Protection Policy Strategy for Green Bond Investors Against the Risk of Greenwashing Practices in the Capital Market

The Green Bond is a financial instrument designed to raise funds for projects that are environmentally sustainable. It is governed by the Financial Services Authority Regulation Number 60/OJK.04/2017, which outlines the issuance and requirements for Environmentally Friendly Debt Securities (Green Bond). Nevertheless, the criteria for evaluating the viability of green projects remain inadequately defined in POJK 60/OJK.04/2017. Issues and practices related to sustainability have emerged as vital components and trends that garner global attention. In their business operations, companies must consider not only economic factors but also the importance of sustainability practices. This research aims to examine how corporate sustainability practices, viewed through the lens of the 3Ps (Profit, Planet, People), influence the decision to issue green bonds and their subsequent effect on company performance. The legal research conducted is of a normative juridical nature, employing a legislative approach, a conceptual approach, and a comparative approach. The anticipated outcome of this study is the identification of a protective policy strategy for Green Bond investors against the risks associated with greenwashing practices in the Indonesian Capital Market. A significant policy enacted by the Government is the Minister of Industry Regulation No. 51/M-IND/PER/6/2015. This standard acts as a guideline and foundation for industry stakeholders when formulating agreements on various matters, including production processes, raw materials, energy consumption, methodologies employed, waste management, and other relevant aspects. However, this regulation has not been effectively enforced due to the absence of specific rules addressing prohibited actions related to greenwashing practices. Consequently, the Government must develop a specific, centralized policy to regulate greenwashing in Indonesia to safeguard consumers.