On Thursday (October 23, 2025), Dr. Khotibul Umam, S.H., LL.M., a lecturer in the Department of Islamic Law at Gadjah Mada University, had the opportunity to serve as a speaker at a Focus Group Discussion (FGD) organized by the Environmental Fund Management Agency (BPDLH). The BPDLH is a Public Service Agency under the Ministry of Finance of the Republic of Indonesia. In carrying out its function as a manager of environmental funds, the BPDLH acts as a Financial Services Institution (LJK) that channels funding through various schemes—such as grants, loans, and/or investments—specifically targeted at businesses engaged in the protection of the natural environment and the prevention of pollution and environmental degradation. In practice, BPDLH offers recipients the option to use either conventional or Sharia-compliant contracts.
Based on this, this FGD aims to deepen the BPDLH’s knowledge and understanding of several topics. As outlined in the presentation by Dr. Khotibul Umam, these topics include: (1) an overview of the financial services ecosystem in Indonesia; (2) sustainable financing within the Environmental, Social, and Governance (ESG) framework; (3) a review of business processes in providing Sharia-based financing schemes; (4) a review of various Sharia contract alternatives that can be implemented in each of BPDLH’s services; and (5) an examination of the risks of non-performing financing and alternative resolutions through non-litigation channels. In addition to presenting the theoretical material outlined above, Dr. Khotibul Umam also shared case studies based on his own experience, which was important to provide the BPDLH Team with a clear picture of the actual situations and conditions in the field. Translated with DeepL.com (free version)
It is hoped that this FGD will enhance the BPDLH Team’s understanding and ability to align Islamic economic theory with BPDLH services through the implementation of sustainable financing based on Sharia contracts. The active role of UGM Law Faculty lecturers in this discussion forum aligns with UGM’s commitment to supporting the Sustainable Development Goals (SDGs). First, SDG 4 (Quality Education), through active contributions and participation in presenting material related to the application of Sharia principles in the field of economics, particularly in the financial services sector. Second, SDG 13 (Climate Action) and SDG 8 (Decent Work and Economic Growth) relate to the goal of applying Sharia principles in BPDLH’s sustainable financing services to support businesses engaged in environmental conservation and empowerment; and third, the collaboration between UGM and BPDLH—as part of the Ministry of Finance—is also aligned with SDG 17 (Partnerships for the Goals).
Author: Farihaini (Student majoring in Business Law, Faculty of Law, UGM)
