1 Sustainable Banking Introduction Overthepastyear,intenseandwide-rangingdebatehasarisenontheheelsofthe global financial crisis. In recent months, thecritique has turned to capitalism itself, with media headlines posing questions such as 'Crisis in Capitalism?' and 'Whats wrong with capitalism?' Criticism has targeted the international financial system, questioning the role andactivitiesofbanksinparticular.Questionshavefocusedonhowbankshave generated their returns and, even more closely, on how they have shared their returns withvariousstakeholdersincludingcustomers,investors,employees(especiallysenior management), and wider society more generally. While the debate continues to draw attention a group of banks has for some time been answering many of these challenges by delivering strong, straightforward and sustainable banking services. Sustainable banks haveconsistentlydeliveredproducts,servicesandsocial,environmentalandfinancial returns to support the real economy1. These banks demonstrate decades of responsible bankingandaconsistentcommitmenttoproductiveeconomicactivity.Theyhave increased their activity during the present recession, expanding their lending to small and growingbusinessesinparticular.Committedtoprovidingabroadrangeofbanking servicestotherealeconomyoverthelong-term,theyhighlightthepowerfulroleof sustainablebanksasstewardsofsuccessful,equitablecapitalism.Manyofthese sustainable banks have been in business for a few decades, others for far longer. Their models of providing long-term, patient but sustainably profitable banking services have been at theheart of someof theworlds most successful economies, especially in the small and growing business sectors. The vital role that these banks play in true economic development is increasingly recognized in the debate over how to restructure local and globalfinance.Theevidenceoftheirsuccesssuggestsarenewedemphasisinpublic policy,andbyinvestors,onsustainablebanks,couldprovidethelong-termpathfor responsiblebanking.Suchresponsiblebankingisnecessarytosupportamorejust, environmentally sound, and sustainable economy. Definition of Sustainable banking Sustainable banking also known as a social, alternative, civic, or ethical banking, is using money with conscious thought about its environmental, cultural and social impacts, and withthesupportofsaversandinvestorswhowanttomakeadifference,bymeeting present day needs without compromising those of future generations. History of Sustainable Banking MainstreamfinancialbankshavehadvaryingrelationshipswithCorporateSocial Responsibility and Sustainable investment. However, a clearer movement has emerged since the 1990s. With changing social demands, and as more is known about the effects that banks can have through their lending policies, banks have begun to feel pressure from the general public, NGOs, governments, regulatory bodies and others to consider their social and environmental impact. For example, in themid-1990s theCooperative Bankasked6,000customerswhattheirthoughtswereonSustainablebanking;84% 2 respondedthatitwasagoodidea.Harvey1995Infactthecooperativebankwas formedinresponsetothegrowingconsumerbaselookingforSustainabilityoriented bank. Principles of Sustainable Banking Triple bottom line approach at the heart of the business model; Grounded in communities, serving the real economy and enabling new business models to meet the needs of both; Long-term relationships with clients and a direct understanding of their economic activities and the risks involved; Long-term, self-sustaining, and resilient to outside disruptions; Transparent and inclusive governance; All of these principles embedded in the culture of the bank. Activities of Sustainable Banking1.Ethical initiatives 2.Community involvement 3.Environmental standards for lending 1.Ethicalinitiatives:Numeroussustainablebanksallowcustomerstocontributeto organizations that have positive societal/environmental impacts either in the local communityorindevelopingcountries.Examplesincludeanevaluationofthe energy efficiency of a home and potential improvements in this; carbon-offsets; Coro Strindberg 2005 credit cards that benefit charities or lower interest rate loans for low emission cars. 2.Communityinvolvement:Ethicalbanksexcelincommunityinvolvement,asdo otherfinancialinstitutionssuchascreditunions.Communityinvolvementisnot limited to ethical banks as conventional banks also partake in such actions. The following are a few examples of community involvement done by ethical banks, credit unions, and conventional banks: a.Affordable housing projectsb.Many banks/credit unions try to increase financial literacy in the community c.Give local scholarships & sponsorships. d.Financially support community events (for ex. each year TD Canada trust donates to a local cause) 3.Environmental standards for lending: Environment is a key focus amongst ethical banks (in this field specially called sustainability or green banks) as well as amongst many conventional banks that wish to appear more ethically oriented or that see switching to more environmental practices to be to their advantage. Some view this move as green washing. In general bankers "consider themselves to be in a relativelyenvironmentallyfriendlyindustryintermsofemissionsandpollution. However, given their potential exposure to risk, they have been surprisingly slow to examine the environmental performance of their clients. 3 Sustainable Banking practice in Bangladesh In our country Green Banking is given more focus among sustainable banking activities Bangladesh is one the least developed countries (LDCs) where natural calamities are a common phenomenon, which often causes huge losses. Even climate change impacts arehighinourcountry,whichneedsproperdealingandmanagement,effective guidance from all quarters, especially from banks. Green banks involve pursuing financial and business policies that are friendly to environment. The Bangladesh Bank has shown keen interest in it, and as such formulated guidelines in this respect, and encourages the scheduledbankstotakemeasurestocreateacongenialatmospherethrough'green banking methodology'. Green banking can also reduce the need for expensive branch-bankingandcustomerservices.GreenbankingisanewinitiativeinBangladesh.The leading bankers and entrepreneurs have come forward to save man from environmental disasters. In the context of Bangladesh, if we think about it, we will find the situation to be terrible.Ourpeoplehavelittleawarenessaboutenvironment,airandwaterpollution, industrial and medical, and household wastes. Some Important Features of Green Banking Operations are as Follows: Banks can help environment through automation and online banking. Greenbankingfocusesonsocialsafetyandsecuritythroughchangingthe negative impacts of the society Infinancing,italwaysgivesprioritytoinvestments/loanswhichconsiderrisk factors regarding environmental conditions. It always cares for sustainable and green growth in industrialisation and for social purposes. It creates a congenial atmosphere inside and outside the bank. It considers the clients as its family members, and as such, guide and supervise the projectstoreducepollutionandthusimplementscientificmethodsinthereal sense by implementing environmental due diligence (EDD) checklist. It reduces cost and energy, thus saving money and increasing GDP of a country. It changes themental faculties of theofficials and customers, in linewith green sensibilities. It helps institutions, men and the nation in general live with dignity. Green Banking products and services Financial institutions are rushing to market with new or re-packaged product and serviceOfferingsfromgreenautoinsurancetoinnovativepro-ecomortgagesandnew sustainability-backing investment funds.GreenDeposits:BankscanofferhigherratesonCDs,moneymarketaccounts, checkingAccounts and savings account if customers opt to conduct their banking activities online.4 GreenMortgagesandLoans:Agreenmortgageoffersbetterratesortermsfor energy efficient houses. Green mortgages can allow home buyers to add as much as an additional 15 percent of the price of their houseintoloansfor upgradesincluding energy-efficient windows,solarpanels,geo-thermalheating orwaterheaters.Thesavingsinmonthlyenergybillscanoffsetthehighermonthlymortgagepaymentsandsavemoneyin thelong run.TheEnergyEfficientMortgage(EEM) is a type ofHUD-approved green mortgagethatwillcredityouforyour homesenergyefficiencyinthemortgage itself.Manyhome improvementsalsoqualifyfortheenergytaxcredit.Anyoneundertakingan energy-saving house project should shop around for a bank that offers a special rate for a green mortgage or loan.GreenCreditCards:Agreencreditcardallowscardholderstoearnrewardsor pointswhichcanberedeemedforcontributionstoeco-friendlycharitable organizations. These cardsofferanexcellentincentiveforconsumerstousetheirgreen card fortheirexpensive purchases. Imagine the millions of dollars that could be raised for worthwhile environmental groups if green credit cards really took off.Green Reward Checking Accounts: A product called reward checking accounts paysabonusratetocustomerswhogogreen.Customerscanearnhigher checkingaccountratesiftheymeetmonthlyrequirementslikereceiving electronicstatements,paying bills onlineorusing adebitorcheck card.With this banking product higher ratesand eco-friendly livings go hand-in-hand. Scopes of sustainable Banking in Bangladesh 2.All the branches of the banks may prepare a list of their goods, furniture fixture etc. to arrange or keep the important commodities and reject the unnecessary goods / things and thus clean up the branch with better set-up and get-up. 3.Power,gasandwateruseandallotherday-to-dayactivitiesoughttobe cautiously carried out. 4.Banks may introduce all sorts of IT-based online services to its customers to reduce hazards and huge rush inside their premises. 5.Banks may offer higher rates of profit to the depositors if they opt to conduct their banking activities only through online services. 6.Greenbanksthinkaboutenvironment,especiallyclimatechanges,natural calamities and pollution. As such many scopes to establish eco-friendly industries and pro- environment projects are created. 7.All the industrial units under their command should be advised to complete BMRE ifrequired,andestablishment/installationofEffluentTreatmentPlants(ETPs)at their industrial units. 8.Implementation of the solar energy programme is a must. It will help the banks in the projects of electrification of schools, houses, hospitals and other places. 5 9.Banks may help the organizations dealing with environment in establishing special projects or resisting the anti-environment elements and conserving the resources. 10. Bio-gasprojectsmaybeestablished.Theyaremainlybasedonanimaland municipal wastes. 11. Therearestillmanyscopesforestablishingmicro/macrolevelhydroprojectsin Chittagong and Chittagong Hill Tracts. The capacity of the Kaptai hydro project can be enhanced. 12. Banking authorities in Bangladesh may impose restrictions on establishment of any industry or projects without putting in place the green banking methodology. 13. Banks may encourage jute and jute product projects, cottage industries and small industries. 14. Theymayhelpensurebettersanitation,beatification,drinkingwater,smooth water supply projects. 15. Greenplantationmaybeintroduced.Banksmayinitiateplantationprograms throughout the country. 16. TherealGDPgrowthcouldbeincreasedifthegreenbankingprojectis implemented properly. Conclusion Weshouldexpectbankstostartlookingmoreindetailatthepotentialecological damagethattheirclientscouldbegeneratingwhenreceivingfinancingfromthem. Companiesknowntobeinvolvedinactivitiesthatresultinsubstantialenvironmental damage through the extraction of fossil fuels for instance; companies polluting the seas throughthereleaseoftoxicchemicals;companiesthatmanufactureproductswhich persist in the environment and are linked to health concerns; and any other company damaging the world should not receive financing so easily as they do today from banks andfinancialinstitutions.Whilewerecognizethatavoidanceofallpossible environmental damage is often very expensive and hard to achieve, we believe that the efforts should be at least seriously pursued. We expect companies to actively search for a balance between their activities, their production processes, their use of natural and human resources and the respect for the environment.