Green Banking – Banking System That Practices To Keep the Environment Green – Rahman Mahfuz
The impact of climate change is currently threatening human existence on this earth. Because these changes have a direct impact on biodiversity, agriculture, forests, dryads, water resources, and human health.
The main areas of environmental degradation are air pollution, water pollution, drinking water crisis, river filling and narrowing, open dumping of solid waste and direct disposal of untreated liquid waste in the water bodies, deforestation, reducing open spaces and destruction of biodiversity.
The environmental conditions of the earth are deteriorating rapidly; although, now many of the countries like Bangladesh are climatically vulnerable.
In the line of “Global development along with the environmental degradation protection” the present world slogan, the banks and the financial sectors of Bangladesh can play an important role. Finance is the core of all development activities, including infrastructure development, industrial production, agricultural production, trade, and services, etc.
It means the banks and the financial sectors hold is a unique position in the economic system that may influence pollution-free productions, businesses, commerce’s & trades and development activities through their business activities and thus may contribute to the environment. Moreover, efficient energy, water, power and reduction of waste are highly concerned with the financial institutions. Hence, banks and financial institutions can play a vital rule to protect the environment from degradation.
The term “green banking” is now popular worldwide. It is a banking system keeping the planet inhabited by protecting the environment from degradation.
Generally, the green banking refers to the banking sector’s efforts to keep the environment green and provide banking services in the development activities, trade & business, productions, social activities, and human livelihood activities in a way that reduces greenhouse impacts by reducing the environmental pollution.
Therefore, this banking system is also called green banking or eco-friendly banking or a sustainable banking system. It promotes environmentally friendly practices and reduces the carbon footprint from banking activities.
Green banking is a type of banking that gets the country and the nation’s environmental benefits. A traditional bank turned into a green bank, conducting key activities towards improving the environment. Actually, Green Banking is the social initiative keeping the environment green from the banking end.
The banking sector can play an intermediary role in economic development and environmental protection by promoting environmentally sustainable and socially responsible investments.
At first, this concept of green banking was developed in Western countries in order to protect the environment. Green banking was officially started in 2003 with a view of protecting the environment from pollution.
Then the Equatorial Principles (EP) was introduced and first accepted by some leading global banks such as Citigroup ENC, Royal Bank of Scotland, Westpac Banking Corporation. United States Congressman Chris Van Hollen introduced the Green Bank Act in March 2009, to establish a US government-owned green bank.
After introducing the Green Banking, the initial decision was to minimize the paper use in banking works because to manufacture paper need to cutting plants as raw materials (its minimize the green forestation) and for this reason naturally its reduce the Oxygen ( O3) and increase the carbon dioxide (CO2) in air space/globe.
There are two ways of green banking practices. One is in-house green banking and the other is practices the banks in its investment, business. Online banking, emailing communications, using webcam for video conferencing instead of physical meetings, online statements, clean and hygienic banking environment, using green building, reforestation, applying waste management system, installation of solar panel on the rooftop of the bank building and using high mileage vehicles, reducing sound pollution, reduction of noise pollution are include in house green banking.
Financing the green projects like Biogas Plant, Solar/Renewable Energy Plant, Bio-fertilizer Plant, Effluent Treatment Plant (ETP), ISO: 14001:2015 certified Industries/ Factories, voluntary activities of the banks, etc. are the green banking activities of its business/investment. Another is the financing of green building, forestry, green space projects such as biogas plant, solar/renewable energy plant, bio-fertilizer plant, effluent treatment plant (ETP), work on specific green projects, recycling processor industries, volunteer activities of the bank, etc.
Green Banking undertakes proactive measures to protect
the environment and meet climate change challenges through financing along with renewable, non-renewable, human and natural resources as well as financing.
The main objective of the Green Banking System is to earn the emerging goals of the UN’s Sustainable Development Goal. The objectives of Green Banking are given below:
Avoiding waste and giving priority to the environment and society.
Focusing on environment-friendly initiatives by providing innovative financial and ensure sustainable development;
- To ensure proper utilization of natural resources;
- Using organizational resources with responsibility.
- Keeping the world livable for a long period of time.
- To minimize paper works as much as possible inside and outside the bank.
- To achieve cost and time efficiency.