Green Finance and Climate Change Nexus in Indonesia: Autoregressive Distributed Lag Approach

This study aims to investigate the relationship between green financing and Indonesia's climate change, specifically the short- and long-term directions of influence. The time period under investigation covered monthly data from 2018, the year that Indonesia's first green sukuk was issued, to 2022. The study is enhanced by estimation using Granger causality and autoregressive distributed lag. The results show that while green stock and sukuk have a negative impact on climate change over the long term, lag-1 and lag-2 are significantly impacted negatively in the short term by green sukuk. In the short run, green stocks are beneficial. While the industrial production index has a negative short-term impact on climate change, it has a favorable long-term impact. This suggests that there has to be an increase in both the short- and long-term tenors of Indonesia's global green sukuk.