Bangladesh Bank plays a leading role in green banking

The concept of 'Green Banking' originates in modern banking approaches. The concept has actually been derived from ethical banking which seeks to mitigate the hazards of climate change due to global warming. Climate change has  direct  impact  on biodiversity, agriculture, forestry, water resources and human health. Due to unusual weather pattern, rising greenhouse gas, declining air quality etc. society demands that businesses also take responsibility of safeguarding the planet. Green finance as a part of green banking can make great contribution to the transition to resource-efficient and low-carbon industries i.e. green industry and green economy in general.
Green banking is a component of the global initiative by a group of stakeholders to save the environment. The environment in Bangladesh is rapidly deteriorating. The key areas of environmental degradation are: air pollution; water pollution and scarcity; encroachment of rivers; improper disposal of industrial, medical and house-hold waste; deforestation; loss of open space, and loss of biodiversity. In addition, Bangladesh is one of the most climate-vulnerable countries.  In  line  with  global development  and  response  to  environmental  degradation, the  financial  sector, as one of the key stakeholders  in society, should play its due role.
Green Banking Initiatives of the Bangladesh Bank (BB) have two aspects: in-house green activities and non-in-house operations. Bangladesh Bank's in-house green activities include installation of a 8-kilowatt solar power system on its rooftop on March 12, 2012; environmentally harmful incineration of non re-issuable damaged bank notes is being phased out, resorting instead to shredding; steps for measuring the carbon footprint of BB's internal processes and operations are underway, eventually to set time-bound targets for carbon neutrality/emission reduction. Under the networking programme, all the departments of Bangladesh Bank Head Office and its nine branch offices have already been brought under a computer network (LAN/WAN), connecting almost 3,100 PCs.
BB has enhanced the product line under its green banking scheme from 6 to 47 and segregated these products into 10 categories which are: Renewable Energy, Energy Efficiency, Solid Waste Management, Liquid Waste Management, Alternative Energy, Fire Burnt Brick, Non Fire Block Brick, Recycling & Recyclable Product, Green Industry and Miscellaneous. The utilisation trend of the fund is given below:

BB'S NON-IN-HOUSE OPERATIONS: Bangladesh Bank is well aware of the environmental degradation situation and has already given directions to all scheduled banks. Commercial banks are now required to ensure necessary measures to protect environmental pollution while financing a new project or providing working capital to the existing enterprises. Banks have been advised to finance in Solar Energy, Bio-gas, ETP and Hybrid Hoffman Kiln (HHK) in brick field under refinance programme of BB. A comprehensive guideline on Corporate Social Responsibility (CSR) has been issued where banks have been asked to concentrate hard on linking CSR at their highest corporate level for ingraining environmentally and socially responsible practices and engaging with borrowers in scrutiny of the environmental and social impacts. Banks have been brought under the purview of E-commerce with a view to providing the customers with online-banking facilities covering payments of utility bills, money transfer and transactions in local currency through internet as well. Considering the adverse effects of Climate Change, banks have been advised to be cautious about the adverse impact of   natural calamities and encourage the farmers to cultivate salinity-resistant crops in the salty areas, water-resistant crops in the water-logged and flood-prone areas, drought-resistant crops   in the drought-prone areas, using surface water instead of underground water for irrigation and also using organic fertiliser, insecticides by natural means instead of using chemical fertiliser and pesticides.
BB INITIATES GREEN BANKING: The Bangladesh Bank issued policy guidelines for Green Banking in February, 2011. According to the guidelines, all operating banks and financial institutions need to take effective measures to conduct environment-friendly banking activities in the country. BB has also issued a common reporting format to all the commercial banks to report green banking activities. Banks and financial institutions now regularly submit a quarterly report to the Bangladesh Bank on their performance of green banking activities.
Bangladesh is committed to pursuing low-carbon green development without compromising the imperative of faster economic growth and social development.
The following suggestions will help us to mitigate the social costs and give us a positive NPV (net present value) from social angle:
Green Credit Cards: A green credit card allows a cardholder to earn rewards or points which can be redeemed for contributions to eco-friendly charitable organisations.
Online banking: Converting to an online savings account and mobile banking you can play your part in green banking and help the environment.
Paper-less banking: Green banking includes setting up direct deposit to receive pay-cheques, receiving electronic statements from bank and by paying bills online. All of these steps can drastically reduce the amount of paper produced by banks.
Energy Consciousness: Developing energy- consciousness, adopting effective office time management and automation solutions and using compact fluorescent lighting (CFL) can help banks save energy consumption considerably. Banks can conduct energy audits in all their offices for effective energy management. They can also switch over to renewable energy (solar, wind, etc.) to manage their offices and ATMs.
The writer is a banker and M. Phil Fellow, Department of Business Administration, Bangladesh University of Professionals (BUP), Dhaka, [email protected]