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Introduction
Over the past year, intense and wide-ranging debate has arisen on the heels of the
global financial crisis. In recent months, the critique has turned to capitalism itself, with
media headlines posing questions such as 'Crisis in Capitalism?' and 'Whats wrong with
capitalism?' Criticism has targeted the international financial system, questioning the role
and activities of banks in particular. Questions have focused on how banks have
generated their returns and, even more closely, on how they have shared their returns
with various stakeholders including customers, investors, employees (especially senior
management), and wider society more generally. While the debate continues to draw
attention a group of banks has for some time been answering many of these challenges
by delivering strong, straightforward and sustainable banking services. Sustainable banks
have consistently delivered products, services and social, environmental and financial
returns to support the real economy1. These banks demonstrate decades of responsible
banking and a consistent commitment to productive economic activity. They have
increased their activity during the present recession, expanding their lending to small and
growing businesses in particular. Committed to providing a broad range of banking
services to the real economy over the long-term, they highlight the powerful role of
sustainable banks as stewards of successful, equitable capitalism. Many of these
sustainable banks have been in business for a few decades, others for far longer. Their
models of providing long-term, patient but sustainably profitable banking services have
been at the heart of some of the worlds most successful economies, especially in the
small and growing business sectors. The vital role that these banks play in true economic
development is increasingly recognized in the debate over how to restructure local and
global finance. The evidence of their success suggests a renewed emphasis in public
policy, and by investors, on sustainable banks, could provide the long-term path for
responsible banking. Such responsible banking is necessary to support a more just,
environmentally sound, and sustainable economy.
Definition of Sustainable banking
Sustainable banking also known as a social, alternative, civic, or ethical banking, is using
money with conscious thought about its environmental, cultural and social impacts, and
with the support of savers and investors who want to make a difference, by meeting
present day needs without compromising those of future generations.
History of Sustainable Banking
Mainstream financial banks have had varying relationships with Corporate Social
Responsibility and Sustainable investment. However, a clearer movement has emerged
since the 1990s. With changing social demands, and as more is known about the effects
that banks can have through their lending policies, banks have begun to feel pressure
from the general public, NGOs, governments, regulatory bodies and others to consider
their social and environmental impact. For example, in the mid-1990s the Cooperative
Bank asked 6,000 customers what their thoughts were on Sustainable banking; 84%
1
responded that it was a good idea. Harvey 1995 In fact the cooperative bank was
formed in response to the growing consumer base looking for Sustainability oriented
bank.
Principles of Sustainable Banking
Triple bottom line approach at the heart of the business model;
Grounded in communities, serving the real economy and enabling new business
models to meet the needs of both;
Long-term relationships with clients and a direct understanding of their economic
activities and the risks involved;
Long-term, self-sustaining, and resilient to outside disruptions;
Transparent and inclusive governance;
All of these principles embedded in the culture of the bank.
Activities of Sustainable Banking
1. Ethical initiatives
2. Community involvement
3. Environmental standards for lending
Green Mortgages and Loans: A green mortgage offers better rates or terms for
energy efficient houses. Green mortgages can allow home buyers to add as much
as an additional 15 percent of the price of their house into loans for upgrades
including energy-efficient windows, solar panels, geo-thermal heating or water
heaters. The savings in monthly energy bills can offset the higher monthly
mortgage payments and save money in the long run. The Energy Efficient
Mortgage (EEM) is a type of HUD-approved green mortgage that will credit
you for your homes energy efficiency in the mortgage itself. Many home
improvements also qualify for the energy tax credit. Anyone undertaking an
energy-saving house project should shop around for a bank that offers a special
rate for a green mortgage or loan.
Green Credit Cards: A green credit card allows cardholders to earn rewards or
points which can be redeemed for contributions to eco-friendly charitable
organizations. These cards offer an excellent incentive for consumers to use
their green card for their expensive purchases. Imagine the millions of dollars that
could be raised for worthwhile environmental groups if green credit cards really
took off.
Green Reward Checking Accounts: A product called reward checking accounts
pays a bonus rate to customers who go green. Customers can earn higher
checking account rates if they meet monthly requirements like receiving
electronic statements, paying bills online or using a debit or check card. With
this banking product higher rates and eco-friendly livings go hand-in-hand.
9. Banks may help the organizations dealing with environment in establishing special
projects or resisting the anti-environment elements and conserving the resources.
10. Bio-gas projects may be established. They are mainly based on animal and
municipal wastes.
11. There are still many scopes for establishing micro/macro level hydro projects in
Chittagong and Chittagong Hill Tracts. The capacity of the Kaptai hydro project
can be enhanced.
12. Banking authorities in Bangladesh may impose restrictions on establishment of any
industry or projects without putting in place the green banking methodology.
13. Banks may encourage jute and jute product projects, cottage industries and small
industries.
14. They may help ensure better sanitation, beatification, drinking water, smooth
water supply projects.
15. Green plantation may be introduced. Banks may initiate plantation programs
throughout the country.
16. The real GDP growth could be increased if the green banking project is
implemented properly.
Conclusion
We should expect banks to start looking more in detail at the potential ecological
damage that their clients could be generating when receiving financing from them.
Companies known to be involved in activities that result in substantial environmental
damage through the extraction of fossil fuels for instance; companies polluting the seas
through the release of toxic chemicals; companies that manufacture products which
persist in the environment and are linked to health concerns; and any other company
damaging the world should not receive financing so easily as they do today from banks
and financial institutions. While we recognize that avoidance of all possible
environmental damage is often very expensive and hard to achieve, we believe that the
efforts should be at least seriously pursued. We expect companies to actively search for
a balance between their activities, their production processes, their use of natural and
human resources and the respect for the environment.