Research Paper

On
Green Banking in Bangladesh: A case Study on Dutch Bangla Bank Limited



















Research Paper
On
Green Banking in Bangladesh: A case Study on Dutch Bangla Bank Limited


Prepared For:
Chairman
Exam committee
Institute of Business Administration,
JahangirnagarUniversity,
Savar, Dhaka-1342



Prepared By:
Exam ID No: 090703
Registration Number: 20547
Area of concentration: Finance& Banking
Academic Session: 2009-2010
MBA Program



Date of Submission
April 15, 2012
April 15, 2012

The Chairman
Examination Committee
MBA Program
Institute of Business Administration
Jahangirnagar University
Savar, Dkaka-1342
Subject: Submission of the Research Paper
Dear Sir/Madam:
It is my pleasure to submit the paper on Green Banking in Bangladesh: A case Study on
DBBL. The paper is submitted as part of the partial fulfillment of the MBA program.
Here I have tried to combine all the data available to prepare this paper and give it a final shape. I
have collected what I believe to be the most relevant information to make the paper as analytical
and coherent as possible.

I am grateful to you for providing me the opportunity to have such an excellent experience.I will
be obliged if you kindly approve this effort. I request you to excuse me for any mistake that may
occur in the paper despite of my best effort.

Sincerely yours,
Exam ID: 090703
Area of Concentration: Finance and Banking
Academic Session: 2009-2010
MBA Program


Acknowledgement
First of all I would like to express my gratitude to almighty God, whose invisible guidance
helped me to complete this research paper. Although, time was very limited for getting the
sufficient knowledge about green banking in Bangladesh, but the hard work, confidence and
curiosity provide me the guidelines to complete this paper properly within the time. I would like
to take the opportunity to express my deep sense of gratitude to my honorable supervisor
Mr.Mohammad Abu Sayeed Faculty- Institute of Business Administration, Jahangirnagar
University, for his valuable suggestions and guidance during the study period that has greatly
inspired me in preparing this paper successfully. I would also like to thank to Mr. Md.
NazmulIslamFaculty- Institute of Business Administration, Jahangirnagar University for his
helpful instruction to prepare the report accordingly. My appreciation goes to my friend,
Mohammad Umar Faruk for his cooperation to make this paper.














Table of Contents

Executive Summary

Topic
Page No
CHAPTER-1
Introduction of the Study.....
Background of the Study...
Objectives of the Study
Scope of the Study.
Methodology of the Study.............
Limitation of the Study
1-3
1
1
2
2
2
3
CHAPTER-II:
Definition of Green banking
Advantages & Disadvantages
DBBL and Green Banking...
PHASE_ 1: Governance and Initial In-house Environment Management
PHASE_2: Sector-specific Policies and Strategic Planning
PHASE_3: Green Product and Standard Report ..
Amendment and Compliance .


CHAPTER-III:
Critical Evaluation
Conclusion


Appendix
References
4-16
4
5
6
6-13
14
15
15-16


17-20
17-19
20







Executive Summary

Global warming is a burning issue that calls for a global response. We are much concerned about
global warming now-a-days. The rapid change in climate will be too great to allow many eco-
systems to suitably adapt, since the change have direct impact on biodiversity, agriculture,
forestry, dry land, water resources and human health. Due to unusual weather pattern, rising
greenhouse gas, declining air quality etc. society demands that business also take responsibility
in safeguarding the planet.

Green finance as a part of Green Banking makes great contribution to the transition to resource-
efficient and low carbon industries i.e. green industry and green economy in general. Green
banking is a component of the global initiative by a group of stakeholders to save environment.
The state of environment in Bangladesh is rapidly deteriorating. 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. In addition, Bangladesh is one of the most climate change vulnerable countries.
This growing issue is getting much importance day by day in our country. In line with global
development and response to the environmental degradation, financial sector in Bangladesh
should play important roles as one of the key stake holders. In response to the above, urgent
measures are required by stake holders for sustainable development and thereby save the planet.
Banks hold a unique position in an economic system that can affect production, business and
other economic activities through their financing activities and thus may contribute to pollute
environment. Moreover, energy and water efficiency and waste reduction are of high concern for
many big banks. Green banks or environmentally responsible banks do not only improve their
own standards but also affect socially responsible behavior of other business.











CHAPTER ONE
Introduction:
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 sectors and 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.
The globe is encompassing enormous 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.
Background of the Study:
Studies on green banking issues in Bangladesh are limited. Hence, a comprehensive study with
respect to Bangladesh banking sector is warranted. Though green Banking is a burning issue
worldwide now a days, it is a new concept in the field of banking sector in our country. But it is
the issue on which we have to give much concentration especially for our country. Banks in our
country can play important role by undertaking such activities, policies and strategies that make
environment sustainable and eco-friendly. By realizing that it is expected that Green Banking
Policy as guided by Bangladesh Bank 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. With this knowledge, banks can formulate appropriate green
strategies to promote their brand image.
Objectives of the Study:
To explore the concept of Green Banking
To explore the policies and strategies taken by DBBL about Green Banking.
Scope of the Study:
The paper will be mainly helpful for those people who would like to conduct further research on
this issue. As a primary research this paper will also be a source on policy documentation which
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. In fact, the paper may serve as a background
of literature review in future.
Methodology:
This research paper is based on the secondary data which is collected from the Bangladesh Bank
website, Dutch Bangla Bank Website, some published articles in newspapers about green
banking and some training materials provided by Bangladesh Institute of Bank Management.







Limitations:
There are some limitations of the research paper, such as:
This type of exploratory research is new idea, so lack of experience and knowledge is
one of the big limitations for me.
The stage of adoption and implementation of green banking in our country is based on
the assumption and knowledge, no statistical model or tools are used to prove.
The decision or applicability is hypothetical and assumption not proved.
















CHAPTER TWO
Definition of Green Banking:
The term Green Banking developed in the western countries and has been replicated by many
developing countries. Green Banking is now popular worldwide. It is for stopping the
environmental degradation and making this planet habitable. It means the eco-friendly or
environment-friendly banking and it also refers to ethical banking or sustainable banking. We all
know that the peoples of the whole world are concerned about the environmental degradation,
especially the rising of global temperature and thereby melting of glaciers and ice-berg in the
polar region and consequently rising of sea level. This will directly affect the low lying countries
of the world. The world conscious people are also concerned about the increase of Green House
Gases and Chlorofluorocarbons (CFCs) and thereby depletion of Ozone layer. As bankers are the
important professional group of society, they must have greater role to check the environmental
degradation. They can adopt different green activities within their in-house environment and also
can initiate the protection of the air pollution, water pollution by their clients. Bankers can
finance the green projects, which are environmental friendly and discourage the projects that
damage the environment
Generally Green banking 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.

Conservation of environment and protection of ecology should be maintained through combined
efforts of multi stakeholders. The main stakeholders are businessmen, consumers and
professionals, NGOs and government organizations. As banks deal with the money of the
public, they can not remain indifferent and must be more sensible to the maintenance of
ecological balance. They must have effective role for the betterment of the environment and
green banking practices.
Advantages:
External Advantage: By adopting Green Banking policy, banks and financial
institutions take responsibility for keeping the environment green and safeguarding the
planet.
Internal Advantage: Apart from enrichment of the external environment, Green banking
may also help improve the performance of the Bank in the following ways:
i. Improve the image of the Bank by showing and serving its commitment to the environment
ii. Significantly reduce operational cost due to less consumption of office stationeries, energy
and water.
iii. Enhance productivity as well as efficiency of the employees through skilled & optimum
usage of technology
iv. Reduce possible health hazards by installing eco-friendly equipments.
v. Save significant portion of Forestry by reducing paper usage
vi. Lessen emission of Green House Gases (GHGs) through making less corporate traveling
through teleconferencing as well as arranging transport pool for the employees
vii. Help develop customers consciousness on environment by arranging awareness
development program
viii. Reduce the extent of Non-Performing Loans (NPLs) if investment goes to less risky projects
Disadvantages:
Everything has both sides, positive and negative. If we think about implementation of Green
banking in our country, we have to consider some industries. Most of the industries in our
country use hazardous chemical, they have no legal systematic arrangement in their design. If
banks and financial institutions stop loan sanctions on projects of these industries due to the
vulnerability to environment changes, these industries will be closed totally. Many people will be
unemployed.

DBBL AND GREEN BANKING:
Bank since its inception has been maintaining a balanced initiative and supporting activity to
contain things adversely affecting environment. The practice of efficient uses of resources,
encouraging for green financing and environment friendly initiatives, effective utilization of its
on-line communication system etc. have been maintained. Green Banking Policy & Strategy of
DBBL has been outlined for every individual of the Bank working in front and back office to
make socially responsible behavior for the grater interest of the country and planet as a whole.
Bank views that a Green Bank is an ethical bank or a sustainable Bank. The broad objective of
green bank is to use resources with responsibility avoiding spoilage and giving priority to
environment and society.
The policy to be covered in 3 segregated phases. A brief of the phases and bank's courses of
action as per guideline are stated below:
PHASE_ 1: Governance and Initial In-house Environment Management
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.
1.1 POLICY FORMULATION AND GOVERNANCE:
A Green Banking Cell to be formed with the participation of the executives and officers
from the relative divisions who will be responsible for designing, evaluating and
administering related green banking policy issues of the Bank. The Managing Director of
the Bank will approve formation of Green Banking Cell. The cell will review, direct and
coordinate with concerned Division/Branch/Individual for effective implementation of
the targeted agendas and prepare monthly progress report in detailed and put
recommendation for management information and record. The Green Banking Cell will
quarterly report to the High Powered Committee on the overall progress of the green
banking activity of the Bank as per specified format and seek
recommendation/suggestion/instruction of the Committee for effective and timely
implementation of the policy directions. The cell will report to Bangladesh Bank as per
prescribed format on quarterly basis regarding Green Banking activities. The members
will serve under a senior level executive who will act as the Chairman of the Cell
immediate to formation. At the instruction of the management, the construction of the
cell will be re-arranged through inclusion and exclusion of members for effective
coordination and successful implementation of the initiative.

The Policy entails formation of a High powered Committee comprising of directors
from the Board. In line with Bangladesh Bank policy guidelines, the Audit Committee of
the Board is designated as High Powered Committee which will review Bank's
environmental policies, strategies and programs. The Committee shall recommend,
suggest and provide instruction to the Green Banking Cell for effective and timely
implementation of the policy directions.

A Budget allocating considerable amount of fund have to be prepared by the related
Division (Accounts Division) and be inserted onward in the annual budget of the Bank
for each consecutive year in support of marketing and capacity building approach under
green banking initiatives of the Bank. Budget to be prepared calculating segment of
expenses to be incurred with the recommendation of Green Banking Cell duly intimated
and approved by the competent authority.
1.2 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A 'Green Office Guide'/set of general instructions should be circulated to the employees for
efficient use of electricity, water, paper and reuse of equipments. With the support/initiative of
General Services Division a 'Green Office Guide' should be circulated among the employees of
the Bank. The office guide should entail among others instructions/advices for-
Double-side printing to save papers,
Application of ecofont printing to reduce ink,
Usage of scrap paper as notepads,
Avoiding of disposable cups/glasses,
Installation of energy efficient electronic equipments,
Automatic shut down of computers , fans , lights , air coolers, usage of energy saving
bulbs, installation of Solar energy, etc. to help reduce electricity consumption;
Purchase energy efficient cars that can reduce gas and petroleum consumption.
1.3 CREATION OF CLIMATE RISK FUND:
Bank should finance flood, cyclone, and drought prone areas assessing risks at the regular
interest rate without charging additional risk premium and create, as a part of Bank's CSR
expenses, a Climate Risk Fund which will be used in case of emergency.
1.4 ONLINE BANKING
Bank should give more emphasis to make the easiest way to help environment by eliminating
paper waste, saving gas and carbon emission, reducing painting costs and postage expenses. On-
line communication should be extensively used. Effective and optimum utilization of online
banking facility should be encouraged to reduce operating time, resources and to ensure fast
customer services.
1.5 SUPPORTING EMPLOYEE TRAINING, CONSUMER AWARENESS AND GREEN
EVENT:
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer & client awareness development shall be a continuous job of the Bank.
1.6 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES:
Bank shall report on the initiatives/practices to Bangladesh Bank and disclose in the respective
website.
1.7 INTRODUCING GREEN MARKETING:
Bank should encourage marketing products that are presumed to be environmentally safe which
includes product modification, changes to the production process, packaging changes as well as
modifying advertising activities.

1.8 INTRODUCING GREEN FINANCE:
Eco friendly business activities and energy efficient industries like renewable energy project,
clean water supply project, waste water treatment plant, solid & hazardous waste disposal plant,
bio-gas plant, bio-fertilizer plant should be encouraged and financed by the Bank. Consumer
loan program may be applied for promoting environmental practices among clients.
1.9 INCORPORATION OF ENVIRONMENTAL RISK IN CRM:
Compliance of instructions as stipulated in the guidelines on Environmental Risk
Management (ERM) as a part of Green Banking Policy;
Incorporation of Environmental and Climate Change Risk as part of the existing
credit risk methodology to assess the prospective borrower which will include integrating
environmental risks in checklists, audit guidelines and reporting formats.

Bangladesh is one of the most climate change vulnerable countries and flood, tropical cyclones,
storm surges, droughts are likely to become more frequent and severe in the coming years. In
line with the global agenda for a sustainable environment, Bank need to protect their financing
from the risks arising out of the deteriorating environmental scenario and climate change. These
Guidelines should necessarily be used for all individual customers (corporate, institutional,
personal, small and medium enterprise) whose aggregate facilities are above the following
financing thresholds:
_ For Small and Medium Enterprises (SMEs), financing > BDT 2.5 million
_ For Corporate, financing > BDT 10 million. and
_ For real estate financing > BDT 10 million.
1.9.1. Purpose:
The overall purpose of Environmental Risk Management is to understand and manage risks that
arise from environmental concerns. This brings a focus on planning and implementing policies
and procedures to mitigate environmental risks. The specific purposes are to:
_ Examine the environmental issues and concerns associated with potential business activities
proposed for financing,
_ Identify, evaluate and manage the environmental risks and the associated financial implications
arising from these issues and concerns,
_ enhance the credit risk appraisal process.
1.9.2. Approach:
The following approaches have been used to enhance environmental risk management:
_ Bank should be able to ascertain risks arising out of environmental issues.
_ The practice should be directed towards addressing the focused environmental problem that is
causing the risks. It should not be used as a tool to solve problems in general.
_ The practice needs to be value adding to the borrower and should not be policing in nature.
Bank should work with the potential borrowers in a collaborative manner and plan that the
business activity may adequately address the environmental risks.
_ Bank should use Environmental Risk Management to strengthen the relationship with the
borrower and not to create unease.
_ Environmental Risk Management should focus on managing risks and not on avoiding risks.
This is intended for inculcating responsible financing practices and not for discouraging /
reducing financing. However, if there are business activities that are inherently irresponsible and
managing these risks are not feasible, Bank should avoid financing.
1.9.3 Key responsibilities in different functions:
Relationship banking / marketing function: The responsibilities of this function are:
(i) to be aware of environmental issues confronting the various sectors,
(ii) to communicate to the potential borrower that environmental information is sought with a
view to avoiding unexpected situations in the future,
(iii) to assess the potential borrower and the proposed business activity using a due-diligence
checklist and provide an Environmental Risk Rating (EnvRR), and
(iv) to provide environmental information to the credit risk management function.
As part of the Relationship Banking function, the Environmental Due-Diligence (EDD) checklist
and the Environmental Risk Rating (EnvRR) as given in the Technical Annex are to be
completed prior to forwarding the proposed financing to the credit risk management for
consideration.
Credit risk management function: The responsibilities of this function are -
(i) to be aware of environmental issues confronting the various sectors,
(ii) to review the completed due-diligence checklist and the EnvRR,
(iii) to integrate environmental risk considerations into the credit risk assessment and
(iv) to specify financing conditions / covenants, if any, are required.
In this credit risk management function, it is required to verify whether the EnvRR has been
correctly done. If not, the Relationship Banking function should be asked to redo the EDD
checklist. Wherever the EnvRR is High, the credit risk management function will ensure that
additional conditions / covenants are included.
Examples of Environmental risk-related financing conditions / covenants are as follows:
The borrower will conduct business and maintain property in compliance with all
environmental laws;
The borrower will provide environmental clearance certificates as and when obtained or
renewed;
The borrower will have emergency response procedures in place;
The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release;
The borrower will not use the property for disposing of, producing, treating, storing or using
contaminants, pollutants, toxic substances or hazardous materials or wastes;
The borrower will employ a separate environmental manager with required background and
skills to address environmental problems;
The borrower will ensure adequate preparedness to climate change induced extreme events
such as floods and cyclones.
Credit processing and approval functions;
The Environmental Risk Management responsibility of this function is to ensure that the
additional financing conditions / covenants, if any, are included in the agreements. Bank needs to
modify credit processing and approval processes to include Environmental Risk Management
considerations.
Wherever the EnvRR is High, the credit approval decision should be taken by the Executive
Committee / Board. For all other ratings of the EnvRR, there is no separate requirement for
approval decision;
All credit agreements should include the standard condition / covenant about meeting the
regulatory requirements;
At the time of approving the financing, it needs to be ensured that the appropriate, additional
condition/ covenant has been included wherever EnvRR is High.
Credit administration and monitoring functions:
Pre-disbursement: Prior to the disbursement where EnvRR is High, Bank has to verify that
the conditions /covenants (e.g. obtaining environmental clearance certificate) is met prior to
disbursement. Documented evidence of adhering to the conditions / covenants should be
provided.
Post-disbursement: To minimize credit losses, Bank should have monitoring procedures in
systems already in place. These systems need to be modified to include environmental risk
considerations wherever EnvRR is rated as high in the following manner:
Bank should carry out periodic inspections to ensure that proper environmental management is
being adopted. EDD checklists should be used as guidance for these inspections as well.
Whenever the monitoring requires more than the usual management expertise, e.g. specific
technical expertise, Bank should use external consultants. Evidence of the periodic monitoring
should be maintained.
Bank should follow-up with the borrower on the findings of the inspections. Borrower should
send written documentation on the action taken. Bank should maintain record of the same. Bank
should take cognizance of the commitment to follow-up on these findings in taking decisions to
deal with the borrower.
Credit recovery functions:
Database on Non-Performing Loans (NPLs) due to Environmental risks:
Bank should establish and maintain a database of NPLs that are due to environmental reasons,
either in partial or full. The purpose of this database is to ensure that the Bank streamlines its
own institutional knowledge for better decision-making in its future financing.
Reporting system:
Bank is required to have a reporting system, with a view to intimating management,
shareholders, and other stakeholders on the use of these Guidelines. This reporting should be
done on an annual basis and should form a part of Bank's Annual Report.
Overall responsibility: The Managing Director of the Bank will be responsible for ensuring the
integration of Environmental Risk Management into Credit Risk Management. The operational
responsibility will be with the Head of concerned Division(s) or any of the senior management
team member nominated by the Managing Director.
At a portfolio level, Bank should classify their financing of business activities across the
Department of Environment (DOE)s Categories of Red, Orange A, Orange B and Green
(Schedule 1 of the ECR 1997);
Bank should estimate the number and financial exposure to each of these categories;
Bank should classify their financing of business activities based on their environmental risks,
i.e. High, Moderate or Low and estimate the number and financial exposure to each.
The Credit Committee of the Bank on periodic interval review the portfolio of the bank on
environmental risks and consider approaches to managing them annually.
Based on these risk estimates, Bank should review their asset composition and the
environmental risk in their portfolio. Such a review can lead to an accurate prioritization of risks
and appropriate risk management efforts;
With the background of such a portfolio analysis, Bank will be able to undertake subsequent
environmental risk reviews in a more efficient and effective manner;
Using the outcomes, Bank can re-balance and take counter-balancing approaches, e.g. adopt
more green and low environmental risk business activities if their portfolio is more oriented to
the red and high environmental risk.
A detailed Technical Annexes is provided in Appendix in support of the approach for definite
assessment and segmentation of sector wise environmental threats and risks associated with and
theragainst risk grading tools.
PHASE_2: Sector-specific Policies and Strategic Planning
Activities under Phase II are to be completed by December 31, 2012.
2.1 Sector Specific Environmental Policies:
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
2.2 Green Strategic Planning:
Bank should determine a set of achievable targets and strategies which should cover reducing
loans for certain environmentally harmful activities, attaining a particular percentage
ofenvironmental loans as percentage of total, introducing eco-friendly f inancial products etc.
and disclose these in their annual reports and websites
2.3Setting up Green Branches:
Bank shall open a Green Branch designed with a special logo that will be featured by a
maximum use of natural light, use of renewable energy, use of energy saving bulbs and other
equipments, reduced water and electricity use, use of recycled water etc.
2.4 Improved In-house Environment Management:
Bank shall formulate strategy of reuse, recycling of materials and equipments and source
reduction, waste minimization strategy as a part of in-house environmental management as will
as rely on virtual meeting through the use of Video Conferencing to save cost and energy.
2.5 Formulation of Bank Specific Environmental Risk Management Plan and Guidelines:
Bank should develop and follow up environmental risk management manual or guidelines
covering national and internationally accepted higher environmental standards in assessing and
monitoring of project and working capital loans.
2.6 Rigorous Programs to Educate clients:
Bank should introduce rigorous programs to educate clients to comply with the environmental
regulation and undertake resource efficient environmental activities.
2.7 Disclosure and Reporting of Green Banking Activities:
Bank should start publishing independent Green Banking and Sustainable reports showing past
performances, current activities, and future initiatives.
PHASE_3: Green Product and Standard Report
Activities under Phase III have to be completed by December 31, 2013. At this phase, the
Bank will introduce Green Products and submit report based on international standard.
3.1 Designing and Introducing Innovative Products:
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country.
3.2 Reporting in Standard Format with External Verification:
Bank should publish independent Green Annual Report following internationally accepted
format like Global Reporting Initiatives (GRI) targeting their stakeholders which should be
verified by an independent agency or acceptable third party.
3.3 Reporting green banking practices on quarterly basis:
Bank shall report their initiatives/activities to the Department of Off-site supervision of
Bangladesh Bank on quarterly basis. First reporting has been started as of June 30, 2011 quarter
and each reporting on the activities to be submitted within 15th of the following month of the
quarter ended. Reporting Formats as designed by Bangladesh bank are annexed herewith at the
end of the Policy Guidelines.
Amendment and Compliance
Amendment of the Policy
In view of the dynamic nature of the banking business and the changing pattern of the
environment, the Banks Green Banking Policy should be subject to ongoing review,
modification and revision. This Policy will be amended, revised as and when warranted to
accommodate the changes in the environment condition, government policy, central bank
regulation and experience of the Bank while dealing with Green Banking.
Compliance
The Compliant Bank practicing Green Banking will have the following preferential treatments:
Bangladesh Bank will award points to Bank on Management component while
computing CAMELS rating;
Bangladesh Bank will declare the names of the Top Ten Banks for their overall
performance in green banking activities in the Bangladesh Bank websites;
Bangladesh Bank will consider green banking activities/practices of a Bank while
according permission for opening new Bank Branch.


CHAPTER THREE
Critical Evaluation:
Environmental protection is not in a priority list of banks in Bangladesh till date. On the other
hand, many banks in the developed world have already started green banking activities. Taking
lessons from these banks and also considering the guidelines of international organisations as
well as charters of environmental conventions, we have some suggestions about green banking:
Strategic plans of banks to protect the Environment: Banks must adopt a strategic
plan to perform green activities on long term basis as well as short term basis.
Government of Bangladesh (GOB) should also outline a broad guideline of green
banking for environmental protection, conservation of biodiversity. Bangladesh Bank, the
central bank, has a greater role in shaping up a concrete guideline for green banking
practices in Bangladesh. According to GOB and central bank, each banks and financial
institutions can formulate a strategy and guideline for Green Banking and Green
Financing.

It will be obligatory for each person to show respect to the environmental issues.
Otherwise, the environments where the concerned person lives will be inhabitable and as
whole the country and the globe will no longer be safe place. We have to use resources
carefully and keep in the mind that the reserve of the resources is not unlimited and its
excessive use may endanger the future generation. We have to think that each of our
activity has a specific impact on the environment. As a best creation of Almighty, we
have greater role to conserve the environment, maintain biodiversity, not to endanger
other fauna and flora and above all a green, healthy planet for safe and sound living of
our future generations. Since banking industry is a vital institution in the economic and
business activity round the world, bankers can not remain indifferent to this burning
issue. A banker or a banking industry may address many issues to save environmental
degradation and conserve the ecological balance.


Practice of in-house Green Banking:
1) Waste Management: A green banker must be cautious about wastage and waste
management. We should try to control the wastage of resources like water, gas,
electricity, paper, foods etc. For example, if we draft our letters on a computer rather
than in paper, it will save millions of paper as well as thousands of trees that provide
raw materials for paper production. Similarly, if we select a location of the branch of
a bank with sufficient access to light and air, it will save huge electricity and create a
healthy environment. Wastages must be grouped like organic and inorganic wastage.
Organic materials like food, vegetables, animals etc. can be recycled for manure, gas
and electricity etc. The inorganic material like paper, bottles, pots etc. can be
recycled. Wet and degradable materials can be processed directly keeping under the
soil. The recycling materials should be disposed off at the respective disposal site and
the rotten items should be buried under the soil and as such, pollution can be
protected.

II) Clean and hygienic environment: A green banker will not throw any waste,
bottles or packing materials here and there. Each group of waste should be kept in a
separate place, which does not pollute the environment and all the wastes must be
disposed off separately. A green banker will not spit or cough on the floor, walls or
on the road.

III) On line statements, emailing documents: We must send account statements and
balance confirmation etc. to the clients through online and through email, which will
save paper, time, cost and above all the environment. We may use these technologies
for our clients as well as inter bank correspondence.

IV) Sound Pollution: We should keep our voice low when we converse and also
convince our clients maintain this for the sake of healthy working environment in the
branches.

V) I nstallation of solar panel in the rural branches and using high mileage vehicles
or using shared vehicles instead of personal vehicle: Since Bangladesh is an energy
deficit country we can install solar panels in all Branches as an alternative energy
source. We can also use the vehicles which consume less fuel which will save huge
fuel import of the country. We can also use big vehicles to carry the employees of the
Banks instead of personal vehicle to reduce fuel as well traffic jam in the roads.
Green Banking Practices by the Bankers in their business area:
I) Financing only the green projects: Bankers must be aware of the environmental
issues and they must go for financing the projects that do not pollute the environment.
The industries that are financed by the banks must have effluent treatment plant (ETP),
recycling facilities and smoke and gas arresting unit. The industries must not release any
kind of effluents, chemicals or smoke to the environment. Banks must not finance any
dirty project that pollutes the environment.

II) Voluntary activities of Banks: Banks should take initiative to make their clients aware
by organizing seminar and symposium. They can organise awareness campaign in
schools and colleges. They can participate in the tree plantation and cleanliness
programmes in city areas.

III) Working on specific green project: Our country has lot of problems of proper waste
management, drainage and sanitation, and affected by river pollution, water pollution by
pesticides etc. Every bank can undertake a specific green project for removal of existing
polluting substances from the ecosystem.






Conclusion:
Green banking is a win-win situation for all participants, and banks would be well served in their
efforts to bring these benefits to the attention of the corporate clients in an increasingly
competitive marketplace. Bangladesh is enormously affected from the events of environmental
and climate change in recent years. Environmental conservation and protection of ecological
balance should be maintained through combined efforts of multi stakeholders. The main
stakeholders are businessmen, consumers and professionals, NGOs and government
organisations. Since, banking industry deals with public money, they cannot remain indifferent
and must be more sensible to the maintenance of ecological balance. They must have effective
role for the betterment of the environment and green banking practices. Realizing the fact,
businesses will not only be helping the environment, but will also benefit from greater
operational efficiencies, a lower vulnerability to manual errors and fraud, and cost reductions.
Banks are already offering many of the services necessary for businesses to enjoy these benefits,
and they must be more vocal about the inherent green value proposition. It is now up to the
businesses to adopt them. Every small step taken today will have a positive effect on the future
of our planet.











References
Banking Regulation & Policy Department Bangladesh Bank Head ...: Retrieved March
01, 2012 from(www.basicbanklimited.com/.../Green_Banking_Policy_Guidelines_of...)
Bangladesh Bank takes step on green banking(October 01 2011): Retrieved March 01,
2012 from (www.thedailystar.net/newDesign/news-details.php?nid=204684)
Bangladesh Bank, website: www.bangladesh bank.org.bd
Green Banking Policy: Retrieved March 01, 2012 from
(www.ucbl.com/Green%20Banking/Green%20Banking%20Policy.pdf)
Islam M.A: Green banking: Future important issue for banking industry: Retrieved
March 01, .2012 from (www.thefinancialexpress-bd.com/more.php?news_id=114842)
U.S Cash Management Goes Green( August 2009): Retrieved March 13, 2012 from
(www.bottomline.com/green_banking)
www.ductchbanglabank.com










APPENDIX






















TECHNICAL ANNEXES
Technical annexes have been divided into two separate segments for calculating under
environmental due diligence checklist based on sector of consideration:
i.) Sector wise Environmental Due-Diligence (EDD) Checklist, and
ii.) General Environmental Due Diligence Checklist.
Please complete a response to each of these questions as Yes or No or Not Applicable (NA), and
determine the EnvRR.
If a question does not apply to the sector under consideration, it should be excluded by deducting
from the total number of questions used to calculate the percentages in determining the EnvRR.
The justification for any exclusion is to be documented separately and retained on file with the
EnvRR checklists.
(i) SECTOR Wise ENVIRONMENTAL DUE-DILIGENCE CHECKLIST:
TEXTILE AND APPARELS
Legal classification
As per ECR 1997, this is Orange B category.
Key issues and proposed technologies / approaches



Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


ENGINEERING AND BASIC METAL
Legal classification
As per ECR 1997, this is Orange B category for engineering works up to BD Tk 10,00,000 and
re-rolling.
And, this is Red category for engineering works above BD Tk 10,00,000.
Key issues and proposed technologies / approaches:









Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:




SHIP BREAKING
Legal classification
As per ECR 1997, this is Orange B category.
Key issues and proposed technologies / approaches


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


CEMENT
Legal classification
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


CHEMICALS (FERTILIZERS, PESTICIDES AND PHARMACEUTICALS):
FERTILIZERS
Legal classification:
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches:


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:





PESTICIDES
Legal classification
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


PHARMACEUTICALS
Legal classification
As per ECR 1997, this is Orange B category. This is classified as life saving drugs.
Key issues and proposed technologies / approaches



Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


HOUSING
Legal classification
As per ECR 1997, this is not classified.
Key issues and proposed technologies / approaches


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


PULP & PAPER
Legal classification
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches





Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


SUGAR & DISTILLERIES
Legal classification
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches




Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


TANNERY
Legal classification
As per ECR 1997, this is Red category.
Key issues and proposed technologies / approaches


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:


POULTRY
This checklist should be used for all proposals for financing in the poultry subsector of the agri-
business.Please complete a response to each of these questions as Yes or No or Not Applicable
(NA), and determinethe EnvRR.
Legal classification
As per ECR 1997, this is Orange A category up to 250 birds in urban areas and up to 1000 in
rural areas.
And, this is Orange B category for above 250 birds in urban area and above 1000 in rural areas.
Key issues and proposed technologies / approaches:


Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:

(ii) GENERAL ENVIRONMENTAL DUE-DILIGENCE CHECKLIST: If there are no
specific checklists for the particularsector under consideration, the General EDD checklist alone,
is to be used to determine the EnvRR rating.
Please complete a response to each of these questions as Yes or No or Not Applicable (NA), and
determine the EnvRR. If a question does not apply to the sector under consideration, it should be
excluded by deducting from the total number of questions used to calculate the percentages in
determining the EnvRR. The justification for any exclusion is to be documented separately and
retained on file with the EnvRR checklists



Determining overall EnvRR
The italicized questions are the more important / critical ones. The EnvRR is determined as
follows:

MATRIX FOR QUICK GUIDANCE ON POTENTIAL ENVIRONMENTAL RISKS
A.) Overall Risk based on Project Location

B. ) Sector Specific Risk

Yes: Source of Risk must be considered.
No : Source of Risk not applicable