Green Banking for Sustainable Development

Farzana Akter

Banking is an essential economic sector for people and nation. We are all aware of bank transactions. We make a profit by depositing money in the bank and investing in various sectors with loans. From the domestic bank to the World Bank, transactions are going on all the time. Even the World Bank provides financial assistance for domestic needs. So, banking is a complete economic sector. But now there is a new possibility called Green Banking, which at the same time emphasizes on the economically and environmentally sensitive issue. Green banking is a new opportunity through which at the same time we will benefit economically as well as protect the environment.
At present, the environment is facing various changes caused by climate change and man-made disasters. Temperatures have skyrocketed, ice is melting, forests are degrading, and many species of animals and plants are becoming extinct. Agricultural fields are being disrupted; we are facing terrible floods every year. All in all, sustainable management is essential to protect and replenish the environment and think about the future that refers as a green banking. In that case we need financial support. The bank has taken new initiatives to protect the environment.

Green banking is promoting environment friendly practices and reducing carbon footprint from banking activities. It refers to the banking business conducted in selected areas and manner that help the overall reduction of external carbon emission and internal car-bon footprint. It considers social, economic and environmental factors, which ultimately promotes sustain-ability. Also green banking is called ethical banking for starting with the aim of protecting environment. The concept of green banking is promoting environment friendly banking practices, protection to the environment, banking practices that bring social welfare. Green banking takes care of planet, people and profit. It makes profits with responsibility. Green banks avoid too much paperwork, they provide green card, e banking, and their logo is “Go Green”.
Bangladesh is a developing country with enormous industry. Day by day industries are swallowing out our small country. It is no doubt good for economic growth, but in getting economic development we are polluting and destroying our environment. Effluent water from industries pollutes both soil and water. There are very dangerous chemicals in it. Industries pollute air by fume. Life is slowly becoming mechanical and the environment is being destroyed.

We are sacrificing the environment in exchange for a better life. Green banking creates a social awareness to the business people about environmental and social responsibility and enabling them to do environment friendly business practices.
They follow environmental standards for lending, which is really good idea and it will make business owners to change their business policy to environmental friendly which is savings for our future generation, that promotes sustainability.
Green bank finance for effluent treatment plant (ETP), biogas plant, solar panel/ renewable energy, hybrid brick field, waste management plant, mush-room project, horticulture, afforestation etc. These sec-tors are well known as environmental sectors.
ETP purifies the waste water that is must in each and every industry. Waste management is our savior now. But we can’t see any management work. Development and environmental pollution are like a thread. Most of the industries in our country are located in Dhaka, Gazipur, Narayanganj and Chittagong, and if we look, we can see that these few districts are the most polluted, semi-immersed in dirt. There are no management facilities; there is no water treatment system. Dhaka city is now one of the most environmentally degraded areas. Air, soil, water every element are polluted, but no remedy is seen. Management is the key to a healthy environment. Following in the footsteps of developed countries, Green Banking has provided loans to the environmental sector.

Emphasis has also been placed on renewable energy. Because of the gradual depletion of renewable sources, if we do not adopt sustainable thinking and projects now, we will face this catastrophe in the future. That is why it is important to focus on green energy or renewable energy. Banks and other financial institutes play a major role in financing sustainable development and social needs. Sustainability is defined as development that meets the needs of present generation with-out compromising future generations. Financial sector is a powerful player in the economy but May important in achieving sustainable development. We are facing a number of risks to sustainable development. Mitigating and adapting climate change is perhaps the most urgent global environmental issue. One of the biggest reason of climate change is burning coal for energy, emits a huge amount of CO2, and current is-sues are reducing natural resources. Green banks or financial institutes could help address the sustainable risks.
“We are facing a number of risks to sustainable development. Mitigating and adapting climate change is perhaps the most urgent global environmental issue. One of the biggest reason of climate change is burning coal for energy, emits a huge amount of CO2, and current issues are reducing natural re-sources. Green banks or financial institutes could help address the sustainable risks. “
They could finance in the projects addressing climate mitigation and adaptation and support the energy sec-tor. This strategy could also help to avoid financial risks by stranded assets caused by a carbon bubble. Finally they could accept the basic commodities, such as water and food, should not be subject to financial speculation. Another sustainable issue is social. Health care, aging, income distribution, education etc. are sustainable risks that we have to be dealt with. Banks can give high salaries to environmental advisors and reduce financial distribution. Green banks promotes to decreasing paper use, increasing energy efficiency, video conferencing. Green Banking is correlated with all the aspects of banking sector, so it should be located at the top management level of bank.
For developing a country, sustainability is a core of everything. Bangladesh is also joining the race of gaining Sustainability. In these purposes green banking or sustainable banking is spreading throughout the country also. The central bank of Bangladesh has issued policy guidelines for green banking that aim to prevent environmental degradation and ensure sustainable banking practice.
The guidelines cover the incorporation of environmental risk management in credit management, in house environmental management, green financing,
climate risk funds, green marketing, online banking, training, research and development in green banking, sector specific environmental policies, green strategic planning, green bank branches, bank specific environmental resources management plan, innovative sustainable products and sustainability reports. There are 10 private banks under Bangladesh Bank, which were recognized as green bank. Mutual Trust Bank Limited has recently been recognized as one of the top ten sustainable banks of the country. For coping with environmental vulnerabilities and achieving sustainability green banking is new hope. It’s high time, we should raise our voices and join to the sustainable world. Save Green, save environment for protecting us.

Author is a Student of Environmental Science and Engineering at Jatiya Kabi Kazi Nazrul Islam University, Trishal, Mymensingh – 2224, Bangladesh

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