uses false imagery. Companies pretend to be environmentally friendly. This greenwashing can mislead consumers. The reality on the ground isn't as beautiful as the words suggest, and that's perhaps one phrase that best describes the practice of greenwashing.

In BNI's 2020 Sustainability Report, for example, the bank stated its commitment to implementing sustainable finance, one of the goals of which is to reduce GHG emissions. However, a report by Urgewald, a German-based institution, found BNI to be one of six banks in Indonesia still lending to coal companies.

In fact, coal is one of the most destructive fossil fuels. The damage caused by coal is not only related to the environment but also to health. The environmental damage caused by coal extends from mining to the construction of coal-fired power plants. Lauri Myllyvirta, a Greenpeace International activist, stated that coal use causes 60,000 deaths in Indonesia each year. Donna Lisenby, Coal Campaign Coordinator for the Global Waterkeeper Alliance, stated that 26 percent of babies born near coal mines are at risk of birth defects.

Related to the climate crisis, GHG emissions from coal are accelerating the climate crisis. Burning coal produces more carbon dioxide per unit of energy produced than any other fossil fuel. Compared to gas, coal releases 66% more CO2 per unit of energy produced. Furthermore, coal mining releases methane into the atmosphere. Methane is twenty times more potent than carbon dioxide as a GHG, a cause of the climate crisis.

In this regard, it's no surprise that the fossil-free campus community in Indonesia, led by Fossil Free UI and UGM, has created a petition at https://www.change.org/GaPakeNanti . In the petition, young campus students urge BNI to immediately stop funding coal energy. The petition was motivated by the state-owned bank's promise in its Sustainability Report to support GHG reduction.

In short, amid rising environmental concerns, a bank can unilaterally claim to be green banking. As consumers, we must be critical of whether these green banking claims are actually another form of greenwashing. Therefore, financial literacy is necessary to prevent us as consumers from falling victim to misleading information regarding green banking.

By: Firdaus Cahyadi

Environmental Observer