Indonesia’s OJK warns floods and forest fires pose financial risks

Indonesia’s Financial Services Authority (OJK) has warned that climate-related disasters, including floods and forest and land fires, are directly affecting the financial sector. Its board of commissioners chair, Friderica Widyasari Dewi, said these events could weaken borrowers’ ability to meet their obligations to banks.

Speaking at the Indonesia Stock Exchange in Jakarta on 10 November 2026, Friderica identified climate risk as one of five global strategic challenges with implications for Indonesia. She said its financial effects extended to asset quality, credit risk, insurance claims and investment values.

Another challenge was the interconnection of risks and their potential to cause systemic disruption, she said. Environmental disturbances could spread through health, production and logistics and affect inflation. She cited haze from forest and land fires, which affects public health both in Indonesia and beyond its borders.

Measuring climate risk was a further challenge, involving data availability and quality, business quality and the use of technology to assess and manage exposure. Friderica also highlighted weaknesses in the credibility of sustainability reporting, pointing to gaps between companies’ environmental, social and governance commitments, implementation and disclosures.

She flagged greenwashing, exaggerated claims about positive impacts and unsupported claims of social contributions as concerns discussed at the Organisation for Economic Co-operation and Development. Companies still needed guidance on transparent reporting that reflected actual conditions and did not conceal material information, she said.

The fifth challenge was governance and accountability. Friderica said this covered oversight, internal controls and stronger accounting capabilities to support accountable management and reporting of sustainability risks.