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Earth Day in sustainable & responsible financing

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The whole world is now struggling to deal with climate change and environmental challenges. In particular, the current concentration of carbon dioxide in the atmosphere of 421 ppm is causing a major headache, which has almost doubled from 280 ppm during the Industrial Revolution from ten thousand years ago to the mid-18th century. In 2009, in view of the 15th United Nations climate conference, a large-scale campaign was held in many countries with the participation of millions of people in an effort to limit  carbon dioxide in the atmosphere to 350 ppm. Despite the widespread awareness, the concentration of carbon dioxide in the atmosphere is increasing day by day.  Excessive use of fossil fuels is the main cause of this increase in atmospheric density and climate change. Besides, various human activities like drastic deforestation, destruction of natural environment and using of biomass are also largely responsible for this change.  Currently, the financial sector is promoting environmental responsibility as well as development of sustainable financial systems. As a result, it is playing an important role to reinvigorate the implications of Earth Day.

On April 22, 1970, this day was celebrated for the first time with the participation of about 20 million people in several thousands of places including primary schools, secondary schools, universities and communities in the United States. This day of the largest environmental protest programme has now secured a special space in human history as World Earth Day. With the theme of 'Planet vs. Plastic', around 1 billion people in at least 193 countries around the world are celebrating the 54th Earth Day through various events. In the last 74 years, the amount of plastic production in the world has increased rapidly. Even in 1950, the world produced only 2 million tons of plastic, which has increased to more than 400 million in 2022. About 350 million tons of plastic waste are produced every year in the world, of which 1 to 2 million end up in the oceans, causing serious harm to the natural environment and biodiversity. If the amount of plastic production in the world is reduced, the harmful effects on the natural environment will also be reduced. With this aim, the goal of reducing the amount of plastic production in the world at least 60 percent by 2040 has been set. That is why all students, parents, businessmen, governments, churches, various unions, individuals and NGOs are united to call for an unwavering commitment to build a plastic-free future for future generations with a request to stop plastic for the sake of protecting human health and environmental health of the planet.

The role of sustainable and responsible financing is undeniable in realising the commitments of Earth Day. In particular, the latest ideas and plans of green banking, which were first introduced in the United States in 2008 during the administration of Barack Obama, should be widely expanded and implemented accordingly. Although this green banking programme was introduced in Bangladesh in 2009, Bangladesh Bank issued circular on green banking in 2011 and 'Sustainable Finance Policy' was adopted in Bangladesh in 2020. According to the report of Bangladesh Bank, during October-December 2023, around Tk 74,051.41 million were invested in the green banking sector from banks and other financial institutions and Tk 9,07,038.61 million under sustainable financial policies. Investment in both sectors is steadily increasing.

In the green banking sector and the adoption of sustainable financial policies, not only the number of investments should be increased, but efforts should be made to make a financial system sustainable and responsible related to the financial market such as green banks, sustainable asset management companies, green energy companies, social enterprises, sustainable technology companies, green real estate companies, corporate green bond issuing companies and sustainable agriculture and food companies including the proper functioning of relevant authorities should be enhanced. Also, every company should strive to play a responsible role in protecting the natural environment and biodiversity.

The situation is turning for the better as investors, businesses and financial institutions recognise the imperative to integrate environmental considerations into their decision-making processes. World Earth Day serves as a poignant catalyst for our collective responsibility to protect and preserve this planet.

It is in this context that sustainable finance has emerged in recent years as a prominent force promoting positive environmental outcomes. By developing a  holistic approach, not only financial returns are considered but also the wider impact on society and the environment is crucial. Earth Day serves as an annual reminder to recalibrate investment strategies and prioritise sustainability objectives. Whether it's by transitioning away from fossil fuels or promoting renewable energy projects, Earth Day encourages financial institutions to channelise capital toward environmental-friendly efforts. Furthermore, initiatives such as the Task Force on Climate-Related Financial Disclosures (TCFD) reporting is increasing transparency and standards that are enhancing investors' ability to take decisions about climate-related risks and opportunities.

Earth Day inspires green innovation through participatory and collective action and encourages the adoption of sustainable practices across the financial system. It, therefore, serves as an opportunity for financial institutions to engage with their stakeholders and demonstrate their commitment to sustainable practices. Thus Earth Day carries a deep significance in promoting sustainable and responsible financing which is an example of environmentally conscious investment practices. Positive environmental outcomes will be easily achieved if all financial sectors, stakeholders and investors alike are part of a long-term plan to improve the environmental health of this planet, along with the financial and human health.

As we celebrate Earth Day around the world, let us reaffirm our commitment towards building a greener, more tolerant, liveable and sustainable future for our next generations.

M M Mahbub Hasan is a banker & development researcher.

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