The Bangladesh Bank (BB) has taken a very good initiative for sustainable business development. Already 44 products have got their access to the refinance facility from the central bank. Three criteria are considered for the facility-solar power setup, green industry, workplace safety in the textile and apparel sector. Entrepreneurs will get the facility from different banks and non-bank financial institutions as nominated by the BB. Every bank will be assessed under the CAMEL rating system.
The CAMEL is an international bank-rating system, based on which the bank supervisory authority rates institutions as per six fixed criteria. The CAMEL rating is an advanced version. The six factors are as follows: capital adequacy, asset quality, management efficiency, earnings record, liquidity position, and sensitivity to market. A total of 48 scheduled commercial banks including nine foreign ones are operating business in Bangladesh. Out of the total business, 56.5 per cent is handled by private commercial banks and the remaining 43.5 per cent is dealt with by nationalised commercial banks. Now let's delve deep into the three criteria of direct green financing by the BB:
SOLAR POWER: One of the most renewable energies in the world is solar power. The sun provides huge resource for generating clean and sustainable electricity without pollution or global warming. Unfortunately, the people in Bangladesh are not familiar with how to use it though they have an immense scope to utilise the sunlight properly.
The amount of energy from the sun that falls on the Earth's surface is enormous. All the energies stored in Earth's reserves of coal, oil and natural gas is matched by the energy from sunshine. Outside the Earth's atmosphere, the sun's energy contains about 1,300 watts per square metre. About one-third of this light is reflected back into the space and a portion is absorbed by the atmosphere.
The BB has drawn up the refinancing plan taking into consideration the environmental aspect to promote green industry and usher in a new era by helping different stakeholders use solar power as the best renewable energy. An individual, a group of beneficiaries or a cooperative society or organisation registered with the Registrar of Joint Stock Companies and Firms (RJSCF) can get loan for a water treatment project. They will be allocated maximum Tk 30 million. The beneficiary will get ten years' time for repayment of the loan to the BB in installments. The interest rate is maximum 9 per cent-customary bank rate (5 per cent) + maximum 4 per cent. Another interest phase is maximum 11 per cent--customary bank rate (5 per cent) + maximum 6 per cent.
Solar energy is a great supplementary system for power cuts. It is getting cheaper. It is a better alternative to an instant power supply (IPS) system and more efficient than an IPS. It can play an increasingly integral role in ending our national dependence on fossil fuels, combating the threat of global warming, and securing a future based on clean and sustainable energy. While the United States uses solar power randomly, its use in Bangladesh is not still extensive. Solar power is the best clean energy option in the country.
GREEN INDUSTRY: Bangladesh has gone a long forward in becoming a leader in social and economic arenas, but with regard to green industry sustainability for a sound industrial atmosphere, we should focus on how to emerge as a centre of excellence. Social compliance has already been established as an industrial norm, but green industry sustainability is going to be a core component of sustainable process in industrial management in the days to come in Bangladesh. The entrepreneurs should think of eco-friendly factories in their business planning and put emphasis on addressing these issues in an appropriate manner.
Most entrepreneurs think it needs a big amount of investment to set up a green industry. There is no doubt about it. But there is no alternative to green industry for sustainable development in the days ahead. Japan, China and India have already set up their green industries. Vietnam has taken necessary steps and is also working to that end. But Bangladesh is like an infant in this area.
This is the first time the central bank of Bangladesh has taken a good initiative for promoting green industries. The concept of green industry is new in Bangladesh. With the elapse of time, establishment of green industries has become imperative for sustainable business development. For that reason, the BB has initiated the direct green finance. An individual, a group of beneficiaries or a cooperative society or organisation registered with the Registrar of Joint Stock Companies and Firms (RJSCF) can get a loan of maximum Tk 200 billion for a green industry project. The beneficiaries will get six years' time for repayment of the loan to the BB in installments. The interest rate is maximum 9 per cent--customary bank rate (5 per cent) + maximum 4 per cent.
Green building offers many benefits, both tangible and intangible. The most tangible benefits are the reduction in water and energy consumption right from the day of occupancy. Intangible benefits of a green factory include enhanced indoor air quality, good day lighting, health, wellbeing and safety of the workforce. The green industry sustainability is focused on social responsibility. If safety is ensured effectively in a business world, it will lead to fewer schedule interruptions and minimum production costs.
The central bank has said that the green industry should be certified by the US Green Building Council (USGBC) or by the Leadership in Energy and Environmental Design (LEED) until the government develops its own guideline and issue a directive regarding the matter. Green building can help reduce water use by 40 per cent, greenhouse gas emissions by 33-39 per cent, solid waste 70 per cent and energy use 24-50 per cent.
Green factory building, according to the USGBC rating, addresses green features in the following categories for both new and existing buildings. Here the core values are as mentioned below:
Sustainable site: It helps rehabilitate contaminated sites where development is complicated by environmental contamination, reduce air pollution and land development impacts from personal automobile use, enhance the overall quality of life by providing amenities within and closer to the site and minimise disturbances to the factory building site so as to reduce long-term environmental impacts.
Water efficiency: Green building helps minimise water use by installing efficient water fixtures, limit such landscapes which consume large quantities of water, design the landscape to ensure minimum consumption of water and reduce the demand for irrigation water through water-efficient management techniques.
Energy and atmosphere: It helps avoid the use of chlorofluorocarbon (CFC)-based refrigerants and ozone layer depleting gases which negatively impact the environment and optimise energy efficiency and thus reduce environmental impacts from excessive energy consumption.
Materials and resources: Green building ensures effective non-process waste management, minimises construction waste being sent to landfills, encourages use of products (materials other than plant machinery) which contain recycled materials to reduce environmental impacts associated with the use of virgin materials.
Indoor environment: Green building minimises exposure of non-smokers to adverse health impacts arising out of passive-smoking and post-occupancy, provides better ventilation to ensure good indoor environment, ensures a better factory design that offsets major health risks associated with exposure to asbestos and ensures proper use of daylight.
Innovation and design process: It helps identify the following in writing: intent of the proposed innovation credit, requirement of compliance and the design approach (strategies) used to meet the requirements.
Four RMG manufacturers in Bangladesh are certified by the USGBC. They are: 1. ABA Group (platinum, USGBC standards), 2. Viyellatex Group (Platinum, USGBC standards), 3. Vintage Denim (Platinum, USGBC standards), and 4. Envoy Textile (certified USGBC standards). According to factory insiders, the initiative will enhance competitiveness of Bangladeshi products in the global market.
Workplace safety: The BB has taken an initiative to ensure workplace safety for workers. The generalised system of preferences (GSP) facility in the US market has been suspended over the factory safety issue. Buyers from across the world are pressing for ensuring workplace safety in Bangladesh following the Tazreen Fashions fire and the Rana Plaza tragedy. For that reason, the BB has made it clear that those who are members of BKMEA, BGMEA and BTMA will get their access to loans from the central bank. The BB mentioned in a circular that each unit would get maximum Tk 10 million for ensuring workplace safety for workers. The BB has included retro-fitting, rebuilding and factory relocation in the workplace safety. A loan recipient will get five years' time to repay the loan in installments. The interest rate is maximum 9 per cent-customary bank rate (presently 5 per cent) + maximum 4 per cent. Entrepreneurs should take the BB refinance facility to establish green industries for sustainable business development.
The writer is Assistant Secretary, BKMEA and presently working at the Institute of Apparels Research and Technology (iART), BKMEA harun.bkmea@gmail.com
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