Group certification may be utilized to meet the requirements for the “Green” classification if the relevant certification scheme includes a group certification mechanism, provided that all requirements within the certification scheme and applicable laws and regulations have been fulfilled.

Reporters use the APOLO OJK application to submit pilot project TKBI reports, following the same reporting mechanism used for THI.

The issuance of TKBI does not change the fundamental aspects of taxonomy reporting to OJK. Reporting is still carried out using the APOLO application with the same reporting format. The economic sector codes used also remain the same, considering that both TKBI and THI use KBLI 2017. TKBI adjusts the assessment stages carried out by taxonomy users. Once the assessment results are obtained, reporting continues to be conducted using the same mechanism. It should be noted that in the reporting application, taxonomy classification still uses the same classification codes: under THI – Code 1 Red, 2 Yellow, 3 Green, 4 Not Yet Categorized. After the issuance of TKBI – Code 1 Red/Does Not Meet Classification, 2 Yellow/Transition, 3 Green, 4 Not Yet Categorized. For reporting purposes during the transition period, the “Red” label (THI) is reported using the same code as “Does Not Meet Classification” (TKBI). Likewise, “Yellow” (THI) is reported using the same code as “Transition” (TKBI).

With the issuance of TKBI version 3, which already covers all NDC-related sectors and enabling sectors, reporting will focus solely on using TKBI (THI is no longer used).

All accounts must be reported. Therefore, if in a given reporting period the Reporter is required to report 100 major debtors, it is possible that the reported data will consist of more than 100 rows (in cases where a single debtor has more than one account).

The supporting assessment documents are required for reporters to substantiate the assessment results they have conducted. At present, these documents can be maintained independently by the reporter. In the future, if THI/TKBI reporting becomes part of an object of examination by OJK, the reporter may then be required to provide such supporting documents.

The determination of the debtor threshold is based on the outstanding amount as of the current reporting position.

A Grievance Mechanism is a channel for addressing complaints and grievances from stakeholders related to the negative environmental and social impacts of an economic activity on the environment and surrounding communities. TKBI has fundamentally incorporated social aspects, one of the criteria of which is assessing impacts on communities living near an investment. In conducting the assessment, users can ascertain whether an economic activity has negative environmental and social impacts on its surroundings by reviewing complaints and grievances from the affected communities related to the activity. In addition, grievance mechanisms are already included within the framework of sustainability disclosure requirements (for example, GRI Disclosure 103-2).

Unlike the simpler and more straightforward THI assessment mechanism, the TKBI assessment mechanism is carried out through several stages. After users are able to identify the economic activity and business scale to be assessed, and ensure that the economic activity falls within the scope of TKBI, the steps that need to be taken are as follows: Determining the user entry point/starting point to identify the most relevant EO or the EO that provides the main contribution to a given economic activity. This stage is crucial, as the criteria that must be fulfilled by an activity will be highly dependent on the selected EO. The same type of economic activity may be assessed using more than one EO, depending on the perspective/justification of the taxonomy user conducting the assessment (Appendix 2). After successfully identifying the most relevant EO or the EO with the main contribution, the user then assesses compliance with the EO based on the criteria corresponding to the selected EO. For corporate/non-MSME business scales, the assessment of criteria is conducted using the TSC (Appendix 3), while for MSMEs, the assessment of criteria is conducted using the SDT (Appendix 4). Each criterion under the EO listed in the taxonomy must be fulfilled (applied as “and”, unless otherwise stated, for example “or”, “and/or”, or “option”). After completing the assessment of EO compliance, the user must then assess compliance with DNSH for EOs other than the most relevant EO or the EO with the main contribution (Appendix 5). For example, if the primary EO is EO1, then the DNSH compliance assessment is conducted against the criteria under EO2, EO3, and EO4. It should be noted that the DNSH compliance criteria differ between MSMEs and non-MSMEs. Each DNSH criterion listed in the taxonomy must be fulfilled (applied as “and”, unless otherwise stated, for example “or”, “and/or”, or “option”). In the event that DNSH is not fulfilled, the user is given the opportunity to undertake remedial/improvement actions through an assessment of the RMT aspect. The assessment of the RMT aspect may be conducted using the guiding questions provided in the TKBI or by using other approaches, provided that all core principles are fulfilled (Appendix 6). The final step in the TKBI assessment is the assessment of the social aspect (Appendix 7). It should be noted that the criteria for fulfilling the social aspect differ between MSMEs and non-MSMEs. Each social aspect criterion listed in the taxonomy must be fulfilled (applied as “and”, unless otherwise stated, for example “or”, “and/or”, or “option”). The social aspect serves as the final determinant that results in the taxonomy classification of an economic activity (“Green”, “Transition”, or “Not Classified”).

In using TKBI, taxonomy users need to ensure the correctness of their classification in accordance with the applicable assessment mechanisms and requirements under TKBI, either through self-assessment or by using Third-Party services (such as accountants, assessors, or other third parties), in order to avoid greenwashing, social washing, and impact washing. Although TKBI assessments can currently still be conducted through self-assessment, users are expected to take steps to ensure the validity of their assessment results. Going forward, verification/validation by a Third Party will be important to ensure the validity of assessment results and data quality, which can ultimately be used as indicators for assessing green/sustainable performance in disclosure requirements. It should be noted that there are several criteria whose assessments have already been conducted by competent parties (for example, PROPER assessments, Good Mining Practices, and others), so taxonomy users may refer to the assessment results that have been carried out by those parties.

TKBI assessments are conducted in accordance with the needs of its users. TKBI users need to ensure that the criteria under TKBI are continuously met. Changes in TKBI classification are possible if there are changes in conditions that affect the fulfillment of an economic activity against the TKBI criteria. The frequency of TKBI assessments is conducted at least once a year or adjusted to reporting period requirements and the timeframes set by relevant stakeholders (e.g., fund providers or investors). Accordingly, taxonomy classifications may change depending on the conditions at the time the assessment is conducted.

TKBI can be applied to certain productive and consumptive purposes (for example: green mortgages, credit/financing for electric vehicles and solar photovoltaic systems). Further details can be found in the TKBI Book, Appendix 8 – Examples of the Use of the Taxonomy for Sustainable Finance in Indonesia.

For the time being, the Sector-agnostic Decision Tree assessment mechanism only applies to economic activities that fall within the scope of TKBI.

In the Technical Screening Criteria (TSC) for certain activities, there is a cross-referencing mechanism. If a TSC includes cross-referencing, then compliance with the TSC for that activity must follow the classification (“Green” or “Transition”) of the referenced activity. Such references may refer to other activities within the same sector or across different sectors, with the objective of ensuring consistency in the application of sustainability principles across all activities within TKBI.

As an example, in the TSC for the Glass and Glass Products Industry, there is a provision under item 2c in the “Green” classification which states: “Meets the direct emission limits (direct GHG emissions) stipulated under the ‘Green’ classification for heat generation from fossil gas, in accordance with the TSC for the Steam/Hot Water and Cold Water Supply Activity (source derived from fossil gas) in the Energy sector under TKBI (cross-referencing).” This means that if the Glass and Glass Products Industry activity uses fossil gas for heat generation, then to comply with item 2c under EO1, the direct emissions from such heat generation must meet the applicable “Green” classification TSC for the Steam/Hot Water and Cold Water Supply Activity in the Energy sector under TKBI.

With opportunities opened for MSMEs to use TKBI, MSMEs will gain access to alternative sources of sustainable financing, both domestic and international, in addition to conventional “plain vanilla” financing/investment sources, and will also contribute to supporting sustainability efforts, such as sectors that support the energy transition.

One of the strategic objectives of developing TKBI is to expand the scope of taxonomy users beyond corporations/large companies/non-MSMEs to also include MSMEs. To ensure MSMEs’ readiness to implement TKBI, its implementation for MSMEs will be carried out gradually, starting with Medium Enterprises and expanding in line with the development of industry readiness.

If, based on the classification of the scale of economic activities, an entity is deemed to meet the criteria for MSME business capital and sales turnover in accordance with Government Regulation of the Republic of Indonesia Number 7 of 2021, the TKBI assessment is conducted using the SDT (Sector-Agnostic Decision Tree) approach. SDT itself is a principle-based assessment approach in the form of a decision tree developed based on specific criteria of an EO, equipped with guiding questions and consisting of binary (“Yes” or “No”) questions. This method is relatively simpler compared to the TSC-based approach, making it more feasible to be applied by MSME actors with a smaller scale of economic activities compared to corporations. For more detailed information regarding SDT requirements and guidance, please refer to the SDT Approach Methodology and Guiding Questions for SDT Assessment in the TKBI Book.

A taxonomy navigator has been developed as a TKBI dissemination support tool that can be used by the public to gain a deeper understanding of TKBI implementation procedures. The taxonomy navigator has the following two features:

• TKBI Explorer: A feature used to search for detailed assessment criteria for a specific activity within TKBI.
• TKBI Simulator: A feature used to conduct a comprehensive simulation of the stages of TKBI assessment.

TKBI does not restrict access to financing; rather, it serves to expand sustainable financing options by providing clear guidance for business actors and investors. This framework helps identify activities that meet sustainability criteria, thereby increasing their attractiveness to investors oriented toward sustainability principles.

At present, there are no provisions regarding sanctions or penalties for TKBI users. The use of TKBI is industry-driven or market-driven.

TKBI does not constitute a negative list for financing/investment. TKBI is a classification of economic activities that support Indonesia’s Sustainable Development Goals, encompassing economic, environmental, and social aspects. TKBI is used as a guideline to increase the allocation of capital and sustainable financing in support of achieving net zero emission targets.

Emission reductions from Business as Usual in 2030 are carried out by first determining the emissions generated by the production process of an economic activity under the Business as Usual scenario up to 2030, then comparing them with the emission reduction targets up to 2030 that can be achieved if various mitigation efforts are implemented (for example, the use of environmentally friendly technologies, limits on emission outputs, etc.). The results of the emission reduction calculation must be verified/validated to ensure the credibility of the emission reductions.

Carbon offsets from carbon units obtained through carbon trading have the potential to be used as one alternative way to meet emission threshold criteria or emission reduction targets in TKBI. However, in principle, carbon offsets are not the primary solution in emission reduction efforts. Each Activity must first carry out and demonstrate its best efforts in reducing emissions (for example through the use of environmentally friendly technology, energy efficiency, and other measures). Carbon offsets are used as a last step/effort to maximize emission reduction targets. Example: An activity has Green and Transition requirements as shown in the table below. If a geothermal power generation company has emissions of 350 gCO2/kWh, then the company may use carbon offsets as a factor to reduce the resulting emissions in order to achieve the EO1–Green classification of <100 gCO2e/kWh as stipulated in the criteria set out in the taxonomy. Nevertheless, the company must meet the specified requirements. ActivityEO 1 – GreenEO 1 – Transition, Energy Sector [35101]Electricity Generation: Geothermal, Lifecycle emissions from all power generation facilities <100 gCO2e/kWh over the duration of the Power Purchase Agreement (PPA). Lifecycle emissions from all power generation facilities >=100 gCO2e/kWh and <510 gCO2e/kWh over the duration of the PPA. Currently, the use of carbon offsets in TKBI is still awaiting developments in policies related to carbon units, including among others limits on the permitted use of carbon offsets, the scope of use across sectors, specific provisions for hard-to-abate sectors, and so forth.

The TSC is established in accordance with ATSF version 3, the principles of the EU Taxonomy, and national policies to support decarbonization, sustainable capital allocation, and consistency with international best practices.

TKBI is a classification of sustainable activities aimed at increasing the allocation of sustainable capital and financing. Emission limits are determined by the Ministry of Environment and the Ministry of Transportation. Therefore, the TKBI TSC uses global and ASEAN regional emission limits by referring to applicable national policies and regulations.

Zero direct tailpipe refers to vehicles that do not produce direct emissions from the exhaust (tailpipe) during their operation, for example electric vehicles (EVs) that do not have an internal combustion engine, and therefore do not emit direct exhaust gases such as carbon dioxide (CO2), nitrogen oxides (NOx), or particulate matter (PM).

However, zero direct tailpipe only refers to emissions generated during the use of the vehicle itself, not emissions associated with the full life cycle of the vehicle. This means that although the vehicle does not produce direct tailpipe emissions, emissions from the energy source used to charge the vehicle (such as power generation) or emissions related to the vehicle manufacturing process (including batteries) are not counted in this category.

Reference documents that can be used for zero emission tailpipe include guidelines from international institutions, such as the EU Green Deal, and publications from the International Council on Clean Transportation (ICCT): https://theicct.org/sites/default/files/publications/EU-vehicle-standards-green-deal-mar21.pdf

Zero direct tailpipe energy refers to energy sources or systems that do not produce exhaust gas emissions during their operation. These systems eliminate the combustion of fossil fuels at the end-use stage and typically rely on renewable energy or other clean technologies. Examples of zero direct tailpipe energy sources include:

• Electricity: Electric vehicles (EVs) that use batteries, such as electric cars or electric vessels, do not produce emissions from the exhaust pipe.
• Green Hydrogen: Hydrogen produced through electrolysis using renewable energy. This type of hydrogen is used in fuel cells that only produce water vapor as a by-product.
• Green Ammonia: Ammonia produced using green hydrogen and nitrogen, which can be used as a clean alternative fuel for the transportation sector or other sectors.

Materials or substances that can be used as substitutes for fossil fuels that do not produce CO2 exhaust emissions or produce lower emissions compared to fossil fuels, such as biofuels, gaseous fossil fuels (propane, natural gas, methane, and ammonia, green hydrogen), and ethanol. The list of alternative fuels is based on:
a. Fourth IMO GHG Study (2020), Table 75:
https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/Fourth%20IMO%20GHG%20Study%202020%20-%20Full%20report%20and%20annexes.pdf; or
b. EU: https://alternative-fuels-observatory.ec.europa.eu/general-information/alternative-fuels
This term does not yet include carbon emission avoidance achieved through onboard carbon capture and storage (OCCS); however, in the future, when the technology becomes available and is utilized, it will be considered in TKBI (in line with ATSF version 3).

Vehicle emissions data (new vehicles) are available at the testing centers of the Ministry of Transportation, while periodic emissions test data are available at local governments. Relevant regulations include:

• Minister of Finance Regulation No. 138 of 2021 on the Types and Tariffs of Volatile and Urgent Non-Tax State Revenue Applicable at the Ministry of Transportation.
• Regulation of the Minister of Transportation of the Republic of Indonesia Number PM 44 of 2020 on Physical Type Testing of Motor Vehicles Using Electric Motor Drives.
• Regulation of the Minister of Environment and Forestry of the Republic of Indonesia Number P.20/MENLHK/SETJEN/KUM.1/3/2017 on Exhaust Emission Standards for New Type Motor Vehicles in Category M, Category N, and Category O.
• Regulation of the Minister of Environment and Forestry of the Republic of Indonesia No. 8 of 2023 on the Implementation of Motor Vehicle Emission Standards for Category M, Category N, Category O, and Category L.

• Hybrid vehicles use conventional engines without plug-in charging systems and generally still rely on petrol fuel. Hybrid vehicles also generate electricity through passive charging from the conventional engine. The resulting CO2 emissions range from 70–80 grams/km.
• Plug-in hybrid vehicles are a combination of a conventional engine with a small electric motor and a small high-voltage battery. This means the vehicle can still use petrol fuel, but also utilizes an electric battery. The resulting CO2 emissions range from 45–50 grams/km.
• Electric vehicles use 100% electricity through rechargeable electric batteries. The resulting CO2 emissions range from 0–5 grams/km.

Source: https://www.esdm.go.id/id/media-center/news-archives/mengenal-jenis-dan-tingkat-emisi-mobil-listrik

The IMO GHG Strategy 2030, issued in 2023, targets a 20% reduction in emissions by 2030 as a transitional step toward net zero by 2050. This target can be used as a reference in developing a net zero roadmap for Indonesia’s maritime sector. However, higher standards, such as CBI, may be adopted to encourage the achievement of more ambitious goals, depending on national policies and government support for green infrastructure in the maritime sector. Further information on the IMO strategy can be downloaded at https://www.imo.org/en/OurWork/Environment/Pages/2023-IMO-Strategy-on-Reduction-of-GHG-Emissions-from-Ships.aspx

TKBI refers to the ATSF and uses IMO standards as a reference in determining the TSC of TKBI for the T&S sector, Maritime Water Transport Activities; however, these standards are not the final thresholds. Standards such as EEDI and EEXI under the IMO serve as a basic framework for the entire shipping industry to begin reducing emissions. TKBI seeks to encourage an Activity to move toward sustainability and go beyond business-as-usual, which is more robust than the existing EEDI and EEXI standards.

Ship retrofit refers to modifications made to a vessel to improve its environmental performance, particularly in terms of energy efficiency and emission reductions. These improvements aim to align the vessel with sustainability objectives and the targets of the Paris Agreement. Key elements of ship retrofit include:

• Energy Efficiency Improvements: enhancements such as hull optimization, energy-saving devices, and advanced coatings to reduce fuel consumption.
• Emission Reduction Technologies: installation of systems such as scrubbers, Selective Catalytic Reduction (SCR) units, or air lubrication systems to reduce greenhouse gas (GHG) emissions and air pollutants.
• Fuel System Adaptation: converting engines to support low-carbon or zero-carbon fuels, such as LNG, green hydrogen, ammonia, or biofuels.
• Compliance with Environmental Objectives: ensuring that the improvements contribute significantly to climate mitigation while complying with the “Do No Significant Harm” principle.

To qualify, retrofits must demonstrate measurable improvements, such as achieving better EEXI performance or reducing carbon intensity in line with the IMO CII. Improvements must also be verified through numerical assessments or similar methods.

Source: https://ec.europa.eu/sustainable-finance-taxonomy/activities/activity/341/view

Certification for ship retrofit activities is issued by the Directorate of Shipping and Seafarers, Ministry of Transportation, including certifications for energy efficiency, air pollution prevention, and other control indicators.

Currently, the TKBI TSC for maritime transport applies generally to all types of vessels. However, at the implementation level, there are not yet specific provisions, either nationally or internationally, within the taxonomy context for vessels below 5,000 GT. This will be included in future TKBI development once relevant national or international standards or regulations become available.

SAF is aviation fuel produced from renewable and environmentally friendly sources, such as biomass, waste, or algae oil, which can replace traditional fossil-based aircraft fuel (Jet A-1). SAF is designed to reduce carbon dioxide (CO2) emissions generated from aviation and to support the aviation industry in achieving global emission reduction targets. SAF feedstock must meet applicable sustainability certification in the AFOLU sector.

• The policy for implementing SAF in Indonesia will be carried out gradually. In the period from 2030 to 2034 (Phase 1), the SAF blending mandate for international flights from major airports such as Soekarno-Hatta and Ngurah Rai will be set at 7.5%, which will increase to 15% in the period from 2035 to 2039 (Phase 2). SAF demand is estimated to reach 166 million liters in 2030 and is projected to increase to 397 million liters by 2035. This policy is projected to increase international air ticket prices by approximately 3.2% in Phase 1 and 6.4% in Phase 2, based on the assumption that SAF prices are 2.2 times higher than conventional fuel prices.
• Starting in 2040, the use of SAF will be expanded to cover all flights, both international and domestic, from major airports such as Soekarno-Hatta, Ngurah Rai, Kualanamu, Juanda, and Sultan Hasanuddin. The initial mandate phase (2040–2044) requires the use of SAF at a level of 15%, which will increase to 25% in the subsequent phase (2045–2049).

Source: Sustainable Aviation Fuel (SAF) Industry Roadmap, Coordinating Ministry for Maritime Affairs and Investment of the Republic of Indonesia (September, 2024).

TKBI establishes TSC that must be fulfilled by an Activity in order to be categorized as “Green” or “Transition.” The TSC in TKBI does not differentiate whether an activity involves a private jet or not, as long as it meets the criteria under the “Green” or “Transition” classification.

According to Government Regulation No. 8 of 2011 on Multimodal Transportation:

• Multimodal Transportation is the transportation of goods using at least 2 (two) different modes of transport under 1 (one) contract as a multimodal transport document, from the place where the goods are received by the multimodal transport business entity to a designated place for the delivery of goods to the recipient of multimodal transport.
• Multimodal transportation activities include activities that commence from the receipt of goods by the multimodal transport business entity from the multimodal transport service user until the delivery of goods to the recipient by the multimodal transport business entity in accordance with what is agreed upon in the multimodal transport document.

TKBI recognizes various types of certificates for the AFF sector, both nationally and internationally recognized, provided that such certifications:

• Promote sustainable practices of the Activity and contribute to the achievement of environmental objectives (EO).
• Meet credible and accountable quality assurance standards.

With regard to meeting quality assurance standards, certificates issued by institutions accredited by accreditation bodies that comply with ISO/IEC 17011:2017 standards (such as the National Accreditation Committee/KAN in Indonesia) are prioritized. However, certificates issued by institutions that are not accredited by bodies in accordance with ISO/IEC 17011:2017 may still be recognized provided that they are accompanied by:

• Additional analysis of the certification process and scope.
• Compliance with international conformity assessment principles, such as:
• SNI ISO/IEC 17065 for product, process, and service certification.
• Relevant and credible certification schemes.
• Assessment scope that reflects the intended environmental objectives (EO).

Some examples of certificates that may be considered include (Non-Exhaustive):

• Seasonal and Annual Crop Agriculture Activities: IndoGAP, Organic Certification, Rainforest Alliance, Sustainable Rice Platform (SRP), Bonsucro, and for Oil Palm Plantation Activities: Indonesian Sustainable Palm Oil (ISPO), Roundtable on Sustainable Palm Oil (RSPO), International Sustainability and Carbon Certification (ISCC), Malaysian Sustainable Palm Oil (MSPO)
• Livestock Activities: GLOBAL SLP, Global Animal Partnership, Organic Certification
• Aquaculture Activities: Aquaculture Stewardship Council (ASC), Best Aquaculture Practices (BAP)
• Capture Fisheries Activities: Marine Stewardship Council (MSC), Fairtrade Capture Fisheries Certification
• Sustainable Forest Management Activities, Non-Timber Forest Products, Plantation Forests: Forest Stewardship Council (FSC), Indonesian Forestry Certification Cooperation (IFCC), Timber Legality Verification System (SVLK)

Expired certificates cannot be used as a basis for assessment under TKBI. Therefore, business entities holding such certificates cannot meet the requirements to obtain the “Green” classification through the certification pathway.

Group certification may be used to meet the requirements for the “Green” classification provided that the relevant certification scheme includes a group certification mechanism, and that all requirements under the certification scheme and applicable laws and regulations have been fulfilled.

An IFMP is an integrated planning document that describes how an agricultural, livestock, or aquaculture business unit is managed in a sustainable and efficient manner and contributes to environmental objectives (EO). In the context of TKBI, the IFMP serves as evidence that the business Activity has implemented all relevant sustainability practices in accordance with the requirements to obtain the “Green” classification. The IFMP document does not have a fixed structure; however, it must at least include the following information:

• A comprehensive description of the current situation of the agricultural/livestock/aquaculture activity
• Expected outcomes in the medium and long term, aligned with environmental objectives (EO) and the selected core/non-core practices.
• An implementation and project monitoring plan to achieve the IFMP objectives, including timelines, eligible inputs, monitoring plans, and monitoring mechanisms.

Further details on IFMP requirements may refer to Appendix 3 – AFF Sector, Section C. Definitions of Related Terminology used in the TSC.

To ensure compliance with the criteria, the IFMP must meet the following requirements:

• The IFMP includes information in accordance with the requirements set out in Appendix 3 – AFF Sector, Section C.
• The IFMP must be accompanied by evidence of implementation, such as monitoring reports, audits, or evaluations demonstrating tangible contributions to the environmental objectives (EO). This evidence must reflect the achievement of both key indicators and proxy indicators of each sustainability practice.
• Verification of the IFMP may be conducted by third-party service providers as recommended by certain standards and principles, or as required under agreements with investors or lenders. Verification includes an evaluation of documentation, evidence of implementation, and consistency with the environmental objectives (EO).
• The IFMP must be accompanied by annual reporting on the implementation of the IFMP. This report must demonstrate progress and compliance with applicable sustainability principles.

“IFMP Action Plan with a clear timeline” means that the IFMP Action Plan must contain structured steps with milestones and specific deadlines (day/month/year) to achieve certification or to implement the relevant core practices—or as many of them as feasible.

The plan must fall within the Transition period (a maximum of 5 calendar years or until the “Transition” classification expires), with a sequence of milestones that ensures certification or implementation of core practices is achieved no later than the end of the 5th year or before the validity period of the “Transition” classification ends.

Core practices are the minimum mandatory measures that must be implemented to ensure a sustainable production system. These practices are developed based on a review of various certification schemes, taking into account relevance, national regulations, and are supported by strong scientific evidence.

Non-core practices are optional; however, they reflect more advanced best practices that go beyond minimum sustainability standards and can deliver more significant environmental impacts. The implementation of these practices encourages improvements in sustainability quality and can serve as added value in the assessment, particularly in demonstrating a long-term commitment to sustainability.

Activities that follow the practice pathway are required to implement all relevant core practices. If there are core practices that are considered not relevant (for example, due to business characteristics, commodities, location, or operational conditions), then evidence-based justification must be provided to explain why such practices cannot be or are not implemented.

Practices that are still in the pilot stage may be categorized as already implemented in accordance with the requirements under the “Green” classification, provided that they demonstrate alignment with sustainability principles. Such practices must be supported by a clear implementation plan, including an implementation timeline, the use of eligible inputs, monitoring mechanisms, and evidence of progress in the implementation of the practices.

In the table of core and non-core practices, there are two types of indicators that can be used to measure the implementation of sustainability practices, namely:

• Main Indicators: Indicators used to measure and demonstrate that a practice has been implemented in accordance with sustainability standards. These indicators are generally in the form of quantitative data or verifiable documents.
• Proxy Indicators: Alternative indicators used when main indicators are not yet available or are difficult to obtain. Although indicative in nature, proxy indicators can still be used to demonstrate that sustainable practices are being or have been implemented.

This approach provides flexibility for taxonomy users in demonstrating compliance with sustainability practices, ensuring that the assessment process remains inclusive and evidence-based, even when ideal data are not yet fully available.

In TKBI, AMDAL is recognized as one form of ESIA. This is based on the similarity of objectives between ESIA and AMDAL, namely to identify and manage environmental and social impacts, where:

• ESIA: A term commonly used internationally, covering environmental and social impacts comprehensively, and usually following standards of international financial institutions such as the IFC Performance Standards.
• AMDAL: A legal requirement in Indonesia regulated by government regulation (Government Regulation of the Republic of Indonesia Number 22 of 2021 on the Implementation of Environmental Protection and Management), with a primary focus on environmental impacts. Although it includes social aspects, its scope is not as broad as ESIA.

Thus, AMDAL can be used to fulfill ESIA practices as long as the relevant requirements are met in accordance with TKBI provisions.

Self-assessment is a process in which a business entity independently identifies, calculates, and evaluates greenhouse gas (GHG) emissions and removals associated with its Activities, without undergoing external verification. In this context, the use of general estimates is permitted as long as recognized methodologies are applied to ensure that the assessment is based on credible assumptions, rather than merely indicative figures without a clear and justified basis.

Self-assessment of GHG emission sources and sinks may be conducted using nationally or internationally recognized project- or organization-based carbon accounting methods, such as the GHG Protocol, ISO 14064-1 (organizational GHG inventory), ISO 14064-2 (quantification of emission reductions at the project level), and SNI ISO 14064 (national adoption). In addition, assessments may use available and recognized sector-specific methodologies, including:

• Annual and Perennial Crop Agriculture: IPCC AFOLU Guidelines, FAO Environmental Externalities Accounting Tool (EX-ACT) for estimating emissions and carbon sequestration from agricultural projects, or other nationally or internationally recognized methods.
• Livestock: IPCC Emission Guidelines for Livestock, the Global Livestock Environmental Assessment Model (GLEAM) developed by FAO to calculate emissions from livestock systems, or other nationally or internationally recognized methods.
• Fisheries: FAO Fisheries and Aquaculture Carbon Footprint Guidelines, fisheries carbon emission assessment tools (e.g., the Seafood Carbon Emissions Tool), or other nationally or internationally recognized methods.

Yes. Based on regulations in Indonesia, all aquatic biota, including aquatic plants such as seaweed, are categorized as “fish.” This is stipulated in Law of the Republic of Indonesia Number 45 of 2009 concerning the Amendment to Law Number 31 of 2004 on Fisheries, which defines fish as “all types of organisms whose entire or part of their life cycle takes place in the aquatic environment.” Thus, seaweed cultivation (for example, KBLI 03217 – Marine Aquatic Plant Grow-out) is included within the scope of Aquaculture Fisheries Activities, while seaweed harvesting (for example, KBLI 03114 – Capture/Harvesting of Aquatic Plants in the Sea) is included within the scope of Capture Fisheries Activities.

These three pathways—Certification, Fisheries Improvement Program (FIP), and Fisheries Improvement Action Plan (Practice Pathway)—are provided to offer flexibility for business entities. In addition to the certification pathway, TKBI establishes alternative pathways for actors who do not yet hold certification but can demonstrate commitment through the implementation of sustainable practices. This approach aims to enhance inclusivity and access to sustainable finance, allowing actors with limited resources to participate in the transition toward sustainability without being constrained by certification barriers.

In determining the classification of Capture Fisheries Activities, greater emphasis is placed on the issuance status and compliance with applicable standards, with the following provisions:

• Activities that meet the issuance requirements of a Comprehensive Fisheries Improvement Program (such as a Comprehensive FIP) in accordance with applicable standards may be recognized as fulfilling the requirements for the “Green” classification, as they demonstrate comprehensive implementation of sustainable fisheries practices and have undergone an adequate verification process.
• Activities that meet the requirements of a Basic or Beginner Fisheries Improvement Program (such as a Basic FIP) in accordance with applicable standards may be recognized as fulfilling the requirements for the “Transition” classification, as they demonstrate an initial commitment and concrete steps toward the implementation of sustainable practices.

The standards and provisions for Fisheries Improvement Programs may refer to nationally or internationally recognized standards, such as the Fishery Improvement Project – Guidance Document issued by the Marine Stewardship Council (MSC) and the Guidelines for Supporting Fishery Improvement Projects issued by the Conservation Alliance for Seafood Solutions.

What is meant by the statement: “Basically, the environmental objective (EO) most relevant to this Activity is EO3. However, taxonomy users may also classify this Activity under this EO as a secondary EO if it can be demonstrated that the Activity implements relevant core and non-core practices aligned with this EO”?

This statement explains that activities such as Annual and Perennial Crop Farming, Livestock, Capture Fisheries, and Aquaculture are primarily classified under EO3, which focuses on ecosystem protection and biodiversity. This classification is based on the direct interaction of these activities with biological resources and natural habitats. If not managed sustainably, these activities have the potential to cause ecosystem degradation, biodiversity loss, and disruption of ecological functions.

Beyond their primary relevance to EO3, the sustainability practices of these activities often support or impact more than one environmental objective (EO) simultaneously. For example, in Annual and Perennial Crop Farming, implementing balanced fertilization not only helps maintain soil fertility and biodiversity while preventing pollution (EO3), but also can contribute to greenhouse gas emission reduction (EO1). Therefore, TKBI users may also designate other EOs as secondary EOs, depending on the environmental objectives supported by the practices implemented—in this example, EO1.

Yes, all environmental objectives (EO) other than the primary EO remain within the scope of the DNSH assessment. For example, if the taxonomy user designates EO3 as the primary EO, the user is still required to conduct a DNSH assessment for EO1, EO2, and EO4, even if EO1 is a secondary EO.

Oil Palm Plantation Activities have different TSC because they were part of the development of TKBI version 2, which was published earlier. In that version, the TSC determination for Oil Palm Plantation Activities was based on the Climate Bonds Standard using a certification pathway approach, which is an assessment based on recognized sustainable certification. This approach was adopted because it is considered capable of ensuring that palm-based products are produced consistently with low-carbon development objectives. This is supported by research from Schmidt and De Rosa (2020), which shows that GHG emission levels from sustainably certified oil palm plantations are proven to be 35% lower compared to uncertified plantations.

Moving forward, the TSC for Oil Palm Plantation Activities will be periodically reviewed to assess the potential for integration with the TSC for Annual and Perennial Crop Agriculture Activities.

Each Activity operator is required to have documentation of the identification results of High Conservation Value Areas (HCVA) within the operator’s concession area, documentation of GHG emission source inventory, as well as the operator’s policy documents related to forest and peatland protection. The operator’s policy documents concerning forest and peatland protection can be treated as a representation of the assessment of High Carbon Stock Areas (HCSA).

All sustainable palm certification instruments used as criteria in Oil Palm Plantation Activities must include the three documents above as administrative requirements. Activity operators need to provide them separately if one or more of these documents are not yet included as administrative requirements in the selected sustainable palm certification instrument.

Both documents must be signed by the Board of Directors or an official with a position equivalent to the Board of Directors of the business entity.

Both documents should at minimum include commitments or brief action plans consistent with the No Deforestation, No Peat, and No Exploitation (NDPE) principles, such as:

• Contributing to the protection of areas with high biodiversity (High Conservation Value/HCV), areas with high carbon stock (High Carbon Stock/HCS), and peatlands.
• Not developing new areas on peatlands.
• Promoting best practices in existing plantations on peatlands.
• Reducing Greenhouse Gas (GHG) emissions from plantations.
• Building a transparent palm oil supply chain.
• Respecting the rights of indigenous peoples, workers, and local communities.

The determination of the TSC for Supporting Activities is based on the principle of substantial contribution through enabling, as introduced in the Climate Bonds Standards and ICMA. This means that the Activity does not have a direct environmental impact, but plays an important role in supporting the main Activity to significantly achieve the environmental objectives (EO).

For example, fertilization services can be categorized as “Green” if they are used to support the implementation of a sustainable agricultural system in Seasonal and Perennial Crop Farming Activities that have already met the “Green” classification, and apply balanced fertilization and environmentally friendly practices.

Therefore, the assessment of Supporting Activities is contextual and must consider their connection to the main activity, to ensure that the services provided genuinely reinforce the achievement of the environmental objectives (EO).

To meet this criterion, the Supporting Activity must ensure that:

1. The Supporting Activity acts as a prerequisite for the main activity classified as “Green” to be developed or implemented. Although it may not always provide a direct positive environmental impact, its position in the value chain of the main activity must be clear and documented. This linkage justification must include relevance to the net-zero scenario and medium- to long-term transition.
2. The Supporting Activity provides measurable and attributable environmental benefits, either based on actual impact or estimates. Examples include GHG emission reduction, water savings, or waste reduction. This should be supported by Life Cycle Assessment (LCA) analysis or comparisons with a non-green scenario.

Example in the Context of Seasonal and Perennial Crop Farming:

Main Activity: Cultivation of seasonal crops (e.g., rice, maize) using environmentally friendly practices such as balanced fertilization systems and integrated pest management.

Green Supporting Activities:

a) Balanced Fertilization System

• Justification: This service is necessary for the sustainable cultivation system to operate according to green standards.
• Environmental benefits: Reduces GHG emissions from excessive synthetic fertilizer use, improves soil health, reduces water pollution, and ensures nutrient balance through proper organic and inorganic fertilizer combinations.
• Indicators: Tonnes of CO2e avoided per year, percentage reduction in chemical fertilizers, and ratio of balanced fertilization implementation.

b) Integrated Pest Management (IPM) Services

• Justification: IPM is needed to reduce the use of chemical pesticides that negatively impact the environment.
• Environmental benefits: Reduces pesticide residues, preserves biodiversity, and lowers soil and water pollution.
• Indicators: Percentage reduction in chemical pesticide use, area managed using IPM, and estimated reduction of negative environmental impacts.

This is because Supporting Activities do not provide a direct environmental impact, but instead support the main Activity in achieving environmental objectives (EO); therefore, the “Transition” classification does not apply to these Activities.

TKBI users (corporations and MSMEs) assess social aspects based on the criteria in Appendix 7 of the TKBI book. The criteria in Appendix 7 are principle-based with detailed provisions referring to Appendix 11 (non-exhaustive list). Several criteria specified in Appendix 7 are fundamental principles that are commonly applied in Indonesia and constitute the minimum requirements for fulfilling the sustainability aspect in TKBI. In their application, they can be adjusted to local conditions and assessments are supplemented with relevant documents (document-based).

As regulated in Article 145 paragraphs (1) and (2) of the Government Regulation of the Republic of Indonesia Number 23 of 2021 on Forestry Implementation, Timber Forest Product Utilization activities include:

1. Natural Growing Wood Forests
   a. Logging/harvesting;
   b. Enrichment planting;
   c. Seedling production;
   d. Planting;
   e. Maintenance;
   f. Protection;
   g. Processing; and
   h. Marketing.
2. Cultivated Wood Forests
   a. Land preparation;
   b. Seedling production;
   c. Planting;
   d. Maintenance;
   e. Protection;
   f. Harvesting;
   g. Processing; and
   h. Marketing.

Activities covered in the TKBI AFF sector are points 1.a. to 1.f. and 2.a. to 2.f. Activities 1.c. and 2.b. are regulated under separate TSCs, while activities 1.g., 1.h., 2.g., and 2.h. are more relevant for activities in the Manufacturing sector or other related sectors.

The impact is measured at the point in time when the TKBI assessment is conducted, covering conditions at the time of assessment and considering the potential future impact on an Activity.

Timber Forest Product Utilization can be defined as activities aimed at utilizing and managing forest products in the form of wood without damaging the environment and without reducing its primary functions. Meanwhile, Timber Forest Product Harvesting refers to activities that directly collect wood forest products from natural forests. Timber Forest Product Harvesting in Production Forests is not included in the TKBI AFF Sector because this activity is non-commercial and intended to meet the needs of local communities (Article 160 of the Regulation of the Minister of Environment and Forestry of the Republic of Indonesia Number 8 of 2021 concerning Forest Management and the Preparation of Forest Management Plans, as well as Forest Utilization in Protected and Production Forests).

For now, the Sector-agnostic Decision Tree (SDT) assessment mechanism only applies to economic activities that fall within the scope of TKBI.

As regulated in Article 146 paragraph (1) of the Government Regulation of the Republic of Indonesia Number 23 of 2021 on Forestry Administration, the utilization of Non-Timber Forest Products in Production Forests includes at a minimum the utilization of:
a. Rattan, sago, nipah, aren, bamboo;
b. Resin, bark, leaves, fruits or seeds, agarwood;
c. Commodities for bioenergy feedstock development; and/or
d. Commodities for the development of food crops, which include activities such as enrichment/planting, maintenance, harvesting, processing, and/or marketing.

As regulated in Article 131 paragraph (1) of the Government Regulation of the Republic of Indonesia Number 23 of 2021 on Forestry Administration, the collection of Non-Timber Forest Products in Protected Forests includes:
a. Rattan
b. Honey
c. Resin
d. Fruits
e. Seeds
f. Mushrooms
g. Leaves
h. Flowers
i. Swiftlet nests; and/or
j. Other Non-Timber Forest Products.

Business operators may employ children as long as they meet the requirements and conditions stipulated by law. Based on Law Number 13 of 2003 concerning Manpower (Manpower Law), children aged 13 to 15 years can perform light work as long as it does not interfere with their physical, mental, and social health with the following requirements: Written permission from parents/guardians; Employment agreement between the employer and parents/guardians; Maximum working hours of 3 hours; Work is done during the day and does not interfere with school; Occupational safety and health; Clear employment relationship; and Receiving wages in accordance with applicable regulations. Letters a, b, f, and g are exempted for children working in their family's business. There are jobs that are prohibited and involve children, as referred to in the Manpower Law, namely: all jobs in the form of slavery or similar; any work that exploits, provides, or offers children for prostitution, pornography production, pornographic performances, or gambling; any work that exploits, provides, or involves children in the production and trade of alcoholic beverages, narcotics, psychotropic drugs, and other addictive substances; and/or; all work that endangers the health, safety, or morals of children.

Furthermore, children are not permitted to engage in work that endangers their health, safety, or moral well-being, namely:

Types of Work That Endanger Children’s Health and Safety:

- Work related to machinery, aircraft, installations, and other equipment;

- Work performed in hazardous work environments (physical hazards, biological hazards, chemical hazards);

- Work involving certain dangerous characteristics and conditions, including:

a. Construction of buildings, bridges, irrigation systems, or roads;

b. Work carried out in wood-processing companies, such as logging, transportation, and loading or unloading;

c. Work involving the manual lifting and carrying of loads exceeding 12 kg for boys and 10 kg for girls;

d. Work in locked workplace buildings;

e. Fishing work conducted offshore or in deep-sea waters;

f. Work performed in isolated and remote areas;

g. Work on ships;

h. Work carried out in waste disposal and processing or recycling of used goods;

i. Work performed between the hours of 6:00 p.m. and 6:00 a.m.

Types of Work That Endanger Children’s Moral Development:

a. Work in businesses such as bars, discotheques, karaoke venues, billiard halls, cinemas, massage parlors, or locations that may be used as places of prostitution;

b. Work as models for the promotion of alcoholic beverages, sexual stimulants, and/or cigarettes.

Further provisions are regulated under the Decree of the Minister of Manpower and Transmigration of the Republic of Indonesia Number KEP-235/MEN/2003 of 2003 concerning Types of Work That Endanger the Health, Safety, or Moral Development of Children.

The Utilization of Non-Timber Forest Products can be defined as activities aimed at managing and using non-timber forest products in a way that does not harm the environment and does not reduce the forest’s primary functions. Meanwhile, the Harvesting of Non-Timber Forest Products refers to activities that collect non-timber forest products directly from natural forests. Harvesting activities in Production Forests are not included in the AFF Sector TKBI because these activities are only permitted for local communities living around the forest (Article 148 paragraph (1) of the Indonesian Government Regulation No. 23 of 2021 on Forestry Management).

The Forestry Plant Nursery Business regulated in the AFF Sector TKBI is limited only to activities carried out in Production Forests, Protected Forests, and Conservation Forests (Article 9 paragraph (1) of the Indonesian Minister of Environment and Forestry Regulation No. P.3/MENLHK/SETJEN/KUM.1/1/2020 on the Implementation of Forest Plant Nurseries).

Both the Certificate of Origin (COO) and the Seed Source Certificate are forms of recognition for the source of seed production, intended to prevent consumers from purchasing low-quality or counterfeit seeds. The COO applies to cross-border seed distribution, whereas the Seed Source Certificate applies to domestic seed distribution.

The assessment of emission thresholds in the TKBI uses lifecycle emissions, in line with / interoperable with the ASEAN Taxonomy. For the initial phase, taking into account the current readiness of industries in Indonesia, particularly with respect to emissions measurement, a transition period is applied for business actors that are not yet able to meet lifecycle emissions measurement requirements. During this transition period, they may use Scope 1 (direct emissions) measurements until 31 December 2027 (or earlier).

In the ASEAN region, coal-fired power plants (PLTU) remain the backbone of electricity generation. According to the ASEAN Centre for Energy in its report ASEAN Power Updates 2023, as of the end of 2022 there were 106.3 GW of active coal-fired power plants in ASEAN (reflecting an additional 15.1 GW of new capacity compared to two years earlier). Most of the capacity additions were driven by the completion of previously delayed coal power projects, such as those in Vietnam, the Philippines, and Indonesia. Regionally, ASEAN has the youngest coal-fired power plant fleet in the world, with an average age of 11.8 years.

In Indonesia, coal-fired power plants also continue to dominate electricity generation, with an installed capacity of 51.06 GW, or 52% of total installed electricity capacity as of Q2 2023 (ADB, 2023). Meanwhile, the average emissions (direct emissions) of coal-fired power plants in Indonesia range from 800 to 1,200 kgCO2e/MWh (IESR, 2022). Peak emissions are estimated to occur around 2039 at 706 million tons of CO2e, after which they are expected to decline significantly after 2040, following the expiration of fossil power plant contracts (including coal-fired power plants) until the Net Zero Emissions (NZE) scenario in 2060 is achieved (Ministry of Energy and Mineral Resources of the Republic of Indonesia, 2022).

At present, coal-fired power plants remain a mainstay for various industries, including playing an important role in the supply chains of clean energy technology manufacturing industries (e.g., electric vehicle batteries, solar panels, etc.), due to the reliability and stability of coal-based energy supply, relatively competitive prices, and limitations in the availability of electricity grids and new and renewable energy sources—particularly in underdeveloped, frontier, and outermost regions (3T areas).

To promote the energy transition in the power sector, the government has issued Presidential Regulation of the Republic of Indonesia No. 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Supply (Perpres 112/2022). This regulation marks the beginning of an era of low-emission and environmentally friendly power plant development, alongside a ban on the construction of new coal-fired power plants, without disrupting existing operating plants. Perpres 112/2022 strictly regulates coal-fired power plants, whereby the development of new plants is prohibited except for those already stipulated in the Electricity Supply Business Plan (RUPTL) prior to the enactment of the regulation, and for coal-fired power plants that meet the following requirements, among others:

1. Integrated with industries developed to enhance value added from natural resources or included in National Strategic Projects that make significant contributions to job creation and/or national economic growth;

2. Committed to reducing greenhouse gas emissions by at least 35% (thirty-five percent) within 10 (ten) years of operation compared to the average emissions of coal-fired power plants in Indonesia in 2021, through technology development, carbon offsets, and/or renewable energy mix; and

3. Operating no later than 2050.

The ASEAN Taxonomy for Sustainable Finance (ATSF), as one of the references for the TKBI, is the world’s first regional taxonomy that comprehensively considers efforts to accelerate the phase-out of coal-fired power plants (coal phase-out), supports decarbonization to achieve the goals of the Paris Agreement, and serves as a tool for transition. The ATSF classifies such activities into “Green,” “Amber Tier 2,” and “Amber Tier 3,” with stringent criteria.

During the transition period toward Net Zero Emissions (NZE) and a just energy transition, fossil energy still plays an important role and will be used as a temporary energy source. The TKBI has captured this context; therefore, it is necessary to encourage certain activities that play an important role during the transition period, including coal-fired power plants and efforts to accelerate their phase-out, in accordance with ATSF criteria and Perpres 112/2022. Accordingly, the TKBI divides coal-fired power plant activities into:

1. Activities to accelerate the phase-out of coal-fired power plants, with Technical Screening Criteria (TSC) and classifications aligned with the ATSF (“Green” and “Amber”); and

2. New or existing coal-fired power plant activities with TSC aligned with Perpres 112/2022 and a maximum classification of “Transition.” The permitted operating period for coal-fired power plants under Perpres 112/2022 is no later than 2050, which is aligned with the “Amber” criteria for coal phase-out activities under the ATSF. In addition, new or existing coal-fired power plant activities are also aligned with the definition of “Transition,” which, among other things, facilitates short- to medium-term emissions reductions within a specified timeframe and encourages other activities to become sustainable.

Further explanation is provided in Book Chapter 2.A and the TSC in Appendix 3.

The Certificate of Quality (COQ) and the Seed Quality Certificate contain information regarding the genetic status, purity, germination rate, and overall quality of the distributed seeds. Both COQ and the Seed Quality Certificate are instruments used to ensure that seeds can grow properly at the planting site. The COQ is relevant for cross-border seed distribution, while the Seed Quality Certificate is relevant for domestic seed distribution.

Other Forestry Business Activities
The results of supervision or periodic evaluation, as a criterion in Other Forestry Business Activities, refer to routine (or incidental) supervision conducted by the Director General, Provincial Head of Service, Head of Technical Implementation Unit (UPT), Head of Provincial UPTD, or Head of Regency/City UPTD according to their authority. The procedures for this supervision are regulated in the Indonesian Minister of Environment and Forestry Regulation No. 3 of 2021 on Activity Standards for Risk-Based Business Licensing in the Environment and Forestry Sector, the Director General of Forest Protection and Nature Conservation regulations, the Director General of Natural Resources and Ecosystem Conservation regulations, and their amendments. Elements of assessment that reinforce the relevance of periodic supervision results as a criterion for the AFF sector TKBI include:

• Alignment of the business activity area with the management plan
• Maps of activity areas from remote sensing data
• Field validation to ensure that the activity operator:
  • Does not engage in tree cutting
  • Implements mandatory ecosystem restoration

The documents of supervision or periodic evaluation are issued by the authorized authority to each supervised business entity.

Seedling/Nursery Activities
Supervision of seedling/nursery activities is conducted by the Provincial and Central authorities according to their respective powers.

• Central authority (i.e., Ministry of Forestry):
  1. Import of forest seeds and/or seedlings from abroad;
  2. Export of forest seeds and/or seedlings abroad;
  3. Business entities procuring and distributing seeds and/or seedlings from Foreign Investment Applicants (PMA).
• Provincial authority (Forestry Service or Provincial UPTD for Forest Seedling):
  Procurement and distribution of forest seeds and/or seedlings from Domestic Investment Applicants (PMDN).

Mining and quarrying activities are among the sectors that make a significant contribution to Indonesia’s economic growth, accounting for 12.22% of GDP in 2022 (BPS, 2022). Nevertheless, mining and quarrying activities also have impacts on the surrounding environment. Therefore, a gradual transition process in the mining and quarrying sector is required to achieve Indonesia’s Net Zero Emissions (NZE) target.

Furthermore, there are global dynamics in which the important role of certain activities that drive the energy transition, including critical minerals, in achieving sustainable economic growth and pursuing decarbonization targets is increasingly being discussed. As comprehensively explained by the IEA in its 2021 report The Role of Critical Minerals in Clean Energy Transition, the rapid deployment of environmentally friendly energy technologies as part of the energy transition has led to a significant increase in demand for critical minerals. In addition, the Energy Transition Commission (ETC), in its July 2023 report Material and Resource Requirements for the Energy Transition, explained that the energy transition requires a substantial amount of clean energy technologies. Certain mining and quarrying activities also play a significant and currently irreplaceable role in the development of clean energy technologies, such as solar panels, electric vehicles, and others.

This is also in line with COP28 in 2023 in Dubai, which resulted in agreements, including to triple global renewable energy capacity and double the global average rate of energy efficiency improvements by 2030. These efforts encourage contributions from all parties as a global endeavor, implemented through nationally determined pathways. Without the availability of certain critical minerals that play a significant role as raw materials to support clean energy technologies and the energy transition, achieving the NZE target would be difficult.

However, to date there is no global taxonomy that includes mining and quarrying activities, and discussions on this issue are still ongoing. In Indonesia, the Minister of Energy and Mineral Resources of the Republic of Indonesia has issued Decree No. 296.K/MB.01/MEM.B/2023 on the Determination of Types of Commodities Classified as Critical Minerals, which defines critical minerals as minerals that have important uses for the national economy and national defense and security, face potential supply disruptions, and have no viable substitutes. Furthermore, based on studies by the Ministry of Energy and Mineral Resources of the Republic of Indonesia, critical minerals that support clean energy technologies and the transition toward NZE (green metals) include aluminum, galena, cobalt, copper, iron, manganese, nickel, zinc, silica, lithium, rare earth metals, platinum, cadmium, gallium, and tellurium.

The TKBI seeks to strike a balance in policymaking by taking into account national interests while adhering to the principle of credibility in taxonomy development. Considering the nature of mining and quarrying activities, their significant role in supporting clean technologies, and alignment with the definition of the “Transition” classification, including, among other things, facilitating other activities to become sustainable, TKBI currently includes critical mineral activities that support clean technologies and the transition toward NZE (green metals) based on these studies, with a maximum classification of “Transition” and subject to stringent requirements. Meanwhile, other mining and quarrying activities will be further reviewed in line with ongoing discussions at both the national and global levels, while also taking into account the various efforts that have been and are being undertaken by the mining and quarrying industry to promote sustainability and emissions reduction (details in Appendix 3).

The Forest Management Plan (RPH) is a document detailing planned forestry activities. This document sets out the objectives, actions, and control arrangements to achieve desired outcomes while ensuring sustainable utilization and conservation of forest resources. The RPH does not have a fixed structure, but at a minimum it must include the following information:
a. Current forest situation/condition
b. Environmental and climate data
c. Sustainable Forestry Practices
d. Management Implementation Plan
e. Monitoring, evaluation, and reporting programs

Detailed RPH requirements can refer to Appendix 3 – AFF Sector, Section C: Definitions Related to Terminology Used in the TSC.

To ensure the criteria are met, the RPH must comply with the following requirements:

• The RPH must include information in accordance with the requirements listed in Appendix 3 – AFF Sector, Section C.
• The RPH must be accompanied by evidence of implementation, such as monitoring reports, audits, or evaluations demonstrating a tangible contribution to the environmental objectives (EO). This evidence should reflect the achievement of both primary and proxy indicators for each sustainability practice.
• Verification of the RPH can be conducted by third-party service providers as recommended by the relevant standards and principles, or as required in agreements with investors or lenders. Verification includes evaluation of the document, implementation evidence, and consistency with the environmental objectives (EO).
• The RPH must be accompanied by annual reporting on its implementation. These reports should demonstrate progress and compliance with the applicable sustainability principles.

Sustainable Forestry Practices in the context of Conservation, Restoration, and Natural Forest Maintenance Activities must be categorized into one or more types of interventions with the following priority hierarchy:

1. Deforestation Prevention, e.g., activities that prevent the loss of existing forest resources.
2. Minimization, e.g., sustainable management of existing forests that maintain or enhance carbon stocks in accordance with the National Biodiversity Strategy and Action Plan.
3. Active Restoration, e.g., activities that restore degraded ecosystems.
4. Compensation, e.g., assisted natural regeneration or other offset mechanisms that produce equivalent ecological outcomes elsewhere.

In the context of Carbon Storage and Sequestration Activities, providing an Action Plan to Increase Carbon Stocks and Sequestration serves as the basis for evaluating the sustainability of activities carried out by business entities or Social Forestry Groups (KPS) in supporting climate change mitigation. This document ensures that planned interventions are strategic, measurable, and designed to deliver tangible environmental benefits.

The provision of an Action Plan to Increase Carbon Stocks and Sequestration should comply with applicable regulations, but at a minimum, it may include:

• A clearly defined and detailed plan of activities to enhance carbon stocks and sequestration, such as increasing land cover or other initiatives that demonstrate the potential to achieve net carbon sink conditions. This plan can be presented as a roadmap, strategy, and/or program with clear phases.
• Quantitative estimates of the potential increase in carbon stocks and sequestration and/or calculations of greenhouse gas (GHG) emission reductions.
• Evidence of actual implementation in the field, such as activity reports, documentation, or monitoring results demonstrating realized carbon sequestration.

Measurement and estimation of the potential increase in carbon stocks, carbon sequestration, and/or GHG emission reductions in the Social Forestry TSC can be conducted using one or a combination of project- or organization-based carbon accounting methods recognized nationally or internationally, such as the GHG Protocol, ISO 14064-1 (organizational GHG inventory), ISO 14064-2 (project-level emission reduction quantification), and SNI ISO 14064 (national adoption). In addition, assessments can use forestry sector–specific methods, such as the IPCC AFOLU Guidelines (Forestry Section), REDD+ MRV Guidelines (UNFCCC) for measurement, reporting, and verification of emission reductions from deforestation and forest degradation, as well as other methods recognized nationally or internationally.

The obligation to verify quantitative estimates is carried out by the government or a third party in accordance with the applicable laws and regulations.

The Social Forestry Management Plan and Annual Work Plan are prepared in accordance with the format and standards established by the applicable laws and regulations.

Assessment is carried out by verifying that the agroforestry sustainability practices applied genuinely support environmental sustainability according to the criteria in the TSC. This process includes:

• Alignment of practices with the sustainability practices stipulated in the TSC, legislation, and best practices.
• Evidence of actual implementation in the field, such as activity reports, documentation, or monitoring results.
• Contribution to environmental objectives (EO), such as increased land cover, soil conservation, or enhanced biodiversity.
• Consistency with the Social Forestry Management Plan and Annual Work Plan.

Activities to accelerate the early retirement of coal-fired power plants are activities that involve the combustion of coal in the electricity sector, such as coal-fired power plants, which are gradually phased out or whose operational lifetime is shortened with the objective of reducing greenhouse gas (GHG) emissions. The TKBI can be used to assess whether an activity to accelerate the early retirement of a coal-fired power plant can be classified as “Green” or “Transition.”

Examples of types of financing for such activities include, but are not limited to, debt refinancing provided that the project is on a pathway toward accelerated early retirement of the coal-fired power plant; financing for activities related to the early retirement of coal-fired power plants (e.g., grid disconnection, facility dismantling, and site remediation); or any costs incurred during the commissioning period that are intended to enhance the “greenness” of the project.

The criterion “maintaining, protecting, and/or enhancing land cover” aims to ensure that agroforestry practices contribute to ecosystem sustainability through positive land cover management. Currently, no explicit quantitative thresholds are set, but the enterprise must be able to demonstrate that its activities:

• Increase ecological indicators, such as:
  • Change in forest cover (net increase/decrease in hectares)
  • Biomass growth rate (tons/ha/year)
  • Tree density per hectare

OR

• Do not cause a decrease in land cover that harms environmental functions.

Assessment is conducted by considering:

• The condition of land cover before and after intervention, supported by concrete evidence such as maps, satellite imagery, forest inventories, GIS-based assessments, or relevant monitoring reports.
• The type of vegetation planted and maintained, and its contribution to ecological functions.
• Consistency with the Social Forestry Management Plan and Annual Work Plan.

Social Forestry Activities do not have a “Transition” classification because they are, in principle, designed to support forest ecosystem restoration and protection. The included activities, such as agroforestry and carbon storage and sequestration, directly contribute to conservation, rehabilitation, and enhancement of the ecological functions of forest areas.

Unlike other sectors that are still in the process of transitioning from environmentally harmful practices to sustainable practices, Social Forestry Activities do not go through such a transition phase. Therefore, if the criteria in the TSC are met, Social Forestry Activities can be directly classified as “Green.”

The performance assessment of a Green Building (BGH) is carried out in four stages, namely:

1. Programming and planning,
2. Construction implementation,
3. Utilization/operation, and
4. Demolition.

A BGH certificate may be obtained at each stage.

The BGH ratings awarded for both new building construction and existing/renovated buildings are as follows:

• Primary (Utama) rating is awarded if the score exceeds 80%,
• Intermediate (Madya) rating is awarded if the score is between 65% and 80%, and
• Basic (Pratama) rating is awarded if the score is between 45% and 65%, out of a total assessment score of 165 points.

For new buildings, the assessed aspects include:

1. Site management
2. Energy efficiency
3. Water use efficiency
4. Indoor air quality
5. Use of environmentally friendly materials
6. Waste management
7. Wastewater management

For existing/renovated buildings, the assessed aspects include:

1. BGH organization and governance
2. Construction modification/retrofit process
3. Maintenance of BGH performance during the operational phase
4. The role of BGH occupants/users

The AFF sector has sector-specific DNSH guidelines due to the unique practice-based assessment approach in this sector. Sustainability practices in the AFF sector often contribute to more than one environmental objective (EO) simultaneously, so DNSH considerations in this sector are largely integrated into the classification process.

Therefore, business entities in the AFF sector are only required to comply with DNSH specific to activities within the AFF sector. These DNSH guidelines for the AFF sector remain aligned with the overall TKBI DNSH principles but are designed to be more relevant and applicable to the characteristics of the AFF sector.

No. Activities in the AFF sector carried out by MSMEs and assessed using the SDT approach will follow the DNSH Guidance Questions for SDT Assessment, which have been specifically prepared for this approach. This is the same as for other sectors. Meanwhile, DNSH for the AFF sector only applies to activities assessed using the TSC approach.

The Green Building (BGH) certificate is issued by the regency/municipal (kabupaten/city) local government. The assessment of BGH performance is carried out by a Team of Professional Experts (Tim Profesi Ahli/TPA) established by the respective local government. This assessment is conducted after the building owner or a party appointed by the building owner uploads the BGH performance assessment checklist and supporting documents into the Building Management Information System (Sistem Informasi Manajemen Bangunan Gedung/SIMBG). The BGH certificate is issued electronically.

The BGH certificate is valid for 5 years, and re-certification is mandatory for buildings classified as mandatory, in accordance with Ministry of Public Works and Housing (PUPR) Regulation No. 21 of 2021.

Activities in the IC sector support the achievement of environmental objectives within the focus sectors by helping reduce emissions, increase climate resilience, enhance ecosystem protection and biodiversity conservation, and strengthen resource resilience and the transition to a circular economy. Examples of the IC sector’s role in supporting focus sectors can be found in the Sectoral Context section for the IC sector.

The IC sector is currently not positioned as a focus sector because the contribution of its activities is assessed based on the enabling principle, which aims to support focus sectors in achieving environmental objectives. This approach aligns with the ASEAN Taxonomy.

Each TSC for IC sector activities refers to relevant national standards or guidelines.

For example, in the context of EO3 – Protection of Healthy Ecosystems and Biodiversity, applicable standards and guidelines include the Indonesian Biodiversity Strategy and Action Plan (IBSAP) 2025–2045 issued by Bappenas. Meanwhile, for EO4 – Resource Resilience and the Transition to a Circular Economy, relevant references include the Indonesian National Roadmap and Action Plan for Circular Economy 2025–2045 by Bappenas, as well as the Life Cycle Assessment (LCA) Reporting Guidelines from KLHK.

The IC sector accommodates new technologies by grouping activities as follows:

• Development of applications, algorithms, or platforms based on AI, blockchain, or other digital technologies is classified under computer programming and software activities.
• Activities involving the application of physical technologies such as sensors, IoT devices, or operational system integration that leverage data for process optimization are classified under data-driven solutions, including IT/OT.

Examples:

• Development of AI algorithms for optimizing energy consumption in the industrial sector is classified under computer programming and software activities.
• Implementation of IoT sensor networks for energy monitoring in manufacturing facilities is classified under data-driven solutions, including IT/OT.

A Building Approval (PBG) is a permit issued by the regency/municipal (kabupaten/city) local government to commence, modify, maintain, or renovate a building. A PBG is valid for the lifetime of the building.

The issuance of a PBG is carried out by the regency/municipal local government. The PBG application process consists of several stages, namely:

1. Registration: The applicant registers through the Building Management Information System (Sistem Informasi Manajemen Bangunan Gedung/SIMBG);

2. Document review: Documents may be reviewed up to a maximum of five times;

3. Planning consultation: The applicant consults with the Technical Assessment Team (Tim Penilai Teknis/TPT) for residential houses, or the Team of Professional Experts (Tim Profesi Ahli/TPA) for other types of buildings;

4. Determination of fees and technical recommendation: The Investment and One-Stop Integrated Services Office (Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu/DPMPTSP) determines the amount of regional retribution fees and issues a Regional Retribution Assessment Letter (Surat Ketetapan Retribusi Daerah/SKRD);

5. Payment of regional retribution fees: The applicant pays the regional retribution fees;

6. Issuance of PBG: The DPMPTSP issues the PBG upon completion of the process.

Yes, all types of data center activities are covered as long as they are located and operate within the jurisdiction of Indonesia.

Data-Driven Solutions including IT/OT:

• Focus on the application of physical technology and control systems such as sensors, IoT devices, and operational data integration.
• Emission reduction impacts occur directly through optimization of industrial, energy, or transportation processes.
  Example: An IoT sensor system that monitors energy consumption and reduces electricity usage by 15% in a factory.

Computer Programming and Software Activities:

• Focus on developing applications, algorithms, or digital platforms that process data to support decision-making or automation.
• Emission reduction impacts occur indirectly through data analysis, prediction, and software-based control.
  Example: An AI-based predictive maintenance application that reduces downtime and improves energy efficiency.

A Certificate of Proper Function (SLF) is a document stating that a building has met safety and legal standards for use before the building is occupied or utilized. The SLF is issued by the local government or central government for buildings with special functions, such as airports.

The requirements for applying for an SLF vary depending on the building’s specifications and classification. Some of the documents typically required include:

1. Statement letter of functional feasibility inspection;

2. Application letter for SLF;

3. Photocopy of ID card (KTP) or temporary residence permit (KITAS);

4. Photocopy of proof of land ownership;

5. Photocopy of PBG documents;

6. Minutes of completion showing that construction has been finished;

7. Hardcopy and softcopy of as-built drawings.

The process for obtaining an SLF usually includes:

1. Preparing the application documents in accordance with the requirements;

2. Submitting the application documents to the authorized agency;

3. Officials review the completeness of the documents;

4. If the documents are complete, the building is surveyed. If the documents are incomplete, they will be returned;

5. Once the documents are complete, the applicant waits until the SLF is issued.

The SLF is valid for 5 years for public buildings and 20 years for residential buildings, and re-certification is required. Before the SLF expires, the building owner must apply for an SLF extension no later than 60 days prior to the expiration date.

These metrics are international standards used to measure energy efficiency, water usage, and the climate impact of refrigerants, which are key factors in data center sustainability (definitions of PUE, WUE, and GWP can refer to the glossary). The TSC sets threshold values for all three metrics. Data center operators are required to regularly monitor and report PUE and WUE values, and ensure that the refrigerants used comply with the specified GWP standards.

Verification can be conducted by an independent third party and requires a minimum audit every 3 years, covering PUE, GWP, and Green Building metrics.

An advanced level of certification refers to a higher tier within a Green Building Certification (GBC) program. In schemes with a tiered rating system, it includes the higher certification levels, although it is not necessarily the “highest level,” as long as the building demonstrates improvement over common practices.

Examples of advanced level certifications include:

- Greenship certificate at the “Gold” and “Platinum” levels;

- EDGE certificate at the “Zero Carbon Building” level;

- LEED certificate at the “Gold” and “Platinum” levels;

- Green Mark certificate at the “GoldPlus” and “Platinum” levels.

TKBI accommodates differences in data center operational characteristics through facility scale segmentation: Small (<1 MW), Medium (1–20 MW), and Large (>20 MW), as well as differentiation of technical thresholds in the TSC. In addition, the TSC distinguishes between new-build and retrofit facilities.

Credible and recognized GBC programs include those that are credible, recognized, and applicable under Indonesia’s climate conditions. However, there is potential for additional GBC programs to be included as developments occur, provided it can be demonstrated that the GBC program is credible, recognized, and applicable in Indonesia.

Activities in the PST sector support the achievement of environmental objectives within focus sectors by reducing emissions, enhancing climate resilience, improving ecosystem protection and biodiversity conservation, as well as promoting resource resilience and the transition to a circular economy. Examples of the PST sector’s role in supporting focus sectors can be reviewed in the Sectoral Context section for PST.

Each TSC for PST sector activities refers to relevant national standards or guidelines.

For example, in the context of EO3 – Protection of Healthy Ecosystems and Biodiversity, standards and guidelines include the Indonesian Biodiversity Strategy and Action Plan (IBSAP) 2025–2045 issued by Bappenas. For EO4 – Resource Resilience and the Transition to a Circular Economy, references include the Indonesian National Roadmap and Action Plan for Circular Economy 2025–2045 by Bappenas, as well as the Guidelines for Preparing Life Cycle Assessment (LCA) Reports issued by the Ministry of Environment and Forestry (KLHK).

Research and development related to social sciences that are dedicated to climate change mitigation, adaptation, protection of healthy ecosystems and biodiversity, resource resilience, and transition to a circular economy can be assessed under the TSC for activities related to market research, development, and innovation.

The validity period for each green building certification varies. It is recommended to refer to the latest regulations from each issuing organization.

- LEED Certification must be recertified every 3 years through the LEED for Building Operations and Maintenance (LEED O+M) assessment system.

- Green Mark Certification for new buildings is valid for 5 years, while for existing buildings, recertification is required every 3 years.

EDGE Certification validity varies depending on the level: Level 1 (EDGE Standard Certification): Valid for 36 months after issuance or 12 months after project completion, whichever comes first. Level 2 (EDGE Advanced Certification): No expiration date. Level 3 (EDGE Zero Carbon Building Certification): Expires after four years if the project fully meets on-site criteria, or after two years if the project meets criteria by purchasing carbon offsets or renewable energy off-site.

Greenship Certification is valid for 3 years.

Sources:

a. LEED Certification: https://support.usgbc.org/hc/en-us/articles/4582055108755-Maintaining-certification

b. Green Mark: https://www1.bca.gov.sg/docs/default-source/docs-corp-buildsg/sustainability/faq-nrbrb.pdf

c. EDGE: EDGE Certification: https://edgebuildings.com/certify/certification/

d. Greenship: https://gbcindonesia.org/files/resource/ca41425f-7b30-40d0-8639-9d1080c90496/Greenship%20Introduction%20on%20NZ.pdf

ESCO (Energy Service Company) and GISCO (Green Industry Service Company) activities have been considered due to their alignment with the environmental objectives that TKBI aims to achieve.

A BGH certificate or other recognized certification for a new building must be shown not only at the planning stage but also during the construction phase. This is to demonstrate that a green building is not just verified from the design aspect alone, but there must also be consistency between the design and the actual construction results of the building.

Management consulting activities:
Involve providing advice and operational guidance on various aspects of business management, such as strategy, finance, marketing, human resources, production, and accounting, aimed at improving organizational efficiency and effectiveness.

Technical consulting activities:
Include engineering design, industrial and construction project consulting, and technical surveys such as geophysics, geology, and cartography to support the development and management of technical projects and infrastructure.

Peer-reviewed scientific publications serve as supporting evidence to demonstrate that activities in the PST sector contribute to focus sector activities aligned with best practices. However, producing such publications is not a mandatory output for entities carrying out PST sector activities. Therefore, PST sector activities do not need to publish journal articles.

TOE, or Tonne of Oil Equivalent, is a unit of energy representing the amount of energy produced by burning one ton of crude oil. It serves as a comparative measure of different types of energy.

Buildings that consume at least 500 TOE per year are required to implement energy management in accordance with Government Regulation No. 33 of 2023 on Energy Conservation.

To calculate a building’s energy consumption in TOE, you collect electricity bills and other energy bills, then convert the energy units into TOE. For reference, 1 kWh of electricity consumed by a building is equivalent to 0.0000860 TOE.

TKBI does not require specific research outputs in the form of intellectual property. TKBI is an economic activity classification framework that emphasizes alignment with environmental objectives, including activities related to Market Research, Development, and Innovation. At a minimum, research outputs should be demonstrated through fully functional prototypes or representative models.

The measurement of Energy Usage Intensity (EUI) must be carried out by a certified auditor in accordance with the Indonesian National Work Competency Standards (SKKNI) No. 53 of 2018 on Energy Audits. The auditor conducts an energy audit to evaluate the building’s current energy consumption performance and compares it with the performance after building improvements to demonstrate efforts to reduce EUI.

The results of the energy audit conducted by a certified auditor can serve as a reference for EUI reduction efforts. EUI is calculated by dividing the total energy consumed by a building in one year by its total gross floor area, expressed in kWh/m².

The list of certified energy sector auditors according to SKKNI No. 53 of 2018 can be viewed on the Ministry of Energy and Mineral Resources website at the following link: https://simebtke.esdm.go.id/sinergi/page/auditor.

An example of enabling activities in KBLI 41020 – Installation of Prefabricated Buildings for Buildings can be categorized as Green if the activity supports the construction of buildings that have been certified with a BGH “Utama” (Primary) rating or an international certification such as Greenship, LEED, EDGE, or Green Mark that has achieved an advanced level of certification.

Sunsetting is the process of ending the validity of a specific Technical Screening Criteria (TSC) for a given classification after a set date. For example, the TSC for “Transition” electricity generation with a life-cycle emission of 510 gCO2/kWh will no longer apply after 2040. Sunsetting is important because it:

• Prevents transition activities from being labeled as sustainable permanently.
• Reduces the risk of greenwashing.
• Provides certainty to investors and issuers regarding future changes.
• Encourages timely adoption of green technologies and practices.

The classification primarily affected is “Transition,” as it is designed to be temporary (time-bound) and to move toward the “Green” classification. After the sunset date, only the “Green” classification remains applicable for that activity. Therefore, the sunsetting mechanism is generally more relevant for “Transition” activities, although under certain conditions, TSCs for “Green” activities may also be discontinued.

No. Sunsetting does not apply retroactively to instruments that have already been issued. These instruments can use a Grandfathering mechanism, which allows them to retain their original classification for a certain period (7 years) after the TSC changes.

Yes. Proposed sunset dates for certain activities are listed in the TKBI Version 3 – Annex 3 Technical Criteria of the Indonesian Sustainable Finance Taxonomy. This document will be available on the OJK website once published.

These KBLI codes are not included in the scope of TKBI because they are not aligned with the sustainability principles that form the basis of TKBI, based on analysis and considerations from various aspects. These considerations include environmental, social, public health aspects, as well as alignment with the Sustainable Development Goals (SDGs).

a. Specifically, for the Tobacco Processing Industry, tobacco production is considered to have significant environmental and social impacts and is not consistent with SDG 3: Good Health and Well-being. In addition, most global sustainability standards and frameworks also recommend excluding tobacco from ESG initiatives and sustainable financing.

b. Meanwhile, the exclusion of the Alcoholic Beverage Industry is made considering potential social dynamics, including societal norms and public health concerns.

The review process of Technical Screening Criteria (TSC) in TKBI is conducted periodically. The review depends on the type of TSC, namely Enduring TSC, Updates Pre-set TSC, and Review Date Pre-set TSC. In each review cycle, decisions on whether a TSC needs to be revised, tightened, or subjected to the Sunsetting mechanism are made based on technical evaluations, policy considerations, and public consultations.

The determination of Sunsetting in TKBI is aligned with national policies and regulations, which include national decarbonization targets and sectoral roadmaps; other relevant national regulations; developments in international policies and commitments; and technological advancements.

Sunsetting is an integral part of the periodic TSC review cycle. When a TSC is reviewed (typically every 5 years), the reviewing body evaluates whether certain classifications—particularly “Transition”—need to be discontinued. The sunset date is confirmed during this process and announced alongside the updated TSC.

KBLI 221 – Rubber and Rubber Products Industry is not yet included in the scope of TKBI, even though this activity is covered under the ASEAN Taxonomy, because the TSC (Technical Screening Criteria) is not specifically relevant to rubber industry practices in Indonesia.

However, considering its economic and social significance and its status as a Priority Industry in the National Industrial Development Master Plan (RIPIN), the development of TSC for the Rubber Products Industry will be considered in future versions of TKBI.

The KBLI codes for this activity include:

22111 – Outer and Inner Tire Industry

22112 – Tire Vulcanization Industry

22192 – Rubber Products Industry for Industrial Purposes

TSCs are estimated to be reviewed approximately every 5 years, taking into account developments in science, technology, and national and international policies.

The Pharmaceutical and Medicinal Products Industry does not have specific Technical Screening Criteria (TSC), so assessments under TKBI are limited to Do No Significant Harm (DNSH) and other Essential Criteria (EC). This approach is based on the following considerations:

- The pharmaceutical and medicinal products industry in Indonesia has implemented various environmental mitigation measures, including energy efficiency and waste management. However, the industry’s contribution to specific environmental objectives cannot be clearly identified.

- The production processes, materials, and formulations in the pharmaceutical industry are governed by strict regulations, which limit flexibility for implementing sustainability-supporting changes, such as material substitution or production process modifications.

The sunset date will be published at least 12 months prior to its implementation, alongside the new TSC. This information will be made publicly available (e.g., through the OJK website). Issuers are expected to promptly communicate this change to investors (e.g., in prospectuses or term sheets).

The Low-Carbon Fuel Industry, including Biofuels, is considered within the scope of TKBI because all these types of fuels are based on low-carbon energy sources that can support climate change mitigation. Low-carbon fuels have the potential for lower greenhouse gas emissions compared to fossil fuels.

Moreover, the development of this industry in Indonesia shows the potential for a transition toward cleaner energy, in line with emission reduction targets and net-zero commitments. This industry is also part of the renewable energy strategy outlined in the National Energy General Plan (RUEN).

Based on these considerations, this activity is relevant and important to include within the scope of TKBI.

The sunset date is set based on current science and policy, but it can be adjusted in subsequent reviews if there are significant technological or policy developments. Any changes will follow a transparent consultation process.

The TKBI version 3 framework recognizes the need for flexibility in the review schedule, particularly for sectors with long-term investments. While the general review cycle is targeted at every five years, the framework allows the sunset date and review schedule to be set at the Activity level. This enables adjustments based on technology readiness, decarbonization pathways, transition feasibility, and sector-specific investment cycles.

The Low-Carbon Fuel Industry, including Biofuels in TKBI covers the entire production process of pure biofuels (100% plant-based feedstock). The process of blending with other fuels is not included in the scope, as it does not materially contribute to greenhouse gas emission reductions and does not significantly change the life-cycle emission characteristics of the fuel. Therefore, the assessment of GHG emissions savings focuses on products directly produced from plant-based feedstock.

Consequently, the clause “having GHG emissions savings =65% relative to fossil fuel comparators” applies to the emission intensity of the pure biofuel produced. Measurement is conducted over the entire life cycle of the product, and biofuels meet this criterion if their emissions are recorded as at least 65% lower than the reference emission intensity of fossil fuels. This calculation can be performed using a lifecycle assessment approach or other internationally recognized methodologies.

In TKBI, Sunsetting is not determined on an ad-hoc basis but through the periodic TSC review cycle, targeted at every five years. In each cycle, an assessment is conducted to decide whether a TSC should be maintained, tightened, or assigned a sunset date. These decisions take into account the readiness of all stakeholders, including regulators, financial institutions, and business actors in each sector, through a public consultation process.

For Activities with TSC requirements that are qualitative, including Transition Activities, the provisions are included under the Review Date Pre-set TSC approach. This category of TSC is subject to change in the future, but from the outset, the exact nature of the changes and their effective dates are not specified in detail.

Compliance with references in TSC cross-referencing should be adjusted to the context of the assessment, as follows:

- If the assessment is conducted for the “Green” classification, the referenced criteria must meet the “Green” classification as stated in the cross-referenced Activity TSC.

- If the assessment is conducted for the “Transition” classification, the referenced criteria must meet the “Transition” classification as stated in the cross-referenced Activity TSC.

- If the referenced TSC only has a “Green” classification, then for both “Green” and “Transition” assessments, the criteria must meet the “Green” classification as stated in the cross-referenced Activity TSC.

After an Activity reaches its sunset date, the “Transition” classification for that Activity no longer applies. This means the Activity can no longer be categorized as sustainable unless it meets the “Green” criteria in the latest TSC. If it does not meet these criteria, the Activity will be classified as “Not Meeting Classification.”

Meeting the criteria for the Battery Industry Activity does not require companies to conduct recycling processes directly. The requirements focus on the production process and battery design capabilities to support the use of secondary raw materials and enable recycling and recovery of critical materials at the end of the product’s life.

Compliance can be achieved through product designs that are easy to disassemble and use separable materials, as well as collaboration with third parties that have recycling facilities. Therefore, companies do not need to carry out recycling internally but must ensure that the batteries produced are compatible with recycling processes.

TKBI users, including financial service institutions and financial instrument issuers, need to:

1. Review the classification of the financed Activity and ensure whether the Activity still meets the “Green” criteria in the latest TSC.
2. Inform investors and stakeholders transparently about the classification changes and potential impacts.
3. Adjust financing and reporting strategies, including sustainability and impact reports, to remain aligned with TKBI.

Bonds with maturities that extend beyond the sunset date of the financed Activity will be affected. If the Activity loses its “Green” classification due to TSC changes but falls within the Grandfathering period, the sustainability label of the instrument can be maintained for up to 7 years. However, if the classification change results from decreased Activity performance or violations of DNSH/social criteria, the Grandfathering mechanism does not apply, and the bond may lose its sustainability label before maturity. Therefore, issuers must conduct regular monitoring and transparent reporting so that investors understand the current status of the financed Activity.

The “Transition” classification in the Manufacturing sector does not explicitly set a sunset date because it falls under the category of “Review Date Pre-set TSC.” However, all TSC in TKBI, including those in the Manufacturing sector, will have a time limit determined through a periodic review process in the future.

Through this process, a TSC can be:

(a) updated,

(b) discontinued (sunset), or

(c) retained.

In principle, the Grandfathering and Sunsetting mechanisms in TKBI only apply to Activities or entities classified under Transition TSC. Therefore, for the PST sector, there is currently no Transition mechanism in the TSC, so Grandfathering and Sunsetting provisions are not directly applied within the current framework. For the IC sector, these mechanisms are only relevant for data center Activities that are classified under Transition TSC. Nevertheless, it should be noted that the Grandfathering mechanism may become relevant in the future if there are tightened requirements for Green TSC.

Energy efficiency is integrated across all Manufacturing sector Activities that have EO1, although it is not always expressed as an explicit and uniform technical criterion. In certain Activities, energy efficiency is formulated directly through quantitative technical criteria, such as achieving energy efficiency levels compared to a baseline, as applied in the Basic Organic and Inorganic Chemical Industry Activities.

More generally, for all Manufacturing sector Activities with EO1, energy efficiency integration is implemented through the requirement to apply energy management in accordance with the Government Regulation of the Republic of Indonesia No. 33 of 2023 on Energy Conservation (or its amendments). This requirement applies to both suppliers and users of energy in the Manufacturing sector. Therefore, it also applies to Activities that are not considered hard-to-abate sectors, such as: Leather, Leather Goods, and Footwear Industry; Pulp, Paper, and Paper Products Industry; Wood, Cork, Straw, and Woven Materials Products Industry.

Energy efficiency is also reflected indirectly through other criteria, such as emission intensity indicators, since improvements in energy efficiency play an important role in achieving them. Thus, energy efficiency integration in the Manufacturing sector is carried out through a combination of explicit technical criteria, regulatory obligations, and its linkage to emission control within TKBI.

Recycling criteria are set as a requirement under EO1 to emphasize that battery waste management is an integral part of climate change mitigation strategy, rather than merely a circular economy initiative. Within this framework, recycling is not positioned as an additional target but as a universal design element that must be implemented to prevent batteries from being produced as single-use products.

Although recycling activities fall under EO1, all activities are still assessed according to the Do No Significant Harm (DNSH) principle. This means that Battery Industry Activities must not cause harm, negative impacts, or damage to other EOs, including EO4.

The Grandfathering period is set at 7 years from the date the TSC change takes effect. After this period ends, ongoing instruments must comply with the latest TSC if they wish to maintain their sustainability label. If not, the TKBI alignment label (“TKBI Green-aligned” or “TKBI Transition-aligned”) initially assigned will no longer be valid.

In determining the 7-year Grandfathering period, the following were carried out: (a) various dialogues with relevant regulators, financial industry actors, and other stakeholders; (b) a study of the tenor profile of financial instruments in Indonesia; and (c) an analysis of alignment and interoperability with relevant international taxonomy practices. Based on this analysis, the 7-year period was considered the most proportional choice to cover the majority of instrument tenors, provide certainty and classification stability for market participants over a reasonable time frame, and remain in line with global and regional best practices.

In practice, the difference between the TSC review cycle of at least every 5 years and the 7-year Grandfathering period may create a potential greenwashing risk when old TSCs start to lag behind scientific or policy developments. This risk can be mitigated through annual reporting obligations and transparency that an instrument is in its Grandfathering period and still refers to a specific TSC (in the form of explanatory notes). Thus, the market still receives sufficient stability and certainty through the 7-year Grandfathering period, with the addition of the explanatory notes mechanism to control greenwashing risk.

In the context of the “Transition” classification in the Manufacturing sector, “having a transition plan” means that a company has a comprehensive, credible, and science-based plan aligned with greenhouse gas reduction targets under the Paris Agreement or recognized net-zero targets. The plan outlines the strategy for transitioning to low-carbon technologies and production processes, structured decarbonization steps, and projected emission reductions based on scientific analysis. The transition plan also includes implementation mechanisms, governance, performance indicators, and financing requirements to allow for objective assessment of progress.

The document can refer to nationally or internationally recognized transition plan frameworks, such as: Expectations for Real-Economy Transition Plans by The Glasgow Financial Alliance for Net Zero (GFANZ), Transition Plan Taskforce Disclosure Framework by the Transition Plan Taskforce (TPT), and other relevant frameworks. These framework documents also provide guidance on verifier qualifications, update periods, and key elements to consider when developing a transition plan that can be used as a reference.

Grandfathering is applied to maintain the “financial instrument classification” when there are changes to the TSC. The instruments covered include:

• Bonds (“TKBI Green-aligned” bonds, “TKBI Transition-aligned” bonds)
• Other financial instruments, primarily loans
• Including portfolio approaches and innovative instruments (e.g., blended finance), as long as they comply with TKBI principles.

Grandfathering applies to both classifications, namely instruments classified as “TKBI Green-aligned” and “TKBI Transition-aligned.” The Grandfathering rule is more relevant for instruments with the “TKBI Transition-aligned” classification because they are more likely to be updated, compared to the “TKBI Green-aligned” criteria, which target long-term outcomes aligned with 1.5°C.

1. If funds have been fully allocated (allocated bond/committed loan): the instrument can retain its label. This label is based on the Activity classification using the old TSC prior to the change. However, the use of the old TSC in this case is not considered a Grandfathering mechanism, but rather a general characteristic of instruments with already allocated funds.
2. If funds have not been fully allocated (unallocated bond/uncommitted loan): the instrument can retain its label based on the Activity classification using the old TSC, during the Grandfathering period, which is 7 years.
3. Portfolio-based allocation: the same Grandfathering period also applies. After the Grandfathering period ends, all assets in the portfolio must comply with the latest TSC for the instrument to continue being classified as “TKBI Green-aligned” or “TKBI Transition-aligned.” Reports on fund usage demonstrating alignment with the classification must be published at the end of the 7-year Grandfathering period.

Extended Producer Responsibility (EPR) is an environmental policy that places full responsibility on producers for the entire lifecycle of the products they manufacture, particularly regarding waste management after the product is used. This policy encourages producers to design more environmentally friendly products and ensures the establishment of safe and effective waste management systems. In general, EPR includes several key components, such as: obligations for product design that supports sustainability, provision of waste management mechanisms by producers, financing of the waste management system, periodic performance reporting and monitoring. In Indonesia, the concept of EPR is regulated under Law No. 18 of 2008 on Waste Management, which states that producers are responsible for managing packaging and products that are difficult to process or compost. Thus, the implementation of EPR supports the achievement of environmental objectives related to the circular economy under EO4.

Yes. Any change in the Activity classification or the use of the Grandfathering mechanism at the time of a TSC change must be transparently disclosed to stakeholders.

Currently, disclosures are adjusted according to the type of financial instrument. For example, reporting under POJK 18 of 2023 concerning the Issuance and Requirements for Debt Securities and Sustainability-Based Rates (EBUS), as well as the Green Bond and Green Sukuk Framework. The format includes:

1. The underlying Activity classification; and
2. The financial instrument classification, with an explanation of any differences between the instrument label and the Activity classification (for example, due to Grandfathering).

These provisions will be integrated into the Fund Utilization Realization Report and Impact Report.

In addition, issuers and holders of financial instruments are also advised to:

1. Disclose information on TSC changes and Grandfathering status in the relevant reports; and
2. Provide a narrative on how TSC changes affect the Activity classification and the mitigation measures undertaken.

If there is a discrepancy between the reported Activity classification (based on the latest TSC) and the financial instrument classification (based on the old TSC protected by Grandfathering), this condition fundamentally reflects a potential greenwashing risk because the instrument label no longer fully represents the sustainability profile of the underlying Activity. To mitigate this risk, an explanatory note can be provided that clarifies which version of the TSC was used and highlights any differences between the Activity classification and the financial instrument classification.

Feedstock: The main substance used in chemical processes to produce a specific chemical product. Feedstock enters the reactor/process, reacts, and becomes part of the final product or its derivatives. Below are examples of feedstock for several products:

- HVC: naphtha/ethane/propane as feed to steam cracker for ethylene/propylene

- BTX: catalytic reformate/heavy naphtha

- HNO3: green H2 as feed

- Carbon black: heavy aromatic oils (naphtha), carbon black from pyrolysis char/gasification

- Soda ash: N/A

- Ammonia: H2 from biomass gasification

- Cl2: chlorine from NaCl electrolysis

- Methanol: CH4, biogas, CO2 + H2

The figure above shows examples of feedstock commonly used in chemical production processes. Feedstock is marked with a red box in the figure. Feedstock is divided into two types:

(a) Basic feedstock, such as crude oil, raw natural gas, naphtha, and gas oil

(b) Intermediate feedstock, such as methane, ethylene, propylene, benzene, butadiene, etc.

Fuel: A substance that contains potential energy for combustion processes. The combustion process generates heat energy, which is then used for various purposes, such as evaporating water, raising the temperature of materials, aiding mixing processes, bonding, forming processes, and others.

In the Basic Organic and Inorganic Chemical Industry Activities:

The clause “>=50% of total production volume consists of chemicals within scope” means that a facility can only be assessed for taxonomy alignment if at least half of its total production volume consists of chemicals listed in the TKBI scope. This clause ensures that the taxonomy assessment is applied only to facilities whose primary activities fall within the designated chemical scope.

For example:

- If a facility produces 60% methanol (included in the scope) and 40% other products, the facility qualifies for assessment.

- If only 30% of its production is methanol, the facility does not qualify.

- If a facility produces 40% nitric acid and 10% methanol, neither qualifies, because no single chemical in the scope reaches the 50% threshold of total production volume.

The clause “generates a significant reduction in GHG emissions” in Battery Industry Activities refers to the contribution of battery use to lowering greenhouse gas emissions in the sectors that use the battery products, rather than to emission reductions from the battery production process itself. Batteries are positioned as an enabling technology for low-carbon activities, such as transportation, stationary energy storage, on-grid and off-grid electricity systems, and other industrial applications.

The term “significant” is used as a qualitative classification and does not refer to a specific quantitative threshold. Assessment is based on the extent to which battery use enables a transition from fossil fuel–based technologies to lower-emission systems, taking into account, for example, relevant national energy transition roadmaps. Evaluation of the significance of emission reductions is generally carried out by reviewers or external auditors.

The clause “lifecycle GHG emissions savings” in Other Low-Carbon Technology Industry Activities refers to the reduction of greenhouse gas emissions calculated across the entire lifecycle of a product or technology, from production, distribution, and use, to end-of-life. These savings are assessed comparatively against the best-performing alternative technology or solution available, emphasizing emissions performance based on a lifecycle approach.

Emission savings calculations are carried out using internationally recognized lifecycle emissions methodologies, such as Life Cycle Assessment (LCA) or similar methods. In this context, the methodology may refer to relevant international standards, for example, ISO 14067:2018 or ISO 14064-1:2018. Additionally, these emission savings are generally verified by independent external parties through audits, certifications, or reviews conducted by entities with recognized competence and credibility to ensure the reliability of the claims.

This clause covers all materials used throughout the entire furniture manufacturing process, and is not limited only to the main materials such as wood and leather. The minimum 70% from recycled sources is calculated based on the total composition of materials used in producing the furniture products. Thus, the calculation includes all product components, including supporting materials such as adhesives, coatings, fabrics, foams, and any other materials used in the production process.

Land, water, and air transport are not dedicated solely to the transport of fossil fuels. Furthermore, in the context of water transport, there are specific conditions referring to vessels that may be exempted as follows:

Vessels that are exempted because they are “dedicated to transporting fossil fuels”

Explanation:

• “Non-Green facility” in this context refers to a facility (e.g., a power plant) that does not meet the “Green” TSC classification as defined in TKBI. Assessors are generally not expected to conduct a full TKBI assessment of the facility that is the end-user of the transported fuel, unless an individual classification for that facility is also being sought. However, assessors are expected at minimum to review evidence that the end-use facility is likely to comply with the “Green” TSC classification.
• “Non-Transition facilities” have a definition similar to “non-Green facilities”, except that these facilities are related to the Transition classification TSC.

Source: ASEAN Taxonomy for Sustainable Finance, Version 3, Appendix C

The following is a table regarding vehicle categories M, N, and L (Regulation of the Minister of Environment and Forestry of the Republic of Indonesia Number P.20/MENLHK/SETJEN/KUM.1/3/2017 on Exhaust Gas Emission Standards for New Type Motor Vehicles Category M, Category N, and Category O) and Regulation of the Minister of Environment and Forestry of the Republic of Indonesia No. 8 of 2023 on the Implementation of Motor Vehicle Emission Standards for Category M, Category N, Category O, and Category L.

The following is a table regarding regulations and what is measured to determine vehicle exhaust emissions:

AER, EEOI, EEDI, and EEXI are ship performance indicators based on energy performance, with details as follows:

Additional Notes:

• AER: Primarily used in the calculation of the Carbon Intensity Indicator (CII).
• EEOI: Serves as a monitoring tool for ship operators but is not mandated by the IMO.
• EEDI & EEXI: Part of MARPOL Annex VI regulations aimed at reducing emissions from ships.

In Indonesia, SAF production uses main feedstocks such as palm oil and used cooking oil. Furthermore, SAF producers in Indonesia plan to diversify other feedstocks, such as palm oil mill effluent (POME) and other waste oils. Under the CORSIA certification framework, only SAF used for international flights needs to meet this standard. The percentage of SAF use in Indonesia’s aviation roadmap is dynamic (a living document), so it may change along with infrastructure development and market demand. It is expected that by 2027, aircraft in Indonesia will operate with a minimum of 1% SAF, with this target increasing to 20% by 2045, and reaching 50% by 2060.

The following table shows SAF feedstocks recognized by ICAO under the CORSIA framework:

The table above only lists SAF feedstocks related to palm oil and used cooking oil as the main sources used in Indonesia. However, ICAO, through the CORSIA framework, has also recognized several other feedstocks as internationally eligible SAF sources (https://www.icao.int/environmental-protection/Pages/SAF_Feedstocks.aspx).

Other examples include technical corn oil, tallow, jatropha oil, and various types of agricultural and forestry residues. ICAO’s recognition of these feedstocks reflects a global effort to provide more diverse and sustainable alternatives for aviation fuel, in line with carbon emission reduction targets in the aviation sector.

A GHG-neutral lifecycle refers to the condition where a product made from wood, cork, straw, or woven materials demonstrates that the total amount of carbon or greenhouse gases (GHG) absorbed and stored throughout its entire lifecycle is equal to the total emissions released from upstream to downstream stages. This condition is assessed through Life Cycle Assessment (LCA) in accordance with international standards. In the assessment, biogenic carbon absorption, storage, and emissions are clearly calculated and traceable. For example, a wood product sourced from a sustainably managed forest that can store carbon over its long service life can achieve a GHG-neutral condition if the total carbon absorption and storage balances the emissions from harvesting, processing, transportation, use, and end-of-life.

A GHG-negative lifecycle refers to the condition where a wood-based product absorbs and stores more carbon or GHG throughout its lifecycle than the total emissions it generates, resulting in a net removal of carbon from the atmosphere. For illustration, a long-lifespan wood product from a continuously growing forest that absorbs new carbon can be classified as having a GHG-negative lifecycle if the accumulated carbon stored in the product exceeds all emissions generated from harvesting, processing, distribution, use, and end-of-life.

The term “high-impact feedstock” refers to raw materials that have significant environmental impacts throughout their lifecycle, particularly on biodiversity, land use, energy consumption, and greenhouse gas emissions. Identification is carried out through Life Cycle Assessment (LCA), and high-impact materials should be replaced or blended with alternative materials that have lower ecological pressures.

In the Wood, Cork, Straw, and Woven Material Product Industry Activities, examples of high-impact feedstock include wood from non-certified sources or from areas with high deforestation and forest degradation risks. These materials are considered high-impact because of their contribution to forest cover loss and carbon stock reduction. Alternative materials can include certified wood from sustainably managed forests, non-wood fibers with a lower ecological footprint, or recycled materials, as determined by the results of a lifecycle assessment.

In the Food and Beverage Industry Activities, examples of high-impact feedstock include agricultural commodities that are globally recognized to have high-impact intensity on biodiversity, such as palm oil from deforested areas, soy from land expansion, or sugarcane and beef linked to land conversion and high emissions.

Based on the results of a lifecycle assessment, these materials can be replaced with certified sustainable sources, regenerative agriculture products, or feedstock with lower ecological pressure, in accordance with the clause requiring >=70% use of alternative materials.

The “pre-determined baseline” refers to a value internally set by the company as a reference condition when no action has occurred or is yet to occur (business-as-usual scenario). In this context, the baseline serves as the basis for evaluating the reduction of unnecessary textile waste.

A baseline is generally defined as the condition against which changes are measured. It can be:

- Current baseline: the actual condition representing a specific operational period or historical data as a reference point.

- Future (projected) baseline: the projected future condition assuming no interventions are implemented.

The choice of baseline approach is determined by the company’s policy, as long as it is technically justifiable and applied consistently.

Temporal correlation means that the renewable electricity claimed for hydrogen production must be generated at the same time the hydrogen is produced. The term “minimum annual” indicates that the alignment between renewable electricity generation and the energy consumption of the hydrogen facility must be verified at least once per year. Verification can also be conducted more frequently, for example, semi-annually or monthly.

This requirement ensures that the volume of renewable energy allocated through recognition instruments or contracts truly corresponds to the period of energy consumption by the hydrogen facility. Consequently, claims of renewable electricity use reflect actual, time-consistent, and verifiable energy consumption.

The minimum annual temporal correlation approach aligns with international practices prior to the transition to hourly matching.

Certification, Comprehensive Fishery Improvement Program (FIP), Fishery Improvement Action Plan, and Basic or Starter Fishery Improvement Program in Capture Fisheries are developed with reference to the Marine Stewardship Council (MSC) standards. Although they refer to the same framework, there are fundamental differences in terms of status, development process, scope of assessed aspects, and requirements for periodic audits and evaluations.

Detailed information on these differences is provided in the table below.

Comparison of Certification, Comprehensive Fishery Improvement Program, Basic or Starter FIP, and Fishery Improvement Action Plan

The requirements for renewable electricity usage in Low-Carbon Gas Industry Activities, including Hydrogen, mandate contractual evidence that renewable energy generation capacity is specifically allocated to the production process in order to maintain ownership and exclusive claims over the "environmental attributes" of the renewable electricity. The form of the contract can be adjusted to comply with the applicable electricity regulations. Some forms of contracts recognized internationally include:

- Supply Contract with Utility for Specific Generation (Green Tariff)

A specific generation contract with a utility for electricity and environmental attributes (proven with environmental attribute certificates such as Renewable Energy Certificates) that are internationally recognized. Under this contract, the hydrogen producer is the sole owner of the clean electricity and environmental attributes from one or more specific renewable power plants. In Indonesia, the GEAS Dedicated Sources (DS) offered by PLN is one of the available options.

- Bilateral Contract between Generator and Hydrogen Producer

An agreement stating that the renewable energy generation capacity is exclusively dedicated to hydrogen production, including under an on-grid scheme. In principle, the contract must demonstrate the dedicated capacity and exclusive allocation of a renewable generator to the Hydrogen Producer.

"Regarding the clause 'Product and packaging design allows for practical reuse or recycling, as evidenced by compliance with national standards' in EO4 for certain Activities in the Low-Carbon Gas Industry (TKBI):"

National standards can be used as a reference as long as their mechanisms allow the product and packaging design to be practically reused or recycled, provided that the system has been internationally recognized. This international recognition ensures that the methodology, criteria, and procedures applied are consistent with global sustainability practices. It provides assurance that the sustainability claims made for the product have legitimacy and credibility at the global level.

How to verify compliance with the clause “Product and packaging design allows for practical reuse or recycling, as demonstrated by compliance with national or international systems aligned with globally recognized schemes and/or frameworks, such as ISO EN 13432 or Extended Producer Responsibility (EPR) programs” for Green classification under EO4 across the following activities: Plastics Industry including Plastic Packaging Products, Textile Industry, Garment Industry, Paper and Paper Products Industry, Furniture Industry made of Wood and Leather, Food and Beverage Industry, and Electrical and Electronic Equipment Industry, namely:

Compliance with ISO EN 13432 can be validated through a certification process conducted by verification and validation bodies whose competence is internationally recognized. The certificate issued serves as official evidence that a product meets the requirements and has the capability to biodegrade in accordance with the applicable provisions. This certificate is generally valid for a period of three to five years, depending on the policies and procedures of the certification body. Upon expiration of the validity period, the product is required to undergo re-evaluation or re-audit as a condition for certification renewal.

Compliance with ISO EN 13432 can be validated through a certification process conducted by verification and validation bodies whose competence is internationally recognized. The certificate issued serves as official evidence that a product meets the requirements and has the capability to biodegrade in accordance with the applicable provisions. This certificate is generally valid for a period of three to five years, in accordance with the policies and procedures of the certification body. Upon expiration of the validity period, the product is required to undergo re-evaluation or re-audit as a condition for certification renewal.

Meanwhile, validation of compliance specifically for certain parameters can be referred to in the Compliance Validation Table for Specific Parameters in Certain Activities below.

Compliance Validation for Specific Parameters in Certain Activities

There are six main Activity Groups within the WSSWM sector, namely:

1. Clean Water and Wastewater Management and Nature-Based Solutions

2. Waste and Garbage Collection and Transportation (Hazardous and Non-Hazardous)

3. Non-Hazardous Waste Treatment

4. Hazardous Waste Treatment

5. Recycling

6. Remediation

No. TSC assessment is conducted based on the specific activity. For example, if a user carries out a Desalination activity, only the TSCs applicable to Desalination need to be fulfilled.

TKBI users can select the KBLI based on the primary focus of the activity, and then align it with the TSC available in the WSSWM sector by referring to the Activity Notes. For example:

An activity with KBLI 42212 (Construction of Buildings for the Treatment, Distribution, and Storage of Drinking Water, Wastewater, and Drainage) can be classified under the TSC of the following sectors:

- WSSWM, if the activity focuses on water treatment and supply functions, such as the construction of wastewater treatment systems to improve energy efficiency and water quality.

- C&RE, if the activity focuses on sustainable construction aspects, such as the use of low-carbon materials and building efficiency.

Construction is included in WSSWM because the construction phase of water supply facilities, wastewater installations, and flood and drought control infrastructure is a critical phase in which the selection and application of technologies are determined, and these decisions define the system’s ability to achieve environmental objectives within the WSSWM sector. In this sector, construction is assessed through aspects such as energy efficiency and emissions reduction (EO1), increased resilience to floods and droughts (EO2), protection of water body quality (EO3), and water reuse (EO4).

This approach differs from construction in the C&RE sector, which is assessed based on the performance of buildings and their physical structures. Under EO1, C&RE requires a Sustainable Construction Rating and prohibits construction intended for fossil fuel–based activities. Under EO2, the assessment focuses on Climate Risk and Vulnerability Assessment (CRVA), climate projections, and appropriate adaptation solutions in line with relevant guidelines and adaptation plans.

Thus, construction in the C&RE sector is oriented toward building sustainability, whereas construction in the WSSWM sector is oriented toward the performance of water and wastewater service systems that support the sector’s environmental objectives.

Construction activities refer to the development of new facilities, where design, configuration, and technology selection can be directed from the outset to achieve performance aligned with best practices. In contrast, Renewal activities refer to facilities that are already in operation, with an approach focused on refining existing systems through upgrades to components or processes without changing their primary function.

These differing characteristics mean that construction activities tend to target optimal performance from the design phase, while renewal activities place greater emphasis on measurable improvements by comparing against the facility’s baseline condition.

Nature-based Solutions (NBS) can be categorized under the WSSWM, AFF, or PST sectors. In the context of WSSWM, NBS within WSSWM activities refers to structural measures (including civil construction) and nature-based solutions aimed at protecting humans, ecosystems, cultural heritage, and infrastructure from flood and drought risks. In the WSSWM sector, nature-based solutions can include various ecosystem restoration and management measures to reduce flood and drought risks and enhance ecological functions.

In the WSSWM sector, the scope of WtE activities emphasizes the treatment of residual waste into energy. This is because the focus of these activities is on resource recovery before final disposal, and they are associated with EO4: Resource Resilience and Transition to a Circular Economy. Therefore, the TSC requirements emphasize aspects such as the use of sorted residual waste, recovery of metals, or utilization of bottom ash.

In contrast, in Bioenergy Power Generation activities under the Energy Sector TKBI, the scope of landfill-based power generation (PLTSa) focuses on electricity generation from energy produced by waste as a renewable energy source. The TSC for these activities focuses on reducing carbon emissions from electricity generation and is associated with EO1: Climate Change Mitigation. In this case, the TSC requirements emphasize indicators related to the lifecycle emissions produced.

These activities can be mapped to the existing TSC as follows:

- Biomass and Refuse-Derived Fuel (RDF) Production: If the activity produces alternative fuel from RDF, it can be used for cement production, similar to the Cement Industry Activity in the Manufacturing sector. If biomass or Solid Recovered Fuel (SRF) is used for energy generation, it falls under Bioenergy Power Generation Activities in the Energy Sector.

- Bioconversion with Black Soldier Fly (BSF) Maggots: If the activity aims to process organic waste into compost, it falls under the Organic Waste Composting TSC. If the focus is on maggot farming as a commodity, it refers to the Agriculture, Forestry, and Fisheries (AFF) sector.

- Thermal Waste Treatment: Thermal processes such as incineration for energy recovery are included in Waste-to-Energy activities. Meanwhile, thermal processes such as gasification and pyrolysis are included in Low-Carbon Gas Industry activities, including Hydrogen, in the Manufacturing Sector.

- Landfill Mining: If the activity focuses on recovering and utilizing valuable materials from old waste deposits, it can refer to the Recycling Activity Group. If the activity is conducted to extract materials from landfills to improve environmental conditions, it can refer to the Remediation Activity Group.

It should be noted that the economic scale also affects the classification mechanism. If the activity is carried out on a small or medium scale, for example by MSMEs, the Sector-Agnostic Decision Tree (SDT) in Annex 4 can be applied.

If there is a 3R TPS facility where waste sorting and recovery activities are carried out at the same location without going through a transportation process, under these conditions, the TSC for Waste Collection and Transportation Activities cannot be applied. The TSC for Waste and Waste Collection and Transportation Activities can only be used if the assessed activities include the physical collection and transportation of waste from one location to another. If, at a 3R TPS, waste is sorted and recovered directly at the same location (without being transported), then this activity is not categorized as transportation. The assessment should instead be directed to the TSC for Material Recovery Activities from Non-Hazardous Waste (Non-B3).

The reference standards for fulfilling the TSC are listed in the TSC section and in Annex 10, such as ISO, SNI, and other international guidelines. In terms of compliance, if a standard is explicitly mentioned in the TSC, it is mandatory as part of meeting the criteria. On the other hand, standards or guidelines listed only in the annex serve as technical references to support implementation or to supplement national regulations when an equivalent domestic standard is not available.

In general, all activities will have their TSC reviewed through the TSC Review and Sunsetting mechanism. However, for the following activities in the WSSWM sector, specific sunset dates have been established:

1. Activities with a sunset date of December 31, 2035 (Group: Clean Water, Wastewater, and Nature-Based Solutions Activities):

- Desalination activities

- Construction, expansion, and operation of wastewater collection and treatment systems

- Renewal of wastewater collection and treatment systems

2. Activities with a sunset date of December 31, 2030 (Group: Non-Hazardous Waste and Solid Waste Treatment Activities):

- Anaerobic organic waste decomposition activities

- Landfill gas capture and utilization activities

After these dates, only the “Green” classification can be applied.

It should be noted that these criteria and sunset dates are not fixed and will be periodically reviewed and updated in line with advances in science and technology.

Evidence can include environmental permits, SOPs, operational logs, audit reports, and other relevant technical documents. Verification is conducted through internal/external audits, third-party inspections, and compliance with national regulations.

Not all listed evidence needs to be provided simultaneously. TSC compliance evidence is selective and contextual, depending on the type of activity and the targeted classification (e.g., “Green” or “Transition”). Therefore, businesses only need to provide evidence that supports TSC compliance for the activities they carry out, not the entire list of evidence included in the document.

The measurement of energy consumption reduction can be carried out in the following steps:

1) Determine the baseline performance: the average annual energy consumption over the last three years.

2) Measure current energy consumption after the upgrade or improvement.

3) Calculate the percentage reduction from the baseline to the current consumption.

For illustration, PT Y has an energy consumption baseline of 30 kWh/p.e./year, and the planned upgrade is expected to reduce it to 22 kWh/p.e./year. With this achievement, there is a reduction of approximately 26.7%, which meets the “Green” classification threshold for energy efficiency improvement in the Wastewater Collection and Treatment System Upgrade.

Companies can conduct CRVA evaluations through self-assessment or by engaging consultants/third parties. The determination of material criteria and measurements is not entirely set by the authorities, giving companies flexibility in the assessment method. To assist in this process, users can refer to Annex 12, which contains CRVA examples as guidance.

Population Equivalent (P.E.) is used to represent the organic load equivalent to the contribution of one person per day, generally calculated based on a BOD5 load of 60 grams per person per day. In practical plant design, P.E. can be calculated using two approaches: the daily wastewater volume-based approach and the designed BOD5 load-based approach.

1. Volume-based approach:

The calculation uses an assumed daily wastewater production per person. As a general reference, each person generates approximately 100–120 liters per day. Using this approach, a 10,000 P.E. capacity means the plant requires a treatment capacity of about 1,200 m³ per day if the estimate is 120 liters per person per day.

2. BOD5-based approach:

P.E. is determined from the total BOD5 load when wastewater flow data is unavailable. The approach compares the total BOD5 load received by the system with the standard load of 60 grams BOD5 per P.E. per day. For example, if a plant receives a BOD5 load of 600,000 grams per day, this load is equivalent to 10,000 P.E., since it equals ten thousand times the standard load per P.E.

Both methods can be used as long as the reference values are consistent and follow the applicable technical standards.

Net energy consumption is calculated by comparing the net energy used with the output (clean water produced or wastewater volume treated) each month, and then averaging these monthly values over a 12-month period. This annual value is used for TSC compliance.

There are differences in the calculation method between clean water management and wastewater management, as explained below:

- For clean water management: the facility compares the net energy used each month with the volume of water produced in the same month. Over a 12-month period, all monthly values are averaged to produce the annual value, expressed in kWh/m³.

- For wastewater management: the calculation differs from that of clean water. This is because renewable or recovered energy must first be subtracted from the monthly energy consumption to obtain the monthly net energy consumption. The monthly net energy is then divided by the service load, for example in population equivalents (p.e.), and all monthly results are averaged over 12 months to produce the annual value, expressed in kWh per population equivalent (p.e.).

Distribution loss measures the percentage of clean water lost during the distribution process, calculated by comparing the volume of water lost to the volume of water entering the system. For example, if a network receives 10,000,000 m³ of water and loses 1,400,000 m³, the distribution loss is 14%. Water loss is calculated as the difference between the water produced and the water recorded as delivered to customers (billed authorized consumption).

The TKBI assessment approach is divided into two methods: the Technical Screening Criteria (TSC) approach for corporations, and the Sector-Agnostic Decision Tree (SDT) approach for MSMEs. The SDT approach uses a simpler, principle-based concept to determine the classification of MSME activities, supplemented with example guiding questions provided in Annex 4.

Material recovery is calculated by measuring the amount of metal successfully recovered compared to the total metal content in the bottom ash. In other words, the recovery percentage refers to the proportion of metal that can be extracted from the ash, not the total weight of the ash. This ensures that the focus of recovery is on the high-value materials contained in the ash, while the overall utilization of the ash, for example as construction aggregate, is carried out as long as it is permitted by national law.

For illustration, a facility has 800 tons of metal content in its bottom ash. After the recovery process, 600 tons of metal are successfully extracted. With this result, the recovery rate reaches approximately 75%, meeting the “Green” classification threshold for metal recovery from bottom ash.

For Material Recovery from Non-Hazardous Waste (non-B3), the material recovery efficiency thresholds are set at 50% for the “Green” classification and 40% for the “Transition” classification. Efficiency is calculated by comparing the total material successfully recovered to the total waste received by the facility, including the organic fraction. Recovery includes all materials that can be reused, recycled, or otherwise utilized, such as compost, plastics, and metals.

For illustration, PT X receives 10,000 tons of waste and successfully recovers 4,500 tons of material. With this achievement, the recovery rate reaches approximately 45%, meeting the threshold for the “Transition” classification but not yet reaching the threshold for the “Green” classification.

In general, there are four Environmental Objectives (EO) in TKBI:

- EO1 – Climate Change Mitigation

- EO2 – Climate Change Adaptation

- EO3 – Protection of Healthy Ecosystems and Biodiversity

- EO4 – Resource Resilience and the Transition to a Circular Economy

The establishment of EOs in the WSSWM sector is based on the key characteristics of water and waste management, which have material impacts on emissions, climate risks, and ecosystem quality. EO1 applies to energy-intensive processes or activities that contribute to emissions, including clean water production, wastewater treatment, and organic waste management that generates methane. EO2 is relevant because WSSWM infrastructure is highly affected by floods, droughts, and hydrological changes, requiring climate risk assessment and adaptation measures. EO3 focuses on ecosystem protection by preventing pollution of water bodies, soil, and the environment, particularly through the management of hazardous waste (B3). EO4 is used to promote resource efficiency through waste sorting, material recovery, reduction of residuals sent to landfills, and the optimized reuse of water and other recoverable fractions.

Measuring energy consumption over a 12-month period is intended to avoid seasonal bias, such as fluctuations in energy use caused by rainy or dry seasons. By using a full-year period, the measurement results consistently and accurately reflect system performance, ensuring that the efficiency achieved is genuinely sustainable and not temporary.

Metal recovery is focused on bottom ash because it is chemically more stable and contains valuable metals such as iron, aluminum, and copper, which can be recovered efficiently using magnetic separation and eddy current technologies. The process produces metals for use in the steel, packaging, and electrical component industries, while the remaining ash is utilized as a construction material for road mixes. In contrast, fly ash has a high toxicity potential, so its management focuses on emission control and stabilization rather than material recovery.

TKBI is a classification of economic activities that support Indonesia’s efforts and Sustainable Development Goals, covering economic, environmental, and social aspects. TKBI is used as a guideline to increase the allocation of capital and sustainable financing in supporting the achievement of Indonesia’s net zero emissions target. The strategic objectives of TKBI are: to refine the standard definitions of economic activities to align with the SDGs/Sustainable Development Goals that integrate economic, environmental, and social aspects; to minimize multiple interpretations, greenwashing, social washing, and impact washing through a science-based framework; to increase the allocation of capital and sustainable financing in supporting the achievement of Indonesia’s NZE target; to serve as a basis for the development of sustainability policies, including sustainability reporting, incentives and disincentives, and the development/innovation of Sustainable Finance products and/or services; to enhance access, literacy, and inclusion of sustainable products/services through the expansion of users, including MSMEs and non-MSMEs, which in turn drives economic growth; and to serve as a manifestation of cross-sectoral synergy with various stakeholders in supporting Sustainable Finance efforts in Indonesia, including fulfilling Indonesia’s targets under various global commitments on climate change.

TKBI can be used by any interested parties to assess whether an Activity meets sustainability aspects, such as companies, financial services institutions, regulators, investors, and others.

TKBI plays a very important role within the policy framework of Sustainable Finance in Indonesia. TKBI serves as a common language to define economic activities that are aligned with sustainable development objectives, as well as a tool to create transparency in order to avoid greenwashing, social washing, and impact washing. The classification results produced by TKBI can be used as a reliable database for formulating other Sustainable Finance policies, for example policies related to disclosure requirements, risk management, products/services, and others. TKBI also ensures that sustainability performance disclosures across different entities are assessed in a consistent and uniform manner. Going forward, TKBI will be adjusted in line with developments in the discussion of the Draft Government Regulation (RPP) on sustainable taxonomy, as mandated under Law of the Republic of Indonesia Number 4 of 2023 on the Development and Strengthening of the Financial Sector (P2SK Law).

TKBI uses the ASEAN Taxonomy for Sustainable Finance (ATSF) as its primary reference. The main features of the ATSF adopted in TKBI include the incorporation of four Environmental Objectives (EOs), namely Climate Change Mitigation (EO1), Climate Change Adaptation (EO2), Protection of Healthy Ecosystems and Biodiversity (EO3), and Resource Resilience and the Transition to a Circular Economy (EO4). In addition, the three essential criteria in the ATSF are also adopted by TKBI, namely DNSH-EC1, RMT-EC2, and SA-EC3. Furthermore, their implementation in TKBI is adapted to Indonesia’s specific conditions, including elaboration of a principle-based assessment approach under the Foundation Framework for the Micro, Small, and Medium Enterprises (MSMEs) segment, and the Technical Screening Criteria (TSC) under the Plus Standard for the corporate/non-MSME segment.

The development of TKBI adopts an approach in line with best practices applied in the region, such as the ASEAN Taxonomy, which focuses on sectors with high emissions and significant contributions to the economy. In line with this, TKBI will only focus on certain sectors based on the Indonesian government’s commitments under the NDC (and does not cover all sectors within the KBLI). The sectoral focus of TKBI includes NDC-related sectors, namely Energy, Waste, IPPU, Agriculture, and FOLU, with the energy sector as the initial focus in 2024. Other sectors will be developed in the following years so that all NDC sectors will be included within the scope of TKBI. Assessment using THI remains applicable as long as it does not conflict with TKBI, under the following provisions: Economic activities fall within the scope of both THI and TKBI in the event that an economic activity falls within the scope of both THI and TKBI, the assessment approach applied is the approach and assessment mechanism under TKBI. For example, the Electricity Transmission activity [35102] is listed in both THI and TKBI. Therefore, TKBI users must assess the activity using the assessment mechanism under TKBI. Economic activities fall within the scope of THI but are not included in TKBI. In the event that an economic activity falls within the scope of THI but is not included in TKBI, the assessment is conducted using the mechanisms and criteria under THI. For example, the Corn Farming activity [01111], which is covered under THI and not included in TKBI, continues to be assessed using the THI mechanism. The definitions of the “Green,” “Yellow,” and “Red” classifications in THI differ from the “Green,” “Transition,” and “Does Not Meet the Classification” categories in TKBI. However, during the transition period, reporting of the “Green,” “Yellow,” and “Red” classifications may be treated as equivalent to “Green,” “Transition,” and “Does Not Meet the Classification.” Economic activities do not fall within the scope of THI but are included in TKBI In the event that an economic activity does not fall within the scope of THI but is included in TKBI, the assessment approach applied is the TKBI assessment. Example: Accelerated early retirement of coal-fired steam power plants (PLTU).

Similar to THI, TKBI still uses KBLI 2017 (Regulation of the Head of Statistics Indonesia Number 19 of 2017 concerning Amendments to the Regulation of the Head of Statistics Indonesia Number 95 of 2015 on the Indonesian Standard Industrial Classification), considering that currently the majority of reporting systems in the Financial Services Sector still use KBLI 2017. To facilitate users, Appendix 3 of the TKBI Book provides a mapping of alignment between KBLI 2017 and KBLI 2020 (or its amendments).

The “Transition” classification in TKBI is not a combination of the “Yellow” and “Red” classifications in THI. The “Transition” classification in TKBI also has a different definition from the “Yellow” classification in THI. The “Transition” classification in TKBI describes Activities that are currently not aligned with the commitment to limit global temperature increases and are not yet on the NZE pathway, but which: Move toward the “Green” classification within a specified timeframe; Facilitate significant emissions reductions in the short or medium term within a defined timeframe; or Encourage other Activities to become sustainable, and meet social aspects.