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In recent years, the eminent problem of global warming has finally shifted the attention of business practices of all functional areas to climate change, resource efficiency and environmentally conscious issues. As such, initiatives related to green safety and sustainable ecological balance is growing in support. Environmental degradation has become such a pressing issue today that even the financial sectors need to address this universal concern (Goyal and Joshi, 2011). This is because financial institutions, particularly banks, play a vital role in the economic system of a country and generally affects all types of business practices through their financing activities (Bahl, 2012). Thus, banks should contribute to the saving of the environment by considering environmental aspects as part of their lending and investing principles, which would then divert industries to invest in environmental management and the use of appropriate green technologies (Masukujjaman and Aktar, 2013).
As a response to this global development and environmental degradation, financial sectors of many developed and developing countries have adopted green technologies to address the issue of sustainable business practices. As such, various eco-friendly practices and in-house operations, broadly known as green banking, are now part of most banking activities (The Daily Observer, May 26, 2015). Green banking mainly involves the environmental and social responsibility of banks in terms of the contribution they make towards ensuring sustainability of the environment and ecological system, through their in-house operations and the wide range of financial products and services that they offer (Nisha, 2016).
Green banking focuses on two aspects: green revolution of internal operations through the consumption of renewable energy, digitalization and other measures that can reduce the emission of carbon mark from the banking activities and the use of environment-friendly financing like sustainable banking, ethical banking, green mortgages, green loans, green credit cards, mobile banking, online banking, etc. (Inderst et al., 2012). Additionally, banks worldwide use energy-wise Green Machines, which source power from clean, emission-free methods such as wind power and invests hugely for local environment and wildlife projects in their community (Hossain et al., 2015).
Since the objectives of green banking provide incentives for environmental sustainability, its adoption is increasingly growing in emerging economies to promote the concept of social responsibility towards the environment (Masum, 2015). This is because most of the emerging economies tend to be prone to natural calamities which often cause huge losses to the environment, adversely affecting biodiversity, agriculture, forestry, water resources and human health (Biswas, 2011). For emerging economies like Bangladesh, this issue is all the more pressing because people in this country have very little awareness about environmental hazards, air and water pollution, industrial, medical and household wastes community, etc. (Hossain and Ahmed, 2015). Thus, the growth of green banking initiatives can be rightly justified in Bangladesh.