Banks go green: Green banking for sustainable development

‘Go green’ is a phrase that is repeated again and again in the current business environment, to influence all spheres of life to reduce its carbon footprint or reduce its carbon emissions from their regular business activities

By Viruli de Silva

We come across many interesting articles and promotional materials in the local and global media on banks turning to ‘go green’ or initiating ‘green banking’ activities, in addition to their regular business activities. Have you ever tried to find out answers to what is ‘go green’? Why ‘go green’? And how to ‘go green’? It is interesting and timely to pause for a moment and think..... why and what is all this noise about ‘green’? Because, it is crucial to ‘go green’ as there is no Planet B!

What does ‘green’ means and what have banks got to do with it? Dictionary definitions of ‘green’ indicate that it has many different meanings as an adjective, a noun and a verb, in the normal context of our usage. Most commonly ‘green’ indicates something relevant to the natural environment. 

Researchers Opatha and Arulrajah (2014) in their comprehensive paper on ‘Green Human Resource Management: Simplified General Reflections,’ have highlighted ‘green’ has at least four different meanings connected with the natural environment, when focussed on managing of people at work/human resource management. Accordingly, in the business context ‘green’ means: preservation of the natural environment; conservation of the natural environment; avoidance or minimisation of environmental pollution and generation of gardens and look-alike natural places. 

Hence, to ‘go green’ a bank should cover the roles of a preservationist, conservationist, non-polluter and a generator of the natural environment. In addition, a bank should play the role of an ‘eco-auditor’, to assesses the environmental impact of its business activities, etc., in order to be conscious about the above four roles. This background would help us to understand what it means to ‘go green’ and how ‘green banking’ leads to sustainable development.

 

What is ‘go green’? 

‘Go green’ is a phrase that is repeated again and again in the current business environment, to influence all spheres of life to reduce its carbon footprint or reduce its carbon emissions from their regular business activities. ‘Greening’ of business activities is a proactive and a smart way of doing business, with an aim to protect the environment and conserve natural resources. 

The current global and local business establishments are concerned about ‘greening’ their regular activities. Hence, they invest heavily on research and development to introduce green initiatives in their business operations. The banking sector too, globally and locally, has introduced many suitable practices to their regular processes, to follow suit. 

These initiatives are collectively named as ‘green banking’. Therefore, green banking could be identified as ‘the banking initiatives promoting environment-friendly, green practices that reduce carbon footprint from their regular banking activities’. 

 

Why ‘go green’?

The environmentally harmful or destructive nature of organisations’ activities and outcomes have challenged the biodiversity and ecosystem integrity of the nature. In other words, the rapid destruction of natural resources by mankind due to its unlimited desirers have led to an imbalance of relationships among, plants, animals, humans, and the natural environment. 

As a result, current environmental issues such as global warming, change of global weather patterns, unusual natural disasters like tsunamis, acid-rains, severe droughts, major floods, and earth slips, etc. have become common occurrences. Hence, ‘go green’ or ‘greening’ is to promote green initiatives in work processes, in order to reduce its carbon footprint from its business activities. It is for the survival and sustainability of the natural environment, and mankind. Hence, the modern banking sector has opted to ‘go green’ or initiate ‘green banking’ activities to fulfil this vital responsibility as a corporate citizen. 

 

How to ‘go green’?

Many established banks in the local and global business environment ‘go green’ or make dedicated, efforts to promote different forms of eco-friendly green banking initiatives. Following are a few green banking initiatives introduced by the established banks in the modern business environment:

 

Green banking initiatives

• Eco-friendly, online and mobile banking facilities instead of branch banking, which provide paperless banking services such as special savings accounts, settlement of utility bills, loan repayments, credit card dues etc., account balance inquiry and down load of transaction statements, regular e-statements, SMS banking alerts, e-fund transfers, etc.
• Automated cash deposit terminals, which completely eliminate the use of paper.
• Cash withdrawals and cheque book requests, etc. through ATMs.
• Digital filing systems with a digital archived and digital index query system.
• E-mail correspondence and video conferencing, instead of postal mail or face-to-face meetings.
• Green loans (bonus/special rates for energy-efficiency, energy-conservation projects).
• Green mortgages (better interest rates and terms for energy-efficiency houses/buildings).
• Introduction of ‘green buildings’ in the branch network, which ensure eco-friendly innovative designs, with sustainable site planning, water efficiency, energy efficiency, conservation of materials and resource, and indoor environment quality. 
• Introduction of green philosophy, green procurement policies and green pledges by banks
• Engage in Green CSR activities or to conduct environment protection activities: replanting of damaged corals in the sea or coral restoration, re-forestation, presearvation of the natural environment in areas where its branches are present etc.

‘Go green’ is to be eco-friendly for the sustainability of the natural environment. ‘Green banking’ as a concept is a proactive and smart way of doing business, with an aim to protect the biodiversity of the environment, and conserve natural resources. Green banking has a visionary, eco-friendly initiative for future sustainability of the environment. Hence, this smart move of banks, ‘go green’, inevitably leads to the sustainability of the business in the long run.

[The writer, MBA (USJ- PIM), AIB (Sri Lanka), AMIM (SL), is a senior Commercial Banker and former Director Studies, of the Institute of Bankers of Sri Lanka.]