Unequal shades of green: A human rights review of Indonesia's green finance policies

Abstract

Motivation

Indonesia's green finance policies (GFPs) have been evolving, but questions remain about their consistency with human rights (HR) and social justice. This issue is particularly important as the green transition can generate social exclusion and uneven impacts on affected communities if environmental objectives are pursued without substantive rights-based safeguards.

Purpose

This article reviews the extent to which green finance instruments, such as taxonomies and certified green actions, align with social justice as an integral part of sustainable development. It specifically assesses whether existing GFPs provide substantive safeguards against social exclusion and structural inequality beyond procedural and environmental compliance.

Approach and Methods

Drawing on a pragmatist paradigm, it employs desk analysis and normative juridical review to examine Indonesia's GFPs and their alignment with three dimensions of HR: the right to a clean and sustainable environment, equitable access to green finance, and protection against social and economic inequalities. The desk analysis covers academic literature, policy documents, reports, and local newspaper reports, while the normative juridical review assesses the legal status and substantive content of relevant GFP regulations.

Findings

The findings indicate that existing policies are primarily administrative in nature and focused on environmental classification, meeting formal legal and regulatory requirements but offering limited substantive safeguards against social exclusion and structural inequality affecting local communities. Persistent gaps between the regulatory framework and on-the-ground implementation result in divergence from the sustainability principle of “Do no significant harm.”

Policy Implications

The review highlights the risks of social exclusion and structural inequality in the green transition, underscoring the need for an HR-based regulatory framework. Beyond Indonesia, it also highlights how prioritizing proceduralism to secure public legitimacy while sidelining instrumentalism may erode social justice. It also extends the literature on GFP and sustainability by foregrounding how regulatory proceduralism may obscure rights-based accountability, a dimension underexplored in global GF discourses.