Chapter 1

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
2

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.

1.2. Objectives of Green Banking

The broad objective of the green banks are avoiding waste and giving priority to
environmental and society.
Focusing on environment friendly initiatives by providing innovative financial and ensure
sustainable development.
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.

1.3. Limitations of the Study

During the completion of this project paper, numerous problems have been encountered for the
accomplishment of the study. These problems may be termed as limitation of the study,
enumerated as follows:

Time frame for the research was very limited. The actual survey was done within assort period.

Unavailability of written documents as require for making a comprehensive study.

Some supportive materials were not available during the completion of my project paper i.e. PC,
Internet facility etc.

Green Banking

1.4. Research Method

In order to make the project paper more meaningful and presentable, data is collected from many
sources. The data collection sources can be accumulated two sources. Majority of the
information was collected from secondary sources. The study is based on secondary data source;
collected data and information have been processed and analyzed systematically. This project
paper has been prepared by latest data to make the study more informative and useful. The
primary data collected from officers, supervisors, clients. The secondary data and information
were collected from

Journal
Books
Newspaper
Internet
Annual Report
Bangladesh Bank Publication

Chapter 2

Green Banking Practices

in Bangladesh

Introduction
Chapter 1

Introduction

Introduction

2.1. Comments of experts about Green Banking

"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

2.2. Evolution of Green Banking

In March 2009, Congressman Chris Van Hollen in USA introduced a Green Bank Act with th e a i m o f
e s t ab l is hi ng a g re en b an k u nd er t he ow ne rs hi p of th e U S g ov er n me nt . It s
objective was to offer financial support to efforts to increase efficient energy usage, and reduce
carbon emissions and environmental pollution resulting from energy creation. Bank Technology News has
recently given Citigroup the US banking giant, top honors in its first ranking of 'America's Greenest Banks.
The award highlighted the accomplishments of Citys Sustainable Operations and Technology program, which
includes dozens of initiatives aimed at shrinking environmental footprints and controlling costs. In just one
example, City updated computer hardware across the 1,000+ Citibank branches in North America,
reducing energy costs by 15 percent a year, while improving the speed with which it services
customers. The Financial Times of London announced the Sustainable Banking Awards last year.
8

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.

2.3. Importance of Green Banking

The public concern at the state of the environment has been growing significantly in the last few years,
mostly due to apparently unusual weather patterns, rising greenhouse gases, declining air quality etc.
Banks hold a unique position in an economic system, and can affect production and businesses through
their financing activities. However, if green banking simply means incurring additional
costs by a bank, it might never be accepted as common business practice by the global
banking industry. Though, positive relationship between green banking strategy and profitability
has not always been the case, there is evidence that socially and environmentally responsible
banks can also be financially successful and have growth rates similar to, or even better than,
those of their conventional competitors. Moreover, banks that mainly do business with the
depositors' money cannot avoid responsibility to the society. When the common people
take care of banks in their bad days, banks must be made responsible to take care of the society as
well. Banks that were once seen only as profit motive institutions have been adjusting to amore
demanding market and a more socially conscious society over the last two decades.
Environmental concern is at the Centre of the green banking strategy. An increasing number of
global banks around the world are going green by launching environmental friendly initiatives and providing
innovative green products. In the long run, the trend towards green banking will be largely
driven by consumer behavior. Common people and consumers are becoming increasingly
aware of the responsible behavior of businesses.

2.4. Draft Guideline of Green banking in Bangladesh

Bangladesh Bank (BB) has prepared a draft policy guideline for introducing green banking this
year in line with global development and response to the environmental degradation. The guideline,
posted on the central bank web site, outlines a three-stage roadmap for green banking, requesting public
feedback by January 25, 2011.The guideline, in the first phase, suggests all banks to develop green
banking policies and establish separate green banking cells and incorporate environmental risk
9

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.

2.5. Green banking in Bangladesh

Bangladesh Bank, the central bank, has a greater role in shaping up a concrete guideline for green banking
practices in Bangladesh. According to central bank, each bank and financial institution can
formulate a strategy and guideline for Green Banking and Green Financing. The commercial
banks are to develop green banking policies and show general commitment on environment
through in-house performances by December 31 this year. A high-powered committee will be
responsible for reviewing the banks' environmental policies, strategies and programmers .The
committee will be comprised of directors from the board in case of scheduled Bangladeshi banks
and regional chief of global office and members from the top management including chief
executive in case of foreign banks. The banks will allocate considerable fund in their annual
budget for green banking, and set up a separate green banking unit. A senior executive should
head the unit, which will report to the high- powered committee time to time. They will have to
comply with the instructions stipulated in the detailed guidelines on Environmental Risk
Management. The banks will also incorporate environmental and climate change risks as part of
the existing credit risk methodology prescribed to assess a prospective borrower. The banks
should take measures to save electricity, water and paper consumption, according to the BB
guidelines. A 'Green Office Guide' or at least a set of general instructions should be circulated among the
employees. Instead of relying on printed documents, online communication should be
extensively used (where possible) for office management. Energy saving bulbs should replace the regular ones
in branches/offices of the banks. They should make plans to use solar energy on their premises, and encourage
employees to purchase energy efficient cars.

2.6. Roles of Green Banking

The people of the whole world are concerned about the environmental degradation, especially
the rising of global temperature and thereby melting of glaciers and ice-berg in the polar region
and consequently rising of sea level, which will directly affect the low-lying countries of the world.
The world conscious people are also concerned about the increase of Green House Gases and
Chlorofluorocarbons (CFCs) and thereby depletion of Ozone layer. As such, every person and
11

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.

2.7. Green Banking Practices

2.7.1. Practices of in house Green Banking
2.7.1.1. Waste Management
A green banker must be cautious about wastage and waste management. We should try to control
the wastage of resources like water, gas, electricity, paper, foods etc. For example, if we draft our letters on a
computer rather than in paper, it will save millions of paper as well as thousands of trees that provide
raw materials for paper production. Similarly, if we select a location of the branch of a bank with
sufficient access to light and air, it will save huge electricity and create a healthy
environment. Wastages must be grouped like organic and inorganic wastage. Organic
materials like food, vegetables, animals etc. can be recycled for manure, gas and electricity etc.
The inorganic material like paper, bottles, protest can be recycled. Wet and degradable materials can be
processed directly keeping under the soil. The recycling materials should be disposed off at the
respective disposal site and the rotten items should be buried under the soil and as such, pollution can be
protected.
2.7.1.2. Clean and hygienic environment
A green banker will not throw any waste, bottles or packing materials here and there. Each group of waste
should be kept in a separate place, which does not pollute the environment and all the wastes must be
disposed off separately. A green banker will not spit or cough on the floor, walls or on the road.
2.7.1.3. On line statements, emailing documents
We must send account statements and balance confirmation etc. to the clients through online and through email,
which will save paper, time, cost and above all the environment. We may use these technologies for our clients
as well as inter bank correspondence.
2.7.1.4. Sound Pollution
13

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.

2.8. Green Banking Products and Services

Financial institutions are rushing to market with new or re-packaged product and service o f f e r i n g s f r o m
green

auto

insurance

to

innovative

pro-eco

mortgages

and

new

sustainability-backing investment funds.

14

2.8.1. Green Deposits

Banks can offer higher rates on CDs, money market accounts, checking accounts and savings account if
customers opt to conduct their banking activities online.

2.8.2. Green Mortgages and Loans

A green mortgage offers better rates or terms for energy efficient houses. Green
mortgages can allow home buyers to add as much as an additional15 percent of the price of their
house into loans for upgrades including energy-efficient windows, solar panels, geo-thermal heating or
water heaters. The savings in monthly energy bills can offset the higher monthly mortgage payments and save
money in the long run. The Energy Efficient Mortgage (EEM) is a type of HUD-approved green
mortgage that will credit you for your homes energy efficiency in the mortgage itself. Many home
improvements also qualify for the energy tax credit. Anyone undertaking an energy-saving house project should
shop around for a bank that offers a special rate for agree mortgage or loan.

2.8.3. Green Credit Cards

A green credit card allows cardholders to earn rewards or points which can be redeemed
for contributions to eco-friendly charitable organizations. These cards offer an excellent
incentive for consumers to use their green card for their expensive purchases. Imagine the
millions of dollars that could be raised for worthwhile environmental groups if green credit cards really
took off.

2.8.4. Green Reward Checking Accounts

A product called reward checking accounts pays a bonus rate to customers who go green.
Customers can earn higher checking account rates if they meet monthly requirements like receiving
electronic statements, paying bills online or using a debit or check card. With this banking product higher rates
and eco-friendly livings go hand-in-hand.

15

2.9. Prospects of Green Banking

The banking sector may also have significant impacts on biodiversity while providing financial
support to high impact sectors such as forestry, mining, oil and gas, fisheries, and infrastructure. In project
finance, banks may exercise their powers through assuming roles as environmental
policeman to ensure that their borrowers comply with the environmental standards, and
could enter into a partnership with different industries and encourage companies to be more
sustainable. Regulatory enforcement by governments, pressure from the civil society and
consumers, voluntary support, and responses by the business entities are preconditions for
creating a congenial atmosphere for offering and accepting productive green banking services. A common
platform or unique approach by the policy makers and civil society groups in all countries or
regions would give the best result. However, creating a common platform and launching a uniform
approach would require major political effort by all global economies - a tough job.

16

Chapter 3

Bangladesh Bank Policy and

Guidelines for Green Banking

17

3.1. Bangladesh Bank's Earlier Initiatives

BB is well aware of the environmental degradation situation as mentioned above and has already
given time to time directions to all scheduled banks. Commercial Banks are now required to
ensure necessary measures to protect environmental pollution while financing a new project or
providing working capital to the existing enterprises. Banks have been advised to facilitate their
clients with utmost care in opening Letter of Credit (L/C) for installation of Effluent Treatment
Plant (ETP) in the industrial units. Banks have been advised to finance in Solar Energy, Bio-gas,
ETP and Hybrid Hoffman Kiln (HHK) in brick field under refinance programmed of BB. A
comprehensive guideline on Corporate Social Responsibility (CSR) has been issued where banks
have been asked to concentrate hard on linking CSR at their highest corporate level for
ingraining environmentally and socially responsible practices and engaging with borrowers in
scrutiny of the environmental and social impacts. Banks have been brought under the purview of
E-commerce with a view to providing the customers with online-banking facilities covering
payments of utility bills, money transfer and transactions in local currency through internet as
well. Considering the adverse effects of Climate Change, banks have been advised to be cautious
about the adverse impact of natural calamities and encourage the farmers to cultivate salinity
resistant crops in the salty areas, water resistant crops in the water locked and flood prone areas,
drought resistant crops in the drought prone areas, using surface water instead of underground
water for irrigation and also using organic fertilizer, insecticides by natural means instead of
using chemical fertilizer and pesticides.

3.2. Adopting Green Banking Policy

Now it is the high time for the banks to adopt a comprehensive 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. With a view to developing green banking practices in the
country, an indicative Green Banking Policy and Strategy framework has been developed for the
banks in the following manner: Green Banking Policy needs to be covered through time frame
work which will be segregated into 3 phases.

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

3.3.3. Initiating In-house Environment Management

Banks shall prepare an inventory of the consumption of water, paper, electricity, energy etc. by
its offices and branches in different places. Then it should take measures to save electricity, water
and paper consumption. A 'Green Office Guide' or at least a set of general instructions should be
circulated to the employees for efficient use of electricity, water, paper and reuse of equipments.
In place of relying on printed documents, online communication should be extensively used
(where possible) for office management and make sure that the printers are defaulted to duplex
for double-side printing to save papers. Banks may apply Eco-font in printing to reduce use of
ink, use scrap paper as notepads and avoid disposable cups/glasses to become more eco- friendly.
Installation of energy efficient electronic equipments and automatic shutdown of computers,
fans, lights, air coolers etc. will help reducing electricity consumption. Energy saving bulbs
should replace normal bulbs in branches/offices of the banks. Banks should make plan to use
solar energy at their premises to save electricity. Bank should take steps to save energy from
corporate business travel and encourage employees to purchase energy efficient cars
(That consume less fuel) can reduce gas and petroleum consumption.
3.3.4. Introducing Green finance
Eco friendly business activities and energy efficient industries will be given preference in
financing by bank. 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 should be encouraged and financed by bank. Consumer loan programs may be
applied for promoting environmental practices among clients.
3.3.5. Creation of Climate Risk Fund
Bank should finance the economic activities of the flood, cyclone and drought prone areas at the
regular interest rate without charging additional risk premium. However, banks should assess
their environmental risks for financing the sectors in different areas for creating a Climate
Change Risk Fund. This will be used in case of emergency. The bank would ensure regular
financing flows in these vulnerable areas and sectors. The fund could be created as part of banks
CSR expenses.

20

3.3.6. Introducing Green Marketing

Green marketing is the marketing of products that are presumed to be environmentally safe.
Green marketing incorporates a broad range of activities, including product modification,
changes to the production process, packaging changes, as well as modifying advertising. It refers
to the process of selling products and/or services based on their environmental benefits. Such a
product or service may be environmentally friendly in itself or produced and/or packaged in an
environmentally friendly way. Banks should use environmental causes for marketing their
services to consumer. Green marketing is expected to help awareness development among
common people.
3.3.7. Online Banking
Online banking is the practice of making bank transactions or paying bills via the Internet on a
secure website of the respective bank that allows the customers to make deposits, withdrawals
and pay bills. Banks should give more emphasis to make the easiest way to help environment by
Eliminating paper waste, saving gas and carbon emission, reducing printing costs and postage
expenses.
3.3.8. Supporting Employee Training, Consumer Awareness and Green Event
Employee awareness development and training on environmental and social risk and the relevant
issues should be a continuous process as part of the bank's Human Recourse Development.
Awareness development among consumers and clients would be a continuous job of a bank
under its public relation department.
3.3.9. Disclosure and Reporting of Green Banking Activities
Banks shall report on the initiatives/practices to BB and disclose in their respective websites.

3.4. Phase-II
The time lining for the actions to be taken under Phase-II should not exceed December 31, 2012.

21

3.4.1. Sector Specific Environmental Policies

Banks need to formulate strategies to design specific policies for different environmental
sensitive sectors such as Agriculture, Agri-business (Poultry & Dairy), Agro farming,
Leather(Tannery), Fisheries, Textile and Apparels, Renewable Energy, Pulp and Paper, Sugar and
distilleries, Construction and Housing, Engineering and Basic Metal, Chemicals (Fertilizers,
Pesticides and Pharmaceuticals), Rubber and Plastic Industry, Hospital/Clinic, Chemical Trading,
Brick Manufacturing, Ship breaking etc.
3.4.2. Green Strategic Planning
A bank should determine green targets to be attained through strategic planning. Bank should
determine a set of achievable targets and strategies, and disclose these in their annual reports and
websites for green financing and in-house environment management as well. For in-house
environment management, the target areas should cover attaining energy efficiency in the form
of the use of renewable energy, reduction of electricity, gas, and petrol consumption, reduction of
Green House Gas(GHG) emissions, issuance of e-statements, electronic bill pay, saving papers,
environment friendly office buildings etc. For Green Financing, the target areas should cover
reducing loans for certain environmentally harmful activities, attaining a particular percentage of
environmental loans as percentage of total, introducing eco-friendly financial products etc.
3.4.3. Setting up Green Branches
A Green Branch should be featured by the provision of the maximum use of natural light, use of
renewable energy, use of energy saving bulbs and other equipments, reduced water and
electricity use, use of recycled water etc. Such a branch of a bank would be specifically
designated as a Green Branch. A Green Branch will be entitled to display a special logo
approved by Bangladesh Bank. The criteria for certification of a Green Branch will be
circulated by Bangladesh Bank in due course of time.
3.4.4. Improved In-house Environment Management
Strategy of reuse, recycling of materials and equipments, and source reduction and waste
minimization strategy should be part of in-house environmental management in Phase-II. Banks
should increasingly rely on virtual meeting through the use of video conferencing in lieu of
physical travel which would help saving cost and energy.
22

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.

3.5.1. Designing and Introducing Innovative Products

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.

3.6. Reporting Green Banking Practices on Quarterly Basis

Banks shall report their initiatives/activities under the said program to the Department of Off-site
Supervision of Bangladesh Bank on quarterly basis. Banks shall submit their first quarterly
report on June 30, 2011 basis within July 15, 2011 and similarly they will be required to continue
to submit reports on the subsequent quarters within the next 15 days of the respective quarter
end. Banks shall keep their annual report and websites updated with the disclosures on green
banking initiatives/activities.

24

Chapter 4

Jamuna Bank Limited

Green Banking

25

4.1. About Jamuna Bank limited

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994
with its Head Office at Chini Shilpa Bhaban,3 Dilkusha C/A Dhaka-1000. The Bank started its
operation from 3rd June 2001.
Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital
and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respectively. The Paid-up
Capital has been raised to 429.00 million and the total equity of the bank stands at 725.00 million
as on June 30, 2005. Currently the Bank has 61(sixty one) branches.
The Bank undertakes all types of banking transactions to support the development of trade and
commerce of the country. JBL's services are also available for the entrepreneurs to set up new
ventures and BMRE of industrial units.
Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was
established by a group of winning local entrepreneurs conceiving an idea of creating a model
banking institution with different outlook to offer the valued customers, a comprehensive range
of financial services and innovative products for sustainable mutual growth and prosperity. The
sponsors are reputed personalities in the filed of trade, commerce and industries.
The Bank is being managed and operated by a group of highly educated and professional team
with diversified experience in finance and banking. The Management of the bank constantly
focuses on understanding and anticipating customers needs. The scenario of banking business is
changing day by day, so the bank's responsibility is to device strategy and new products to cope
with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress
within only two years. The bank has already ranked as one of the quality service providers & is
known for its reputation.
Jamuna Bank offers different types of Corporate and Personal Banking Services involving all
segments of the society within the purview of rules and regulations laid down by the Central
Bank and other regulatory authorities.

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.

4.4. Jamuna Bank Green Banking Policy

Jamuna Bank Limited credit policy is based on green banking concept. The credit policy of the
bank strictly forbids financing in environmentally hazardous industries. To provide special
emphasis, a separate policy namely Green Banking Policy Has also been prepared or
formulated based on Bangladesh banks policy guideline on Green Banking, in line with global
development response to the environmental degradation. Thus the policy is being implemented in
phases.
As stipulated in Bangladesh bank guidelines, phase-1, requiring policy formulation, awareness
development, training etc. have been completed during 2011. Phase-2 requires formation of
sector specific environmental policies, setting up of Green branches; formation of bank specific
environmental risk management plan and guidelines, etc.Phase-3 requires designing and
introduction of innovative products and reporting in standard format with external verification.
Phase-2 has to be completed by December 31, 2012 and Phase-3 by December 31, 2013.
Accordingly Jamuna Bank Limited has developed its own green Banking guidelines focusing the
following issue:

Providing a safe and healthful workplace and ensuring that personal are properly trained
with appropriate safely and emergency equipment.

Being an environmentally responsible bank in Bangladesh.

27

Participating in efforts to improve environmental protection, understanding and sharing

appropriate pollution prevention technology, knowledge and methods.

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.

Incorporating environmental risk in CRM.

Initiating in-house environmental management.

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.

Introducing of internet banking.

Supporting employee training, consumer awareness and green event.

Disclosing and reporting green banking activities.

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.

4.5. Jamuna Bank Green Banking Implementation

Sl. No
1

Issue

Implementation Status

To formulate broad Green Jamuna Bank Limited has already formulated

Banking policy approved by broad Green banking policy, which has been
board of directors

To

form

high

approved by board of directors.

powered Jamuna Bank limited has formed high powered

committee comprising of committee comprising of directors.

directors
3

To allocate fund for green JBL fund will be allocated at the time of
banking in annual budget

To

establish

separate JBL a separate green banking unit headed by a

green banking unit

5

preparing annual budget.

senior executive has been established.

To incorporate environment Necessary guidelines have been issued for

risk in CRM

incorporating environment risk in CRM and

continuous monitoring will be ensured for proper
implementation.

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,

energy water, paper, electricity, etc. which is under

etc. by offices and branches process.

in different places
7

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

and reuse of equipment

8

To

use

online In place of relying on printed and copied

communication in place of documents, online communication is being

relying

on

documents

and

printed extensively used through FTP (file transfer

to

set protocol). Instructions have been issued to set

printers defaulted to duplex printers defaulted to duplex, where possible.

for double side printing
9

To

apply

Eco-font

Follow up is going on in this regard.

in Instructions have been issued to apply Eco-font in

printing and to use scrap printing and to use scrap paper as notepads.
paper as notepads
10

To

avoid

disposable JBL Employees have been encouraged to avoid

cup/glasses
11

disposable cup/glasses.

To install energy efficient JBL has already installed energy efficient

electronic equipments and electronic equipment to a large scale. Steps are
automatic

shutdown

of being taken for automatic shutdown of computers,

Computers, fans, lights, air fans, lights, air Coolers etc.

coolers etc.
12

To replace normal bulbs by JBL does not use any tungsten bulb. Some tube
energy efficient bulbs

lights are in use which shall be replaced with

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

has established solar system in a remote Char of

Kishoregonj as part of its CSR activities.

14

To take steps to save energy Instructions have been issued to encourage

from

15

corporate

business employees to save energy from corporate business

travel

travel.

To introduce green finance

Eco friendly business activities and energy

efficient industries are given preference in
financing. Green financing will be included as
30

priority sector in the next annual credit plan.

16

To create climate risk fund

JBL Creation of climate risk fund is under

process.

17

18

To

introduce

Green JBL shall emphasize on green marketing in its

marketing

marketing activities.

To implement online baking

Certain online banking is already in place. Steps

are underway to maximize online e banking.

19

To undertake training for JBL has already undertaken several training

employee awareness

20

To

develop

programs for employee awareness.

awareness JBL will organize Green Event to develop

among customers by public awareness among customers.

relation department

4.6. Jamuna Bank Green Banking Practices

To save our beloved earth from the disaster of Green House Effect, Jamuna Bank is offering
ECO friendly product Jamuna Green. Under this product, you can get finance for ETP plants in
different sectors, Eco friendly vehicles, Eco friendly fields (reduce CO2 emission), Bio Fertilizer,
Bio gas plants, Solar plants and Eco friendly any other business. Mode of finance shall be Term
Loan mainly. Jamuna Bank Limited adopts the green banking business model for sustainable
banking by launching the following strategies:

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

4.6.4.2. Energy Consciousness: Jamuna bank limited Developing energy consciousness,

adopting effective office time management and automated solutions and using compact
fluorescent lighting (CFL) can help banks save energy consumption considerably. Jamuna bank
limited has also adopted the policy to use energy savings lights, to use gradually renewable
energy such as solar panels in all their branches.

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

Others Banks Green

Banking Practices

5.1. United Commercial Bank Limited

The globe is encompassing immense environmental effects due to the activities of business,
industries and financial houses. Moreover, the effects of climate change also create specific
environmental issues for the enterprises and living beings at large. On the other hand, in-house
consumption and use of paper, electricity, water, fuel, stationeries, equipments, technologies,
34

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,

energy and water.

Enhance productivity as well as efficiency of the employees through skilled & optimum
usage of technology
35

Reduce possible health hazards by installing eco-friendly equipments

Save significant portion of Forestry by reducing paper usage
Lessen emission of Green House Gases (GHGs) through making less corporate travelling

through teleconferencing as well as arranging transport pool for the employees

Help develop customers consciousness on environment by arranging awareness
development program

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.

5.1.2. Green Banking

Green banking in general refers to the efforts of the Banking sector to keep the environment
green and to minimize greenhouse effects through rationalizing their strategies, policy, decisions
and activities pertaining to banking service, business and in-house operational activities. Green
banking may be seen as a component of the global initiative from Banks end to save
environment. Green banks or environmentally responsible banks do not only improve their own
standards but also affect socially responsible behavior of other business.

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,

energy and water.

Enhance productivity as well as efficiency of the employees through skilled & optimum

usage of technology
Reduce possible health hazards by installing eco-friendly equipments
37

Save significant portion of Forestry by reducing paper usage

Lessen emission of Green House Gases (GHGs) through making less corporate travelling

through teleconferencing as well as arranging transport pool for the employees

Help develop customers consciousness on environment by arranging awareness

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.

5.2. Governance and Initial In-house Environment Management

5.2.1. Phase I
Activities under Phase I are to be completed by December 31, 2011 or within extended time
allowed by Bangladesh Bank. This phase includes developing Green Banking policies and shows
general commitments on environment through in-house performance.

5.2.2. Policy formulation and Governance

The Audit Committee of the Board of Directors of the Bank will act as the high powered
committee, who will be responsible for reviewing the banks environmental policies, strategies
and program every year.

5.2.3. Incorporation of Environment Risk in CRM

The Bank will comply with the instructions stipulated in the detailed guidelines on
Environmental Risk Management (ERM) in consideration of a part of the Green Banking Policy.
With a view to incorporating Environmental and climate risk as part of existing credit risk
methodology to assess a prospective borrower, Banks ERM Policy has been designed in line
with Bangladesh Bank guidelines. From now Environmental and Climate Change Risk will be
considered as part of the existing credit risk methodology of the Bank to assess a prospective
38

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.

5.2.4. Initiating In-house Environment Management

An inventory of water, paper, electricity, energy etc. used by officers and executives at offices
and branches of the Bank will be prepared by the General Services Division and submit the same
to the Green Banking Unit/Cell quarterly. The Inventory Report submitted by the General
Services Division will help the Bank to use it as a yardstick to measure the improvement of the
Bank regarding implementation of Green Banking Guidelines.
General Services Division will formulate a Green Office Guide or at least a set of general
instructions to be followed by the employees of the Bank for efficient use of electricity, water,
paper and reuse of equipments. In place of relying on printed documents, on line communication
will be extensively used (where possible) for office management to save papers. For this
purpose, the Information Technology Division will take appropriate initiatives, e.g. introduction
of Digital Signature.
Initiatives will be taken to apply Eco font in printing to reduce use of ink, use scrap paper as
notepads and avoid disposable cups/glasses and to install energy efficient electronic equipments
and automatic shutdown of computers, fans, lights, Air Coolers, etc. that will help the Bank to
reduce electricity consumption. Occupancy Sensors may be used in places, i.e. meeting room,
dining room, guest room, etc., not requiring consistent lighting. Energy saving bulbs will be
replaced by normal bulbs in branches/offices of the Bank. An extensive plan will be made to use
solar energy at the Bank premises to save electricity.
Steps will be taken to save energy from corporate business travel and employees will be
encouraged to purchase energy efficient cars (that consume less fuel) to reduce gas and
petroleum consumption. The General Services Division will execute the above activities in
collaboration with the Information Technology Division and other Divisions where necessary.

5.2.5. Introducing Green Finance

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.

5.2.6. Creation of Climate Risk Fund

Financing to the economic activities of the flood, cyclone and drought prone areas will be made
at the regular interest rate without charging additional risk premium. A Climate Change Risk
Fund will be created for financing in different areas after assessing the risks involved and the
fund will be used in case of emergency. Regular financing flows will also be ensured in these
vulnerable areas and sectors. The above Climate Change Risk Fund will be a part of the Banks
CSR expenses. Banks Credit Marketing Division, CRM Division, Finance and Accounts
Division and Corporate Affairs Division will look into this area.

5.2.7. Introducing Green Marketing

Green marketing is the marketing of products that are presumed to be environmentally safe.
Green marketing may incorporate a broad range of activities, including product modification,
changes to the production process, packaging changes, as well as modifying advertising. It refers
to the process of selling products and/or services based on their environmental benefits. Such a
product or service may be environmentally friendly in it or produced and/or packaged in an
environmentally friendly way. The Bank will use environmental causes for marketing their
services to consumer and to create awareness among the mass people. This part will be executed
by the Public Relations Department of Corporate Affairs Division and the General Banking and
Development Division of the Bank.

5.2.8. Online banking

Online banking is the practice of making bank transactions or paying bills via the Internet on a
secure website of a bank that allows the customers to make deposits, withdrawals and pay bills.
The Bank has been providing such services to its large base of customers throughout the country
40

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.

5.2.9. Employee Training, Consumer Awareness and Green Event

Training and campaign on employee awareness and environmental and social risk and the
relevant issues will be taken continually as part of the Bank's Human Recourse Development.
The Public Relations Department under Corporate Affairs Division of the Bank will continually
arrange necessary campaign and programs to create awareness among consumers and clients.
This part will be executed by the Training Institution of Human Resources Division and the
Corporate Affairs Division of the Bank (as the case may be).

5.2.10. Disclosure and Reporting Green Banking Activities

The Report on the initiatives/activities as part of implementation of Bangladesh Banks Policy
Guidelines for Green Banking will be submitted on quarterly basis to the respective Department
of Bangladesh Bank. The Report will also be published on the website of the Bank and in the
Annual Report. This part will be executed by the General Banking and Development Division,
the Information Technology Division and the Corporate Affairs Division of the Bank.

5.3. Sector-specific Policies and Strategic Planning

5.3.1 Phase II
5.3.2. Sector specific environmental policies
Strategies will be formulated to design specific policies for different environmental sensitive
sectors such as Agriculture, Agri-business (Poultry & Dairy), Agro farming, Leather (Tannery),
Fisheries, Textile and Apparels, Renewable Energy, Pulp and Paper, Sugar and distilleries,
Construction and Housing, Engineering and Basic Metal, Chemicals (Fertilizers, Pesticides and
Pharmaceuticals), Rubber and Plastic Industry, Hospital/Clinic, Chemical Trading, Brick
Manufacturing, Ship breaking etc.
This part will be executed by Credit Marketing Division and CRM Division.
41

5.3.3. Green Strategic Planning

A set of achievable targets and strategies will be determined, and disclosed in the Annual Report
and on the website of the Bank for green financing and in-house environment management.
For in-house environment management, the target areas will cover attaining energy efficiency in
the form of the use of renewable energy, reduction of electricity, gas, and petrol consumption,
reduction of GHG emissions, issuance of e-statements, electronic bill pay, saving papers,
environment friendly office buildings etc. For Green Financing, the target areas will cover
reducing loans for certain environmentally harmful activities, attaining a particular percentage of
environmental loans as percentage of total, introducing eco-friendly financial products etc. This
part will be executed by General Services Division, Information Technology Division, Corporate
Affairs Division, Credit Marketing Division and Credit Risk Management Division (as the case
may be).

5.3.4. Setting up Green Branches

Branches of the Bank will be featured by the provision of the maximum use of natural light, use
of renewable energy, use of energy saving bulbs and other equipments, reduced water and
electricity use, use of recycled water etc. Such Branches will be entitled to display Green Logo
upon approval by Bangladesh Bank. This part will be executed by the General Banking and
Development Division of the Bank.

5.3.5. Improved In-house Environment Management

Strategy of reuse, recycling of materials and equipments, and source reduction and waste
minimization strategy will be part of in-house environmental management of the Bank. Virtual
meeting will be carried out through video conferencing in lieu of physical travel which would
help saving cost, energy as well as time. This part will be executed by General Services Division
and General Banking and Development Division.

5.3.6. Bank specific Environmental Risk Management Plan and Guidelines

42

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.

5.3.7. Educating the clients

Clients and business houses of the Bank will be encouraged and influenced to comply with the
environmental regulations and undertake resource efficient and environmental activities through
rigorous programs. This part will be executed by the General Services Division and the
Corporate Affairs Division of the Bank.

5.3.8. Disclosure and reporting of Green banking activities

Independent Green Banking and Sustainability reports showing past performances, current
activities, and future initiatives will be published through Annual Report and website of the
Bank. Updated and detailed information about the Banks environmental activities and
performances of its major clients will also be disclosed. This part will be executed by the General
Services Division, the Information Technology Division and the Corporate Affairs Division and
all other relevant Divisions.

5.4. Green Product and Standard Report

5.4.1. Phase III
Activities under Phase III have to be completed by December 31, 2013. At this phase, the Bank
will introduce Green Products and submit report based on international standard.

5.4.2. Designing and introducing innovative products

Alongside avoiding negative impacts on environment through banking activities, the Bank will
introduce environment friendly innovative green products to address the core environmental
challenges of the country.
43

5.4.3. Reporting in standard format with external verification

The Bank will publish independent Green Annual Report following internationally accepted
format like Global Reporting Initiatives (GRI) upon verification by an independent agency or
acceptable third party.

5.4.4. Reporting Green Banking Practices to Bangladesh Bank

The Bank will report its initiatives/activities under the said program to the Department of Offsite Supervision of Bangladesh Bank on quarterly basis and as instructed by Bangladesh Bank.

5.5. Amendment and Compliance

5.5.1. Amendment of the Policy
In view of the dynamic nature of the banking business and the changing pattern of the
environment, the Banks Green Banking Policy should be subject to ongoing review,
modification and revision. This Policy will be amended, revised as and when warranted to
accommodate the changes in the environment condition, government policy, central bank
regulation and experience of the Bank while dealing with Green Banking.

5.5.2. Compliance
The compliant banks practicing Green Banking will have the following preferential treatments:

Bangladesh Bank will award points to banks on Management component while

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

performance in green banking activities in the BB websites.

Bangladesh Bank will actively consider green banking activities/practices of a bank
while according permission for opening new bank branch.

In view of the above, all concerned Divisions of the Bank must put their sincere efforts to make
UCB a compliant Bank.

44

5.6. BASIC Bank Limited

Global warming, which is one of the most burning & discussed issues, has the worst impact on
the climate of the planet as a whole. The rapid change in climate will be too great to be adapted
by the eco-systems, since the change have already made direct impact on biodiversity,
agriculture, forestry, dry land, water resources and human health. As such, issue of global
warming calls for a global response. Due to unusual weather pattern, rising greenhouse gas,
declining air quality etc. society demands that business also take responsibility in safeguarding
the planet. The key areas of environmental degradation cover air pollution, water pollution,
surface water scarcity, encroachment of rivers, improper disposal of industrial, medical and
house-hold waste, deforestation, loss of open space, loss of biodiversity and many other issues.
In addition, Bangladesh is one of the most vulnerable countries of the world due to climate
change. In line with global development and response to the environmental degradation,
financial sector in Bangladesh in part has already started playing their roles as one of the key
stake holders to address the issue properly. The climate of Bangladesh has already been exposed
to global warming due to environmental pollution followed by climate degradation although she
cant be accused to be responsible for these issues. However, the climate of the country is rapidly
deteriorating due to recklessness of her citizens and inefficient & ineffective use of natural/seminatural/manufactured/processed/ transformed resources. Natural disasters like cyclone, flood,
draught and earthquake become very frequent. As such, state of environment in Bangladesh
needs proper attention and up gradation for ensuring a better future for our successors.

5.6.1. Objectives of the policy

The main objective of the policy will be to contribute to the national/global interest through
establishing an environment friendly banking business system which may be achieved through
proper utilization of human & physical resources and encouraging channeling of fund to
projects/businesses those expose no or very little risk to the environment/climate.
The objectives of the policy will be:
45

To promote sustainable environment friendly initiatives undertaking through adoption of

a set of principles and strict adherence to those principles.

To contribute to the national/global interest through avoidance of financing unspecific
industry/project(s)/process/business, being harmful or tend to be causing harm to the

environment even if they are financially viable;

To create an atmosphere for the bank and/or its both existing and potential clients to work
within an ideal business environment through innovative marketing of innovative

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

through introduction of appropriate technology;

To sponsor awareness programs for environment friendly products/technology through
practice of Corporate Social Responsibilities (CSR);

5.6.2. Covenants of the Policy

The perception towards environmental norms and standards is changing over time. Adhering to
environmental norms and standards were considered costly and as a bottleneck to development.
However, if the economic benefits of these in terms of health care, productivity and insurance
were considered the benefit would have been much higher than the cost. If all the impacts of
environmental degradation are considered and costs are measured, then economic benefits which
these protection measures fetch would have been huge. As formulating & adopting Green
Banking policy will be ultimately befitting for the climate/environment, formulation of effective
policy through designing effective strategy needs to be addressed quickly & properly. Promises
of potential cost savings from no cost or low-cost resource efficiency or waste prevention
measures need to be clearly demonstrated before they will be more widely adopted. This is the
high time for the bank to formulate this policy for confirming its stance towards safety of
environment.

5.6.3. Policy formulation and governance

46

A High-Powered Committee comprising of the director(s) from the Board of the

Directors of the bank shall review environmental policies, strategies and programs of the

bank.
The bank allocates considerable fund in their annual budget for implementing &

practicing green banking.

The bank has established a separate Green Banking Policy Implementation Unit
(GBPIU) which has been assigned responsibility for designing, evaluating and
administering related Green Banking issues of the bank. A senior executive has been
assigned with the responsibility of heading the unit and a permanent position playing the
role of coordinator of the unit shall be created. The unit will report to the high powered

committee time to time.

This policy ensures that services to be provided by all of the credit delivery points of the
bank shall comply Green Banking Policy and activities to be designed within the Green

Banking Policy implementation strategy.

The stakeholders of the bank are encouraged to reduce their consumption & wastage of
physical resources like raw materials, water and energy to make sure that the best value
is received from the resources they use through formulating effective strategies with the
boundaries of the policy.

5.6.4. Introducing Green Finance

Financing in eco friendly and environmentally sustainable business activities and energy efficient
industries shall be extended through preference by all the credit delivery points. Environmental
infrastructures such as renewable energy project(s), clean water supply project(s), waste water
treatment plant(s), solid and hazardous waste disposal plant(s),bio-gas plant(s), bio-fertilizer
plant(s) are encouraged those will be financed by the bank. Viability of environmental
infrastructures for financing shall be assessed in line with the environmental issues i.e. how the
purpose of the project(s)/ business & to what extent this/these is/are rewarding to the
environment. Most viable project(s)/business/ sector(s) shall be prioritized for financing to
position the bank gradually as a Carbon Neutral Bank first & then as a Climate Positive
Bank.

5.6.5. Creation of Climate Risk Fund

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.

5.6.6. Introducing Green Marketing

Green Marketing incorporates a broad range of activities, including products/services design,
engineering, modification, new product innovation, changes to the production process &
packaging encouraging the potential clients for designing Green Project as well as modifying
advertising. Besides, bank effectively uses green marketing channels more for widening target
markets of usual products. Bank takes steps that will help building awareness among common
people for promoting products/services which cause least harm to the environment. R&D
Division shall plan for developing & marketing Green Banking products for offer.

5.6.7. Ensuring all out Online Banking practices

As the bank has already adopted on-line banking practices to operate its regular transactions, it
wont be difficult to adopt paperless banking practices. As such, the GBPIU shall accentuate the
process of commencing e-banking related to processing of proposals avoiding the use of physical
resources like paper, printer cartridge etc. with the help of ICT & MIS Division of the bank.
MIS Division is responsible for preparing effective communication strategy while ICT Division
provides software support & necessary training to the employees of the bank in a manner that all
of employees are trained in Online Banking practices.

5.6.8. Use of appropriate technologies

The bank addresses the use of appropriate technologies through installation of energy efficient
machinery/equipments that will up grade & expand its ATM services and introduce SMS
services & e-mail to its customers for providing better and paperless services to its customers.
48

5.6.9. Supporting employee training, Consumer Awareness and Green Event

Exclusive training programs or specialized/befitting classes in foundation or other credit related
courses for incorporating Green Banking Policy Guidelines as a part of awareness building
among the employees of the Bank are arranged in consultation with GBPIU by the Training Cell.
Training programs on environmental and social risk and employee awareness development
should have to be implemented by the training cell as a continuous process.

5.6.10. Sector specific Environmental Policies

The bank shall formulate strategies to design specific policies for different environmentally
sensitive sectors such as agriculture, agri-business (poultry and dairy), agro farming etc. The
bank shall make the provision for installing water treatment and effluent treatment plants
mandatory for clients having textile, spinning, dyeing, and leather processing factories to qualify
themselves for receiving financial support from the Bank.
The environmentally sensitive sectors may be listed as follows:

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.

5.6.11. Pricing Strategy

49

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.

5.6.12. Green strategic planning

The bank shall determine green targets to be attained through specific planning. It shall
determine a set of achievable targets and strategies, and disclose these in their annual reports and
web sites for green financing and in-house environment management as well. ICT Division shall
time to time up-date the Website of the bank with new and easy navigation slots or publish a
separate webpage for the purpose of marketing/advertising green banking products of the bank.

5.6.13. Setting up Green Branches

The bank shall set up Green Branches which will be featured by the provision of using natural
light, renewable energy and surface & recycled water to the highest possible extent and
implementing energy efficient lighting & cross ventilation air movement system and replacing
gradually the less energy efficient machinery/equipments by higher energy efficient
machinery/equipments. The branches shall be decorated in such a manner that will promote the
activities of Environmental/Green Banking issues to the people.

5.6.14. Incorporation of Environmental Risk Management plan and guidelines

The bank incorporates Environmental Risk Management (ERM) section in the Credit Risk
Management guidelines of the bank for evaluating/sanctioning new as well existing loan
proposals through Assessment of Environmental Impact (EIA) of those projects/businesses. As
such, the bank shall follow the Environmental Risk Management manual, provided by
Bangladesh Bank, for assessing project/business proposals and monitoring of project(s)/business
& working capital loans until it develops an ERM manual or guidelines of its own.
Environmental Risk Management (ERM) Guidelines, issued by Bangladesh Bank, shall be handy
50

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.

5.6.15. Initiation of Programs for educating clients

The bank formulates effective strategies for introducing programs to educate existing & potential
clients (both personal/corporate level) so that they are and/or will be equipped to comply
environmental regulations, imposed or to be imposed time to time by the regulatory authorities.

5.6.16. Disclosure and reporting of Green banking activities

The bank shall start publishing independent Green Banking and sustainability reports showing
past performances, current activities and future initiatives.

5.6.17. Designing and introducing innovative products

The bank shall introduce environment friendly innovative green products addressing the core
national/global environmental challenges. Research & Development (R&D) Division of the bank
shall formulate plan for developing & marketing Green Banking products to offer for public.

5.6.18. Eco Landscaping

The bank shall prepare eco landscaping of its branches/sales offices for encouraging
environmental infrastructures such as renewable energy project(s), clean water supply project(s),
waste water treatment plant(s), solid and hazardous waste disposal plant(s), bio-gas plant(s), biofertilizer plant(s) and implement the Green Banking Policy effectively.

5.6.19. Reporting in Standard Format with External verification

Bank has to publish independent Green Annual Report following internationally accepted
format like Global Reporting Initiative (GRI) targeting their stakeholders.

51

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.

5.6.20. Provision for co-opting intermediary regulations/guidelines

There will be provision for co-opting intermediary guidelines and/or restrictions on financing in
a specific sector/industry, to be dictated by organizations of Government of Bangladesh and
regulatory bodies, related to Green Banking issues without changing any of the clauses of the
policy just by initiating note within the discretion of the Management when the guidelines and/or
restrictions will be considered befitting for the environment.

5.7. Dhaka Bank Limited

Global warming also called as Green House Effect is a global issue that calls for a global
response. The warming is the effect of certain man-made gas emissions such as carbon-dioxide,
methane, nitrous oxide and hydro-flour carbon is found responsible for distortion of balance in
the environment and climate changes. The rapid change in climate will probably be too great to
allow many eco systems to suitable adapt, since the changes have direct impact on bio diversity,
agriculture, forestry, dry land, water resources and human health. However, there is general lack
of adequate awareness on the above issues and hence there is urgent need to promote certain
urgent measures for sustainable development and corporate social responsibility. Green Banking
is a component of the global initiative by a group of stakeholders to save environment.
Bangladesh is one of the most climate change vulnerable countries. In line with global
development and response to the environmental degradation, financial sector in Bangladesh
should play an important role as one of the key stakeholders. Bangladesh Banks Initiatives:
Bangladesh Bank is well aware of the environmental degradation situation as mentioned and has
already given time to time directions to all schedule banks. Commercial banks are now required
to ensure necessary measures to protect environmental pollution while financing a new project or
providing working capital to the existing enterprises.

5.7.1. Green Banking

52

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.

5.7.2. Importance of Green Banking

Green banking is very important in mitigating the following risk involving the banking sector:

5.7.2.1. Credit Risk

Due to climate change and global warming, there have been direct as well as indirect costs to
banks. It has been observed that due to global warming, there have been extreme weather
conditions which affect the economic assets financed by the banks, thus leading to high
53

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.

5.7.2.2. Legal Risk

Banks, like other business entities, face legal risk if they do not comply with relevant
environmental regulation. They may also face risk of direct lender liability for cleanup costs or
claims for damages in case they actually take possession of polluted causing assets.

5.7.2.3. Reputation Risk

Reputation and image are very important for the bank. It is important to demonstrate that the
bank acts responsibly at all the times and this is particularly important when providing finance
for major business activities. Not considering environmental impacts arising from a borrowers
operations can result in negative publicity for both the borrower and the Bank. Reputation risk is
present in financing transactions particularly where the bank considering a large exposure. The
banks reputation can be damaged if there is a failure of the business due to environmental
reasons.

5.7.2.4. Security Risk

Bank might be exposed due to poor quality of the security / collateral e.g. contaminated land or
disposal of hazardous chemicals, in case of default. This is a direct risk.

5.7.2.5. Salient Feature of the Policy

Salient features of the Green Banking Policy are outlined below:

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

responsibility and CSR activities.

In consideration of financing a new project, Credit Division of Dhaka Bank will take

care of the following points:

Take clear idea about clients plan to reduce Carbon emission, if Carbon emission is

incidental with the project under consideration

Financing project with ETP (effluent treatment plant) would be encouraged;
54

Projects those are environment friendly would be given preference; and

Credit risk assessment will include environmental risk in financing decision.
Dhaka Bank will also consider environment friendly aspect of a project at the time of

renewal.
Dhaka Bank will not finance any Brick Field without having environment friendly kiln

for firing bricks.

Agriculture is the thrust sector for Green Banking financing. From the very beginning
Dhaka Bank has been financing agriculture sector. Bangladesh Bank has fixed a target of
Tk.128 chore to finance in the sector for Dhaka Bank in the FY 2011-12. Special Credit

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

plant, organic fertilizer plant etc. as priority sector;

Paperless banking through using modern computer software, effective e-mail service for
official correspondence. Dhaka Bank has already been using a robust core banking
software and e-mail for intra bank official correspondence and with the other

organization those have same connectivity.

Dhaka Bank also has taken initiative for use of energy savings light and rational use of air

conditioner in its all offices for reducing electricity consumption.

Dhaka Bank is also thinking to install solar panel in their rural branches as a source of

electricity.
Dhaka bank also thinking to take coverage of Green Travel Insurance for the carbon
emission caused by it.

5.8. Dutch Bangla Bank Limited

5.8.1. 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 in front and back office to make socially
responsible behavior for the greater interest of the country and planet as whole. Bank
55

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.

56

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
57

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.

5.8.2. Environment and pollution

Since the past few decades, the environmental risks and its management techniques have become
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
rose 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.

5.8.3. Urge to step ahead

58

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.

5.8.4. 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 possibility of loss in the context
of 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 noncompliance of regulations set by Department of Environment. Labor/Social risks specially if
there is potential sources of accidents, employment of child labor, forced labor 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 loss of market of the borrowers which can lead to
59

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.

5.8.5. Bangladesh Bank Directives

Banking Regulations & Policy Department, Bangladesh Bank vides their Circular No.02 dated
February 27, 2011 has outlined detail policy guidelines for implementing Green Banking through
all scheduled banks operating in Bangladesh. The Circular addressed to adopt banks a
comprehensive 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 behavior 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.

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.
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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 up to 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.

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Chapter 6

Recommendation

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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

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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.

Investing in environmental projects (recycling, farming, technology, waste,

etc.) for example reduced-rate of interest on loans to homeowners who install a solar energy
system.

ii.

Providing option for customers to invest in environmentally friendly

banking products.

iii.

Investing in resources that combine ecological concerns and social concerns.

Green Banking

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Chapter 7

Conclusion

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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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