REPUBLIKA.CO.ID, JAKARTA -- PT Bank Syariah Indonesia Tbk (BSI), together with the United Nations Development Programme (UNDP) Indonesia and the National Amil Zakat Agency (Baznas), is ready to develop the Green Zakat Framework and is determined to be at the forefront of its implementation in the future.

BSI Deputy President Director Bob Tyasika Ananta said that the Green Zakat initiative (Green Zakat) has been jointly launched at the World Zakat and Waqf Forum event in November 2024 in Jakarta. This time, BSI and BAZNAS engaged UNDP, the UN agency engaged in sustainable development, for the development of the framework.

Bob confirmed that Green Zakat Framework development efforts are becoming increasingly important as sustainable finance becomes part of the government's Asta Cita. Its goals strengthen the harmonious alignment of life with the environment, nature, and culture and promote the independence of the nation through a green economy and a blue economy.

“It is also an effort to address the issue of climate change, which requires actions and policies capable of driving the transformation of the financial sector. BSI as a sharia financial institution in Indonesia has a high commitment to play an active role in realizing these ideals including supporting Indonesia's achievement of Net Zero Emissions by 2060 or sooner,” he said in a speech at the Green Zakat Framework focus group discussion (FGD) event in Jakarta, Monday (17/3/2025).

BSI's efforts were continuous and carried out from previous years. As on March 4, 2024 at the launch event of Climate Risk Management and Scenario Analysis (CRMS) by the Financial Services Authority (FSA), BSI became one of the 7 banks that signed this commitment declaration.

BSI's commitment to the implementation of sustainable finance is also demonstrated through a number of tangible steps. BSI continues to strengthen sustainable financial governance, one of them by developing Digital Carbon Tracking. The initiative makes BSI the first sharia bank to do a carbon emissions accounting.

Last week, BSI also signed a Memorandum of Understanding with Bappenas to strengthen collaboration in the development of the sharia economic ecosystem in Indonesia. Zakat has become a very essential instrument of sharia social finance in Indonesia.

“Regarding the Green Zakat concept, BSI has been exploring the endowment of zakat funds as an innovative new funding potential to support social and environmental programs related to climate change in accordance with the principles of Sharia compliance. This spirit creates holistic ESG value creation and further reinforces the alignment and distinctiveness between Sharia principles and sustainable finance,” said Bob.

FGD was also attended by Director of Zakat and Waqf Empowerment, Ministry of Religious Affairs, Waryono Abdul Ghofur; representatives of Bappenas, Ministry of Finance, Bank Indonesia, OJK, KNEKS, MUI, ASBISINDO, World Zakat and Waqf Forum, Islamic Development Bank, CIBEST IPB, and other zakat institutions and supporters of the sharia economic and financial ecosystem.

By way of illustration, BSI as a sharia bank allocates 2.5 percent of its operating income as corporate zakat. BSI has distributed corporate zakat amounting to Rp 232 billion in 2024.

The total number of beneficiaries reached 225,700 people spread across the humanitarian sphere 145,600 people (65 percent), economics 37,500 people (17 percent), education 23,500 people (10 percent), health care 14,800 people (7 percent), and preaching and advocacy 4,300 people (2 percent).

Therefore, according to Bob, this FGD will be a means of conveying the development of the Green Zakat Framework and gathering the aspirations of the relevant stakeholders. It is hoped that in the future it can help the process of perfecting the Green Zakat Framework in accordance with national and international standards.

Thus, one of these sharia financial instruments is increasingly able to address the challenges of sustainable development and inclusive climate action.

Through FGD and its future actions, BSI, together with relevant stakeholders, will become increasingly capable of supporting low-carbon development, the preservation of resilient community empowerment environments, and other social activities that collectively lead to a better life.

“Furthermore, in the future, along with the framework that has been put together, we will jointly explore pilot ideas for real implementation of Green Zakat so that it can be referenced and replicated to double the positive impact, not only for zakat practitioners and social finance in Indonesia, but also on a global level. We hope that Green Zakat will be a significant contribution from Indonesia following Green Sukuk and Green Waqf that have already aired,” Bob concluded with optimism.

On the occasion, Baznas Chairman Rizaludin Kurniawan said, Green Zakat Framework aims to encourage a change in the zakat paradigm that is more environmentally concerned. Through this FGD, the role of the framework forms the basis for how the zakat ecosystem can be integrated with environmental, social, and governance or ESG aspects.

“With this FGD, the Green Zakat framework can be implemented in the future at the subnational level, ensuring its alignment with the broader Islamic finance ecosystem and local zakat management structures,” he said.

Meanwhile, Head of UNDP Indonesia Development Financing Team, Nila Murti, said that the initiative seeks to integrate sustainability principles into zakat practices. Thus it can further position zakat as the main financial instrument for environmental preservation, climate resilience, and poverty alleviation.

“Zakat has long been known as a pillar of social solidarity because it brings people together to help provide essential support for those in need. Zakat does have a primary mission for poverty alleviation. However, with this framework zakat can also contribute greatly to the environmental, climate, and sustainability agenda,” he said.

Through this framework, UNDP also wants to ensure that zakat can contribute to climate action and social resilience in an inclusive and transformative way. This adds value to the usefulness of zakat and broadens its impact on society.

UNDP estimates that Indonesia faces a $1.7 trillion funding gap to achieve the Sustainable Development Goals (SDGs). Indonesia is estimated to need an additional 24 billion U.S. dollars each year for its emissions reduction targets. Indonesia is the sixth largest emitter of greenhouse gases in the world, contributing significantly to global carbon emissions.

“Islamic finance therefore offers untapped opportunities to support this country's transition to a low-carbon economy,” he continued.

As an illustration, with a majority Muslim population and a halal industry worth trillions of rupiah, Indonesia has significant potential to leverage zakat as a sustainable and green financing tool. Indonesia's zakat collection has grown significantly, reaching about 1.3 billion U.S. dollars in 2022 and about 2 billion U.S. dollars in the first half of 2023.

This upward trend represents the great potential of zakat as a major financial resource in Indonesia. Where the potential is enormous to contribute to the climate resilience and social welfare programs of this country. The FGD brings together the main stakeholders of Islamic finance.

Including zakat institutions, sharia banks, regulators, academics, and NGOs, to provide strategic insights and refine the Green Zakat Framework. Thus ensuring its practical application in the future. Citing Baznas data, zakat potential in Indonesia reaches Rp 327 trillion per year. This is equivalent to 75 percent of the social protection budget in Indonesia's state budget.

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