SDG or Sustainability-linked Loans component aims to support banks to expand their loan facilities for their clients by identifying and financing bankable small business improvements for SMEs, including their sustainability performance and contribution to the SDGs. Component 2 will support banks as they launch new Sustainability-linked loan products through the creation of “Green catalogues”, which will streamline loan approval systems and provide metrics for measuring impact. Through strengthening, modernizing, and upgrading of SMEs, their competitiveness will be enhanced, which in turn will significantly reduce the risks for investors, increase return on investments, create more jobs, and have a positive environmental impact.
Development of the pilot Sustainability-linked Loan in Aquaculture sector:
- Identification of financially viable solutions for aquaculture farmers/cooperatives, based on the assessment of local economic activities and market intelligence focusing on the green and economy segment.
- Most aquaculture farmers in Indonesia are using traditional methods of aquaculture farming with plans to upgrade to intensive farming, which requires considerable investment.
- UNEP and UNIDO are working with Indonesian commercial banks in developing an SME loan product that supports aquaculture farmers/cooperatives in applying the SOPs and obtaining the IndoGAP Certification issued by the Ministry of Marine Affairs and Fisheries.
- The loans are offered to aquaculture farmers/cooperatives that will commit to obtaining the IndoGAP Certification after sustainability-linked loan disbursement The loan is an opportunity for farmers to gain financial access and sustainably modernize their business