chandana debnath
TRANSCRIPT
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 ForChairman
Exam committee
Institute of Business Administration
JahangirnagarUniversity
Savar Dhaka-1342
Prepared By
Exam ID No 090703
Registration Number 20547
Area of concentration Financeamp 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 SirMadam
It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on
DBBLrdquo 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 experienceI 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
MrMohammad 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-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
1-3112223
CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
AppendixReferences
4-164566-13141515-16
17-2017-1920
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
Research Paper
On
Green Banking in Bangladesh A case Study on Dutch Bangla Bank Limited
Prepared ForChairman
Exam committee
Institute of Business Administration
JahangirnagarUniversity
Savar Dhaka-1342
Prepared By
Exam ID No 090703
Registration Number 20547
Area of concentration Financeamp 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 SirMadam
It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on
DBBLrdquo 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 experienceI 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
MrMohammad 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-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
1-3112223
CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
AppendixReferences
4-164566-13141515-16
17-2017-1920
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 SirMadam
It is my pleasure to submit the paper on ldquoGreen Banking in Bangladesh A case Study on
DBBLrdquo 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 experienceI 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
MrMohammad 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-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
1-3112223
CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
AppendixReferences
4-164566-13141515-16
17-2017-1920
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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
MrMohammad 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-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
1-3112223
CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
AppendixReferences
4-164566-13141515-16
17-2017-1920
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
Table of Contents
Executive Summary
Topic Page No
CHAPTER-1Introduction of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipBackground of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipObjectives of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Scope of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Methodology of the StudyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipLimitation of the Studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
1-3112223
CHAPTER-IIDefinition of Green bankinghelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Advantages amp Disadvantages helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipDBBL and Green BankinghelliphelliphelliphelliphelliphellipPHASE_ 1 Governance and Initial In-house Environment ManagementPHASE_2 Sector-specific Policies and Strategic Planning helliphelliphelliphellipPHASE_3 Green Product and Standard Report helliphelliphelliphelliphelliphelliphelliphellipAmendment and Compliance helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
CHAPTER-IIICritical Evaluation helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipConclusionhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip
AppendixReferences
4-164566-13141515-16
17-2017-1920
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 ie 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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
CHAPTER TWO
Definition of Green Banking
The term lsquoGreen Bankingrsquo 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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 customerrsquos 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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 banks courses of
action as per guideline are stated below
PHASE_ 1 Governance and Initial In-house Environment Management
Activities under Phase ndash 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
11 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 DivisionBranchIndividual 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
recommendationsuggestioninstruction 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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 Banks
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
12 INITIATING IN-HOUSE ENVIRONMENT MANAGEMENT
A Green Office Guideset of general instructions should be circulated to the employees for
efficient use of electricity water paper and reuse of equipments With the supportinitiative of
General Services Division a Green Office Guide should be circulated among the employees of
the Bank The office guide should entail among others instructionsadvices for-
Double-side printing to save papers
Application of ecofont printing to reduce ink
Usage of scrap paper as notepads
Avoiding of disposable cupsglasses
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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
13 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 Banks CSR
expenses a Climate Risk Fund which will be used in case of emergency
14 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
15 SUPPORTING EMPLOYEE TRAINING CONSUMER AWARENESS AND GREEN
EVENT
HRD shall arrange for employee awareness development and training on environmental and
social risk and consumer amp client awareness development shall be a continuous job of the Bank
16 DISCLOSURE AND REPORTING OF GREEN BANKING ACTIVITIES
Bank shall report on the initiativespractices to Bangladesh Bank and disclose in the respective
website
17 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
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
18 INTRODUCING GREEN FINANCE
Eco friendly business activities and energy efficient industries like renewable energy project
clean water supply project waste water treatment plant solid amp 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
19 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 gt BDT 25 million
_ For Corporate financing gt BDT 10 million and
_ For real estate financing gt BDT 10 million
191 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
_ 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
192 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 ldquopolicingrdquo 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
193 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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
(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 ldquoHighrdquo the credit risk management function will ensure that
additional conditions covenants are included
Examples of Environmental risk-related financing conditions covenants are as follows
1048715 The borrower will conduct business and maintain property in compliance with all
environmental laws
1048715 The borrower will provide environmental clearance certificates as and when obtained or
renewed
1048715 The borrower will have emergency response procedures in place
1048715 The borrower will take immediate and necessary remedial action in the event of a hazardous
spill or release
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
1048715 The borrower will not use the property for disposing of producing treating storing or using
contaminants pollutants toxic substances or hazardous materials or wastes
1048715 The borrower will employ a separate environmental manager with required background and
skills to address environmental problems
1048715 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
bull Wherever the EnvRR is ldquoHighrdquo 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
bull All credit agreements should include the standard condition covenant about meeting the
regulatory requirements
bull At the time of approving the financing it needs to be ensured that the appropriate additional
condition covenant has been included wherever EnvRR is ldquoHighrdquo
Credit administration and monitoring functions
Pre-disbursement Prior to the disbursement where EnvRR is ldquoHighrdquo Bank has to verify that
the conditions covenants (eg 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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 eg 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 Banks 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)rsquos 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
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
Bank should classify their financing of business activities based on their environmental risks
ie ldquoHighrdquo ldquoModeraterdquo or ldquoLowrdquo 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 eg 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 ndash II are to be completed by December 31 2012
21 Sector Specific Environmental Policies
Bank need to formulate strategies to design specific policies for different environmental sensitive
sectors
22 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
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
23Setting up Green Branches
Bank shall open a ldquoGreen Branchrdquo 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
24 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
25 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
26 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
27 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 ndash 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
31 Designing and Introducing Innovative Products
Bank should introduce environment friendly innovative green products to address the core
environmental challenges of the country
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
32 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
33 Reporting green banking practices on quarterly basis
Bank shall report their initiativesactivities 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 Bankrsquos 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 activitiespractices 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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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) Installation 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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
References
Banking Regulation amp Policy Department Bangladesh Bank Head Retrieved March 01 2012 from(wwwbasicbanklimitedcomGreen_Banking_Policy_Guidelines_of)
Bangladesh Bank takes step on green banking(October 01 2011) Retrieved March 01 2012 from (wwwthedailystarnetnewDesignnews-detailsphpnid=204684)
Bangladesh Bank website wwwbangladesh bankorgbd
Green Banking Policy Retrieved March 01 2012 from (wwwucblcomGreen20BankingGreen20Banking20Policypdf)
Islam MA Green banking Future important issue for banking industry Retrieved March 01 2012 from (wwwthefinancialexpress-bdcommorephpnews_id=114842)
US Cash Management Goes Green( August 2009) Retrieved March 13 2012 from (wwwbottomlinecomgreen_banking)
wwwductchbanglabankcom
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 1000000 and re-rolling
And this is Red category for engineering works above BD Tk 1000000
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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 amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
PULP amp 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 amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
Determining overall EnvRR
The italicized questions are the more important critical ones The EnvRR is determined as follows
SUGAR amp 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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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-businessPlease 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
- Exam ID No 090703
- Registration Number 20547
-
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
- Exam ID No 090703
- Registration Number 20547
-
(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
- Exam ID No 090703
- Registration Number 20547
-
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
- Exam ID No 090703
- Registration Number 20547
-
- Exam ID No 090703
- Registration Number 20547
-