In order to fulfil the Net Zero Emission commitment, Financial Services Institutions (FSIs) are expected to contribute to the transition to a low carbon economy. This commitment can be initiated by improving the bank's ability to identify climate change risks and opportunities and avoid greenwashing practicesE by both the bank and its stakeholders.

This guide has been prepared in the context of the initial phase of Climate Risk Stress Testing (CRST) 2023 on a bottom-up basis for banks included in the OJK Climate Related Financial Risk Task Force. The Initial Bottom-Up CRST is conducted as a joint learning tool between the banking sector OJK and OJK with pioneering characteristics aimed at increasing the capacity of banks and OJK in assessing the impact of climate change and environmental risks and identifying bank constraints in implementing CRST. As such, it is expected to create early awareness of the impact of climate change and environmental risks on banks' financial performance and assist OJK in supervising the impact of these risks on banks' soundness going forward. This guidance has covered:

1. Priority Financial Risks, details of the portfolio analysed;
2. Stress testing methodology (scenario and period of analysis);
3. Follow-up that must be done by banks, among others, related to the analysis of the impact of climate risk on the bank's financial risk including capital.

OJK CRST Guidance is a living document and will be refined in line with global and industry developments.For further information, please contact Yudhisti Ramadiantio (yudhisti.r@ojk.go.id), Jehan Firrizqi Ananda (jehan.firrizqi@ojk.go.id), and Silvia Adhiarahmawati (silvia.adhia@ojk.go.id).

The guidebook can be accessed through: Panduan Climate Risk Stress Testing (CRST) Perbankan 2023 (1).pdf