Impact of green banking on the performance of United Leasing Company Limited

Abstract

Green Banking is the operation of the financial sector with special focus on the environmental, ecological and social factors, targeting conservation of nature and natural resources. The term broadly encompasses awareness creation and promotion of environment-and-society-friendly projects and practices, and reduction of overall carbon footprint from both its financing and inhouse operations. Through Green Banking, the FIs are not only required to improve their own standards, but also play an active role in demanding the same from its stakeholders. The state of environment in Bangladesh is rapidly deteriorating. The key areas of environmental degradation cover air pollution, water pollution and scarcity, encroachment of rivers, improper disposal of industrial, medical and household waste, deforestation and loss of open space and loss of biodiversity. In addition, Bangladesh is one of the most climate change vulnerable countries. In line with global development and response to the environmental degradation, financial sector in Bangladesh should play important roles as one of the key stake holders. Although FIs are considered environment friendly and do not impact the environment greatly through their own internal operations, the external impact on the environment through their customers activities is substantial. The financial sector is one of the major sources of financing industrial projects such as steel, paper, cement, chemicals, fertilizers, power, textiles, etc., which cause maximum carbon emission. Therefore, FIs can play an intermediary role between economic development and environmental protection, for promoting environmentally sustainable and socially responsible investment. So, to aid the reduction of external carbon emission, like other FIs, ULC should finance green technology and pollution reducing projects. The approach of ULC to sustainability is based on a broad understanding of its duties as a provider of financial services, its responsibilities to society and the environment and also its role as an employer. Its approach also shows the importance the company gives to its dialogue with its stakeholders. ULC is seriously considering to adopt Green Banking with a view to enhancing CAMEL rating, getting approval from the central bank to open up new branches and becoming one of the top ten FIs in Bangladesh. The factors that have influenced ULC to adopt Green Banking are: economic factors, policy guidelines, loan demand, stakeholders’ pressure and environmental interest. ULC is trying to curb its usage of electricity, though on the other hand, the consumption of fuel is erratic. ULC needs serious steps to check its fuel consumption in an efficient manner.ULC has seen its success in reducing paper consumption. With the advent and implementation of latest technology in the operation, ULC is heading toward very less paper consumption. ULC has commendable achievement in noise reduction, decreasing CO2 emission and electricity load reduction. This has been possible mainly because of ULC’s due diligence checklist and special environmental concern while investing. Sustainable development and preservation of environment are now recognized globally as overriding imperatives to protect our planet from the ravages inflicted on it by mankind. 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. Drafting of any policy is not enough to go green for any financial institution. The management has to be serious enough to implement the policy rigorously.