BB governor asks banks to pay heed to climate change
FE Report | Monday, 18 April 2011
FE Report
Central bank governor Atiur Rahman Sunday urged local banks to back energy efficient and renewable power projects and build in-house capacity to assess environmental risks of their industrial investment. "Financial institutions must be pro-active," Mr. Rahman told the launching ceremony of the Environmental Risk Management (ERM) Guidelines, prepared by the Bangladesh Bank (BB), at a hotel in the capital. "In addition to identifying and understanding the risks in financing in the Bangladeshi business climate, banks should actively consider investment opportunities in energy efficiency and renewable energy projects," he said. The BB governor said financial and economic development is now inextricably linked to vulnerability to environmental degradations. He asked the banks to follow the ERM guideline and adopt risk management practices to safeguard against some inevitable environmental havocs. The ERM guideline was drafted with support of the IFC, the private sector arm of the World Bank, and in consultation with Bankers Association, financial sector stakeholders and technical experts. The central bank prepared the policy guideline earlier this year to help the country's commercial banks to assess environmental risks and develop mitigation strategies in their credit programme. Dr. Rahman said the guidelines are aimed at helping banks to classify investments into high, medium, and low-risk categories including sector-specific checklists to complement the general due-diligence guidelines. The governor said the ERM guideline will function, in parallel with the central bank's drive to create accountable project financing through adoption of a Corporate Social Responsibility (CSR) framework. He said both ERM and CSR are critical to the functioning of a sustainable banking system in Bangladesh. "The objective of CSR is to realise and prioritise the financial sector's imprint on the environment and society in which it operates. The ERM Guideline aims to internalise the risk," he said. Bangladesh Bank is firmly committed to contributing significantly as a regulatory authority to the climate change agenda in Bangladesh, the governor added. Manager of International Finance Corporation (IFC) Advisory Services, Ian Crosby, Investment Wing Country Manager Kyle F Kelhofar and chief executive officers of local banks were present on the occasion. Mr. Crosby said the ERM would encourage sustainable project financing in Bangladesh and promote sustainability in the country's fast growing financial sector.
Central bank governor Atiur Rahman Sunday urged local banks to back energy efficient and renewable power projects and build in-house capacity to assess environmental risks of their industrial investment. "Financial institutions must be pro-active," Mr. Rahman told the launching ceremony of the Environmental Risk Management (ERM) Guidelines, prepared by the Bangladesh Bank (BB), at a hotel in the capital. "In addition to identifying and understanding the risks in financing in the Bangladeshi business climate, banks should actively consider investment opportunities in energy efficiency and renewable energy projects," he said. The BB governor said financial and economic development is now inextricably linked to vulnerability to environmental degradations. He asked the banks to follow the ERM guideline and adopt risk management practices to safeguard against some inevitable environmental havocs. The ERM guideline was drafted with support of the IFC, the private sector arm of the World Bank, and in consultation with Bankers Association, financial sector stakeholders and technical experts. The central bank prepared the policy guideline earlier this year to help the country's commercial banks to assess environmental risks and develop mitigation strategies in their credit programme. Dr. Rahman said the guidelines are aimed at helping banks to classify investments into high, medium, and low-risk categories including sector-specific checklists to complement the general due-diligence guidelines. The governor said the ERM guideline will function, in parallel with the central bank's drive to create accountable project financing through adoption of a Corporate Social Responsibility (CSR) framework. He said both ERM and CSR are critical to the functioning of a sustainable banking system in Bangladesh. "The objective of CSR is to realise and prioritise the financial sector's imprint on the environment and society in which it operates. The ERM Guideline aims to internalise the risk," he said. Bangladesh Bank is firmly committed to contributing significantly as a regulatory authority to the climate change agenda in Bangladesh, the governor added. Manager of International Finance Corporation (IFC) Advisory Services, Ian Crosby, Investment Wing Country Manager Kyle F Kelhofar and chief executive officers of local banks were present on the occasion. Mr. Crosby said the ERM would encourage sustainable project financing in Bangladesh and promote sustainability in the country's fast growing financial sector.