Financing green growth

In the financial sector, green financing focuses on funding eco-friendly projects that will support managing intents towards a healthy environment not only for the existing generation but also for the future generation. It refers to the promotion of environment-friendly practices and the reduction of bank finances towards carbon-related footprint.

As Bangladesh progresses towards achieving its status as a developed nation within 2041, the significance of embracing green growth and sustainable finance can't be exaggerated. It is evident that Bangladesh's financial landscape will evolve rapidly and this evolution necessitates a strategic shift towards green financing approaches to mitigate carbon emissions without impeding enterprise development.

At present, Bangladesh stands at a crucial stage where the pursuit of economic progress must complement environmental responsiveness. Adopting green growth isn't merely an option anymore but a requirement. The challenges posed by rising sea levels, unpredictable weather patterns, and environmental degradation emphasise the urgency for ecological practices across all sectors.

At first, banks must embark on a transformative journey that incorporates environmental considerations into their lending practices. This necessitates embracing financial instruments such as green bonds, loans for eco-friendly initiatives, and sustainability-linked credit facilities.

Collaborating with international donors can provide consultations with valuable support in building the essential infrastructure and expertise for implementing green financing frameworks. This is something new for many financial institutions.

The reduction of carbon emissions and the vision for net zero execution demands a collaborative effort involving banks, enterprises, government bodies, and civil society. Banks can obviously incentivise sustainable practices by offering preferential rates or subsidies for green investments by providing technical assistance to enterprises in implementing renewable energy solutions and eco-efficient technologies.

Simultaneously, stringent regulatory actions and policy measures to incentivise/ subsidise enterprises can be introduced by the government and the central bank to align with sustainable development goals.

A robust strategy for green growth focusing on multidimensional interventions encompassing policy reforms, capacity building, and stakeholder engagement is required.

The central bank has to play a pivotal role in formulating reformed guidelines that mandate environmental risk assessments for loan approvals and integrating global green financing best practices into banking regulations gradually. Simultaneously, public-private partnerships can be fostered to activate resources for green projects and initiatives.

It is also essential for a country like Bangladesh to actively chip into the fourth industrial revolution where the rise of artificial intelligence, data analytics, the Internet of Things and robotics could usher in a new era of greener transportation and data-driven solutions for reducing pollution.

We have to bear in mind that fundamentally the revolution is driven by introducing renewable energy resources as a new energy regime. However, the effects extend beyond energy and necessitate comprehensive measurement frameworks for assessing sustainable development implications. The government and other stakeholders must take proper advantage of it to implement green growth with a smart stroke.

Bangladesh's promise to international agreements such as the Paris Agreement and the Sustainable Development Goals underscores our commitment to fostering a sustainable future where we assure a better environment for the next generation. Leveraging these agreements, the government can call for more financial claims from international organisations and donor agencies. Moreover, raising partnerships with global institutions can facilitate knowledge exchange and capacity-building initiatives for sustainable finance.

Bangladesh, by synergising the efforts of private banks, the central bank, international donor agencies, and other stakeholders, obviously can pave the way for a sustainable and prosperous tomorrow. Embracing green financing methodologies not only safeguards the environment but also catalyses economic growth and fosters inclusive development.

The author is a banker