An Impact Assessment of Green Initiatives of the Central Bank on the Environmentally Sustainable Banking in Bangladesh

Abstract

Environmental concern is at the centre of Green Banking policies and strategies. Policy makers in many economies have been undertaking initiatives and formulating rules to support green banking activities by the financial sectors throughout the world. In response to various legislative and regulatory bindings and incentives, a good number of banks in developed countries have been demonstrating their commitment to the earth through incorporating environmental risk in banking. In contrast, the status of environmental management has not been satisfactory in most developing countries, largely due to poor enforcement of existing laws and policies, lack of incentives and inadequate pressure from interest groups. Bangladesh Bank (BB), the central bank of the country, has been helping government in implementing provisions of key environmental regulations in the financial sector and from time to time it (BB) has issued a few environmental circulars and introduced refinance facilities to encourage banks for environmental financing mainly in renewable power generation. Especially, the circular issued in 2011 on ‘Policy Guidelines for Green Banking’ is a remarkable step on the way to developing green banking practices in the banking sector of Bangladesh. Commercial banks’ responses are crucial for positive outcomes of these initiatives and for ensuring environmentally sustainable banking. The paper attempts to examine the impact of the Central Bank’s initiative on the environmental banking in Bangladesh. The paper identified that though remarkable changes have taken place in terms of green awareness, banks could not attained a number of milestone targeted by the Bangladesh Bank.

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Author Information
Shah Md Ahsan Habib, Bangladesh Institute of Bank Management, Bangladesh
Pinki Shah, University of Liberal Arts Bangladesh, Bangladesh

• Category: Economic Sustainability: Sustainable Businesses and CSR

Posted by James Alexander Gordon

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