Research Paper

On

Green Banking in Bangladesh A case Study on Dutch Bangla Bank Limited

Research Paper

On

Green Banking in Bangladesh A case Study on Dutch Bangla Bank Limited

Prepared ForChairman

Exam committee

Institute of Business Administration

JahangirnagarUniversity

Savar Dhaka-1342

Prepared By

Exam ID No 090703

Registration Number 20547

Area of concentration Financeamp Banking

Academic Session 2009-2010

MBA Program

Date of Submission

April 15 2012

April 15 2012

The Chairman

Examination Committee

MBA Program

Institute of Business Administration

Jahangirnagar University

Savar Dkaka-1342

Subject Submission of the Research Paper

Dear SirMadam

It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on

DBBLrdquo The paper is submitted as part of the partial fulfillment of the MBA program

Here I have tried to combine all the data available to prepare this paper and give it a final shape I have collected what I believe to be the most relevant information to make the paper as analytical and coherent as possible

I am grateful to you for providing me the opportunity to have such an excellent experienceI will

be obliged if you kindly approve this effort I request you to excuse me for any mistake that may

occur in the paper despite of my best effort

Sincerely yours

Exam ID 090703

Area of Concentration Finance and Banking

Academic Session 2009-2010

MBA Program

Acknowledgement

First of all I would like to express my gratitude to almighty God whose invisible guidance

helped me to complete this research paper Although time was very limited for getting the

sufficient knowledge about green banking in Bangladesh but the hard work confidence and

curiosity provide me the guidelines to complete this paper properly within the time I would like

to take the opportunity to express my deep sense of gratitude to my honorable supervisor

MrMohammad Abu Sayeed Faculty- Institute of Business Administration Jahangirnagar

University for his valuable suggestions and guidance during the study period that has greatly

inspired me in preparing this paper successfully I would also like to thank to Mr Md

NazmulIslamFaculty- Institute of Business Administration Jahangirnagar University for his

helpful instruction to prepare the report accordingly My appreciation goes to my friend

Mohammad Umar Faruk for his cooperation to make this paper

Table of Contents

Executive Summary

Topic Page No

CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

1-3112223

CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

AppendixReferences

4-164566-13141515-16

17-2017-1920

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Research Paper

On

Green Banking in Bangladesh A case Study on Dutch Bangla Bank Limited

Prepared ForChairman

Exam committee

Institute of Business Administration

JahangirnagarUniversity

Savar Dhaka-1342

Prepared By

Exam ID No 090703

Registration Number 20547

Area of concentration Financeamp Banking

Academic Session 2009-2010

MBA Program

Date of Submission

April 15 2012

April 15 2012

The Chairman

Examination Committee

MBA Program

Institute of Business Administration

Jahangirnagar University

Savar Dkaka-1342

Subject Submission of the Research Paper

Dear SirMadam

It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on

DBBLrdquo The paper is submitted as part of the partial fulfillment of the MBA program

Here I have tried to combine all the data available to prepare this paper and give it a final shape I have collected what I believe to be the most relevant information to make the paper as analytical and coherent as possible

I am grateful to you for providing me the opportunity to have such an excellent experienceI will

be obliged if you kindly approve this effort I request you to excuse me for any mistake that may

occur in the paper despite of my best effort

Sincerely yours

Exam ID 090703

Area of Concentration Finance and Banking

Academic Session 2009-2010

MBA Program

Acknowledgement

First of all I would like to express my gratitude to almighty God whose invisible guidance

helped me to complete this research paper Although time was very limited for getting the

sufficient knowledge about green banking in Bangladesh but the hard work confidence and

curiosity provide me the guidelines to complete this paper properly within the time I would like

to take the opportunity to express my deep sense of gratitude to my honorable supervisor

MrMohammad Abu Sayeed Faculty- Institute of Business Administration Jahangirnagar

University for his valuable suggestions and guidance during the study period that has greatly

inspired me in preparing this paper successfully I would also like to thank to Mr Md

NazmulIslamFaculty- Institute of Business Administration Jahangirnagar University for his

helpful instruction to prepare the report accordingly My appreciation goes to my friend

Mohammad Umar Faruk for his cooperation to make this paper

Table of Contents

Executive Summary

Topic Page No

CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

1-3112223

CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

AppendixReferences

4-164566-13141515-16

17-2017-1920

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

April 15 2012

The Chairman

Examination Committee

MBA Program

Institute of Business Administration

Jahangirnagar University

Savar Dkaka-1342

Subject Submission of the Research Paper

Dear SirMadam

It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on

DBBLrdquo The paper is submitted as part of the partial fulfillment of the MBA program

Here I have tried to combine all the data available to prepare this paper and give it a final shape I have collected what I believe to be the most relevant information to make the paper as analytical and coherent as possible

I am grateful to you for providing me the opportunity to have such an excellent experienceI will

be obliged if you kindly approve this effort I request you to excuse me for any mistake that may

occur in the paper despite of my best effort

Sincerely yours

Exam ID 090703

Area of Concentration Finance and Banking

Academic Session 2009-2010

MBA Program

Acknowledgement

First of all I would like to express my gratitude to almighty God whose invisible guidance

helped me to complete this research paper Although time was very limited for getting the

sufficient knowledge about green banking in Bangladesh but the hard work confidence and

curiosity provide me the guidelines to complete this paper properly within the time I would like

to take the opportunity to express my deep sense of gratitude to my honorable supervisor

MrMohammad Abu Sayeed Faculty- Institute of Business Administration Jahangirnagar

University for his valuable suggestions and guidance during the study period that has greatly

inspired me in preparing this paper successfully I would also like to thank to Mr Md

NazmulIslamFaculty- Institute of Business Administration Jahangirnagar University for his

helpful instruction to prepare the report accordingly My appreciation goes to my friend

Mohammad Umar Faruk for his cooperation to make this paper

Table of Contents

Executive Summary

Topic Page No

CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

1-3112223

CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

AppendixReferences

4-164566-13141515-16

17-2017-1920

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Acknowledgement

First of all I would like to express my gratitude to almighty God whose invisible guidance

helped me to complete this research paper Although time was very limited for getting the

sufficient knowledge about green banking in Bangladesh but the hard work confidence and

curiosity provide me the guidelines to complete this paper properly within the time I would like

to take the opportunity to express my deep sense of gratitude to my honorable supervisor

MrMohammad Abu Sayeed Faculty- Institute of Business Administration Jahangirnagar

University for his valuable suggestions and guidance during the study period that has greatly

inspired me in preparing this paper successfully I would also like to thank to Mr Md

NazmulIslamFaculty- Institute of Business Administration Jahangirnagar University for his

helpful instruction to prepare the report accordingly My appreciation goes to my friend

Mohammad Umar Faruk for his cooperation to make this paper

Table of Contents

Executive Summary

Topic Page No

CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

1-3112223

CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

AppendixReferences

4-164566-13141515-16

17-2017-1920

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Table of Contents

Executive Summary

Topic Page No

CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

1-3112223

CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

AppendixReferences

4-164566-13141515-16

17-2017-1920

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Executive Summary

Global warming is a burning issue that calls for a global response We are much concerned about global warming now-a-days The rapid change in climate will be too great to allow many eco-systems to suitably adapt since the change have direct impact on biodiversity agriculture forestry dry land water resources and human health Due to unusual weather pattern rising greenhouse gas declining air quality etc society demands that business also take responsibility in safeguarding the planet

Green finance as a part of Green Banking makes great contribution to the transition to resource-efficient and low carbon industries ie green industry and green economy in general Green banking is a component of the global initiative by a group of stakeholders to save environment The state of environment in Bangladesh is rapidly deteriorating 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 loss of open space and loss of biodiversity In addition Bangladesh is one of the most climate change vulnerable countries This growing issue is getting much importance day by day in our country In line with global development and response to the environmental degradation financial sector in Bangladesh should play important roles as one of the key stake holders In response to the above urgent measures are required by stake holders for sustainable development and thereby save the planet Banks hold a unique position in an economic system that can affect production business and other economic activities through their financing activities and thus may contribute to pollute environment Moreover energy and water efficiency and waste reduction are of high concern for many big banks Green banks or environmentally responsible banks do not only improve their own standards but also affect socially responsible behavior of other business

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

CHAPTER ONE

Introduction

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 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 sectors and 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 contribute to pollute environment Moreover energy and water efficiency and waste

reduction are of high concern for Banks

The globe is encompassing enormous 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 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

Background of the Study

Studies on green banking issues in Bangladesh are limited Hence a comprehensive study with

respect to Bangladesh banking sector is warranted Though green Banking is a burning issue

worldwide now a days it is a new concept in the field of banking sector in our country But it is

the issue on which we have to give much concentration especially for our country Banks in our

country can play important role by undertaking such activities policies and strategies that make

environment sustainable and eco-friendly By realizing that it is expected that Green Banking

Policy as guided by Bangladesh Bank will be 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 at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

environmental pollution while providing service or financing customers as well as to improve in-

house environment management through efficient use of various resources at Head Office

Branches and other link offices With this knowledge banks can formulate appropriate green

strategies to promote their brand image

Objectives of the Study

To explore the concept of Green Banking

To explore the policies and strategies taken by DBBL about Green Banking

Scope of the Study

The paper will be mainly helpful for those people who would like to conduct further research on

this issue As a primary research this paper will also be a source on policy documentation which

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 In fact the paper may serve as a background

of literature review in future

Methodology

This research paper is based on the secondary data which is collected from the Bangladesh Bank

website Dutch Bangla Bank Website some published articles in newspapers about green

banking and some training materials provided by Bangladesh Institute of Bank Management

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Limitations

There are some limitations of the research paper such as

This type of exploratory research is new idea so lack of experience and knowledge is

one of the big limitations for me

The stage of adoption and implementation of green banking in our country is based on

the assumption and knowledge no statistical model or tools are used to prove

The decision or applicability is hypothetical and assumption not proved

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

CHAPTER TWO

Definition of Green Banking

The term lsquoGreen Bankingrsquo developed in the western countries and has been replicated by many

developing countries Green Banking is now popular worldwide It is for stopping the

environmental degradation and making this planet habitable It means the eco-friendly or

environment-friendly banking and it also refers to ethical banking or sustainable banking We all

know that the peoples 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 This 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 bankers are the

important professional group of society they must have greater role to check the environmental

degradation They can adopt different green activities within their in-house environment and also

can initiate the protection of the air pollution water pollution by their clients Bankers can

finance the green projects which are environmental friendly and discourage the projects that

damage the environment

Generally Green banking 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

Conservation of environment and protection of ecology should be maintained through combined

efforts of multi stakeholders The main stakeholders are businessmen consumers and

professionals NGOs and government organizations As banks deal with the money of the

public they can not remain indifferent and must be more sensible to the maintenance of

ecological balance They must have effective role for the betterment of the environment and

green banking practices

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Advantages

External Advantage By adopting Green Banking policy banks and financial

institutions take responsibility for keeping the environment green and safeguarding the

planet

Internal Advantage Apart from enrichment of the external environment Green banking

may also help improve the performance of the Bank in the following ways

i Improve the image of the Bank by showing and serving its commitment to the environment

ii Significantly reduce operational cost due to less consumption of office stationeries energy

and water

iii Enhance productivity as well as efficiency of the employees through skilled amp optimum

usage of technology

iv Reduce possible health hazards by installing eco-friendly equipments

v Save significant portion of Forestry by reducing paper usage

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

through teleconferencing as well as arranging transport pool for the employees

vii Help develop customerrsquos consciousness on environment by arranging awareness

development program

viii Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects

Disadvantages

Everything has both sides positive and negative If we think about implementation of Green

banking in our country we have to consider some industries Most of the industries in our

country use hazardous chemical they have no legal systematic arrangement in their design If

banks and financial institutions stop loan sanctions on projects of these industries due to the

vulnerability to environment changes these industries will be closed totally Many people will be

unemployed

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

DBBL AND GREEN BANKING

Bank since its inception has been maintaining a balanced initiative and supporting activity to

contain things adversely affecting environment 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 Green Banking Policy amp Strategy of

DBBL has been outlined for every individual of the Bank working in front and back office to

make socially responsible behavior for the grater interest of the country and planet as a whole

Bank views that a Green Bank is an ethical bank or a sustainable Bank The broad objective of

green bank is to use resources with responsibility avoiding spoilage and giving priority to

environment and society

The policy to be covered in 3 segregated phases A brief of the phases and banks courses of

action as per guideline are stated below

PHASE_ 1 Governance and Initial In-house Environment Management

Activities under Phase ndash 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

11 POLICY FORMULATION AND GOVERNANCE

A Green Banking Cell to be formed with the participation of the executives and officers

from the relative divisions who will be responsible for designing evaluating and

administering related green banking policy issues of the Bank The Managing Director of

the Bank will approve formation of Green Banking Cell The cell will review direct and

coordinate with concerned DivisionBranchIndividual for effective implementation of

the targeted agendas and prepare monthly progress report in detailed and put

recommendation for management information and record The Green Banking Cell will

quarterly report to the High Powered Committee on the overall progress of the green

banking activity of the Bank as per specified format and seek

recommendationsuggestioninstruction of the Committee for effective and timely

implementation of the policy directions The cell will report to Bangladesh Bank as per

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

prescribed format on quarterly basis regarding Green Banking activities The members

will serve under a senior level executive who will act as the Chairman of the Cell

immediate to formation At the instruction of the management the construction of the

cell will be re-arranged through inclusion and exclusion of members for effective

coordination and successful implementation of the initiative

The Policy entails formation of a High powered Committee comprising of directors

from the Board In line with Bangladesh Bank policy guidelines the Audit Committee of

the Board is designated as High Powered Committee which will review Banks

environmental policies strategies and programs The Committee shall recommend

suggest and provide instruction to the Green Banking Cell for effective and timely

implementation of the policy directions

A Budget allocating considerable amount of fund have to be prepared by the related

Division (Accounts Division) and be inserted onward in the annual budget of the Bank

for each consecutive year in support of marketing and capacity building approach under

green banking initiatives of the Bank Budget to be prepared calculating segment of

expenses to be incurred with the recommendation of Green Banking Cell duly intimated

and approved by the competent authority

12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT

A Green Office Guideset of general instructions should be circulated to the employees for

efficient use of electricity water paper and reuse of equipments With the supportinitiative of

General Services Division a Green Office Guide should be circulated among the employees of

the Bank The office guide should entail among others instructionsadvices for-

Double-side printing to save papers

Application of ecofont printing to reduce ink

Usage of scrap paper as notepads

Avoiding of disposable cupsglasses

Installation of energy efficient electronic equipments

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Automatic shut down of computers fans lights air coolers usage of energy saving

bulbs installation of Solar energy etc to help reduce electricity consumption

Purchase energy efficient cars that can reduce gas and petroleum consumption

13 CREATION OF CLIMATE RISK FUND

Bank should finance flood cyclone and drought prone areas assessing risks at the regular

interest rate without charging additional risk premium and create as a part of Banks CSR

expenses a Climate Risk Fund which will be used in case of emergency

14 ONLINE BANKING

Bank should give more emphasis to make the easiest way to help environment by eliminating

paper waste saving gas and carbon emission reducing painting costs and postage expenses On-

line communication should be extensively used Effective and optimum utilization of online

banking facility should be encouraged to reduce operating time resources and to ensure fast

customer services

15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN

EVENT

HRD shall arrange for employee awareness development and training on environmental and

social risk and consumer amp client awareness development shall be a continuous job of the Bank

16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES

Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective

website

17 INTRODUCING GREEN MARKETING

Bank should encourage marketing products that are presumed to be environmentally safe which

includes product modification changes to the production process packaging changes as well as

modifying advertising activities

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

18 INTRODUCING GREEN FINANCE

Eco friendly business activities and energy efficient industries like renewable energy project

clean water supply project waste water treatment plant solid amp hazardous waste disposal plant

bio-gas plant bio-fertilizer plant should be encouraged and financed by the Bank Consumer

loan program may be applied for promoting environmental practices among clients

19 INCORPORATION OF ENVIRONMENTAL RISK IN CRM

Compliance of instructions as stipulated in the guidelines on Environmental Risk

Management (ERM) as a part of Green Banking Policy

Incorporation of Environmental and Climate Change Risk as part of the existing

credit risk methodology to assess the prospective borrower which will include integrating

environmental risks in checklists audit guidelines and reporting formats

Bangladesh is one of the most climate change vulnerable countries and flood tropical cyclones

storm surges droughts are likely to become more frequent and severe in the coming years In

line with the global agenda for a sustainable environment Bank need to protect their financing

from the risks arising out of the deteriorating environmental scenario and climate change These

Guidelines should necessarily be used for all individual customers (corporate institutional

personal small and medium enterprise) whose aggregate facilities are above the following

financing thresholds

_ For Small and Medium Enterprises (SMEs) financing gt BDT 25 million

_ For Corporate financing gt BDT 10 million and

_ For real estate financing gt BDT 10 million

191 Purpose

The overall purpose of Environmental Risk Management is to understand and manage risks that

arise from environmental concerns This brings a focus on planning and implementing policies

and procedures to mitigate environmental risks The specific purposes are to

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

_ Examine the environmental issues and concerns associated with potential business activities

proposed for financing

_ Identify evaluate and manage the environmental risks and the associated financial implications

arising from these issues and concerns

_ enhance the credit risk appraisal process

192 Approach

The following approaches have been used to enhance environmental risk management

_ Bank should be able to ascertain risks arising out of environmental issues

_ The practice should be directed towards addressing the focused environmental problem that is

causing the risks It should not be used as a tool to solve problems in general

_ The practice needs to be value adding to the borrower and should not be ldquopolicingrdquo in nature

Bank should work with the potential borrowers in a collaborative manner and plan that the

business activity may adequately address the environmental risks

_ Bank should use Environmental Risk Management to strengthen the relationship with the

borrower and not to create unease

_ Environmental Risk Management should focus on managing risks and not on avoiding risks

This is intended for inculcating responsible financing practices and not for discouraging

reducing financing However if there are business activities that are inherently irresponsible and

managing these risks are not feasible Bank should avoid financing

193 Key responsibilities in different functions

Relationship banking marketing function The responsibilities of this function are

(i) to be aware of environmental issues confronting the various sectors

(ii) to communicate to the potential borrower that environmental information is sought with a

view to avoiding unexpected situations in the future

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

(iii) to assess the potential borrower and the proposed business activity using a due-diligence

checklist and provide an Environmental Risk Rating (EnvRR) and

(iv) to provide environmental information to the credit risk management function

As part of the Relationship Banking function the Environmental Due-Diligence (EDD) checklist

and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be

completed prior to forwarding the proposed financing to the credit risk management for

consideration

Credit risk management function The responsibilities of this function are -

(i) to be aware of environmental issues confronting the various sectors

(ii) to review the completed due-diligence checklist and the EnvRR

(iii) to integrate environmental risk considerations into the credit risk assessment and

(iv) to specify financing conditions covenants if any are required

In this credit risk management function it is required to verify whether the EnvRR has been

correctly done If not the Relationship Banking function should be asked to redo the EDD

checklist Wherever the EnvRR is ldquoHighrdquo the credit risk management function will ensure that

additional conditions covenants are included

Examples of Environmental risk-related financing conditions covenants are as follows

1048715 The borrower will conduct business and maintain property in compliance with all

environmental laws

1048715 The borrower will provide environmental clearance certificates as and when obtained or

renewed

1048715 The borrower will have emergency response procedures in place

1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous

spill or release

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

1048715 The borrower will not use the property for disposing of producing treating storing or using

contaminants pollutants toxic substances or hazardous materials or wastes

1048715 The borrower will employ a separate environmental manager with required background and

skills to address environmental problems

1048715 The borrower will ensure adequate preparedness to climate change induced extreme events

such as floods and cyclones

Credit processing and approval functions

The Environmental Risk Management responsibility of this function is to ensure that the

additional financing conditions covenants if any are included in the agreements Bank needs to

modify credit processing and approval processes to include Environmental Risk Management

considerations

bull Wherever the EnvRR is ldquoHighrdquo the credit approval decision should be taken by the Executive

Committee Board For all other ratings of the EnvRR there is no separate requirement for

approval decision

bull All credit agreements should include the standard condition covenant about meeting the

regulatory requirements

bull At the time of approving the financing it needs to be ensured that the appropriate additional

condition covenant has been included wherever EnvRR is ldquoHighrdquo

Credit administration and monitoring functions

Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that

the conditions covenants (eg obtaining environmental clearance certificate) is met prior to

disbursement Documented evidence of adhering to the conditions covenants should be

provided

Post-disbursement To minimize credit losses Bank should have monitoring procedures in

systems already in place These systems need to be modified to include environmental risk

considerations wherever EnvRR is rated as high in the following manner

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Bank should carry out periodic inspections to ensure that proper environmental management is

being adopted EDD checklists should be used as guidance for these inspections as well

Whenever the monitoring requires more than the usual management expertise eg specific

technical expertise Bank should use external consultants Evidence of the periodic monitoring

should be maintained

Bank should follow-up with the borrower on the findings of the inspections Borrower should

send written documentation on the action taken Bank should maintain record of the same Bank

should take cognizance of the commitment to follow-up on these findings in taking decisions to

deal with the borrower

Credit recovery functions

Database on Non-Performing Loans (NPLs) due to Environmental risks

Bank should establish and maintain a database of NPLs that are due to environmental reasons

either in partial or full The purpose of this database is to ensure that the Bank streamlines its

own institutional knowledge for better decision-making in its future financing

Reporting system

Bank is required to have a reporting system with a view to intimating management

shareholders and other stakeholders on the use of these Guidelines This reporting should be

done on an annual basis and should form a part of Banks Annual Report

Overall responsibility The Managing Director of the Bank will be responsible for ensuring the

integration of Environmental Risk Management into Credit Risk Management The operational

responsibility will be with the Head of concerned Division(s) or any of the senior management

team member nominated by the Managing Director

At a portfolio level Bank should classify their financing of business activities across the

Department of Environment (DOE)rsquos Categories of Red Orange A Orange B and Green

(Schedule 1 of the ECR 1997)

Bank should estimate the number and financial exposure to each of these categories

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Bank should classify their financing of business activities based on their environmental risks

ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo and estimate the number and financial exposure to each

The Credit Committee of the Bank on periodic interval review the portfolio of the bank on

environmental risks and consider approaches to managing them annually

Based on these risk estimates Bank should review their asset composition and the

environmental risk in their portfolio Such a review can lead to an accurate prioritization of risks

and appropriate risk management efforts

With the background of such a portfolio analysis Bank will be able to undertake subsequent

environmental risk reviews in a more efficient and effective manner

Using the outcomes Bank can re-balance and take counter-balancing approaches eg adopt

more green and low environmental risk business activities if their portfolio is more oriented to

the red and high environmental risk

A detailed Technical Annexes is provided in Appendix in support of the approach for definite

assessment and segmentation of sector wise environmental threats and risks associated with and

theragainst risk grading tools

PHASE_2 Sector-specific Policies and Strategic Planning

Activities under Phase ndash II are to be completed by December 31 2012

21 Sector Specific Environmental Policies

Bank need to formulate strategies to design specific policies for different environmental sensitive

sectors

22 Green Strategic Planning

Bank should determine a set of achievable targets and strategies which should cover reducing

loans for certain environmentally harmful activities attaining a particular percentage

ofenvironmental loans as percentage of total introducing eco-friendly f inancial products etc

and disclose these in their annual reports and websites

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

23Setting up Green Branches

Bank shall open a ldquoGreen Branchrdquo designed with a special logo that will be featured by a

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

24 Improved In-house Environment Management

Bank shall formulate strategy of reuse recycling of materials and equipments and source

reduction waste minimization strategy as a part of in-house environmental management as will

as rely on virtual meeting through the use of Video Conferencing to save cost and energy

25 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines

Bank should develop and follow up environmental risk management manual or guidelines

covering national and internationally accepted higher environmental standards in assessing and

monitoring of project and working capital loans

26 Rigorous Programs to Educate clients

Bank should introduce rigorous programs to educate clients to comply with the environmental

regulation and undertake resource efficient environmental activities

27 Disclosure and Reporting of Green Banking Activities

Bank should start publishing independent Green Banking and Sustainable reports showing past

performances current activities and future initiatives

PHASE_3 Green Product and Standard Report

Activities under Phase ndash 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

31 Designing and Introducing Innovative Products

Bank should introduce environment friendly innovative green products to address the core

environmental challenges of the country

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

32 Reporting in Standard Format with External Verification

Bank should publish independent Green Annual Report following internationally accepted

format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be

verified by an independent agency or acceptable third party

33 Reporting green banking practices on quarterly basis

Bank shall report their initiativesactivities to the Department of Off-site supervision of

Bangladesh Bank on quarterly basis First reporting has been started as of June 30 2011 quarter

and each reporting on the activities to be submitted within 15th of the following month of the

quarter ended Reporting Formats as designed by Bangladesh bank are annexed herewith at the

end of the Policy Guidelines

Amendment and Compliance

Amendment of the Policy

In view of the dynamic nature of the banking business and the changing pattern of the

environment the Bankrsquos 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

Compliance

The Compliant Bank practicing Green Banking will have the following preferential treatments

Bangladesh Bank will award points to Bank on Management component while

computing CAMELS rating

Bangladesh Bank will declare the names of the Top Ten Banks for their overall

performance in green banking activities in the Bangladesh Bank websites

Bangladesh Bank will consider green banking activitiespractices of a Bank while

according permission for opening new Bank Branch

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

CHAPTER THREE

Critical Evaluation

Environmental protection is not in a priority list of banks in Bangladesh till date On the other

hand many banks in the developed world have already started green banking activities Taking

lessons from these banks and also considering the guidelines of international organisations as

well as charters of environmental conventions we have some suggestions about green banking

Strategic plans of banks to protect the Environment Banks must adopt a strategic

plan to perform green activities on long term basis as well as short term basis

Government of Bangladesh (GOB) should also outline a broad guideline of green

banking for environmental protection conservation of biodiversity Bangladesh Bank the

central bank has a greater role in shaping up a concrete guideline for green banking

practices in Bangladesh According to GOB and central bank each banks and financial

institutions can formulate a strategy and guideline for Green Banking and Green

Financing

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

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Practice of in-house Green Banking

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 pots etc 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

II) 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

III) 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

IV) Sound Pollution 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

V) Installation of solar panel in the rural branches and using high mileage vehicles

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

or using 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 in the roads

Green Banking Practices by the Bankers in their business area

I) 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

II) Voluntary activities of Banks Banks should take initiative to make their clients aware

by organizing seminar and symposium They can organise awareness campaign in

schools and colleges They can participate in the tree plantation and cleanliness

programmes in city areas

III) 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 a specific green project for removal of existing

polluting substances from the ecosystem

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

Conclusion

Green banking is a win-win situation for all participants and banks would be well served in their

efforts to bring these benefits to the attention of the corporate clients in an increasingly

competitive marketplace Bangladesh is enormously affected from the events of environmental

and climate change in recent years 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

organisations Since banking industry deals with public money they cannot remain indifferent

and must be more sensible to the maintenance of ecological balance They must have effective

role for the betterment of the environment and green banking practices Realizing the fact

businesses will not only be helping the environment but will also benefit from greater

operational efficiencies a lower vulnerability to manual errors and fraud and cost reductions

Banks are already offering many of the services necessary for businesses to enjoy these benefits

and they must be more vocal about the inherent green value proposition It is now up to the

businesses to adopt them Every small step taken today will have a positive effect on the future

of our planet

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

References

Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)

Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)

Bangladesh Bank website wwwbangladesh bankorgbd

Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)

Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)

US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)

wwwductchbanglabankcom

APPENDIX

TECHNICAL ANNEXES

Technical annexes have been divided into two separate segments for calculating under environmental due diligence checklist based on sector of consideration

i) Sector wise Environmental Due-Diligence (EDD) Checklist and

ii) General Environmental Due Diligence Checklist

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR

If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

(i) SECTOR Wise ENVIRONMENTAL DUE-DILIGENCE CHECKLIST

TEXTILE AND APPARELS

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

ENGINEERING AND BASIC METAL

Legal classification

As per ECR 1997 this is Orange B category for engineering works up to BD Tk 1000000 and re-rolling

And this is Red category for engineering works above BD Tk 1000000

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SHIP BREAKING

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CEMENT

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

TECHNICAL ANNEXES

Technical annexes have been divided into two separate segments for calculating under environmental due diligence checklist based on sector of consideration

i) Sector wise Environmental Due-Diligence (EDD) Checklist and

ii) General Environmental Due Diligence Checklist

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR

If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

(i) SECTOR Wise ENVIRONMENTAL DUE-DILIGENCE CHECKLIST

TEXTILE AND APPARELS

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

ENGINEERING AND BASIC METAL

Legal classification

As per ECR 1997 this is Orange B category for engineering works up to BD Tk 1000000 and re-rolling

And this is Red category for engineering works above BD Tk 1000000

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SHIP BREAKING

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CEMENT

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

ENGINEERING AND BASIC METAL

Legal classification

As per ECR 1997 this is Orange B category for engineering works up to BD Tk 1000000 and re-rolling

And this is Red category for engineering works above BD Tk 1000000

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SHIP BREAKING

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CEMENT

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SHIP BREAKING

Legal classification

As per ECR 1997 this is Orange B category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CEMENT

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CEMENT

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

CHEMICALS (FERTILIZERS PESTICIDES AND PHARMACEUTICALS)

FERTILIZERS

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

PESTICIDES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

PHARMACEUTICALS

Legal classification

As per ECR 1997 this is Orange B category This is classified as life saving drugs

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

HOUSING

Legal classification

As per ECR 1997 this is not classified

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

PULP amp PAPER

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

SUGAR amp DISTILLERIES

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

TANNERY

Legal classification

As per ECR 1997 this is Red category

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

POULTRY

This checklist should be used for all proposals for financing in the poultry subsector of the agri-businessPlease complete a response to each of these questions as Yes or No or Not Applicable (NA) and determinethe EnvRR

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

Legal classification

As per ECR 1997 this is Orange A category up to 250 birds in urban areas and up to 1000 in rural areas

And this is Orange B category for above 250 birds in urban area and above 1000 in rural areas

Key issues and proposed technologies approaches

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST If there are no specific checklists for the particularsector under consideration the General EDD checklist alone is to be used to determine the EnvRR rating

Please complete a response to each of these questions as Yes or No or Not Applicable (NA) and determine the EnvRR If a question does not apply to the sector under consideration it should be excluded by deducting from the total number of questions used to calculate the percentages in determining the EnvRR The justification for any exclusion is to be documented separately and retained on file with the EnvRR checklists

Determining overall EnvRR

The italicized questions are the more important critical ones The EnvRR is determined as follows

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS

A) Overall Risk based on Project Location

B ) Sector Specific Risk

Yes Source of Risk must be considered

No Source of Risk not applicable

• Exam ID No 090703
• Registration Number 20547

• Exam ID No 090703
• Registration Number 20547