Green investment initiatives on the rise

Sarwar Md. Saifullah Khaled | Published: May 05, 2018 20:19:58 | Updated: May 06, 2018 20:59:54

It is essential that the country's banks and financial institutions take more interest in investments with green initiatives than others to save the environment. So it is heartening to see that a much needed green investment is gaining momentum in Bangladesh under the auspices of the Bangladesh Bank (BB). Compared to the July to September period of 2017, investments with green initiatives have increased by 24.61 per cent or Tk 34.33 billion by the end of the October to December quarter of 2017. In the quarter ended on December 31, 2017, there was evidence of upward trend with the green banking activities of banks and financial institutions (FIs). According to a Bangladesh Bank (BB) official's statement, Bangladesh Bank (BB) is trying to play a significant role to expand green banking activities by monitoring the whole scenario and taking appropriate actions.

The total amount invested as green finance, according to the BB's latest data, has been over Tk 173.80 billion in October to December 2017 quarter. Direct green finance, out of the total invested amount, was only 7.78 per cent or Tk 13.53 billion and indirect green finance was over Tk 160.27 billion. In the October to December quarter of 2017, 44 banks out of 57 and 13 FIs out of 34 have had exposure in green finance, either through direct (31 banks and 8FIs) or indirect (29 banks and 13FIs) modes. Bangladesh Bank (BB) issued a policy guideline for Green Banking in February 2011. All operating banks and FIs, under the guideline, have introduced environment-friendly banking activities in the country.

As per the Bangladesh Bank (BB) official record, 56 banks have at least one online branch and 46 banks have introduced internet banking facility up to December 2017 and SMS or mobile banking and internet banking facility has also been observing an increasing trend - 18.76 per cent to 19.92 per cent - than the previous quarter. The banks and FIs are now providing regular training to their staff on green banking. The Bangladesh Bank (BB) data shows that 28 banks have arranged 356 training programmes concerning green banking where total number of participants was 6,424. On the other hand, four FIs have arranged 10 training programmes concerning green banking where total number of participants was 42.

According to the central bank of Bangladesh's instruction, banks and FIs have formed a "Climate Risk Fund" by allocating 10.0 per cent of their Corporate Social Responsibility (CSR) budget for this Fund. The Bangladesh (BB) established a lending scheme namely "Financing Brick Kiln Efficiency Improvement Project", supported by Asian Development Bank (ADB), to help reduce greenhouse gas emissions polluting environment and refine particulate pollution from brick fields. The official statement added that, 35 banks and 21 FIs so far have signed participation agreement with the Bangladesh Bank (BB). The Bangladesh Bank (BB) data shows that up to December 2017, Bangladesh Bank (BB) has released a total of US $16.21 million (Tk 1.26 billion) to five FIs against their financing of eight sub projects.

The banking and financial institutions of the country may play a vital role in keeping the environment safe and green surrounding the projects they finance by using the tools of their lending policy. They may even have to interfere in regards to the location of the industries they finance. It needs to be kept in mind that we need industrial development for the advancement of the nation but not at the cost of the greenness of environment - the financiers of industrialisation need to take sufficient care in this regards.

Prof. Sarwar Md. Saifullah Khaled is a retired Professor of Economics, BCS General Education Cadre


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