Essence of green reporting in banks

Environmental reporting or 'Green Reporting' is a keystone of green banking activities of an environmentally responsible bank or a Green Bank. A Green Report is an independent report or one of the major components of a sustainability report by banks and businesses.  Not only does a report help a bank/business promote the good work that it is doing, it also assists the process of sustainability planning. Banks and financial institutions are increasingly embracing green reporting not only as part of their environmental responsibilities, but also as part of their policy to promote businesses.
Good green reporting can make a bank more attractive to the customers. Formatted disclosure makes a bank more disciplined in its environmental performance, which, in turn, reduces its environmental risks as well.
Green Reporting, environmental reporting and sustainability reporting are sometimes synonymous. Sustainability reporting is a generic term for corporate extra-financial reporting. It refers to an account an organisation delivers to narrate its performance on a number of sustainability issues, such as economic, environmental, social and corporate governance activities. Banks must have the intention and necessary arrangements to disclose and to ensure access to relevant information of the stakeholders. Although environmental reporting is not an old concept, many banks may struggle to start it. Like other businesses, banks use different methods for their environmental reporting and conveying environmental information to stakeholders. Among these are newsletters, press releases, magazines and corporate brochures.   
Nevertheless, the Annual Report has been the primary mode of corporate reporting. Initially, environmental information was reported in one of the sections in the Report, but later it constituted a separate section. Subsequently, the practice grew further with the introduction of 'stand-alone' environmental reports.
Banks generally are adopting green or environmental reporting as part of their green banking activities. Green reporting is one of the five pillars of green banking activities carried out by banks. This focuses in-house green management, green financing, leadership or group activities and promotional activities. As part of in-house green management, banks save resources, save trees, restrict greenhouse gas emission, perform waste management etc. that help the banks to reduce their operational costs.
As part of green financing, banks minimise environmental risks in financing activities. In leadership activities, banks take the lead in forming groups and preparing guidelines for better implementation of green activities. Banks promote other stakeholders and perform green promotional activities as a marketing tool and thus positively contribute to the environment. All these activities are disclosed by banks as green reports mean for their stakeholders.  
Many global banks perform their green reporting in response to the regulatory requirements. Some very big and reputed global banks have also adopted the practice of green reporting voluntarily. The nature of reporting also varies from region to region. There are evidences that environmental reporting by banks appears to be very much a European phenomenon. Banks in other regions lag behind. While European banks are more focused on environmental aspects, North American and Oceanian banks concentrate more on community involvement.
Different stakeholders have been playing their roles in developing green reporting covering regulators, clients, media and the civil society. Many national governments have developed environmental policies and rules that encourage green reporting. A number of international initiatives promote disclosure on sustainability issues by developing intergovernmental standards. Environmental NGOs, academic institutions and civil societies continue to play an active role in initiating and refining green frameworks. Media has also been performing a commendable role by disseminating relevant information and creating greater awareness on the issue.
A green or sustainability report should be clearly structured. These reports are typically published or disseminated once a year or once in two years. However, alongside these, dissemination of regular information through websites is very common now-a-days. The information must be updated frequently and posted for all to see on websites. Having developed separately from financial reporting, sustainability reporting most often takes the form of a separate report, which is either published independently from the organisation's financial accounts or as a separate chapter of an Annual Report.
There are also instances of integrated reports covering both financial and sustainability issues. Sustainability reports are designed to be of use to chief executives, board members, managers of financial institutions and stakeholders, who are interested in environmental risk management. However, it should focus particular attention on different stakeholders who are not involved directly in the activities of the company or the bank.  
A good environmental report should contain profiles of the bank's facilities, summarise its environmental policies and systems, a discussion on relevant stakeholder relationships, reviews of product and operations performance and an overview of the environmental sustainability of its business. A classic reporting procedure should also be externally audited for verification. There must be specified verification methods and internal systems for collecting reliable data. The rigorousness of a bank's reporting process and the reliability of its reports make the bank a leader in the world of green reporting.
There have been remarkable international initiatives to identify the right structure and tools for effective green reporting. Some of the multi-stakeholders' initiatives produced fabulous outcome that has received general acceptance and recognition. Of these, the Global Reporting Initiative (GRI), the European Union Eco-Management and Audit Scheme, the Greenhouse Gas Protocol Initiative, and the Carbon Disclosure Project are relevant for banks. These guidelines design and build a common framework for reporting environmental information in sustaining corporate public accountability.
Initiatives by the International Integrated Reporting Committee have also drawn the attention of corporate firms and banks. Sustainability reporting rightly finds an important place in the principles of the Coalition for Environmentally Responsible Economics. To address the financial services sector, the United Nations Environment Programme has been working and publishing various financial service sector supplements on environmental reporting.
In response to the initiatives of the Bangladesh Bank (BB), banks of the country have expressed their concerns about environmental degradations by undertaking green banking activities. However, there are notable scopes for improvement in some areas, like green reporting. Generally, banks do not publish separate reports on their green activities or CSR programmes in the country with notable exceptions of two foreign commercial banks which have published the Corporate Sustainability Report and the Green Banking Report covering some environmental issues in recent times.
All the banks prepare reports in accordance with a prescribed format of the Bangladesh Bank. Banks report their CSR and green initiatives in their annual financial reports in compliance with the BB directives. Some banks also disclose relevant information through their websites. Third party evaluation for reporting (as required by phase-3) is absent till date. Banks generally do not use comprehensive standard reporting formats such as the GRI.
Today green transparency has been recognised as a cornerstone of bank management alongside financial transparency. Green disclosure is being viewed as an important material for the stakeholders in response to the mounting concerns of the policy-makers and growing awareness among common people. Thus in the changing business and regulatory environment, banks are required to formulate green or environmental reporting framework as an expression of their responsible behaviour towards saving the environment for long-term sustainable business operation. The BB is working hard and performing well in the area of green banking. However, a combined effort of all commercial banks and other stakeholders can lift us to the desired goal.  

Dr. Shah Md. Ahsan Habib is Director (Training), the Bangladesh Institute of Bank Management (BIBM).
 ahsan@bibm.org.bd