Slum finance is at the crossroads of climate change. To put this in context, enjoying continued growth, with a market size already reaching USD 3 trillion globally (ADB, 2022), most of the world's largest Islamic financial institutions are benefiting from the fossil economy. I am receiving Meanwhile, the world is moving in a completely different direction with businesses focusing on environmental, social and governance (ESG) issues.
The world's four largest Islamic banks, Saudi Arabia's Al Rajhi, Dubai Islamic Bank, NBD Emirates Airline, and Kuwait Finance House, are home to oil-rich economies. These financial institutions depend directly or indirectly on oil revenues for the growth of their businesses.
Similarly, Islamic financial institutions in Indonesia are also exposed to fossil fuel-based economic activities, albeit on a much smaller scale. The portfolio of Islamic banks in the mining and energy sector is limited. For example, Islamic banks' lending to the mining sector amounted to only Rp9.11 trillion ($587 million) in 2022, while state-run banks provided up to Rp237.39 trillion to the coal-dominated mining sector. We provided financing.
The UAE Consensus, one of the outcomes of the Conference of the Parties, or COP 28, held in Dubai, United Arab Emirates (UAE), calls for the private sector, particularly financial institutions, to play a greater role in climate finance. Masu. The report says that financing for climate action should become more available, accessible and affordable, and ensure that climate investment is seen as an economic opportunity. I emphasize that.
One such opportunity is energy transition financing, which is particularly important for reducing carbon emissions to zero by maintaining global temperatures at current levels. Participating countries set their own zero carbon emissions targets. Indonesia, for example, has a zero emissions goal to be achieved by 2060.
To achieve such ambitious goals, countries will need to utilize all available resources. Developed countries may promise to support developing countries with aid programs, but they also need to optimize their domestic resources. The cost of doing nothing is too high. According to one estimate, sea levels could rise 130 centimeters by 2100 if countries don't work together.
This predicted rise will significantly submerge many coastal areas around the planet. The risk is higher in countries with lower altitudes, such as the Maldives, which has an average elevation of 1.5 meters. If such a situation were to occur, the impact would be even worse for Indonesia, which has the largest area of land below 2 meters above mean sea level, according to one study (Hooijer & Vernimmen, 2021).