Green Banking Policy Essay Sample
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Green Banking Policy Essay Sample
The globe is encompassing immense 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. Bangladesh is enormously affected from the events of environmental and climate change in recent years. Realizing the fact, the Board of Directors in its 325th meeting held on 28.12.2011 has approved a Green Banking Policy for the Bank.
The Audit committee of the Board of Directors will act as the high-powered committee, which will supervise the overall activities of the Green Banking Unit/Cell and review the policies, strategies and programs of the Bank. A separate Green Banking Unit/Cell has also been established comprising members from General Banking and Development Division, Corporate Affairs Division, Corporate Banking Division, Credit Risk Management Division, General Services Division, Human Resources and Management Division and Information and Technology Division and headed by a Deputy Managing Director. The Unit/Cell will have the responsibility of designing, evaluating and administering related green banking issues of the bank. The Unit/Cell will report to the high-powered committee of the Board as well as to Bangladesh Bank quarterly. As the phase-based activities of Green Banking cover wide range of area, responsibilities of different Divisions are specified in the Policy. The purposes of Green Banking Policy of the Bank are 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 (i.e. reduce usage of paper, water, use energy efficient lights and equipments, etc.) at Head Office, Branches and other link offices.
Reduce possible health hazards by installing eco-friendly equipments Save significant portion of Forestry by reducing paper usage Lessen emission of Green House Gases (GHGs) through making less corporate travelling through teleconferencing as well as arranging transport pool for the employees
Help develop customer’s consciousness on environment by arranging awareness development program
Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects
The Green Banking Policy, which comprises of five chapters, is to be implemented in 3 (three) phases within December 31, 2013 as per the direction of Bangladesh Bank from time to time and will continue further. Apart from an introduction and an ending chapter, activities under different phases are elaborated in three chapters.
The Green Banking Policy also encompasses the Environmental Risk Management Policy and covers the overall environmental concerns – arising out of both external or internal sources and the respective measures to manage it.
All concerned Divisions are, therefore, advised to exercise all out efforts for effective
implementation of Green Banking Policy to improve in-house environmental management through efficient use of various resources (i.e. reduce usage of paper, water, use energy efficient lights and equipments, technologies, etc.) as well as to protect environmental pollution while financing.
The Green Banking Policy is annexed herewith for your ready reference. Please acknowledge receipt of the circular and ensure meticulous compliance of the Policy.
(Md. Tariqul Azam)
Senior Executive Vice President
Deputy Managing Director
1. All Divisional Heads, UCBL, Corporate Head Office, Gulshan, Dhaka. 2. The Senior Vice President, Board Audit Cell, UCBL, Corporate Head Office, Gulshan, Dhaka. 3. The First Vice President, MD’s Secretariat, UCBL, Corporate Head Office, Gulshan, Dhaka. 4. The Principal, UCBL, Training Institute, 74, Motijheel C/A, Dhaka. 5. P.A. to Additional Managing Directors, UCBL, Corporate Head Office, Gulshan, Dhaka. 6. P.A. to Deputy Managing Directors, UCBL, Corporate Head Office, Gulshan, Dhaka. 7. Zonal Office, UCBL, Chittagong.
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 sector/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. 1.2. Green Banking
Green banking in general 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.
The purpose of Green Banking Policy 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. 1.4. Scope
This policy document 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. 1.5. Benefits
Improve the image of the Bank by showing and serving its commitment to the environment Significantly reduce operational cost due to less consumption of office stationeries, energy and water. Enhance productivity as well as efficiency of the employees through skilled & optimum usage of technology
Reduce possible health hazards by installing eco-friendly equipments Save significant portion of Forestry by reducing paper usage Lessen emission of Green House Gases (GHGs) through making less corporate travelling through teleconferencing as well as arranging transport pool for the employees Help develop customer’s consciousness on environment by arranging awareness development program
Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects
The Green Banking Policy of the Bank will be implemented in 3 (three) phases as per the direction of Bangladesh Bank from time to time. Activities under different phases are elaborated on later chapters.
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Chapter – 2: Governance and Initial In-house Environment Management Phase – I
Activities under Phase – 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.
2.1. Policy formulation and Governance
The Audit Committee of the Board of Directors of the Bank will act as the high powered committee, who will be responsible for reviewing the banks environmental policies, strategies and program every year.
A separate Green Banking Unit/Cell has already been established headed by a senior executive. The Unit/Cell will have the responsibility of designing, evaluating and administering related green banking issues of the bank and will report to the high powered committee of the Board time to time.
DMD of General Banking and Development Division
Head of General Banking and Development Division
Head of Corporate Affairs Division
Head of Corporate Banking Division
Head of Credit Risk Management Division
Head of General Services Division
Head of Human Resources and Management Division
Head of Information Technology Division
To ensure proper implementation of Green Banking activities, the Bank will approve a considerable fund in the annual budget.
2.2. Incorporation of Environment Risk in CRM
The Bank will comply with the instructions stipulated in the detailed guidelines on Environmental Risk Management (ERM) in consideration of a part of the Green Banking Policy. With a view to incorporating Environmental and climate risk as part of existing credit risk methodology to assess a prospective borrower, Bank’s ERM Policy has been designed in line with Bangladesh Bank guidelines. From now Environmental and Climate Change Risk will be considered as part of the existing credit risk methodology of the Bank to assess a prospective borrower. In this connection, specific check list should be followed by all concerned and be also included in the audit guidelines and reporting formats. Such incorporation will help review possible sources of Environmental Risk under Environmental Due Diligence (EDD) checklists.
Bank’s Credit Marketing Division and CRM Division will implement the above policy.
Green Banking Policy
2.3. Initiating In-house Environment Management
An inventory of water, paper, electricity, energy etc used by officers and executives at offices and branches of the Bank will be prepared by the General Services Division and submit the same to the Green Banking Unit/Cell quarterly. The Inventory Report submitted by the General Services Division will help the Bank to use it as a yardstick to measure the improvement of the Bank regarding implementation of Green Banking Guidelines.
General Services Division will formulate a ‘Green Office Guide’ or at least a set of general instructions to be followed by the employees of the Bank for efficient use of electricity, water, paper and reuse of equipments. In place of relying on printed documents, on line communication will be extensively used (where possible) for office management to save papers. For this purpose, the Information Technology Division will take appropriate initiatives, e.g. introduction of Digital Signature.
Initiatives will be taken to apply Ecofont in printing to reduce use of ink, use scrap paper as notepads and avoid disposable cups/glasses and to install energy efficient electronic equipments and automatic shutdown of computers, fans, lights, Air Coolers, etc. that will help the Bank to reduce electricity consumption. Occupancy Sensors may be used in places, i.e. meeting room, dining room, guest room, etc., not requiring consistent lighting. Energy saving bulbs will be replaced by normal bulbs in branches/offices of the Bank. An extensive plan will be made to use solar energy at the Bank premises to save electricity.
Steps will be taken to save energy from corporate business travel and employees will be encouraged to purchase energy efficient cars (that consume less fuel) to reduce gas and petroleum consumption. The General Services Division will execute the above activities in collaboration with the Information Technology Division and other Divisions where necessary.
2.4. Introducing Green Finance
Preferences will be given in financing eco-friendly business activities and energy efficient industries. Investment will be encouraged in building environmental infrastructure such as renewable energy project, clean water supply project, wastewater treatment plant, solid & hazardous waste disposal plant, bio gas plant, bio-fertilizer plant etc. Bank’s retail and consumer loan programs will promote environmental practices among clients.
Bank’s credit marketing Division and CRM Division will look into this area. 2.5. Creation of Climate Risk Fund
Financing to the economic activities of the flood, cyclone and drought prone areas will be made at the regular interest rate without charging additional risk premium. A Climate Change Risk Fund will be created for financing in different areas after assessing the risks involved and the fund will be used in case of emergency. Regular financing flows will also be ensured in these vulnerable areas and sectors. The above Climate Change Risk Fund will be a part of the Bank’s CSR expenses.
Green Banking Policy
Bank’s Credit Marketing Division, CRM Division, Finance and Accounts Division and Corporate Affairs Division will look into this area.
2.6. Introducing Green Marketing
Green marketing is the marketing of products that are presumed to be environmentally safe. Green marketing may incorporate a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. It refers to the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced and/or packaged in an environmentally friendly way. The Bank will use environmental causes for marketing their services to consumer and to create awareness among the mass people.
This part will be executed by the Public Relations Department of Corporate Affairs Division and the General Banking and Development Division of the Bank. 2.7. Online banking
Online banking is the practice of making bank transactions or paying bills via the Internet on a secure website of a bank that allows the customers to make deposits, withdrawals and pay bills. The Bank has been providing such services to its large base of customers throughout the country for long. The Bank will emphasize more to make available to the customers the easiest way that help environment by eliminating paper waste, saving gas and carbon emission, reducing printing costs and postage expenses.
This part will be executed by the Information Technology Division of the Bank. 2.8. Employee Training, Consumer Awareness and Green Event
Training and campaign on employee awareness and environmental and social risk and the relevant issues will be taken continually as part of the Bank’s Human Recourse Development. The Public Relations Department under Corporate Affairs Division of the Bank will continually arrange necessary campaign and programs to create awareness among consumers and clients. This part will be executed by the Training Institution of Human Resources Division and the Corporate Affairs Division of the Bank (as the case may be).