In Indonesia ’s resource-rich province of South Sumatra, two uninhabited islands have been submerged by rising sea levels, prompting ratings giant Moody’s Investors Service to caution that further disappearances “could hurt” the credit profile of Southeast Asia’s largest economy. Betet Island and Gundul Island now sit between one and three metres below sea level, according to the Indonesian Forum for the Environment, which warns that other low-lying islands in the archipelago nation might soon follow suit. The implications of a rise in sea levels for the credit rating of an affected country “depend on the frequency and severity with which they occur” as well as the country’s “adaptive capacity to cope”, according to Moody’s sovereign risk group senior analyst Anushka Shah. “So far, we do not assess such events to have had a material impact on Indonesia’s sovereign credit profile, partly because they are balanced by other mitigating aspects and credit strengths,” she said, adding that “such shocks”, if repeated “over time could hurt”. Indonesia has ‘tropical glaciers’, but climate change means they could soon be gone Moody’s warning, which comes as the rating agency has begun to place greater emphasis on environmental, social and governance issues in its credit quality assessments and investment decisions, was welcomed by Indonesian environmentalists such as Dharsono Hartono, co-founder of Rimba Makmur Utama, a company that runs eco-restoration and preservation projects. “I’d surely like to see this as the beginning of a pivotal paradigm [shift] among the world’s economic societies towards a new restorative and ecology-centric mindset,” he said. “Few firms and their investors understand the real medium-term risk of climate change.” Moody’s said it will continue to reassess its ratings and “may revise” it assessments “as climate change progresses and evidence from climate science evolves”. Hairul Sobri, executive director of the Indonesian Forum for the Environment’s South Sumatra branch, said the Sumatran islands’ disappearance was a result of the accumulated “destruction of the environment” caused by forest fires, conversion of land use and “massive industries greedy for land” like mining, industrial forestry and plantations. South Sumatra, home to a number of plantations and mines, regularly suffers massive forest fires producing noxious haze that is carried on the wind to neighbouring Malaysia and Singapore, and the province’s reliance on its oil and gas industry has also contributed to climate change – the cause of rising sea levels – said Intan Suci Nurhati, researcher at the Indonesian Institute of Sciences’ Research Centre for Oceanography. It’s not just South Sumatra, either – other parts of Indonesia, such as low lying coastal areas in northern Java, South Kalimantan and Dolok in southern Papua, may also be at risk from the rising tide, Intan said. To date, much of the attention given to the impact of rising sea levels in Indonesia has focused on the big cities along Java’s northern coasts, including Jakarta – the current capital, which President Joko Widodo wants moved to Borneo . On December 31, the sinking megacity of more than 10 million people experienced some of its heaviest rain on record , killing at least 60 people and displacing nearly 175,000. Built on a swampy plain and with about 40 per cent of its total land area now below sea level, Jakarta is regularly hit by flooding as a result of the inability of its infrastructure to cope with excess water during monsoon season, combined with rising sea levels. Climate change also has the potential to threaten local ecosystems and cultures if land and coastal resources are gradually lost, said Intan, the researcher, though she cautioned that “more studies are needed”. She advocates for low-carbon development plans, better forest fire prevention and the protection of carbon-absorbing peatlands, mangrove forests and seagrass to reduce Indonesia’s overall greenhouse gas emissions, while Dharsono – whose company owns 150,000 hectares of peatland in Central Kalimantan that it uses to sell “carbon credits” to companies so they can offset their emissions – said greater regulation and the further development of carbon trading markets was required. China offers Indonesia a blueprint on how to feed a growing nation “Emitters in other parts of the world can buy their offsets from [us] and, in turn, also help the local communities shift from high-carbon activities, such as slash-and-burn agriculture to more sustainable activities, such as coconut sugar cultivation,” said Dharsono, who argues that the Indonesian government has already had some success combating forest fires since it established the Peatland Restoration Agency in 2016, and that the country’s greenhouse gas emissions “have been trending down since their peak in 2015”. The Indonesian Forum for the Environment, meanwhile, has called on Jakarta to re-evaluate the forest concessions it grants to businesses and work on rehabilitating the country’s ecosystems if it wants to keep pace with the growing threats from climate change.