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Introduction
Introduction
Chapter 1
Introduction
Introduction
1
1.1. Introduction
The Green Banking is now popular worldwide now-a-days. It is for stopping the
environmental degradation and making this planet habitable. The concept of Green Banking was developed in
the western countries. Green banking is a general term, which can cover multitude of areas from a bank
being environmentally friendly to how and also where their money is invested. Defining green
banking is relatively easy. It means promoting environmental-friendly practices and
reducing carbon footprint from banking activities. A green bank is a bank that promotes
environmental and social responsibility but operates as a traditional community bank and
provides excellent services to investors and clients. Its progressive approach to the community
and the earth makes it different from the crowd. A green bank is also called ethical
bank, environmentally responsible bank, socially responsible bank, or a sustainable bank, and is
expected to consider all the social and environmental factors. Green banking involves pursuing of
financial and business policies that are not hazardous to environment rather help conserve environment.
The broad objective of green banking is to use resources with responsibility and giving priority
to environment and society. It is more about focusing on 'mother planet and its sustainability',
shifting from a traditional approach on 'profit' or even 'people'. Green banking is not just another
corporate social responsibility (CSR) activity; it is all about going beyond to keep this world livable without
much damage. Green banking, which considers all the social and environmental factors,
is also called ethical banking'. Ethical banks started with the aim of protecting the
environment. These banks are like normal banks that aim to protect the environment and are
controlled by the same authorities. Green banking, compared to normal banking, attaches more
importance to environmental factors. Its aim is to provide good environmental and social
business practices. It checks all the factors before considering a loan whether the project is
environment-friendly and has any implication on the future of people and planet. On would be awarded a
loan only when all environmental safety standards are followed. Basically, green banking avoids as much
as paper work as possible - from go-green credit cards and go-green mortgages to all transactions
done online. It creates awareness around business people about environmental and social
responsibility, enabling them to adopt environment friendly business practices, and follows
environmental standards for lending. When a person is awarded a loan, the interest is less
than normal banks because ethical banks give more importance to environment-friendly
factors - they do not operate with high interest rates only. The world has seen much focus on
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economic progress and mankind has made giant steps in its journey through time. The sideeffects of the development process have, however, also been equally enormousloss of
biodiversity, climatic change, environmental damage, etc. Environmental issue such as,
restoration of natures face of beauty have also become more important as the world has
progressed economically. Bangladesh is, a low carbon emitting country even among the
developing countries, likely to be one of the worst sufferers of Global Warming. It is experienced
that climate change has already enhanced the frequency and intensity of floods, droughts and
cyclones in Bangladesh, and would have negative impact on water resources, land, crop
agriculture and food security, fisheries and livestock, forestry and bio-diversity, and human
health as well. Banks hold a unique position in an economic system that can affect production,
services, business and other activities through their financing activities and thus may contribute
to removing polluted environment. The banks should go green and play a pro-active role to take
environmental and ecological aspects as part of their lending and investment principle, which
would direct industries to go for mandated investment for environmental management, use of
appropriate technologies and management systems. Green Banking means eco-friendly or
environment-friendly banking to stop environmental degradation to make this planet more
habitable. This comes in many forms. Providing innovative green products: using online banking
instead of branch banking, paying bills online instead of mailing them, purchasing green
mortgage, opening up of CDs, green credit cards and money market accounts at online banks
instead of large multi-branch banks or finding the local bank in your area that is taking the
biggest steps to support local green initiatives. Green Banking is also a multi-stakeholders'
endeavor where banks have to work closely with government, NGOs, International Financial
Institutes, International Government Organizations, Central Bank, consumers and business
communities to reach the goal. A Green Banking is an ethical banking/ social banking (banks
with a conscience-Benefiter, 2011) as there is a strong building block which is corporate social
responsibility (CSR) within the agenda of green banking. CSR bind banks in a relation with
society/people showing the caring face of it in different situation, especially, in crisis period.
Furthermore, Green Banking is regarded as sustainable banking, which has a role to safeguard
the planet from environmental degradation, with the aim of ensuring economic growth which is
sustainable. To implement Green Banking, Bangladesh bank has developed the regulations of
Green banking in the year 2011. Bangladesh Bank is the Worlds first central bank, which has in
3
depth and apparent knowledge on green banking. State Owned Bank, State Owned Commercial
Bank, Private Commercial Bank and Foreign Commercial Bank etc., all banks are working
diligently on Green Banking as instructed by Bangladesh Bank. As per Bangladesh Banks data
on Green Banking 2013, all scheduled banks have developed their own Green Banking Policy
and Green Banking unit. After increasing the environmental risks, banks have distributed
793,561.25 million Taka in 10,868 projects. In year 2012, banks have distributed 270,921.53
Million Taka as Green Financing. Banks have been
encouraged to utilize the 258.89 Million Taka as CSR (Corporate Social Responsibility) in Green
Banking Activities and Green Projects. They have concentrated on Green Marketing, Training
and Development utilizing 90.42 million taka from their fund. Current situation of online
banking is, 3445 branches among 8392 branches (41.05%) are completely technologically
enriched. State Owned Banks and Specialized Development Banks have continued working on
online internet and SMS banking initiative.
Time frame for the research was very limited. The actual survey was done within assort period.
Some supportive materials were not available during the completion of my project paper i.e. PC,
Internet facility etc.
Green Banking
Journal
Books
Newspaper
Internet
Annual Report
Bangladesh Bank Publication
Chapter 2
Introduction
Chapter 1
Introduction
Introduction
"We have to change our mindset about environmental issues for making a better future through greening our
mind," said Bangladesh Bank Governor Atiur Rahman."It is time to focus on protecting our planet
through initiating green banking, because the main objective of green banking is to protect
environment through pursuing environment-friendly financing policies." Said Mammon Rashid,
Ex. managing director of Citibank NA. "We need to focus on sustainable development approach because
it has a close link with the development of other sectors, banking sector can play a vital role
to encourage other industries to go green through promoting eco-friendly financing schemes says
Bandana Saha, director general for BIBM. The banks should priorities loaning the sectors that promote
environmental practices, The banks can also launch green initiatives with their own business
operations through pursuing cost cutting, recycling of materials and equipment and
waste minimization strategies, the financial institutions should initiate 'green office guide' to help
protect thee co-system. Use of online communication in stead of printed documents, installation
of e ne rg y effi c ie n t eq ui p me n t, us e of fi l te r ed w at er i n p l ac e o f b ot t le d w a te r
a nd encouraging usage of energy efficient cars are some of the examples of practicing
green business said Shah Md Ahsan Habib, director (training) of BIBM. We are facing a negative
impact of climate change though we contribute little to global warming, so, we have to focus on
adaptation and mitigation process to cope up the adverse impacts of global warming, and green banking
initiative can facilitate this process." Said Qazi Kholiquzzaman Ahmad, chairman of Palli KarmaSahayak Foundation. Green Banking
UK's Cooperative Bank won the 'Sustainable Bank of the Year' award and only
HSBC, among large global banks, was a runner-up in any category. The good news is, BRAC Bank Ltd from
Bangladesh became the regional winner for 'Asian Emerging Markets Sustainable Bank of the Year', which
they are also portraying in all their bill boards and promotion campaigns. Good news for all of us.
management strategies by June 30 this year. In this phase, the banks are also advised to introduce green and
create climate risk funds to finance flood, cyclone and drought prone areas at regular
interest rate without charging additional risk premium. Promoting eco-friendly products, supporting
training and events for raising awareness for environmental risk management are also suggested
to include in the regular activities of the bank in the next six months. In the second phase, the
draft suggests banks to take specific policies by June 2012 for different environmental sensitive
sectors such as agriculture, poultry, dairy, farming, tannery, fisheries, textile and apparels,
renewable energy, pulp and paper, sugar and distilleries, construction and housing, engineering
and basic metal, chemicals, rubber and plastic industry, hospital/clinic, chemical trading, brick
manufacturing and ship breaking. During this period, all banks will also set up green branches to use
maximum natural light, renewable energy, energy saving light bulbs and other equipments. During
the same period, they will have to determine a set of achievable targets and strategies, and
disclose these in their annual reports and websites. They will have to set up green branches.
The banks should increasingly rely on virtual meeting through video conferencing. According to
the draft guideline, banks in the next one year will adopt a green strategic plan, de t er mi n i ng th e ir
t arge t fo r gr ee n b an ki ng . The dr af t s a ys a s ys t e m o f en vi ro n me n t management
should be in place in all banks before they step into the third phase of green banking, to be
completed by June 2013.In this final stage, banks will focus on fine tuning of their green
activities and will look for more innovative products and services to expand eco-friendly business and
industries. Commercial banks will have to adopt a comprehensive green banking policy by
December 2013 as part of the central bank's efforts to make banking practices more responsible to social
and environmental causes. The central bank will name top ten banks for their overall performances in
green banking, and will take into account to give it permission to open new branches. In its policy
guideline for green banking, the BB said co-friendly business activities and energy efficient
industries should get preference in financing by the banks. The banks will have to inform the BB of their
initiatives on a quarterly basis within 15 days after the end of a quarter. The first quarterly report
has to be submitted by July 15, 2011.Besides avoiding negative impacts on environment
through banking activities, the banks are expected to introduce environment friendly
green products to address the core environmental challenges of the country. The commercial banks
will now require taking measures to protect environmental pollution while financing a new project or
providing working capital to the existing enterprises. The guidelines advised the banks to
10
facilitate their clients with utmost care in opening letter of credit for installation of effluent treatment
plant (ETP) in the industrial units.
especially the professionals must have greater role to check the environmental degradation. Bankers are
the important professional group who has interaction with the other groups of people and also with general
masses. They can adopt different green activities within their in - ho us e e nv ir on me n t a nd
a ls o c an in i ti a t e t he pr ot e ct i on of t he ai r p ol l ut i on , w at er pollution by their
clients. Bankers can finance the green projects, which are environmental friendly and discourage the
projects that damage the environment. It will be obligatory for each person to show respect to
the environmental issues. Otherwise, the environments where the concerned person lives will be
inhabitable and as whole the country and the globe will no longer be safe place. We have to use
resources carefully and keep in the mind that the reserve of the resources is not
unlimited and its excessive use may endanger the future generation. We have to think
that each of our activity has a specific impact on the environment. As a best creation of Almighty, we have
greater role to conserve the environment, maintain biodiversity, not to endanger other fauna and flora
and above all a green, healthy planet for safe and sound living of our future generations. Since banking
industry Is a vital institution in the economic and business activity round the world, bankers can
not remain indifferent to this burning issue. A banker or a banking industry may address many issues to save
environmental degradation and conserve the ecological balance. Green banking is a good way of
making people aware of global warming. Each businessman will contribute to the environment
and make this earth a better place to live and enjoy. In addition, it is envisaged that this
institution is going to work towards reducing the countrys dependence on foreign energy sources,
fighting climate change and creating additional jobs through the provision of healthier energy
generation facilities. Green finance may cover all the financial services related to the promotion
and development of green industry and green economy where the environmental benefits inters
of reduced carbon dependency or reduced ecological scarcity are the most significant. Green
banking practices of banks are connected with both internal operation and product ecology. Some banks
are engaged in carbon offsetting, which refers to the effort of canceling out the climate-changing
effects of its own greenhouse gas emissions. Banks, by using their commercial lending and
securities underwriting, may catalyze the necessary transition to an economy that minimizes
greenhouse gas pollution and relies on energy efficiency. There is no doubt that the combined
threats associated with climate change and biodiversity loss call for a deeper commitment
of resources and investment from all stakeholders. In the endeavor of emission reduction and
conservation, stakeholders have been contributing in different ways in different countries and
12
regions. Green banking is just one of the initiatives by stakeholder - banks and financial
institutions. The environmentally responsible banks do not only improve their own standards but also affect
socially responsible behavior of other businesses. The banks will have to go for online banking
by eliminating paper waste, saving gas and carbon emission, reducing printing costs and
postage expenses.
We should keep our voice low when we converse and also convince our clients maintain this for the sake of
healthy working environment in the branches. Installation of solar panel in the rural branches and using high
mileage vehicles rousing shared vehicles instead of personal vehicle:
Since Bangladesh is an energy deficit country we can install solar panels in all Branches as an
alternative energy source. We can also use the vehicles which consume less fuel which will save
huge fuel import of the country. We can also use big vehicles to carry the employees of the Banks
instead of personal vehicle to reduce fuel as well traffic jam unthreads.
2.7.1.5. Practices by the Bankers in Their Business Area
2.7.1.5.1. Financing only the green projects
Bankers must be aware of the environmental issues and they must go for financing the projects
that do not pollute the environment. The industries that are financed by the banks must have
effluent treatment plant (ETP), recycling facilities and smoke and gas arresting unit. The industries
must not release any kind of effluents, chemicals or smoke to the environment. Banks must not finance any
dirty project that pollutes the environment.
2.7.1.5.2. Voluntary activities of Banks
Banks should take initiative to make their clients aware by organizing seminar and symposium.
They can organize awareness campaign in schools and colleges. They can participate in the tree plantation
and cleanliness programmers in city areas.
2.7.1.5.3. Working on specific green project
Our country has lot of problems of proper waste management, drainage and sanitation, and affected by river
pollution, water pollution by pesticides etc. Every bank can undertake specific green project for removal of
existing polluting substances from the ecosystem.
auto
insurance
to
innovative
pro-eco
mortgages
and
new
14
15
16
Chapter 3
17
18
3.3. Phase-I
Banks are to develop green banking policies and show general commitment on environment
through in-house performance. The time lining for the actions to be taken under Phase-I should
not exceed December 31, 2011.
3.3.1. Policy Formulation and Governance
Bank shall formulate and adopt broad environmental or Green Banking policy and strategy
approved by their Board of Directors. A high powered Committee comprises of directors from
the Board in case of scheduled Bangladeshi Banks and a high powered committee comprises
Regional Chief of Global Office and members from the top management including CEO in case
of Foreign Banks should be responsible for reviewing the banks environmental policies,
strategies and program. Bank shall approve a considerable fund in their annual budget allocation
for green banking. Banks are required to establish a separate Green Banking Unit or Cell having
the responsibility of designing, evaluating and administering related green banking issues of the
bank. A senior executive should be assigned with the responsibility of heading the unit. The unit
will report to the high powered committee time to time.
3.3.2. Incorporation of Environmental Risk in CRM
Banks shall comply with the instructions stipulated in the detailed guidelines on Environmental
Risk Management (ERM) in consideration of a part of the Green Banking Policy. Bank shall
incorporate Environmental and Climate Change Risk as part of the existing credit risk
methodology prescribed to assess a prospective borrower. This will include integrating
environmental risks in the checklists, audit guidelines and reporting formats. All of this will help
mainstream Environmental Risk that cover possible sources of Environmental Risk such as Land
use, Climate change related events (cyclone, drought), animal diseases/pathogens such as avian
influenza, solid waste including waste feed, animal waste, carcasses, sediments, wastewater
discharges, hazardous materials, etc. will be reviewed under Environmental Due Diligence
(EDD) checklists.
19
20
3.4. Phase-II
The time lining for the actions to be taken under Phase-II should not exceed December 31, 2012.
21
3.4.5. Formulation of Bank Specific Environmental Risk Management Plan and Guidelines
A bank should develop and follow an environmental risk management manual or guidelines in
their assessment and monitoring of project and working capital loans. In addition to the
compliance of national regulation the bank may set internationally accepted higher
environmental standards. In this connection, Green initiatives by a group of banks will not only
be effective but will also offer competitive advantage. Bank alliances may prepare standard and
guidelines for themselves for improving Green Banking practices.
3.4.6. Rigorous Programs to Educate Clients
Clients and business houses should be encouraged and influenced to comply with the
environmental regulations and undertake resource efficient and environmental activities. Banks
should introduce rigorous programs to educate clients.
3.4.7. Disclosure and Reporting of Green Banking Activities
Banks should start publishing independent Green Banking and Sustainability reports showing
past performances, current activities, and future initiatives. Updated and detailed information
about banks environmental activities and performances of major clients should be disclosed.
3.5. Phase-III
A system of Environmental Management should be in place in a bank before the initiation of the
activities of Phase-III. Banks are expected to address the whole eco-system through environment
friendly initiatives and introducing innovative products. Standard environmental reporting with
external verification should be part of the phase. The time lining for the actions to be taken under
Phase-III should not exceed December 31, 2013.
23
Alongside avoiding negative impacts on environment through banking activities, banks are
expected to introduce environment friendly innovative green products to address the core
environmental challenges of the country.
3.5.2. Reporting in Standard Format with External Verification
Banks should publish independent Green Annual Report following internationally accepted
format like Global Reporting Initiatives (GRI) targeting their stakeholders. There should be
arrangement for verification of these publications by an independent agency or acceptable third
party.
24
Chapter 4
25
26
4.2. Vision
To become a leading banking institution and to play a pivotal role in the development of the
country.
4.3. Mission
The Bank is committed to satisfying diverse needs of its customers through an array of products
at a competitive price by using appropriate technology and providing timely service so that a
sustainable growth, reasonable return and contribution to the development of the country can be
ensured with a motivated and professional work-force.
Providing a safe and healthful workplace and ensuring that personal are properly trained
with appropriate safely and emergency equipment.
27
Using and encouraging use of methods that do not adversely affect the environment ,
including developing and improving products, operations and technologies to minimizes
waste, prevent, air, water and other pollution, minimize health and safety risks and
dispose of waste safely and responsibly.
Ensuring that JBL makes responsible use of energy including conserving energy,
improving energy efficiency and giving preference to renewable energy sources when
feasible.
Allocating a separate fund in their annual budget allocation for green Banking.
Introducing Green Finance: Jamuna Bank Limited will give preference in financing Ecofriendly business activities and energy efficient industries.
Creating Climate Risk Fund: Bank shall finance the economies activities in the flood,
cyclone and drought prone areas at the regular interest rate without charging additional
risk premium.
Introducing Green Marketing: Green marketing is the marketing of products that are
presumed to be environmentally safe.
28
In line with above Jamuna Bank Limited established Green Banking unit headed by a senior
executive. To create awareness about Green banking and develop necessaries skill intense
training program has been undertaken.
Issue
Implementation Status
To
form
high
To allocate fund for green JBL fund will be allocated at the time of
banking in annual budget
To
establish
To prepare an inventory of JBL all the offices and branches have been
consumption of water , advised to prepare inventory of consumption of
paper,
electricity,
To prepare a set of general JBL a set of general instruction has been prepared
instruction and circulate to and circulated to the employees for efficient use
the employees for efficient electricity, water, paper and reuse of equipments.
use electricity, water, paper
29
To
use
on
documents
and
To
apply
Eco-font
printing and to use scrap printing and to use scrap paper as notepads.
paper as notepads
10
To
avoid
cup/glasses
11
disposable cup/glasses.
shutdown
To replace normal bulbs by JBL does not use any tungsten bulb. Some tube
energy efficient bulbs
13
To make plan to use solar JBL will gradually opt for using solar energy at
energy at the premises to the premises to save electricity. Mentionable, JBL
save electricity
14
15
corporate
travel
travel.
17
18
To
introduce
marketing
marketing activities.
19
20
To
develop
4.6.1. Carbon Credit Business: Clean Development Mechanism (CDM) provides for
cooperation between developed and developing countries. The operational mechanism of CDMs
involves an investment by a legal entity from a developed country to developing country, which
results in emission reduction. These emission reductions have to be certified by an appropriate
authority and these Certified Emission Reductions (CERs) are commonly known as Carbon
Credits. The banks can involve themselves in carbon credit business, wherein banks can provide
all the services in the area of CDMs and carbon credits and the services of identification and
31
funding of CDMs projects, advisory services for registration of CDM projects and
commercialization of CERs under different structures to meet the requirements of its customers.
4.6.2. Green Banking Financial Products: Jamuna Bank limited will develop innovative green
banking financial products which can directly or indirectly contribute to the reduction of carbon
emissions. Jamuna Bank limited will introduce Green Fund to provide finance to climate
conscious customers as an option of investing in environmental friendly projects. Besides
introducing specific green banking products bank will incorporate an Environmental Impact
Assessment (EIA) in the project appraisal while financing any project to measure the nature and
magnitude of environmental risk mitigation measures.
4.6.3. Green Mortgages: Jamuna Bank Limited will offer special discount to the borrower who
will provide mortgage of land and buildings which are greener. This initiative will induce use of
more energy-efficient materials and building plans. Jamuna Bank limited will not allow the land
as mortgage that is prone to environmental impacts by virtue of its geographical location and
polluted by the operation business activities. As a mortgage preference will be given to the
buildings those are designed and constructed with energy efficient items such as solar panels and
improved insulation.
4.6.4. Carbon Footprint Reduction: Carbon foot-print is a measure of the impact of our
activities on the environment. It relates to the amount of GHG we are producing in day-today
business while burning fossil fuels for electricity, heating, transportation etc.Jamuna bank limited
will take the following measures to reduce the carbon footprint
4.6.4.1. Paperless Banking: Jamuna bank limited is computerized with all branches; there is
ample scope for doing paperless or less-paper banking. Normally banks use huge quantity of
papers for office correspondence, recording public transactions and reporting, etc.Jamuna bank
limited will switch over to electronic correspondence and reporting more effectively and the
customer would be encouraged and popularize e-statements.
32
4.6.4.3. Using Mass Transportation System: Jamuna Bank limited will take the policy for
mass transportation for staffs working in one place.
4.6.4.4. Green Building: Jamuna Bank limited gradually will build their office building as per
the code of green building to reduce their carbon footprint as well as to save the cost.
4.6.4.5. Social Responsibility Services: As part of the green banking strategies, Jamuna Bank
limited has initiated a number of social responsibility services like tree plantation campaign, park
development, pollution checkup camps etc.
33
Chapter 5
etc. of the business and financial institutions pollutes the environment in different ways and
capacities. As such, the society demands that the Banks and financial institutions should take
responsibility for keeping the environment green and safeguarding the planet. Bangladesh is
enormously affected from the events of environmental and climate change in recent years.
Realizing the fact, the Board of Directors in its 325th meeting held on 28.12.2011 has approved a
Green Banking Policy for the Bank.
The Audit committee of the Board of Directors will act as the high-powered committee, which
will supervise the overall activities of the Green Banking Unit/Cell and review the policies,
strategies and programs of the Bank. A separate Green Banking Unit/Cell has also been
established comprising members from General Banking and Development Division, Corporate
Affairs Division, Corporate Banking Division, Credit Risk Management Division, General
Services Division, Human Resources and Management Division and Information and
Technology Division and headed by a Deputy Managing Director. The Unit/Cell will have the
responsibility of designing, evaluating and administering related green banking issues of the
bank. The Unit/Cell will report to the high-powered committee of the Board as well as to
Bangladesh Bank quarterly. As the phase-based activities of Green Banking cover wide range of
area, responsibilities of different Divisions are specified in the Policy. The purposes of Green
Banking Policy of the Bank are to ensure necessary measures to protect environmental pollution
while providing service or financing customers as well as to improve in-house environment
management through efficient use of various resources (i.e. reduce usage of paper, water, use
energy efficient lights and equipments, etc.) at Head Office, Branches and other link offices.
Apart from enrichment of the external environment, Green Banking will help improve the
performance of the Bank in the following ways:
Improve the image of the Bank by showing and serving its commitment to the
environment
Significantly reduce operational cost due to less consumption of office stationeries,
Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects
The Green Banking Policy, which comprises of five chapters, is to be implemented in 3 (three)
phases within December 31, 2013 as per the direction of Bangladesh Bank from time to time and
will continue further. Apart from an introduction and an ending chapter, activities under different
phases are elaborated in three chapters. The Green Banking Policy also encompasses the
Environmental Risk Management Policy and covers the overall environmental concerns arising
out of both external or internal sources and the respective measures to manage it.
All concerned Divisions are, therefore, advised to exercise all out efforts for effective
implementation of Green Banking Policy to improve in-house environmental management
through efficient use of various resources (i.e. reduce usage of paper, water, use energy efficient
lights and equipments, technologies, etc.) as well as to protect environmental pollution while
financing.
5.1.1. Background
The environment and climate change effect on human existence as well as the planet are now a
global concern because the changes have direct impact on biodiversity, agriculture, forestry, dry
land, water resources and human health. The key areas of environmental degradation cover air
pollution, water pollution and scarcity, encroachment of rivers, improper disposal of industrial
medical and house-hold waste, deforestation, and loss of open space and loss of biodiversity. The
state of environment of Bangladesh is rapidly deteriorating. Moreover, Bangladesh is one of the
most climate change vulnerable countries. In line with global development and response to the
environmental degradation, financial sector/Banks in Bangladesh can play important roles as one
of the key stakeholders. Banks hold a unique position in an economic system that can affect
production, business and other economic activities through their business activities and thus may
36
contribute to pollute environment. Moreover, energy and water efficiency and waste reduction
are of high concern for Banks.
5.1.3. Purpose
The purpose of Green Banking Policy will be to ensure necessary measures to protect
environmental pollution while providing service or financing customers as well as to improve inhouse environment management through efficient use of various resources at Head Office,
Branches and other link offices.
5.1.4. Scope
This policy document will be applicable for issues related to Green Banking with respect to
activities of the Bank and its customers that have impact on the environment.
5.1.5. Benefits
Apart from enrichment of the external environment, Green Banking may also help improve the
performance of the Bank in the following ways:
Improve the image of the Bank by showing and serving its commitment to the
environment
Significantly reduce operational cost due to less consumption of office stationeries,
usage of technology
Reduce possible health hazards by installing eco-friendly equipments
37
development program
Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky
projects
5.1.6. Implementation
The Green Banking Policy of the Bank will be implemented in 3 (three) phases as per the
direction of Bangladesh Bank from time to time. Activities under different phases are elaborated
on later chapters.
borrower. In this connection, specific check list should be followed by all concerned and be also
included in the audit guidelines and reporting formats. Such incorporation will help review
possible sources of Environmental Risk under Environmental Due Diligence (EDD) checklists.
39
Preferences will be given in financing eco-friendly business activities and energy efficient
industries. Investment will be encouraged in building environmental infrastructure such as
renewable energy project, clean water supply project, wastewater treatment plant, solid &
hazardous waste disposal plant, bio gas plant, bio-fertilizer plant etc. Banks retail and consumer
loan programs will promote environmental practices among clients. Banks credit marketing
Division and CRM Division will look into this area.
for long. The Bank will emphasize more to make available to the customers the easiest way that
help environment by eliminating paper waste, saving gas and carbon emission, reducing printing
costs and postage expenses. This part will be executed by the Information Technology Division
of the Bank.
An environmental risk management manual or guidelines will be developed and followed in its
assessment and monitoring of project and working capital loans and other matters. In addition to
the compliance of national regulation, internationally accepted higher environmental standards
may also be set through forming a Green Alliance by a group of banks that will prepare
guidelines for themselves for improving Green Banking practices.
This part will be executed by General Services Division and General Banking and Development
Division with all relevant Divisions.
5.5.2. Compliance
The compliant banks practicing Green Banking will have the following preferential treatments:
computing
CAMELS rating where there will ultimately be a positive impact on overall rating of a
bank.
Bangladesh Bank will declare the names of the Top Ten Banks for their overall
In view of the above, all concerned Divisions of the Bank must put their sincere efforts to make
UCB a compliant Bank.
44
banking products;
To encourage the employees, the existing and potential clients and other stakeholders to
develop, practice & promote for developing & using Environment friendly /Green
Technology/products/production process;
To develop the attitude among the employees to motivate, encourage the stakeholders
through initialization of appropriate in-house environmental risk management system
bank.
The bank allocates considerable fund in their annual budget for implementing &
47
The bank addresses environmental issues & assesses environmental risks (high/ moderate/low)
of projects/businesses of different sectors in different areas those are financed by the bank and
create climate risk fund. A comprehensive risk exposure matrix shall be developed for assessing
environmental risks and reported to different credit committees of the bank by the branches in
the risk exposure matrix. The fund to be allocated/created for Green Banking may be used as a
part of CSR activities at the time of emergency.
Agriculture
Agri-Business (Poultry & Dairy)
Agro Farming
Leather (Tannery)
Fisheries
Textile & Apparels
Renewable Energy
Pulp & Paper
Sugar & Distilleries
Construction & Housing
Light Engineering & Basic metal
Chemicals (Fertilizers, Pesticides & Pharmaceuticals)
Rubber & Plastic Industry
Hospital/Clinic
Chemical Trading
Brick Manufacturing
Ship Breaking etc.
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The bank shall formulate its pricing strategy for its products inline with the global green banking
issues. The clients complying green policy of the bank and adopting appropriate technology for
addressing ERM issues from their part shall be eligible for receiving facilities at a reduced rate
than the usual rate of the bank. Premium pricing strategy shall be adopted and practices for the
clients to reduce carbon/heat emission, waste materials, energy utilization, hazardous byproducts and increase productivity, efficient use of materials, preservation of natural water
stream & water resources.
for use as a reference manual. However, this policy keeps the provision for all future regulatory
directives, to be issued by different authorities of the Government of Bangladesh, to be taken into
cognizance for addressing concurrent Environmental risk issues and incorporating those issues in
the policy matters without any change in the policy.
Bank has to publish independent Green Annual Report following internationally accepted
format like Global Reporting Initiative (GRI) targeting their stakeholders.
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Bank shall report its initiatives/activities under the said program to the department of offsite supervision of Bangladesh Bank on quarterly basis as instructed by Bangladesh Bank
within the next 15 days of the respective quarter end.
Climate change is the most complicated issue the world is facing. Across the globe there have
been continuous endeavors to measure and mitigate the risk of climate change caused by human
activity. Many countries over the world have made commitments necessary to mitigate climate
change. As socially responsible corporate citizen, Bangladeshi banks have a major role and
responsibility to support and supplement the government effort towards substantial reduction in
carbon emission.
Normally we can consider the banks as environment friendly with their operational activities but
it is important that the environment can be effected greatly by the activities of their customers.
The banking sector is one of the major sources of financing industrial projects such as Brick
field, Steel, Paper, Cement Chemicals Fertilizer, Power, Textiles etc., which cause maximum
carbon emission. Therefore, the banking sector can play intermediary role between economic
development and environment protection, for promoting environmentally sustainable and social
responsible investment. Green Banking refers to the banking business conducted in such areas
and in such a manner that helps the overall reduction of external carbon emission and internal
carbon footprint. To aid the reduction of external carbon emission, bank should finance green
technology and pollution reducing projects. Internally the banking operations have considerably
increased the carbon footprint of banks due to their massive use of energy e.g. lighting, air
conditioning, electronic / electrical equipments, IT, high paper wastage, lack of green buildings
etc. Therefore, to adopting green banking, bank should adopt technology, process, and products
which result in substantial reduction of their carbon footprint as well as develop sustainable
business.
incidence of credit default. Credit risk can also arise indirectly when banks lead to companies
whose business is adversely affected due to changes in environmental regulation.
As a responsible private sector financial institution of the country Dhaka Bank Ltd. will
play a crucial role in addressing the issue and in all activities like financing and social
renewal.
Dhaka Bank will not finance any Brick Field without having environment friendly kiln
Unit, Dhaka Bank has taken very intensive program to fulfill the target.
To consider finance to any renewable energy plant (solar panel, wind mill etc.), biogas
electricity.
Dhaka bank also thinking to take coverage of Green Travel Insurance for the carbon
emission caused by it.
An independent Green Banking Policy & Strategy of DBBL has been established for
every individual of the Bank working in front and back office to make socially
responsible behavior for the greater interest of the country and planet as whole. Bank
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views that a Green Bank is an ethical bank or a sustainable Bank. The broad objective of
green bank is to use resources with responsibility avoiding spoilage and giving priority to
environment and society.
A separate dedicated team of Green Banking Cell has been formed consisting of 06 (six)
officials from related divisions led by Head of Credit Division who may contribute with
the vested responsibilities in line with the principles towards implementation and
reporting of Green Banking initiatives of the Bank. All the Divisions, Branches and
senior level management have been informed on the principles and responsibilities on
their part. The team is actively working covering the respective areas for compliance.
The Management has allocated fund for an amount of Tk.5.00 million in support of
marketing and capacity building of the Bank for green banking activity.
A Green Office Guide covering set of general instructions have been circulated among
the Divisions and Branches for meticulous compliance of the instructions contained and
directed towards efficient use of resources, technologies and energy as well as reduction
of wastages.
A separate fund for an amount of Tk.5.00 million has been approved for creation of a
Climate Change Risk Fund which to be disbursed in the environmentally vulnerable areas
in case of emergency as a part of Bank's CSR expenses.
DBBL has the largest on-line banking network and extensively using its on-line facilities
which has meantime received an extreme recognition in the country. It has brought userfriendly state-of-threat technologies for the masses, offering variety of product supports
at a minimum costs and fostering fastest customer services through its professional
expertise. It has reduced cost burden, ensured speedy transactions, one point banking
support and familiarizing clients with Internet supporting activities. The entire network
system is in process of further up gradation for better uses of resources and support for its
clients. The practice of electronic mail for internal communications have been introduced.
Number of users of Internet banking facilities have been gradually increasing.
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The Bank is under process of introduction of Green Banking Products for its customers
engaged in the field of environment-friendly projects and initiatives.
To educate its officials on the issues, Bank has arranged programs to be held shortly with
the participation of executives and officers from divisions and branches ensuring
participation of resource personnel from Bangladesh Bank on the issue.
Bank is offering financial supports in the field of eco-friendly business initiatives since
long and a considerable amount of finances have been extended towards establishment of
ETP, Solar
Home Systems, agrifinances as well as it is channelizing fund at grass root levels through
NOG/MFI linkages and also through its own business network in the areas of ecosupporting projects.
Meantime, 5 branches of DBBL have been partially powered with SHS as alternative
sources of energy. At corporate level, DBBL has a network with valuable exporters of the
country and adequate finances have been extended especially in the garments and textile
industries supported with ETP.
Notable, DBBL participated in the world's first Compost Plant Commissioned under a
CDM project namely WWR Bio Fertilizer Bangladesh Ltd. by way of injecting fund for
Tk.40.00 million which has formally released its first high quality organic fertilizer
produced mainly from fruits and vegetables waste collected from markets in 2009. This
was a unique investment and has received an outstanding recognition in the country.
Bank has already incorporated Environmental Risk in its credit risk methodology and
related circulars among the employees have already been released for compliances.
Approvals are selectively provided to the clients ensuring capacity to prevent potential
environmental risks.
Bank allows facilities to the client on the condition that supporting environmental conditions and
permission from the related environmental regulatory agencies have to be obtained for availing
the facilities. Regular monitoring on environmental issues of the existing clients are advised to
the credit personnels to maintain. The Bank always encourages business entities actively
working in eco-friendly business activities and energy efficient industries. Credit officers at
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marketing levels are directed to search potential clients engaged in eco-supporting business
projects. A number of eligible credit proposals are under consideration. In line with the core
objectives of Bangladesh Bank, the Government and World forum towards a better earth and
careful practices for safeguarding this beautiful planet for the future generations, DBBL always
remains and will actively work with the people at best as it can.
To keep pace with the voices against global adversely changing environmental atmosphere, states
bear responsibility to safeguard Mother Nature, actively work frontline for eco-supporting
initiatives, implement and direct policy issues to contain unexpected human behavior
deteriorating this beautiful planet. Bangladesh is considered as the most victim state for climatic
changes. It is vulnerable for frequent flood, tropical cyclones, storm surges and droughts. These
damage assets suffer people, lives and hinder progress and economic stability. A baseline study
of Bangladesh Bank underlines that Banks/FIs in the country cannot avoid themselves in
protecting environmental degradation by way of reshaping their financing patterns and internal
practices to minimize wastages and use of resources. The financial and economic development of
Bangladesh is inseparably tagged with gradual environmental degradation. An institutionalized
awareness to address adverse environmental issues and their consequences have compelled the
Banks/FIs to integrate Environmental Risk Management principles.
risking Bank finances. Climate induced extreme weather events e.g. cyclone, flood and droughts
periodically may demolish business operations risking bank unable to recover finances made.
Green Banking Policy of the Bank showing general commitments though in-house
operations.
It was advised to form a High Powered Committee with the participation of directors
policy issues.
The directions of Bangladesh Bank also insisted to allocate considerable amount of
issues like efficient use of energy, resources and uses of eco-friendly technologies.
The guidelines supported to create Climate Risk Fund to finance as a part of Bank's CSR
and Guidelines.
Rigorous programs to educate clients and disclosure and reporting of Green Banking
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Chapter 6
Recommendation
62
6. Recommendation
Bank should keep following aspects in mind while financing any projects:
1. Analyzing the project in terms of scale, nature and the magnitude of environmental impact.
The project should be evaluated on the basis of potential negative and positive
environmental effects and then compared with the without project situation. There should be an
Environmental Impact Assessment (EIA) of each project recommending the measures needed to
prevent, minimize and mitigate the environmental negative impact before financing the projects.
2. While investing or funding the projects, the financial institutions should assess the sensitive
issues like vulnerable groups; involuntary displacement etc. and projects s ho ul d b e
e va l ua t ed i n te r ms of en vi ro n me n t al l y i mpo r t an t ar e as in c lu d in g wetlands, forests,
grasslands and other natural habitats.
3. Banking institutions need to evaluate the value of real property and the potential environmental
liability associated with the real property. Therefore, the banks s ho ul d ha ve r ig ht t o
i ns pe c t th e pr op er t y o r t o ha ve a n e nv ir on me nt a l au d it performed through the life
of the loan.
4 . B an ks al s o ne ed t o mo ni t or p os t t ra ns a ct i on f or th e id e al e nv i ro n me nt a l
r is k management program (Rutherford, 1994) during the project implementation and operation.
There should be physical inspections of production, resources, training and support, environmental
liability; audit programs etc.
5. The next round of evaluation includes loan structuring, credit approval, and credit
r ev i ew an d lo an ma n ag e men t . F ur th er b an ks ha ve a nn ua l a ud i ts , q ua rt e rl y
63
environmental compliance certificate from the independent third party and also from the
government
Further the banks can introduce green bank loans and products like:
i.
ii.
iii.
Green Banking
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Chapter 7
Conclusion
65
7. Conclusion
T he r e is a g row in g aw ar en es s a mo ng b an ks an d fi na nc i a l in s t i tu t io ns t o
p ro te c t t h e environment and thereby save 'mother planet'. Big banks are committing large
funds on sustainable basis in responsible banking, creating more values for our next generation. They are
shifting forward from 'profit' to 'people' and now more importantly, to create a better future for
all. The sooner this philosophy of 'green banking' is embraced, the better it is for all. A good online
banking system is the linchpin of reduced costs, improved performance and competitiveness. We provide the
service at no cost to our retail and business customers. The logical progression of online banking - converting
existing customers to online bill payment- is a harder step and can require a lot of legwork. Once
customers get here, there is the chance of moving to completely electronic banking. Environmental
conservation and protection of ecological balance should be maintained through
combined efforts of multi stakeholders. The main stakeholders are businessmen, consumers and
professionals, NGOs and government organizations. As green initiatives sweep across the globe,
more and more banks have been adopting green banking practices. Today, many banks
are assessing environmental risk while selecting a project for financing. Even as the
market slows in the face of economic upheaval, many banks are keeping a focus on green. The
positive outcomes of these green initiatives are evident in many instances. However, these are the
results of collective efforts. There is no doubt that the progress so far has been made possible
because of the substantial efforts of all stakeholders, covering banks, policymakers, civil society
organizations, international development and financial institutions, business entities and the
common people.
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References
http://www.bangladesh-bank.org
Bangladesh Bank (2012), Green Banking Report, Green Banking and CSR Department.
Green Banking Policy of Jamuna bank limited Bangladesh, Head Office, and Dhaka.
Bangladesh Bank (2011), Policy Guidelines for Green Banking.
Bangladesh Bank Green Banking policy, viewed: July 21, 2012.
Atiur Rahman, Financial Services at Peoples Doorstep, Governor, Bangladesh Bank, 2010.
http://dhakabankltd.com
www.basicbanklimited.com
www.ucb.com.bd
www.dutchbanglabank.com
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