SHARIA BANKING TOWARDS SUSTAINABLE FINANCE IN PALM OIL INDUSTRY

Abstract

This study aims to analyze the application of sustainable finance principle in the palm oil industry financing that stipulated by the Financial Services Authority as banking regulator. Sharia Bank X is a member of the First Mover Bank set by the Regulator on the Sustainable Finance project. The identification of the problem in this research is the environmental issues caused by the utilization of oil palm land that does not pay attention to the environmental good governance, so the Regulator involves banks in making policy on sustainable financing of palm oil industry. Design in this research is qualitative approach, with purposive sampling method. Data analysis was conducted by Focus Group Discussion (FGD) from internal and external Sharia Bank X. The result of research showed that in applying the principle of sustainable finance, Sharia Bank X has set acceptance criteria which contains the aspects of Environment, Social and Governance (ESG) in the fund distribution to companies engaged in the field of palm oil.