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Jakarta – Green investment instruments for sustainable MSMEs initiated by Supernova Ecosystem are estimated to support 120 sustainable businesses by 2030 contributing to economic growth and forest conservation.
Equator Capital Partner at Supernova Ecosystem, Inez Stefanie, stated that the investment program based on environmental restoration and conservation is predicted to absorb 7 million tons of CO2, save 700 thousand hectares of forest area, and create 13,000 jobs for indigenous communities.
“As a catalyst for sustainable business funding, Supernova Ecosystem plays a role in matching business owners, investors, and the government,” she said during a media discussion titled “Innovative Green Funding Instruments for Sustainable MSMEs” in Jakarta on Wednesday, April 3, 2024.
Furthermore, Inez mentioned that Supernova Ecosystem’s short-term target for 2025 is to preserve 35,000 hectares of land impacting 3,500 forest farmers, fish farmers, and plantation farmers in three commodities: tengkawang, patchouli, and snakehead fish.
She stated that seven main commodities that will also be developed in their pipeline include cocoa, coconut, and cashew nuts mostly located in Eastern Indonesia.
She emphasized that to achieve these targets, multi-stakeholder collaboration is essential, similar to an ecosystem’s work.
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This is what Supernova Ecosystem continues to do with its partners, such as the Sustainable District Forum (LTKL), the People’s Economy Coalition (KEM), and other multi-stakeholder institutions.
“We initiated the concept and framework of the Value Chain Collaboration Canvas (VC3) to encourage and facilitate sustainable collaboration among ecosystem players focusing on agroforestry and commodities,” she explained.
She mentioned that as part of KEM, the Supernova Ecosystem Accelerator Constellation working group leads and supports Green MSME assistance. Meanwhile, the Equator Capital working group leads the fundraising working group.
“The work target that Supernova Ecosystem aims to achieve is an effort to promote Green MSME development to create fair and equitable economic growth while addressing environmental issues,” she clarified.
Challenges of Sustainable Business in Indonesia
In the discussion session, Economic and Environmental Expert Dr. Mubariq Ahmad stated that there are several challenges in developing Green MSMEs or sustainable businesses, experienced by both business owners and investors.
He outlined the first challenge in developing Green MSMEs in terms of funding providers, which is the lack of government funding focused on Green MSME development and the limited availability of impact investment facilities for business owners.
Additionally, the second challenge is the lack of awareness of the use of conventional banks and the ability to access them by business owners.
“Therefore, Green MSME owners need to be given access to the four sustainable economic frameworks, including access to funding, MSME capacity development, technology access, and market access,” he added.
Mubariq believes that Indonesia has tremendous potential in developing sustainable businesses. So far, MSMEs have been able to contribute to 61% of the country’s Gross Domestic Product (GDP).
“If the business as usual model can be transformed into sustainable business, this sector has the potential to have a significant impact on achieving national carbon emission reduction targets and economic growth,” he said.
Mubariq added that concrete support and direct intervention from the government in the form of regulations for sustainable Green MSMEs are needed.
The mechanisms offered can be a source of funding in existing government programs, such as the People’s Business Credit (KUR) loan program, the Investment Facility program, government Public Service Agency (BLU), and empowerment based on credit unions.
In the future, the government can create concrete policies and incentives to use government funds and apply them to Green MSMEs.
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Meanwhile, Sustainable Finance Policy Practitioner, Dr. Mahpud Sujai, stated that the government is also promoting sustainable business through umbrella regulations that can serve as a basis for Indonesia’s sustainable finance.
“One of the umbrella regulations for developing sustainable businesses is the Sustainable Green Taxonomy Regulation in Indonesia (TKBI). TKBI will protect the implementation of sustainable financial applications, including financing for the transition to sustainable economic growth,” he explained.
He added that although many challenges are still found in its implementation, TKBI is expected to oversee innovations in green funding schemes, especially for entities acting as intermediaries in finding the right and committed business owners and investors to support businesses according to their scale,” he elaborated.
He hopes that entities like Supernova Ecosystem, LTKL, and KEM can assist the government’s efforts to realize more tangible funding access, leading to an increase in MSME capacity and scale. (*)
