Sustainable Environment: Necessities of Green Banking | 2018-08-18 |

Sustainable Environment: Necessities of Green Banking

Mir Mahmudul Haque Chowdhury

    18 August, 2018 12:00 AM printer

Sustainable Environment: 
Necessities of Green Banking

Mir Mahmudul Haque Chowdhury

Green banking refers banking practices that are environmentally sustainable. It is defined as the practice of banking operations by giving utmost concentration and attention to social, ecological and environmental factors. The aim of green banking is centered to conservation of nature and natural resources without changing the main banking activities, green banking can grow through applying environmental friendly policies throughout every sector of its activities.

Thus, green banking involves two pronged approach. Firstly, it focuses on the green transformation of internal operations and activities of all banks working in the country. Elaborately, all the banks should adopt appropriate ways of utilising renewable energy, automation and other measures to minimise carbon from banking activities. Secondly, all banks should adopt environmentally responsible financing by selecting green projects and initiative and rejecting environmentally risky projects.

Green banking is a modern and popular concept all over the world. This type of banking concept first evolved in western countries. Now a days it is practiced in most of the countries in the world. Since green banking considers all the factors involved in social and environmental aspects, it is called ethical banking. The main objectives of green banking are to ensure the use of organisational resources in favour of the environment and society as a whole.

Green banking was formally started in 2003 with a view to protecting the environment. The first concept of green banking was originally developed by Reed Hundt and Ken Berlin in USA, as a part of 2008 Obama-Biden Transition Team’s efforts to facilitate clean energy development. While financing to green project by UK bank’s started in 2009. Bangladesh Bank, The central bank and regulatory authority of Bangladesh issued policy guidelines for green banking on February, 2011. According to the guidelines, all operating banks and financial institutions need to take effective measures to conduct environment friendly banking activities in the country. Bangladesh Bank has also issued a common reporting format to all commercial banks to report green banking activities including the extent of carbon footprint in a structured way.  Banks and financial institutions now regularly submit a quarterly report to Bangladesh Bank on their performance in green banking activities.



Green banking is not only a corporate social responsibility activities of banks but also it is all about going beyond to keep the world livable without any significant damage. It indicates endorsing environment friendly practices and reducing carbon footprint from day to day banking activities. The broad objectives of green banking is avoiding waste and giving priority to environment and society. Focusing on environment friendly initiatives by providing innovative financial and ensure sustainable development by using organizational resources with responsibility by keeping the world livable for long time and to minimise paper works as much as possible inside and outside the bank.

Green banking is proactive and smart way of thinking with a vision for future sustainability of our earth. It evaluates all the factors before giving the loan whether the project is environment friendly and has any implication on the future people and planet. Green finance is a part of green banking that makes significant contribution to the transition to resource efficient and low carbon industries. Green finance includes finance to the project of Effluent Treatment Plant (ETP), Solar energy plant, Bio fertilizer plant, Bio gas plant, Hybrid Hoffman Klin (HHF) plant etc.

Another part of green banking is in-house green banking practices. It covers online banking, mobile banking, internet banking, ATM card services, e-statement generation etc. These types of banking services become popular to the customer day by day and come near of the customer’s hand. Besides these, common in-house green activities includes use of paper on both side, use online communication, use of energy saving bulbs, increasing scope of using day light, common use of table stationeries instead of individual use, are practiced by the banks remarkably.

The banking sector can play a significant role in protecting the environment by financing support to high impact environmentally sensitive sectors. The whole green banking activities are categorised as retail banking, corporate and investment banking and asset management.  Retail banking can include green car loans, green commercial building loan, home loan and green cards. Under corporate and investment banking, banks can offer green project finance, green securitisation, green capital and private equity, carbon commodities. Banks can deal with green fiscal funds, green investment fund and carbon fund under asset management.

Banks usually provide dedicated public services for profits. It is believed that profit should not be earned at the expense of the world’s most pressing environmental problems. The concept of green banking is evolved in the response to the global initiative to save environment. Bangladesh is one of the most climate change vulnerable countries in the world.  Green banking is a kind of welfare banking for the society as well as for the world at large. It needs to be green in daily operations and financing of nature conservation projects. The process and operations have already started in Bangladesh to keep the environment clean and healthy.

Government should encourage general people about green banking and green banking practices and procedures. Every bank has to participate and contribute to green banking practices and projects in today’s national and global banking competition. Bangladesh Bank should supervise and monitor the banks regarding their participation in green banking and progress on it. The coordinated efforts of Bangladesh Bank, Government, all the Banks, consumers and nature activist are essential to attain the vision of green and eco-friendly economy in Bangladesh.


The writer is a banker