Green banking frameworks in Asia with an in-depth focus on Bangladesh and China

Abstract

Green banking frameworks encourage banks to manage their in-house operations and lend and invest in an environmentally sustainable manner. There are at present six nations in Asia that have a green banking framework – Bangladesh, Cambodia, China, Indonesia, Mongolia and Vietnam. Each of the six countries have distinctive green banking policies and frameworks suited to their own national agendas. This article aims to provide a summary of the main green banking frameworks issued by each country's respective regulatory authority or banking association and possible reasons why these six countries have established such a framework. It then focuses specifically on the framework and banking policies practiced in Bangladesh and China, given their experience and strong establishments. The effects of introducing green banking frameworks and policies in Bangladesh and China are also accessed. The article then concludes with recommendations on what more can be done to enhance green banking in Bangladesh and China.

A Review of the Recent Developments of Green Banking in Bangladesh

“…Mutual Trust bank has also recently joined as a member of UN Global Compact. IDLC Finance Limited is the largest non-bank financial institution in Bangladesh and is signatory to local and international initiatives promoting sustainable business practices to CSR activities such as UN Global Compact, UNEP Finance Initiative, and CSR Centre [99,109].…”

“…In addition to banks, non-bank financial institutions such as the state-owned Infrastructure Development Company Limited (IDCOL) play a key role in intermediating refinancing to enable households to purchase solar home energy systems, domestic biogas, solar tirrigation systems and solar mini grids. IDCOL combines concessional refinancing to microfinance institutions and with technology assessments, quality control, monitoring, and other support services [99,109].…”

“…The following figure summarizes the main points to consider for the successful implementation of green banking and key challenges for Bangladesh. We expand the framework proposed by IFC (2018) with criteria extracted from our analysis and literature review to assess progress in each of the ingredients [109]. Figure 4 shows that Bangladesh is very strong in terms of the regulation ingredient but that the lack of fairness in the treatment of state-owned banks might be hindering the behavior change.…”