GREEN BANKING

Contents
Foreword.................................................................................................................... Message from IBA....................................................................................................... Message from Executive Director................................................................................. Preface....................................................................................................................... Green Banking: An Overview....................................................................................... Greening Banking Processes, Products, Services and Strategies.................................... Greening Banking Infrastructure................................................................................. Case Studies in Indian Banks........................................................................................ Fostering Green Banking............................................................................................. Glossary...................................................................................................................... 01 02 03 04 05 07 09 16 18 19

References................................................................................................................... 20

An IDRBT Publication, August 2013. All Rights Reserved. For restricted circulation in the Indian Banking Sector.

FOREWORD

Sustainable development and preservation of environment are now recognised globally as overriding imperatives to protect our planet from the ravages inflicted on it by mankind. Various global initiatives are underway to counter the ill effects of development that we encounter today such as global warming and climate change. A common thread running across all these initiatives is the focus on reducing the demand for fossil fuels by implementing the 3R's viz. Reduce, Reuse and Recycle. Banks and financial institutions can play a major and decisive role in these global efforts to make our planet a better place to live in. As providers of finance, banks can ensure that businesses adopt environment-friendly practices. Incentives by way of offering cheaper funds for adopting green technologies will have a long term beneficial impact on the environment. As major implementers of technology, banks themselves can adopt green practices and thereby lead the way in this global initiative. Also, product innovation and leveraging on the use of technology enable banks and their customers today to reduce the usage of resources such as paper, thereby aiding in environmental protection. This book is a commendable initiative to propagate the idea of green banking. It explains in a very lucid style the various possibilities that exist in the banking arena to increase energy efficiency and reduce the usage of natural resources. The book dwells on environment-friendly practices that banks can adopt with respect to its IT infrastructure as also helpful tips towards green products and services. The case studies offer insight into what banks can potentially achieve by being environmentally proactive. It is hoped that the ideas offered in this book will act as a catalyst to banks and financial institutions to further intensify their efforts at reducing energy usage and thereby contribute their bit to the ongoing global efforts at ensuring sustainable development.

Anand Sinha,
Deputy Governor, RBI, Chairman, IDRBT

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MESSAGE FROM IBA

We are all aware that increased carbon emissions and reckless development without paying attention to environment, led to climate change. Many research studies have pointed out direct corelation with climate change and occurrences of natural disasters. It is believed that natural disasters are bound to increase in future, if we neglect the environment. According to the UN disaster risk reduction agency UNISDR, natural disasters such as the huge earthquake and tsunami that struck Japan caused record $366 billion damage in 2011. Apart from the loss of precious lives and properties, the cost of reconstruction is also enormous. We cannot ignore these warnings and all of us have to act together to minimise the adverse impact on environment arising out of increased pollution. All over the world, banks and financial institutions are concerned about the overall impact of depletion of environment. General frameworks describing corporate climate strategies are difficult to transfer to the banking sector. Such frameworks usually focus on basic industries, examining the dependency of companies on fossil fuels and exploring the effects of extreme weather events and regulation on corporations. However, banks are not generally exposed to weather stresses nor are they heavily dependent on fossil fuels in their operations. Indeed, the main impact of climate change on banks is indirect: they are affected to the extent that their clients' activities and economic activities in general are constrained. The key issue for banks will be assessing the impact of climate change on the asset quality of lending and investment portfolios. This will influence financing and investment policies as well as portfolio management. This will help them to develop a business model which is sustainable and adaptable to their environment policies. While many banks understand the significance of emission reduction, only very few have comprehensively integrated climate change-related aspects into their business processes. Besides this, internally, in their dayto-day operations also banks are devising strategies to make their systems and processes environment-friendly.

Green Banking is comparatively a new development in the financial world. It is a form of banking taking into account the social and environmental impacts and its main motive is to protect and preserve environment. Foreign banks are practising green banking on a much serious note. Some of the foreign banks have introduced a formal Environmental and Social (E&S) risk policy to govern lending activities way back in 1997. They are also signatory to the Equator Principles (EP), and moved ahead in building on bank's work to measure social and economic impact of lending, reduce annual paper consumption of full-time employees and continue to reduce energy and water consumption, etc. The Indian banks are still taking baby steps into this form of banking. Still, many of them are keen to actively pursue this strategy. In this context, this report prepared by IDRBT is quite significant. The report provides guidelines in areas such as i) Greening Processes, Products, Services, and Strategies ii) Greening Infrastructure. The report touches on various but simple methods which could be adopted by any bank for its building, data centre, internal processes, educating customers on technology based transactions, saving energy, etc. Some case studies are given in the report for adoption by other banks. I congratulate Mr. Sambamurthy and other members of the working group for this initiative and I am sure, this will be beneficial to all the banking and financial institutions in their endeavour to protect the environment.

K Ramakrishnan,
Chief Executive, Indian Banks' Association

GREEN BANKING FOR INDIAN BANKING SECTOR

Message from Executive Director

I read with great interest the document "GREEN BANKING", prepared by your team members under the active guidance of Dr. Gangadharan. It is a very important and timely document as one of the challenges faced by the countries world over as technology took over our lives was the impact of technology on environment. As Indian financial sector moves to the next stage of technology adoption, it is imperative that "green banking" as the team calls it, is adopted by every responsible financial institution. The framework put forth is quite exhaustive. Apt case studies included surely enhances the value of the document. I understand Dr. Gangadharan has also co-edited a text book on Green IT that has been adopted by reputed educational institutions like IIM, Kolkata and NIT, Surathkal. Such efforts enhance the reputation of IDRBT which has been taken to a higher pedestal with greater visibility.

G. Padmanabhan,
Executive Director, Reserve Bank of India

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PREFACE
Mathis Wackernagel and his colleagues measured the ecological footprint of humanity and compared it to the carrying capacity of the planet. They concluded that use by human resources has already overshot the planets carrying capacity by 20% already. (Limits to Growth by Donella Meadows and others) The case for sustainable growth is established beyond doubt. Reckless and unimaginative growth is endangering the planet and the adverse consequences are manifest in global warming, climate change, fickle weather, floods, droughts, pollution, high green house gas emissions, etc. While still there is no consensus among the countries on sharing the burden of ecological footprint, most of the countries have been taking aggressive measures to tackle global warming and climate change. Banks also contribute to ecological footprint directly and indirectly through investment/lending in their customer enterprises. As such they need to play a key role in optimizing /reducing the carbon footprint. It is said that what is not measured, is not managed. Green Grid, a nonprofit organization which is spearheading green initiatives has come out with recommended metrics to measure the effectiveness of green initiatives in information technology and data centers. Some of the important metrics are: Electronic Disposal Efficiency (EDE) Power Usage Effectiveness (PUE) Data Centre Infrastructure Efficiency (DCIE) Carbon Usage Effectiveness (CUE) Water Usage Effectiveness (WUE) Data Centre Productivity (DCP) Consumption/use of physical and financial capital are well accounted for and these standards are universally adopted. But accounting for consumption and use of NATURE CAPITAL lags far behind and needs to be adopted. This would bring about better accountability and adds to maturity and sophistication of market for NATURE CAPITAL.

While procuring hardware, banks may factor in environmental attributes through deployment of Electronic Product Environmental Assessment Tool (EPEAT). Banks shall encourage and deploy renewable energy like solar, wind power. Use of thin/zero clients and virtualization helps in energy efficiency. Banks may designate CHIEF GREEN OFFICER to champion the cause and drive these initiatives across the enterprise. Boards of banks shall lay down specific policies and targeted levels for each of the measures and monitor them on annual/semiannual basis. These measures need not be confined to IT space but can be implemented in other areas and we can even mandate clients in service and manufacturing enterprises. We are not putting numbers, but banks themselves may measure where they are and track trends in improvement and ultimately reach global benchmarks. It is a journey but brooks no delay to start with. Achieving carbon neutral state shall be the goal. At the end of the day, being frugal, doing more with less is basic commonsense. Let us give a new and added push to Green Banking.

B. Sambamurthy,
Director, IDRBT

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Chapter 1

GREEN BANKING: AN OVERVIEW

INTRODUCTION
The disastrous impact of recent storms, floods, droughts, and excessive heat that many people have experienced around the world, motivate us to think seriously about global warming and its impact and to do whatever we can to address this problem. Governments, enterprises, and people, all have roles to play in combating global warming and building a sustainable environment. A good thing is that there is now greater awareness and a growing commitment to address environmental problems we face. Inaction to arrest environmental degradation would significantly affect not only current but also future generations and our further progress. So, a proactive multipronged action is necessary by all the industry and business sectors, regulatory agencies and the individuals. What can, and should, Banking, Financial Services, and Insurance (BFSI) sector do in creating a greener and sustainable environment? What can each person in the BFSI sector do individually and collectively to address global warming and create a sustainable environment? Internationally, there are several initiatives to create a common protocol to manage environmental concerns. Among them the United Nations Environment Program Finance Initiative (UNEP FI) and the Equator Principles (EPs) are the two key initiatives. The United Nations Environment Programme Finance Initiative (UNEP FI) seeks to encourage better implementation of sustainability principles at all levels of operations in financial institutions, namely through the incorporation of environmental, social, and governance factors in risk analyses. This initiative is a public-private partnership established between the United Nations Environment Program (UNEP) and the financial sector. It works closely with over 200 members including leading banks, investment funds, and insurance companies to develop and promote linkages between sustainability and financial performance. The Equator Principles are a set of voluntary guidelines for the categorization, assessment and management of social and environmental risks in project financing. The EPs are based on the International Finance Corporation Performance Standards on social and environmental sustainability and on the World Bank Group Environmental, Health, and Safety (EHS) Guidelines. Currently, 78 financial institutions in 32 countries have officially adopted the EPs, covering over 70 percent of international Project Finance debt in emerging markets. The EPs have promoted convergence around common environmental and social standards. In December 2007, the Reserve Bank of India (RBI) issued a circular (RBI 2007-2008/216) highlighting the importance for banks to act responsibly and contribute to sustainable development and emphasizing the need for Indian banks to establish institutional mechanisms to enshrine sustainability.

THE RELEVANCE OF GREEN BANKING

Enterprises are now increasingly interested in establishing and implementing strategies that will help them to address environmental issues and also pursue new opportunities. The reasons for going green are manifold, and the key among them are: increasing energy consumption and energy prices, growing consumer interest in environmentally-friendly goods and services, higher expectations by the public on enterprises' environmental responsibilities and emerging stricter regulatory and compliance requirements. Further, enterprise will increasingly feel the effects of environmental issues that impact their competitive landscape in ways not envisaged earlier. For instance, investors have started discounting the share prices of companies that poorly address the environmental problems they create. When making purchasing, leasing or outsourcing decisions, many customers now take into consideration the company's environmental records and initiatives. Investors are increasingly placing their money on initiatives that are green or that develop and promote

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green products and services. Government agencies, investors and the public are demanding more disclosures from enterprises regarding their carbon footprint and their environmental initiatives and achievements. As a result, enterprises with the technology and vision to provide products and services that address environmental issues will enjoy a competitive edge. Like any other enterprises, as consumers of natural resources, banks directly interact with the environment. For instance, banks contribute towards the carbon emission directly in their day-to-day operations in terms of use of paper, electricity, lighting, air conditioning, electronic equipment and other things, although this is moderate compared to other carbon sensitive industries like steel, oil and gas, etc. Banks affect the environment indirectly by financing intermediaries who are the major source of long term funding to various industries that pollute the environment heavily. Hence, it is imperative to understand the need for sustainable practices for banking. Currently, in India, the concept of green banking is catching up and banks are actively looking for ways to portray themselves as a Green Bank.

Green Banking
Green Banking is an umbrella term referring to practices and guidelines that make banks sustainable in economic, environment, and social dimensions. It aims to make banking processes and the use of IT and physical infrastructure as efficient and effective as possible, with zero or minimal impact on the environment. Considering the nature of banking processes and infrastructures, in this report, we offer guidelines for greening banking in two levels. Greening Processes, Products, Services, and Strategies: Making day-to-day business operations, banking products and services greener by following simple practices and making them environmentally friendly. Greening Infrastructure: Making IT infrastructure (including data center) and physical infrastructure (including buildings) greener and taking initiatives so that a bank could itself generate electricity for its own consumption.

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Chapter 2

GREENING BANKING PROCESSES, PRODUCTS, SERVICES, AND STRATEGIES

Sourcing and Procurement

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Select vendors by the sustainability rating of their products, services and operations. Design and offer banking products and services in such a way that consume less resources and energy and thereby reduce carbon footprint Implement effective systems for product end-oflife management that have minimal impact on the environment.

Product Life Cycle Management

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A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. Banks offer different channels to access their different banking products and services through ATM, Branch, Mobile banking, Internet banking, etc. There are four major avenues for greening banks processes, products and services, strategies and other activities which are briefly outlined here.

GREEN PRODUCTS AND SERVICES

Banks are developing new products and services that respond to consumer demand for sustainable choices. Following are some of the options that banks should offer to their customers, if they are not offering already:
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GREEN PROCESSES
A Green Bank requires each of its functional units and activities to be green environmentally friendly and help to improve environmental sustainability. Several opportunities are available for banks to green their functional units and activities. Key among them are: Supply Chain Management
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Electronic and telephone banking, facilitating customers to perform most of their banking needs anytime, anywhere Automatic payments reduce the need to write and send cheques by mail Electronic (paperless) statements, product information, guides and annual reports to customers and stakeholders Offering and promoting mutual funds that focus investment in 'green' companies Offering a special line of credit to help homeowners invest in energy-efficiency upgrades for their home Offering credit cards co-branded with environmental charities.

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Adopt techniques and plans to minimize inventory and wasted freight Adopt networked design using a carbon footprint.

Enterprise Resource Management

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Facilitate paperless transactions Adopt techniques for workforce and parts optimization as well as intelligent device management. Use electronic means, wherever possible, to maintain contact with and correspond with customers and potential customers, and minimise paper-based correspondences.

GREEN BANKING STRATEGIES

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Customer Relationship Management

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Engage with key stakeholders and create awareness of environmental issues and their impact on the economy, the environment, and the society. Also, explain to them the business and environmental value and the necessity of greening the bank processes, products, and services

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Conduct energy audits and review equipments purchases and disposal policies and practices. Assess IT's environmental and cost impact and identify areas to be greened Set SMART (Specific, Measurable, Attainable, Realistic, and Timely) green goals as the internal targets to reduce your carbon footprint along with timelines. Develop criteria for measuring progress towards the goals Develop and implement a green policy that aims to achieve higher utilization of systems while reducing energy use and lessening their environmental impact Encourage, motivate, and energize the workforce to follow the green path and to come up with and implement their own ideas. In addition, also encourage clients, suppliers, and outsourcers to adopt green practices Monitor the progress regularly; watch industry trends and new developments. Revise the green policy as required Publicize your environmental policy, actions, and achievements and thereby get credits and accolades from customers, peers, industry groups, environmental advocates, government agencies, and society at large.

OTHER GREEN BANKING ACTIVITIES

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Banks may formulate innovative financial solutions and redesign the existing ones so as to incorporate environmental perspectives Banks may provide loans with concessions to corporates or individuals who undertake environment-friendly projects such as projects employing sun, wind equipment, manufacturers of fuel-efficient automobiles Banks can introduce green funds for customers who would like to invest in environment-friendly projects Banks can involve themselves in carbon credit business, wherein they can provide all the services in the area of clean development mechanisms and carbon credit business Banks can support projects ranging from community cleanups to national initiatives on climate change, water, air, biodiversity and more.

Drawing on the above guidelines, opportunities and options, banks need to set their near-term and long-term green goals, develop their green strategies, and execute their greening activities in a phased manner.

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Chapter 3

GREENING BANKING INFRASTRUCTURE

GREENING IT INFRASTRUCTURE
Going green is more than just a social incentive. Making a bank's infrastructure (including physical and IT) more environmentally friendly can also reduce costs significantly.

power saving profiles which when enabled, reduces the amount of energy consumed by the computer. For example, when the laptop is starting up or when the laptop is shutting down, these applications reduce the screen brightness to a minimum. The processors of laptop also consume a lot of power particularly when carrying out computationally-intensive tasks. Many aspects of applications that run on a system impacts power consumption. The following guidelines will help in optimizing the energy consumption:
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Greening Use of Laptops, Desktop Computers, and Servers

In today's environment, all banks are computerized. In this IT-enabled environment, bankers should make use of these IT resources in an eco-friendly manner. Following are some of the guidelines for greening the use of laptops, desktop computers, and servers in a bank. According to various studies, quite a lot of energy is wasted in a laptop when the laptop is being charged. The chargers step down the voltage and convert the AC to DC. This happens as long as the charger is connected to the power socket, irrespective of whether the laptop is connected to the charger or not, thus resulting in waste of energy. Hence, it is very important to switch off the power supply when it is not in use. There are green chargers in the market, which can detect whether a charger is connected to a notebook computer or any other device, and reduce the power consumption when a charger is not connected to a device. Monitors consume about 20 to 30% of the total energy used by a laptop; hence it is important to reduce the power consumption of the monitors. Strategies that help in reducing the power consumption of monitors include:
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The background processes and other applications which are not being used are kept running to keep the processor active, thus resulting in energy wastage. So, when an application is not in use, close the application and also stop the background processes that are not being used Multitasking is a tradeoff between CPU time spent executing tasks and inefficiencies brought in by context switching. When a task starts running slower than it would normally run, one of the likely causes is due to inefficiencies owing to context switching. It is advisable to reduce the number of tasks when such slowing down is noticed The more the processes that are set to start at startup, the more the amount of time the laptop needs to boot up, thus resulting in more unproductive time for the processor and the monitor. So, keep the number of processes that start at the startup of the computer to a minimum. The required applications can be started when needed.

Reduce the brightness of the monitor to the appropriate level. A brighter screen consumes more energy When some background task is running in the computer and there is no need to use the monitor during this time, switch off the monitor instead of using screen savers as screen savers also consume some energy Most of the computer operating systems provide

The peripheral devices that are connected to the computer also consume energy, even though they might not be in active use. For example, devices connected to the USB ports in a computer draw power even when the device is not in use. Most laptops today are provided with power management features and software. The power management software can help in regulating the use of the battery and electric power. It monitors the load on the hard disk, the activities on the laptop, and the ambient

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brightness and changes the various settings in the computer to make optimal use of power. The software also allows users to set timings for the computers to automatically go to standby or hibernate mode. A typical desktop uses about 115 Watts of power. CRT monitors were the primary output device used in the desktop PCs till a few years back. CRT monitors consume a lot of energy and are inefficient. It also contains a lot of environmentally sensitive materials. LCD and LED monitors are energy efficient and small in size. The power management systems and techniques for monitors that were described on laptops also holds good for desktops. The processors used in desktops consume a lot more power than their laptop counterparts. The processor and hard disk power optimization techniques that were used in the laptops also apply here. In many cases, desktops are kept always on, so that it can be remotely accessed from a laptop or some other desktop. In most cases, desktops are left switched on 247 even during holidays. Hence, most of the time desktops remain idle and waste a lot of energy. To avoid having to leave the desktops switched on all the time, we could use remote wake up methodologies. In banks, where there are many desktops in use, it is important to globally monitor the usage of all the desktops to get a holistic picture on the usage efficiency of the desktops. Tools like NightWatchman (www.1e.com), TheEnergyDetective'(TED) (www.theenergydetective.com), 'eMonitor' (www.powerhousedynamics.com) and 'Conserve Insight' (www.belkin.com/conserve/insight/) help managers in assessing the power usage trends of many of their desktops over time by monitoring the usage trends and presenting the data in the form of a dashboard. Banks also need management tools, which allow remote control of desktops. Though most operating systems have group policies, which allow certain configurations to be enforced on the desktops, they are not as effective as management tools which allow granular control over the desktops. Tools like 'Night Watchman' help enterprises have more control over the desktops. These tools allow enterprises 'securely, remotely and centrally', power

down desktops. They also allow enterprises to apply power schemes at different times in multiple locations, globally from a single console, maximizing power savings without impacting users. Though there might be resistance from employees to the implementation of such systems, it is important to make the employees understand the benefits and advantages of the system and then implement solutions. Servers are computers designed to serve the needs of other computers. In general, server computers run one or more services that will be used by other computers in the network. They have powerful CPUs and have large amount of memory RAM. They are ON most of the time and in most cases redundant servers are used to provide increased reliability. These servers are generally placed in data centers. Servers in general generate a large amount of heat due to large power consumption by servers and hence they require better cooling mechanisms. The energy efficiency aspects of servers are discussed in detail in Greening Data Centers section.

Greening Data Centers

Need for Green IT Data Centers
Many design parameters have to be considered while designing and implementing IT data centers. These design parameters include reliability, availability, serviceability, scalability, modularity, flexibility and security. The increase in the number of online service users, leading to an ever-increasing demand for computing resources, has resulted in an increase in the requirement of power and space to host these computer resources and IT infrastructure. Power consumption and power densities are rising and the old techniques of power supply and cooling in a typical, traditional data center are no longer able to cater to today's needs. About half of the data centers will have insufficient power and cooling capacity to handle emerging high density equipments. The power and cooling infrastructure accounts for 50 percent of the total energy consumption by data centers. Most of the electrical energy in a typical data center is utilized by the infrastructure which includes servers and storage devices, chiller units, centralized air

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conditioners, uninterrupted power supplies (UPS), etc. Some electricity is also utilized by the lighting system and humidifiers. Increase in power and space requirement, along with the increase in global warming has forced the IT fraternity to rethink and reconsider the traditional design and implementation approach in developing data centers. Typical cooling techniques, using centralized air conditioning system, in a traditional data center are not proving to be efficient and sufficient to cater to the needs of today's IT infrastructure demands. Centralized air conditioning and floor cooling is not enough for cooling high loads. The cooling effect remains concentrated and localized to lower heights and cannot cool the overall IT equipment in high density racks of data centers. Various innovative ideas and best practices are evolving to ensure optimal utilization of power, space and cooling requirements, leading to development of green IT data centers, which are eco-friendly. A green IT data center is designed keeping in view many design parameters, creating an eco-foundation, and leading to a lower cost of ownership. These parameters range from physical layout and design, cooling system, cabling, power system, IT infrastructure including servers and storage devices; and IT design parameters like consolidation and virtualization for most energy efficient and optimal utilization. These parameters are based around (a) scalable, repeatable, and modular architectures; (b) modular, flexible and optimized power and cooling; (c) simplified, flexible cabling and plumbing; and (d) real-time energy monitoring.

Green Data Center Model

Green data center is defined as a computing environment that uses resources in a more efficient manner and has less impact upon people and the environment. Data centers have a typical energy intensity which can be 15 to 200 times that of regular commercial buildings. This is caused due to three reasons:
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Data centers, being mission- critical facilities, are designed with several back-ups and redundancies A data center would have a lifespan that is upwards of 10 years. While the IT racks are populated and loaded slowly across these years in tandem with business growth, the site infrastructure is traditionally provisioned and deployed upfront The rack density in data centers is increasing unremittingly over the past two decades. The energy needed per compute unit has decreased, but with the corresponding compaction of IT equipment as well, the average density of racks has begun to touch double digits in terms of kW/ Rack, with some HPC (High Performance Cluster) densities scaling 60 kW/ Rack.

However, the green-ness of a data center is not only determined by the usage of energy, but by several other factors as well. These factors are summarised visually in this green data center model below:

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Opportunities for Greening the Data Center These sets of opportunities are classified under four headings: 1. Power Train

Source of Power: In its lifetime, a small 1U server could have a carbon footprint of 4 metric tonnes. Therefore, it is incumbent upon data center owners to ascertain the cleanliness of their power source when setting up a data center. Transmission and Distribution: Today, the tariff we pay per kWhr of energy consumed is heavily subsidised. In the future, if the regulatory authorities mandate a pass-through, then the case for onsite generation will become increasingly strong. Onsite Generation: Data centers merit onsite generation for three valid reasons:

Energy: Energy is the biggest consumable in the data centers, and the biggest operating cost contributor year-on-year. Especially for medium and small-sized data centers, many are not aware of the amount of energy consumed. This is further true when the data center is housed in a shared corporate facility, where there may not be meters to measure the energy fed to the data centers alone. Conceptually, the metric PUE (Power Usage Effectiveness) is:

PUE= (Consumption + Overhead + Wastage)/ Consumption

Water: For those data centers using water-based cooling, the need for water at the data centers can run into lakhs of litres per day. Adequately provisioning for this asset and making availability a qualifying criterion for site election is a must. Materials: Several materials are bought, used and discarded on an ongoing basis in data centers starting with the displacement of topsoil when building right up to the regular replacement of UPS batteries. Responsible procurement practices specifying energy-efficient products are a must. Also, the responsible disposal of hazardous waste such as e-waste should be carried out. IT Hardware: Equipment with energy-efficiency star ratings should be the qualifier for procurement, or where these are still not widely available, should give the supplier an added advantage during the evaluation process. Pay-back calculations for these energy- efficient products should be a part of the product specifications provided by the supplier, making their selection a robust financial choice. Network and Communication: To the maximum level possible, hygiene in maintaining data cables under the raised floor should be done so as not to reduce air-conditioning efficiency. IT Architecture: It has been established that IT infrastructure is heavily under-utilised in data centers. The average utilisation of servers globally in data centers is between 7-27%. This is due to the redundancies built into the IT architecture, as well

For those data centers warranting Tier-IV architecture based on their cost of downtime, the Uptime Institute allows the leeway of viewing onsite generation as the primary source and the grid as the economic alternative or second source For those data centers where there is a gap between quantum of power requisitioned and what is sanctioned, this gap can be bridged by onsite generation Running data centers mostly have a scenario of saturating available power before they run out of space, due to the increasing densification of racks. These many-a-times forces organisations to prematurely build their next data centers. With onsite generation, requisite power augmentation to further utilise available space would become possible. Back-up Generation: The Uptime Institute requires 12 hours' back-up worth of diesel stored at site. This has a sizeable carbon footprint.

3. IT Infrastructure

2. Site Infrastructure Site infrastructure in the data center refers to the facilities or services such as the civil, structural, power, cooling, fire safety, physical security, access and building management systems.

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as the spreading out of applications across more servers than needed. Enabling the power management system in servers to reduce consumption of energy when idling is a must.

bank, hosting their servers in such a facility, would by proxy to enjoy this benefit as compared to achieving such levels of efficiency in their own EDC (Enterprise Data Center).

Virtualization and Consolidation: Virtualization and consolidation are the key design parameters of green IT data centers. Consolidating many servers into one, and vitalising the application and data can lead to reduced server count, also reducing the overall server sprawl, and further leading to efficient space, power and cooling requirements, simultaneously improving IT infrastructure optimisation, and better utilisation in a secured and optimised manner. Virtualization is possible at every level in IT infrastructure, starting from operating system to the physical servers, storage devices and network, and even at client access devices. IT vendors are now coming up with energy-efficient and eco-friendly hardware, which include servers populated with central processing units not requiring more power than an electric bulb and with an overall power requirement of less than 500 watts per server. These servers are also space-efficient, taking a maximum of 1 (one) rack unit space and hence leading to overall best space, power and cooling utilisation. Most of the IT servers today are bundled with virtualization technologies, which enable consolidation of thousands of application into one single server without any performance overheads. These servers have provisions for creating logical domains, using hyper visor technology, and enabling installation and configuration of heterogeneous operating environments, running variety of application in a space and power efficient single server. Colocation: A colocated data center in a large IDC (Internet Data Center) should be greener. The rationale is that a large colocation service provider would see profit linked directly to energy efficiency and lower energy bills. Therefore, they would necessarily track and control PUE in their IDCs. A

Cloud Computing: When migrating non-critical applications to the cloud, similar benefits as above would be realised. Further, if the cloud service provider's IDC is in geography with cooler climes, significant opportunity for free cooling would further drive down PUE. Similarly, the use of clean energy in such IDCs due to geographical advantage would reduce the carbon footprint per banking transaction. Wheeling and Banking: Mature service providers are able to set up remote farms, from where a bank could buy wheeled power. Heavy subsidies are available from the Ministry of New and Renewable Energy. Payback of 4-5 years is promised by such service providers. Onsite Energy as a Service: Many generator companies have established leasing or rental models, where they can bill energy consumed by the data center on a subscription basis. A combination of co-generation or tri- generation in this model, along with the use of natural gas, can make the case for a green data center.

Influencers to Greening the Data Center

While the opportunities are many, there are several influencers on how green a Bank chooses to make their Data Center:

Attitude: A lot is decided by the banks managements and the data center managers attitude on how green to be. In a running data center, the change management needed is even greater. Some opportunities are:

4. Operating Models

Cold and hot aisle arrangement Blanking panels in racks Partitioning (including plenum) out unused data center areas Regular cleaning Detangling under raised floor Shutting down excess capacity in site

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infrastructure (UPS, PAC, etc.), without compromising redundancies

Variable capacity cooling Correct placement of vented tiles in cold aisle, not in hot aisle Sealing of air leakages. When ECBC compliance becomes mandatory, then it would be a given that all medium-sized and large data centers would qualify for compliance. Whatever is the nature of exceptions, compliances and administrative methods that emerge for the ECBC in due course, knowledge of this significant framework would be useful even today.

Policy: Organisational policies sometimes drive or constrain green initiatives in a data center. The new TC 9.9 guidelines from ASHRAE recommends temperature envelope from 18 to 27 Celsius, with some prescribed limits for rate of change and humidity. Efficient operations can be observed till 24 Celsius, provided it is an existing DX-type PAC (Precision Air Conditioner), it can receive the correspondingly high return temperatures. Similarly, green procurement policies can help green a data center even during hardware refreshes. Utilisation: Energy efficiency achieved in any data center is a direct outcome of utilisation. A Data Center, when it is built, envisions a certain growth in business and corresponding loading of IT Racks over the next 10 years. Statutes: As of today, in India, there is no regulation or statutes specific to data centers. Even the Energy Conservation Building Code (ECBC), 2009 by the Bureau of Energy Efficiency for generic buildings is only applicable for voluntary adoption at this point of time. However, the qualifying size of a building as per the ECBC is:
100KW or More 120 KVA or More
1,000 Square meters or more

Green Choices and Initiatives

In the data center, the following can be taken up as wellconsidered choices by a bank:

Site Selection: Choosing to locate a data center in a city with opportunity for free cooling, availability of (preferably piped) natural gas and relatively cleaner sources would be recommended, in addition to other technical, administrative, financial and corporate criteria. Measurement: PUE is one of the best recognised metrics in the industry, and defined as: PUE = (Total Data Center Energy Consumption or Power / IT Energy Consumption or Power)

The higher the PUE, the more inefficient the data center. It is very likely that an enterprise data center such as that of a bank may have a PUE that is greater than 2 The unequivocal methodology to measure PUE, as defined by the Green Grid is given as follows. It is recommended that all banks at the least start measuring PUE Category 1.
PUE Category 0* PUE Category 1 UPS Output IT Annual Energy Total Annual Energy PUE Category 2 PDU Output IT Annual Energy Total Annual Energy PUE Category 3 IT Equipment Output IT Annual Energy Total Annual Energy

Connected Load Contract Demand Air-conditioned Area

IT Energy Measurement Location Definition of IT Energy Definition of Total Energy

UPS Output Peak IT Electric Demand Peak Total Electric Demand

*For PUE Category 0, the measurements are electric demand (kW).

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GREEN BANKING FOR INDIAN BANKING SECTOR

Certification: Certification is a way to encourage data centers for maintenance of a green data center. Innovation: Several opportunities present themselves to deploy green equipment, technologies and operating models in the data center, as discussed earlier. One additional area not mentioned above is the use of a good DCIM (Data Center Infrastructure Management) application, available off-the-shelf from many providers today. Integrating this with all site infrastructure equipment, and then, among other things, tracking PUE constantly would be useful.

In conclusion, whatever else may be achieved towards greening data center, new or old, the one key consideration remains energy. A green and energy efficient data center can not only deliver significant savings in operating costs and reduction in capital cost, but achieve national recognition for the bank in terms of corporate social responsibility and contribution to sustainability.

Ways to Greening Buildings

F

Building designed according to trees on site for preserving more trees and integrating them into the design Good interior design for better daylight penetration Building plans and windows designed for cross ventilation Efficient air conditioning and heating systems Reduction in water usage Highly reflective roofing materials Preserving and Protecting landscape during construction.

F F F F F F

GREEN BUILDINGS
A green building is a building which is energy efficient, resource efficient and environmentally responsible, which incorporates design, construction and operational practices that significantly reduce or eliminate its negative impact on the environment and its occupants. Energy efficiency in buildings could be achieved by realizing the best design and engineering approach. A sustainable procurement process and a conformance assessment of existing codes and regulations for energy efficiency make the realization of building to be energy efficient. The renovation of existing buildings towards being more energy efficient makes sustainable modernization. On a practical level, this encompasses the use of design, materials and technology to reduce energy and resource consumption and create improved human and natural environments.

Self-Energy Generation Techniques Banks can start harnessing renewable energy for satisfying their own energy requirement by:
F F F F

Installing roof top solar panels/collectors Installing faade of photovoltaic film/panels Installing Algae bioreactor to fix carbon dioxide and produce biofuel for power supply Installing biomass combined-heat-and-power boiler burning vegetable oil that will simultaneously generate heat and electricity.

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GREEN BANKING FOR INDIAN BANKING SECTOR

Chapter 4

CASE STUDIES IN INDIAN BANKS

CASE STUDY 1:

Centralized management of the new P7 infrastructure with basic monitoring dashboard reducing administration overheads.

GREEN INITIATIVES BY ABC BANK

Server Virtualization
Most servers used in the ABC bank today utilize between 5 and 15% of their total capacity while consuming 60 to 70% of their maximum energy consumption at idle. This was seen by the bank as a big challenge and area for potential saving. To address the challenge, ABC bank had embarked on server virtualization journey. ABC bank had adopted VMware virtualization technology for x86 servers and also did consolidation of servers as appropriate. By server virtualization, the bank has saved on the following components of the infrastructure / datacenter.
F F F F F F

Desktop Virtualization
ABC bank embarked on virtualization of desktops and setup Virtual Desktop Infrastructure (VDI) in its datacenters. 5000 users have been migrated on 16 blade servers in VDI, giving cost reduction in power and real estate.

Printer Consolidation
ABC bank started rolling out network based laser printers through a printing solutions provider across 1250 offices. This enabled the bank to reduce the number of printers to nearly one third and thus reduced maintenance related issues.

Avoidance of server administration cost Improved central processing unit utilization Reduced deployment times for servers, new applications (from 6 to 8 days to within a day) Server provisioning savings due to shared infrastructure Procurement costs reduction in release of purchase order Improved application availability and reduction in downtime.

Mail Server Consolidation

By consolidating mail servers, ABC bank has managed to reduce the server count from 912 physical servers to 744. New branch users are also being accommodated on existing consolidated servers, thereby reducing server footprint. This has been achieved by optimally using 64bit processor architecture. CASE STUDY 2:

GREEN INITIATIVES BY XYZ BANK

Green Banking Channel
XYZ Bank has implemented Green Banking Channel in select branches to facilitate debit card holders to selfservice transactions at branch counters. It had developed green banking channel where the customer can initiate a transaction by swiping the debit card in a point of sale machine kept at a lobby. The transaction thus initiated by customer will automatically get posted in Core Banking Solution where it is verified by the branch teller. In the whole process, manual filling up of challans or vouchers are dispensed with and the transaction is authenticated through ATM PIN a green initiative for paper-less mode. Green banking channel supports cash withdrawal, cash deposit and fund transfer.

Server Consolidation
ABC bank consolidated multiple IBM Power5 RISC based servers to more powerful Power7 based servers across three datacenters requiring much lesser footprint and multiple benefits.
F

Reduction in rack space, power, cooling 12 P7 770 servers with 416 P7 cores with 12 GB memory/core occupies about 12 racks space in place of 60 racks occupied by around 140 P5 servers P7 servers require around 60% less power and cooling requirements as compared to older generation P5 servers

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GREEN BANKING FOR INDIAN BANKING SECTOR

In green banking channel implementation, the bank has integrated multiple systems such as ATM switch, Core Banking Solution and point of sale network to provide seamless experience to customer. This has substantially reduced the usage of paper withdrawal or deposit slips in the branches, thus contributing towards greener environment.

CASE STUDY 3:

GREEN INITIATIVES BY PQR BANK

E-waste Management
PQR bank took a social responsibility towards proper handling of e-waste management with a view to protect the environment which may be polluted by toxic gases and other non-biodegradable substances which are discharged through e-waste. PQR bank has put in place, a well defined and transparent e-waste management policy in accordance with E-waste Rule, 2011 notified by Ministry of Environment and Forest, Government of India. E-waste policy of the bank contains broad guidelines or procedures for effective e-waste management in all units of the bank located in India. The policy aims at generating awareness amongst all the working staff for proper maintenance of electrical and electronics equipments. The e-waste management initiative of the bank emphasizes on the following:
F

Centralization of Operations
XYZ bank has centralized the business processes being followed in the branches or offices, including centralization of account opening process, centralization of account servicing, centralization of trade finance process, and centralization of overseas customer account opening. In order to automate and track the process at every stage of processing, the bank implemented Document Management System with workflow capability. To reduce the turnaround time, XYZ bank has implemented scanning at branch concept wherein documents are scanned at branches. The system automatically categorises the documents based on the intelligent character recognition or optical character recognition technology. Once the documents are exported into Document Management System, the same is available to National Processing Centre for processing. XYZ bank has created separate processing centre, one for account opening and account servicing and other for trade finance processing. In order to implement the system, XYZ bank has integrated Document Management System with Core Banking Solution, Lending Automation System, Mail Messaging System, SMS, SWIFT, FAX, Intranet Portal, etc. This has helped in straight through processing between various systems. Besides increasing efficiency, reducing cost, and turnaround time, this system helped in eliminating the need for keeping the multiple copies of documents in the branches. It is a Green Initiative by the XYZ bank, reducing the dependency on papers, in turn helping in saving the environment.

Reduction in e-waste generation by locating electronic equipments in proper environment, regular maintenance of equipments and use of centralized printing or photocopying facilities Wherever possible, to take into account buy-back arrangement with the vendor(s) for new purchase Purchase of energy efficient and eco-efficient technology products by giving preference to higher star-rated electric or electronic items Identification of e-waste and their timely disposal (ensuring that no official data is released to outside parties) Repairs or upgrade of the equipments if the cost to be incurred is reasonable and commensurate with the extended life of the equipment Reckoning of the usefulness of items and donating them to trusts or schools, NGOs, etc.

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Chapter 5

FOSTERING GREEN BANKING

Green banking can be an avenue to reduce pollution and save the environment aiding sustainable economic growth. Green Banking is a multi-stakeholders' endeavour where banks have to work closely with government, NGOs, regulator, consumers, and business communities to reach the goal. We propose the introduction of standard rating for green efficient banks and banking practices among Indian Banks. Under this rating system, both the infrastructure and operations of the banks are being considered. We have coined the term of Green Rating Standard as Green Coin Rating. Banks' primary business must not be money making only, but it should also keep in mind social and environmental issues relating to its operations. Green Coin Rating will be in line as energy star rating given for appliances. Banks will be judged based on the rate of carbon emission out of their operations, the amount of reuse, refurbish and recycling concept being used in their building furnishings and in the systems used by them such as computers, servers, networks, printers, etc. They are also being evaluated on the number of green projects being financed by them and the amount of rewards and recognition they are paying for turning businesses green. The primary objectives behind Green Coin Rating are as follows:
F F F

Improving the energy and carbon efficiency of bank To estimate energy usage and wastage Comparative assessment of banks and its products efficiency for the customers and other stakeholders in relation to environment impact assessment Recognize and reward the environment-conscious financial institutions.

Financial institutions and banks in particular have an important role to play in going green by contributing to the creation of a strong and successful low carbon economy. They should expand the use of environmental information in the credit extension and investment decisions. The endeavor will help them proactively improve their environmental performance and creating long term value for their business. Even the customers want ecologically friendly products and services to reduce their impact on the environment. The banks going green in the technologies and services that they are providing, will not only save their energy and water consumption but will also appraise them in the eyes of environment supporting customers. The Green approach adopted by the banks will impact the customers in the following ways:
F

Carbon Emission Green Rewards GREEN COIN RATINGS Reuse/ Recycle/ Refurbish Green Investment Paper work Green Building

Better choice for customers and businesses Customers will be attracted to relationship-driven approach built on foundation of core values designed to enhance environmental, social, and financial well being of communities Active lending to sustainable businesses Green credit being provided to the customers.

F F

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GLOSSARY
Carbon Footprint A measure of an organization's or entity's impact on the environment in terms of the amount of greenhouse gases produced, measured in units of CO2 equivalent. Climate Change Changes in temperature and weather patterns due to certain human activity like burning fossil fuels. The changes include global average air and ocean temperature, widespread melting of snow and ice and rising global sea levels. Cloud Computing A new computing or IT paradigm in which computing resources computing capacity, storage and applications are delivered and consumed as a service accessed over a network. It is easily scalable and highly flexible, and users pay for the services they use. Corporate Social Responsibility (CSR) A form of corporate self-regulation about how companies manage their business processes to produce an overall positive impact on society. Its goal is for a company to embrace responsibility for its actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Integrated into its business model, a business' CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. Data Centre infrastructure Efficiency (DCiE) A metric used to determine the energy efficiency of a data centre. It is the ratio of information technology equipment power to total facility power, and is expressed as a percentage. e-waste Electronic waste, e-waste, e-scrap or Waste Electrical and Electronic Equipment (WEEE) comprises discarded electrical or electronic devices. It is one of the fastest growing segments of our waste stream. Environmental Sustainability The design and provision of products and services that incorporate and promote waste minimization and the efficient and effective use and reuse of resources. Its aim is to protect the

environment for the benefit of current and future generations. It is all about meeting needs and seeking a balance between people, the environment and the economy. According to the United Nations, sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs. Global Warming The rising average temperature of the Earth's atmosphere and oceans and its projected continuation. In the last 100 years, the Earth's average surface temperature increased by about 0.8oC (1.4oF) with about two-thirds of the increase occurring over just the last three decades. Most global warming is caused by increasing concentrations of greenhouse gases produced by human activities such as deforestation and burning fossil fuels. Green Building A resource-efficient building that uses less water, optimizes energy efficiency, conserves natural resources, generates less waste and provides healthier spaces for occupants, as compared to a conventional building. A green building reduces its carbon footprint throughout a building's life cycle design, construction, operation, maintenance, renovation and demolition. Green Data Centre A data centre in which IT systems, air-conditioning systems, electrical and mechanical systems and the buildings that house the data centre are designed and operated for maximum energy efficiency, low carbon footprint and minimum environmental impacts. Green IT A term referring to environmentally sound information technologies and systems, applications and practices. It is the study and practice of designing, manufacturing and using computers, servers, monitors, printers, storage devices and networking and communications systems efficiently and effectively with zero or minimal impact on the environment. It is also about using IT to support, assist and leverage other environmental initiatives and to help create green awareness. Green IT encompasses hardware, software, tools, strategies and practices that help improve and foster environmental sustainability. Greenhouse Gas (GHG) A wide range of different gases that can absorb thermal infrared radiation (heat) which is

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GREEN BANKING FOR INDIAN BANKING SECTOR

emitted from the earth, and then re-emit it. The most significant GHGs are CO2, methane, nitrous oxide and CFC gases. ISO 14001 standard The ISO 14000 standards family addresses various aspects of environmental management. ISO 14001 deals with the requirements of an Environmental Management System (EMS), and ISO 14004 offers general guidelines for EMSs. The other ISO 14000 standards and guidelines address specific environmental aspects such as labelling, performance evaluation, life cycle analysis, communication and auditing. Leadership in Energy and Environmental Design (LEED) LEED consists of a suite of rating systems for the design, construction and operation of high-performance green buildings, homes and neighbourhoods. Developed by the US Green Building Council, LEED is intended to provide building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions. Power Usage Effectiveness (PUE) A metric used to determine the energy efficiency of a data centre. PUE is the ratio of the amount of total power consumed by a data centre to the power used to run the computer infrastructure within it. PUE measures how much overhead energy is required to house and cool computers inside a building relative to the amount of energy that the computers consume themselves. Reuse, Refurbish, and Recycle The philosophy that unwanted computers, monitors and other hardware should not be thrown away as rubbish, as they will then end up in landfills and cause serious environmental problems. Instead, we should refurbish, reuse or recycle (i.e. dispose of) them in environmentally sound ways. This is also known as the three 'Rs' of greening unwanted hardware. Virtualization A process of creating a virtual (rather than actual) version of something, such as a hardware platform, operating system, a storage device or network resources, with the aim to centralize administrative tasks whilst improving scalability and overall hardware resource utilization.

REFERENCES
Harnessing Green IT: Principles and Practices. San Murugesan and G.R. Gangadharan (Editors). 2012 by Wiley IEEE Publishers, United Kingdom. UNEPFI: http://www.unepfi.org/ Equator Principles: http://www.equator-principles.com/ Banks Going Green, Sahitha Abdulla http://www.mbatious.com/article/banks-goinggreen?page=6 (Feb. 2012) Competitive Advantage on a Warming Planet. Harvard Business Review, 85, 2007. Banks and the Environment. Canadian Bankers Association. LEED Certificates: http://www.usgbc.org/leed ICT for a Low Carbon Economy: Smart Buildings, Technical report, European Commission, 2009. ASHRAE Data Center Technical Guidebooks. Best Practices for the EU Code of Conduct on Data Centers, 2011. Evaluating the Carbon Reducing Impacts of ICT: An Assessment Methodology. Global eSustainability Institute, 2010. Report to Congress on Server and Data Center Efficiency. US Environmental Protection Agency, 2007. Smart 2020: Enabling the Low Carbon Economy in the Information Age. Global eSustainability Initiative, 2010. AC versus DC Power Distribution for Data Centers, APC White Paper, 2011. Data Center TCO: A Comparison of High Density and Low Density Space, Intel White Paper, 2008. Energy Efficiency in Buildings: Business Realities and Opportunities, Technical report, World Business Council for Sustainable Development. 2008. Green Building Council, South Africa, www.gbcsa.org.za The Uptime Institute: http://uptimeinstitute.org The Green Grid: www.thegreengrid.org Greener and Smarter: ICTs, the Environment, and Climate Change, OECD, 2010. A New Era of Sustainability: UN Global Compact Accenture CEO Study 2010, United Nations Global Compact, USA, 2010.

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IDRBT Green Banking Working Group

MENTORS
Shri. B. Sambamurthy,
DIRECTOR, IDRBT

Shri. Patrick Kishore,

Chief Operating Officer, IDRBT

MEMBERS

Mr. G. S. V. Surya Prasad,

Executive Vice President & Head, Infrastructure Technology Group, HDFC Bank.

Mr. Anil Tembhe,

AGM, State Bank of India

Dr. San Murugesan,

Director, BRITE Professional Services, Australia

Mr. Anil Kuril,

DGM, Union Bank of India

Dr. Sateesh Kannegala,

Senior Technical Manager, HP India

Ms. Shaheen Meeran,

Managing Director, SCHNABEL DC Consultants (I) Pvt. Ltd.

Mr. Koyal Mandal,

Program Head - ESF, Institute for Financial Management and Research, India

Ms. Swarnalatha Mylavarapu,

Researcher, IBM Research India

Dr. G.R.Gangadharan,
Assistant Professor, IDRBT

An IDRBT Publication, August 2013. All Rights Reserved. For restricted circulation in the Indian Banking Sector.