Developing Green Banking Products in Bangladesh: Involvement of Stakeholders.Docx

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Developing Green Banking Products In Bangladesh :
Involvement Of Stakeholders
Chapter- 1: Introduction
Environmental safety and sustainable ecological balance have appeared as significant argument of the twenty first century as increasing number of “green” technologies are finding their way into the numerous functional areas including banking. As environmental concern gain greater consideration, pressure is being placed on all industries, along with financial services to implement green initiatives. Environmental concern has risen in the 1990s, while green banking is not yet a predominant reason for most customers to choose one financial institution over another; customer interests and greater environmental awareness are influencing a number of financial institutions to go green. In an economy defined by increasing globalization, industries and firms are obligated to be affected by forceful environmental policies which have strike not only consumer to go for green, but also placed high on the list management’s priorities. For example, 78% of CEOs of the top 50 firms agreed with the importance of green issues to their firm’s present activities and 82% considered that greening would be more important in the future (Peattie and Ring, 1993). Through larger investment in greening the firm can minimizes environmental sabotage and serves an important competitive advantage (Porter and van der Linde, 1995). Among both developed and developing economies, green investment is now the prior economic mantra. With most developed economies oppressed with debt after the 2008-09 global recession when they have to pay off debt (as is the case in a number of EU member states and the USA), then their spending power is consequently reduced and channeling funds to tomorrow's green infrastructure becomes more problematic. However, the process can be promoted, but it may require that the firm substantially change its culture to include green issues into all business decisions and activities (McDaniel and Rylander, 1993). The opportunity or coverage and benefits of green banking are by and large recognized. Since banks provide funds to the industries and firms, they can come across severe credit and liability risks under such environmental policies. Further, the quality of their assets and rate of return in the long-run may also be affected by environmental policy impacts. Thus banks are finding it essential for them to go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force industries and other categories of borrowers to direct themselves towards environmental management, usage of appropriate technologies and appropriate management systems. Green banking clearly has a direct and positive effect on the environment, but the benefits go much further, reaching into security and cost (Javelin Research, 2009). Green finance may cover all the financial services related to the promotion and development of green industry and green economy. The banking sector influences the economic growth and development in terms of both quality and quantity, there by changing the nature of economic growth. Banking sector is one of the major sources of financing investment for commercial projects which is one of the most important economic activities for economic growth. Therefore, banking sector can play a crucial role in promoting environmentally sustainable and socially responsible investment. Banks, by using their commercial lending and securities underwriting, are in a position to catalyze the necessary transition to an economy that minimizes green house gas pollution and relies on energy efficiency and low/no carbon energy sources (Bank Track 2010). Corporate firms are also finding that “going green” makes good business sense as well as good environmental sense (Menon and Menon, 1997, Porter and van der Linde, 1995). IFC (2010) notes that international organizations/institutions can...
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