Environment and pollution:

Transcription

1 green banking

2 Environment and pollution: Since the past few decades, the environmental risks and its management techniques have become a widely controversial issues in the global forums. The world leaders have met on several occasions for developing uniform principles and legislations to contain the adverse changes of the mother nature due to causes mostly for human activity and thereby agreed for adopting generalized rules and procedures for safeguarding this earth for the future generations. Voices raised from the people of the developed states for paying compensation to the mostly vulnerable states including Bangladesh against the unacceptable uses of natural resources and harmful technological innovations & its behavior by the western world specially. Series of sudden environmental shocking incidents have taken places meantime which alarmed how far the nature can get revenge against the unlawful acts of human society. Harder environmental liability legislations have been rose as a consequence of pressure from within the societies. Environmental degradation is a process through which the natural environment is compromised in some way through reducing biological diversity and the general health of the environment. This process can be entirely natural in origin, or it can be accelerated or caused by human activities. Many international organizations recognize environmental degradation as one of the major threats facing the planet, and if the environment becomes irreparably compromised, it could mean the end of human existence. The environment can degraded when resources simply become depleted. Air, water, and soil are all resources which are vulnerable to depletion through overuse, as are natural resources like minerals and oil deposits. When the environment becomes polluted, it means that toxic substances have rendered it unhealthy. Pollution can come from a variety of sources, including vehicle emissions, agricultural runoff, accidental or willful chemical release from factories and poorly-managed explored natural resources. Urge to step ahead: 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 behaviour 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. Need for a Green Banking practices: Banks/FIs hold a unique position in an economic system that can affect production, business and other economic activities through their financing activity and thus may contribute to pollute environment. One of the key facilitating factors in credit risks now is Environmental Risks as these can increase risks by bringing an element of uncertainty or

3 possibility of loss in the context of a financing interactions. Inability to consider these as a part of financing decisions will lead to an increase of Non Performing Loans (NPLs). The geographical location of land specially activities of land in a flood prone plain or along the coastal belt are more vulnerable and is a source of risk. Accordingly, business activity in a highly polluted area enhances the possibility of closure of business. Borrowers may become vulnerable to close down operation for non-compliance of regulations set by Department of Environment. Labour/Social risks specially if there is potential sources of accidents, employment of child labour, forced labour and/or gender discrimination etc. may lead to close business operation and bank may get stuck or risk its finances. Community/ Public opposition against inadequate environmental management practices like excess abstraction of water, effluent water release, emissions of carbon and improper waste management may create vulnerable business or shutting down of borrowers operations. Buyers stringent and tightened conditions abroad in support of environmental risk management may degrade business and/or lose of market of the borrowers which can lead to 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. Bangladesh Bank Directives: Banking Regulations & Policy Department, Bangladesh Bank vide their Circular No.02 dated February 27, 2011 has outlined a detail policy guidelines for implementing Green Banking through all scheduled banks operating in Bangladesh. The Circular addressed to adopt banks a comprehensive

4 Green Banking Policy in a formal and structured manner in line with global norms so as to protect environmental degradation and ensure sustainable banking practices. It is hereby stated that, Green Banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behaviour of other businesses. The policy advised to cover in 3 segregated phases. At the first Phase, the directives urged to develop a: 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 from the Board of the Bank to review policy outcomes. Accordingly, a separate Green Banking Cell consisting of personnels of divisions have been advised to form for designing, evaluating and administering related green banking policy issues. The directions of Bangladesh Bank also insisted to allocate considerable amount of budget for Green Banking. It is instructed to circulate a Green Office Guide among the employees addressing to the 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 expenses in the environmentally vulnerable areas in case of emergency.

5 The directives advice to ensure optimum use of On-line banking facilities to save paper, time, resources and associated costs ensuring fastest customer services. Side by side, supporting employee training and consumer awareness program have to be developed by the Bank for an effective launching of the principles. The policy advises to disclose the activity in the respective Website for awaking people on the initiatives. The directives given importance on Green Marketing of the products presumed to be environmentally safe as well as introduction of Green Finance for eco friendly business activity and energy efficient industries. One of the most valuable inputs in the policy as directed, was the incorporation of Environmental Risks in Credit Risk Management. The Second Phase stating a time frame upto December 31, 2012 for implementation as directed includes: Application of Sector Specific Environmental policies and Green Strategic Planning to determine a set of achievable targets and strategies. At the same time it advises to set up Green Branch with a special logo featuring maximum uses of natural light, use of renewable energy, use of energy saving equipments, reduced use of water and electricity. The directives guided to set improved In-House Environment Management setting strategy of reuse, recycling materials and waste minimization strategy. It was also directed to formulate Bank specific Environmental Risk Management Plan and Guidelines. Rigorous programs to educate clients and disclosure and reporting of Green Banking activities are also to be performed by the Bank, as directed. In the Third Phase advising to implement within December 31, 2013 addresses to: Design and introduce environment friendly Innovative Green Products. Accordingly, it advises the Bank to publish Independent Green Annual Report following internationally accepted format after verification of activities through independent acceptable Third Party. DBBL & Green Banking: Bank since its inception has been maintaining a balanced initiative and supporting activity to contain things that may adversely affect environment and contribute to pollution. The practice of efficient uses of resources, encouraging for green financing and environment friendly initiatives, effective utilization of its on-line communication system etc. have been maintained. Meantime, as directed by Bangladesh Bank, An independent Green Banking Policy & Strategy of DBBL has been established for every individual of the Bank working infront and back office to make socially responsible behaviour for the greater interest of the country and planet as whole. Bank 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

6 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 user-friendly state-of-theart 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 upgradation 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. 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 eco-supporting projects. Meantime, 5 branches of DBBL have been partially powered with SHS as an alternative sources of energy. At corporate level, DBBL has a network with valuable exporters of the country and adequate finances have been extended specially in the garments and textile industries supported with ETP. Notable, DBBL participated in the world's first Compost Plant Commissioned under a CDM project

7 namely WWR Bio Fertilizer Bangladesh Ltd. by way of injecting fund for Tk million which has formally released its first high quality organic fertilizer produced mainly from fruits and vegetables waste collected from markets in 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 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.