Jakarta, The PRAKARSA — The series of ecological disasters that have struck various regions in Sumatra in recent times has once again exposed a structural issue that has previously gone unnoticed: environmental damage fueled by financing flows to high-risk sectors. The Responsibank Coalition believes that the floods, landslides, and ecosystem degradation are not solely the result of natural factors, but rather the direct impact of extractive business practices that continue to receive funding from financial institutions, including national banks.
This ecological disaster is seen as the tip of the iceberg of natural resource management that neglects environmental carrying capacity and public safety. The Responsibank Coalition calls on governments, corporations, and the financial industry to use this situation as a turning point for fundamental improvements in the licensing, financing, and accountability systems for natural resource management.
Abdul Haris, Head of the Advocacy and Public Education Department at TuK Indonesia, emphasized that environmental damage resulting from natural resource exploitation has proven to be a significant loss, not only for surrounding communities but also for the country's finances and economy. "This ecological disaster demonstrates that neglected environmental risks ultimately become a social and economic burden that must be borne by the public," he said on Monday (December 22, 2025).
According to the Responsibank Coalition, this situation should serve as a stern warning to the state to return to the mandate of Article 33 of the 1945 Constitution, which stipulates that the control and management of natural resources must be directed to the greatest possible prosperity of the people. Tightening of licensing based on environmental carrying capacity and carrying capacity is deemed urgent, including the obligation to comply with human rights standards and environmental protection in all business operations.
Despite this ecological damage, financing continues to flow to companies in Sumatra on a massive scale. Forests & Finance data shows that between 2014 and 2025, total financing detected to companies in risky sectors in Sumatra reached US$42,9 billion, consisting of US$16,9 billion in loans and US$26,1 billion in underwriting. This flow of funds continues amidst increasing ecological risks and social conflicts in the companies' operational areas.
The list of largest creditors includes several national banks with significant financing. Bank Mandiri has disbursed US$3,75 billion, followed by Bank Rakyat Indonesia (BRI) with US$1,65 billion, and Bank Negara Indonesia (BNI) with US$1,14 billion. In addition to national banks, several international financial institutions from China, Japan, Singapore, and the UK are also actively financing these sectors.
Meanwhile, based on company groups, PT North Sumatera Hydro Energy (NSHE) received the largest amount of financing, totaling US$23 billion, mostly through guarantee schemes. This was followed by PT Agincourt Resources with US$9,87 billion and PTPN III with US$7,54 billion. The Responsibank Coalition emphasized that this data only reflects a small fraction of the companies that can be traced, given the limited transparency of financing data and corporate structures in Indonesia.
"The difficulty in accessing company and financing data demonstrates weak accountability. This actually reinforces the need for increased transparency and reporting requirements," said Abdul Haris. He argued that because companies manage natural resources, which are public goods, disclosing social and environmental risks in financial reports is not an option, but rather an obligation.
Pressure on the ecosystem is also reflected in field findings. WALHI North Sumatra recorded changes in forest cover covering 10.795,31 hectares in the Batang Toru landscape, suspected to be related to the activities of seven large companies. This damage is estimated to have removed more than 5,4 million trees, including those in areas that function as hydrological buffer zones and wildlife corridors. This large-scale land clearing is considered to weaken the natural functions of upstream areas and increase the risk of flash floods and landslides in downstream areas.
The Executive Director of WALHI North Sumatra, Rianda Purba, believes the government's post-disaster response should not stop at merely administrative measures. He emphasized that companies contributing to the damage must be thoroughly evaluated and their permits revoked. "Public safety cannot be sacrificed in the name of legality. The state cannot abdicate its responsibility when ecological damage is legitimized through official permits," he said.
Rianda also warned that ecocide legitimized through official permits demonstrates that the state, as the permit issuer, cannot absolve itself of responsibility for this damage. "It would be futile if illegal perpetrators were prosecuted while legal deforestation activities continued to be allowed through official permits," he said, emphasizing that the ecological disaster in Batang Toru reflects a failure in environmental governance and systemic neglect of natural resource degradation.
The Responsibank Coalition also highlighted the strategic role of the financial industry in breaking the cycle of disaster. Dwi Rahayu Ningrum, Sustainable Development Program Staff PRAKARSA, stated that capital markets and banking hold the key to the transition. "By stopping funding destructive activities and prioritizing sustainable ones, banks are essentially securing the future of their own portfolios from increasingly real ecological risks. This is not about adding to the burden, but about ensuring long-term business sustainability," he said. The Responsibank Coalition believes that without comprehensive licensing audits, transparency of financing data, and firm law enforcement, ecological risks in Sumatra will continue to recur and turn into a humanitarian tragedy. The current disaster is seen as a warning that reforming the financing system and natural resource governance can no longer be postponed.