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Environmental Management Practices: Banking Sector
I001- Akash Subramanian
I002 - Pratyaksh Agarwal
I003 - Karan Aggarwal
I004 - Aditya Bansal
I005 - Saloni Bansal
Flow of the presentation
Banking Sector & the Environment
Green Banking
Green Banking Strategies
Environmental Management Practices: Global & Indian Scenario
Key Indicators/Standards
Case Study: ICICI Bank’s GoGreen Initiative
Banking Sector&The Environment
Banks do not affect the environment directly
Banks always had a passive approach to the environment
Various regulations, laws and movements are changing that trend to a more proactive approach
Banks are generally considered to be clean in terms of their internal processes and emissions
Environmental impact of banks is not physically related to their banking activities, but with their customer’s activities
What is Green Banking?
Green Banking is an term referring to practices and guidelines that make banks sustainable in economic, environment, and social dimensions.
It is an initiative by Banking, Financial Services, and Insurance (BFSI) sector in creating a greener and sustainable environment.
Green Banking broadly covers processes, products, services & strategies
Greening of the IT sector (related to the bank) also plays a major role in Green Banking
Need for Green Banking
Banks interact directly with the environment.
For instance,
Banks contribute towards the carbon emission directly in their day-to-day operations in terms of use of paper, electricity, lighting, air conditioning, electronic equipment and other things.
Banks also interact indirectly with the environment.
By financing intermediaries who are the major source of long term funding to various industries that pollute the environment heavily
Guidelines for Green Banking
Greening Processes, Products, Services, and Strategies
Making day-to-day business operations, banking products and services greener
Greening Infrastructure
Making IT Infrastructure and physical infrastructure greener and taking initiatives
Strategies forGreen Banking
Strategies
Managing environmenta
l risk
Identifying opportunitie
s for innovation
“Environment management for banks is like risk management”
Strategies forGreen Banking
Banks should conduct EIA before investing in a project
Adopt Annual Reporting System (ARS) which is an annual report on environmental risk guidelines for every project
The rate of interest on loans given for green projects should comparatively less than the normal rate of interest
Adoption of Green Street lending, which means offering low rate of interest to businesses for installing solar energy systems and energy saving equipment like solar hot water systems, highly efficient furnaces, heat pumps and replacement windows
Set SMART (Specific, Measurable, Attainable, Realistic, and Timely) green goals as the internal targets to reduce carbon footprint along with timelines
Importance of Green Banking
Although banks are not directly affected by environmental degradation, there are indirect costs to banks
Strict regulations imposed by countries may lead to closure of industries resulting in default to banks
Example: Comprehensive Environmental Response, Compensation and Liability Act in 1980 (CERCLA) in the US in late 1980s held banks directly responsible for the environmental pollution of their clients and made them pay the remediation cost
Reputation Risk
Legal Risk
Conservation of environmental resources
Environment Management practices:
Global picture
In the early 1990s, UNEP launched the UNEP Finance Initiative (UNEPFI).
It counts over 200 members among leading banks, investment funds, and insurance companies.
UNEP Finance Initiative Statements recognize the role of financial service sector in making global economies sustainable.
In 2002, a global coalition of NGOs formed a network named BankTrack to promote sustainable banking practices.
The network consists of 40 organizations, including Greenpeace International, Rainforest Action Network and various national Friends of the Earth groups.
Environment Management practices:
Global picture
In 2003, IFC came up with a risk management framework known as The Equator Principles. It is adopted by financial institutions for determining, assessing and managing environmental and social risk in projects.
As of 2013, 79 financial institutions in 35 countries have officially adopted the Equator Principles
The Financial Times and IFC launched the Sustainable Finance Awards.
World Bank has also formed E&S norms for financial institutions to outline their role in managing environmental and social impact.
Many leading banks around the world have embraced Green Banking.
The Equator Principles
1. Review and Categorization
2. Environmental and Social Assessment
3. Applicable Environmental and Social Standards
4. Environmental and Social Management System and Equator Principles Action Plan5. Stakeholder Engagement
6. Grievance Mechanism
7. Independent Review
8. Covenants
9. Independent Monitoring and Reporting
10. Reporting and Transparency
The third iteration of the Equator Principles was launched on 4th June 2013
Environment Management practices:
Indianscenario
As far as environmental management practices in India are concerned, the banking sector is running behind the schedules compared to global trends.
Only one Indian organization namely IDFC Ltd has signed Equators Principles
Yes Bank is the one and only Indian signatory to UNEPFI
However, the scenario is gradually improving as public sector banks like SBI, Canara Bank and Vijaya Bank and private sector banks like Yes Bank and ICICI Bank are undertaking various green initiatives.
Indian Banks: Going green
SBI
• Introduced Green Channel Counters and no queue banking in over 5000 branches across India
• Installing windmills for green power generation
• Implementing policies aimed at achieving carbon neutrality
• Became a signatory to the Carbon Disclosure Project
Yes Bank
• One of the first signatories in India to the UN Global Compact
• Recognized as the ‘Sustainable Bank of the Year in Asia-Pacific’ twice
• Launched ‘Yes Community’ and ‘War on Waste’ initiatives
• Engages in clean and green drives, energy efficiency and waste reduction practices
Kotak Mahindra
• Launched ‘Think Green’ initiative: partneredwith Grow-Trees.com
• Plants one sapling for every e-statement
• 16,628 saplings were planted in FY 2012-13
• Established the ‘Social, Environmental Management System Plan’ to evaluate the environmental risk
Key Indicators
Green Grid performance metrics
UNEP Standards
LEED standards
Carbon Credits/Footprint
Green Grid
Power Usage Effectiveness (PUE)
• How efficiently a computer data center uses energy (focusing on IT equipment)
Data Centre Infrastructure Efficiency (DCIE)
• Energy efficiency of a data center (by dividing information technology equipment power by total facility power)
Carbon Usage Effectiveness (CUE)
• Carbon gas a data center emits on a daily basis
Water Usage Effectiveness (WUE)
• How much water a facility uses for cooling and other building needs.
Data Centre Productivity (DCP)
• Useful work compared to the energy it requires
It is a non-profit consortium of professional entities, has developed standards such as
UNEP
It has taken a large number of measures in this direction
They have published an exhaustive guide on environmental initiatives specifically for banks
The guide also gives illustrations on various member institutions
LEEDS Developed by the US GREEN BUILDING COUNCIL (USGBC) with
almost 20,000 member organizations
It is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods
For Example: The Bank Of America Manhattan Tower
Construction completed in 2009
55 Floors, 1200 ft-tall, 52 elevators.
Over 1 billion $USD invested
Has PLATINUM-LEED CERTIFICATION
Carbon Footprint & Carbon Credits
Carbon Footprint:
- The total sets of greenhouse gas emissions caused by an organization, event, product or person
Carbon Credits:
- New era of “EMISSION TRADING”
- These credits are bought and sold as stocks/bonds to safeguard environment as well as harboring environmental activity and growth
- 1 CARBON CREDIT = 1 TONNE OF CO2 , issued by UNFCCC
Case Study
ICICI Bank:
GoGreen Initiative
Green Products & Services
Instabanking
• Bank Anywhere• Convenient• Reduces Emissions
Vehicle Finance
• 50% waiver on processing fee of auto loans using Green technology
Home Finance
• Reduced processing fee for LEED certified buildings
Green Engagements
Celebration of World Environment Day annually with activities like Green Pledge, Signature campaigns, plantation & distribution of saplings
Partnership with the Green Theme CNBC Overdrive awards
Celebration of Earth Hour annually in all premises, ATM facilities and branches
‘Solar Branches’ in rural areas where 294 low-cost rural branches have been fitted with solar panels by July 2014
Partnering with active NGOs to promote education about the Go Green campaign and the environment
Green Communication &Paperless Banking
ICICI Bank has approximately 2.8 million mobile banking customers
Registration drive to encourage customers to register for e-statements, e-banking, online funds transfer to save paper
ICICI paperless account opening process to save paper consumption and reduce complexity of the account opening procedure
ICICI pockets app which uses a virtual VISA card enabling users to use it in any online transaction, savings account, investments and transfers
Employee Participation
Encouraging employees to switch off lights & electrical appliances when not in use
Recycling & Refilling ink cartridges of printers
Replacing incandescent bulbs with CFLs
Promoting use of ‘webinars’ for meetings to reduce travel
Encouraging car-pool among employees
Using emails and e-memos internally instead of written memos
Using in-house sewage water treatment in towers to conserve water
Impact
Green Bankin
g
380 mn USD
30,000 trees
3.6 mn reams
of paper
Solar Branch
THANK YOU
References
Research Papers:
Green Banking Framework by the Institute for Development & Research in Banking Technology (IDRBT) established by the Reserve Bank of India
Green Banking in India by Pravakar Sahoo & Bibhu Prasad Nayak, Institute of Economic Growth University of Delhi Enclave
Green Banking Practices – A Review by Vikas Nath, Nitin Nayak & Ankit Goel, Bharati Vidyapeeth Institute of Management & Research, New Delhi
Websites:
http://www.icicibank.com/go-green/Index.html
http://in.usgbc.org/leed
http://www.thegreengrid.org/
http://about.bankofamerica.com/en-us/global-impact/operations.html#fbid=QROGDTZtG0P
http://www.unepfi.org/work-streams/climate-change/tools-training/
http://www.unepfi.org/work-streams/reporting/
Questions?