Indispensability of green finance

The world around us is developing fast, but developing at the cost of depleting the environment. As we look around us there are evidences of glittering development, alongside pollutions to our surroundings arising from all kinds of human activities, from construction of roads and buildings, movements of motorised transports, disposal of industrial waste and use of insecticides and pesticides in agriculture to destruction of wildlife and forests for urbanisation etc.

Dhaka, the capital city is the worst victim of air pollution. Motorised vehicles emitting carbon dioxide is a major polluter that contributes nearly 60 per cent of fine particulate pollution in dry season. The brick kilns spread around Dhaka greatly pollute the air, accounting for 38 per cent of total fine particulate pollution. Nearly 5,000 brick kilns are in operation around Dhaka city alone with an annual production of about 11 billion bricks and emitting over 9.8 million tonnes of greenhouse gases into the air. Apart from these air pollutants, chemical and industrial waste of factories, oil spills of water vessels, explosives or inflammable gases of ship-breaking industries etc. regularly pollute our rivers and other water bodies. This brief description gives us a clinical view of the pervasive nature of pollution in the country.

Green finance can help reduce the mounting environmental pollution by funding initiatives and projects that help keep pollution under control. It is a unique instrument for promoting green growth by striking a harmony between economy and environment. Basically, it aims at building a low-carbon economy by protecting the environment and conserving natural resources. Renewable energy and energy-efficient projects that reduce the effects of greenhouse gases and waste-management initiatives that capture and use landfill gases are examples of such ventures. Green finance also helps consumers adopt clean-energy technologies. Financing for clean energy is a non-traditional approach that has arisen from concerns about conserving clean air, water and natural resources for the future generations.

As the traditional banking practices have proved inadequate in combating environmental pollution, a change in banking strategy to conform to the global standards has become a necessity. Changed strategy may include investment initiatives in industrial pollution control, water sanitation, or biodiversity protection. Despite being a relatively new phenomenon, clamour for green financing has grown with increased demand for clean energy, particularly from the consumer side who want clean energy resources in their homes and neighbourhoods.

Banks and non-banking financial institutions are traditionally profit-driven so much so that they sometimes finance industrial units with known adverse environmental impacts in quest for assured profit necessitating the indispensability of ethical and responsible green financing initiatives. Since banks and financial institutions are an integral part of society, they should play an effective role in facilitating sustainable development and establish themselves as environment-friendly and socially accountable institutions. They can finance areas of green investments like green energy production by using renewable fuel and clean energy sources which will help reduce carbon emission. It should be done by lowering the interest rate and making access of low-carbon industries to financial services easier. The government should also formulate a framework of incentives for banks. Overall, the regulatory control by the government, pressures from the civil society and customers, voluntary support by business communities are pre-requisites for green financing and transforming Bangladesh into a 'green' nation.

The significance of a green nation can hardly be overemphasised. Simply put, green finance refers to financing investments for qualitative change in environment as part of a broader strategy to achieve inclusive, resilient and sustainable development. Given the escalating environmental deterioration due to wayward human behaviour and resulting climate change and global warming, the danger of an unsafe world is looming large. Unless green finance is promoted to pay for a war on pollution, the world may soon be up against unforeseen developments. 

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