BoB gearing towards Green Banking

The Green Banking initiatives will be mutually beneficial to the banks, industries and the economy as a whole

Sangay Rabten

The Bank of Bhutan (BoB) is gearing towards a system called Green banking initiative to promote environmental friendly practices and reducing your carbon footprints from your banking activities.

The concern for environmental sustainability by the banks has given rise to concept of Green Banking and recently BoB had shared it concern during the virtual conference ‘Green, resilient and inclusive development in Hindu Kush Himalaya (HKH); challenges and opportunities held by International Centre for Integrated Mountain Development (ICIMOD).

The director of Credit and Trade Financing, BoB Prem Moktan said that the Green Banking initiatives will be mutually beneficial to the banks, industries and the economy.

Green banking refers to the initiatives taken by banks to encourage environment-friendly investment. Green banking as a concept is a proactive and smart way of thinking towards future sustainability.

As one of the oldest financial institutions in Bhutan, BoB intends to lead towards setting higher standards of sustainability and is undertaking foremost step towards “green banking” initiative.

“Sustainability today is an emerging mega-trend and it is very important business objective to drive green business innovation,” the director said.

BoB also shared concerns over that industrialization has resulted in ecological inequality and corporate are blooming at the expense of local community.

Prem Moktan said that uneven industrialization has disturbed ecological balance and has resulted in natural and industrial disasters globally. He said that by manufacturing, technology, electronics and IT industries, high levels of environmental pollution have raised social concern over environmental issues.  

“This environmental concern is surging in divergent businesses and there is serious need for intervention,” he said.

As banks play a pivotal role in sustainable development of a country, green banking today has become a mandate for BoB.

Due to financial, economic and environmental changes, financial services market is re-shaping and an all-inclusive engagement of ethical proposal and values into banking practices will take place trough green banking initiatives according to the director of credit and trade financing.

Speaking to Bhutan Times, Prem Moktan said that BoB will ‘green itself.’ He said that the bank is going to build infrastructures like tracking machine for energy efficiency and green washing.

There are also plans to develop green home products and provide green education materials. The institute will also frame an electronic motor vehicle (EVM) financial scheme.

The bank officials informed that as a step towards green banking BoB is looking forward to accredit with Green Climate Fund to be a partnership bank to operate a lone component window.

The bank had registered and signed a memorandum of understanding (MoU) with World Wildlife Fund and Department of Renewable Energy. He said that after greening BoB first, the green facilities will be also provided for clients.

The challenges for the green banking initiatives are not having capacity in banks. The director of credit and trade financing said that the country itself lack reliable policy framework.

He said that there is no proper taxonomy and green investment guidelines. He also pointed out that financial institution do not have environmental specialist which should be included in loan and credit system to assess the risk. He said that banks do not meet criteria of green sustainability finance.

Hence, there is no equal deployment of resources and only 5 percent from the required amount of four trillion US dollar by 2030 for the green finance came to HKH as per the 2017-18 report of ICIMOD.

As per the report of Asian Development Bank, the global climate investment is reduced by 3 percent and it is bit concerning according to the

Meanwhile, the director said that Royal Monetary Authority in framing the green finance regulation and taxonomy.

He said that to move towards green banking, financial sectors should be given responsibility to reallocate their resources. BoB is preparing a green finance window and has dedicated green banking division to gear towards green financing and work for green projects.