In the wake of facing the challenge posed by climate change, the need for making finances more accessible for the private sector is crucial to make businesses more green and sustainable.
Despite Bangladesh Bank’s rule, Banks and financial institutions have to provide 5% of loans for green finance annually, though only 1.4% was disbursed in 2020. This, however, is not due to a lack of demand.
According to the World Bank, the potential for climate and green investments is greater than $200 billion in the country.
Policy Research Institute (PRI) in collaboration with the World Bank Group organized a webinar titled “Incentives for Green Finance and Investment” at the policy dialogue platform of Green growth for Bangladesh on March 16.
In the opening remarks, Dr Zaidi Sattar, chairman of PRI said: “Bangladesh must set its eyes on a path to net-zero emissions, if not by 2040s, but certainly by 2060s-2070s, in tandem with China and India.”
Monika Kumar, an environmental specialist at the World Bank presented the keynote presentation where she discusses approaches the government of Bangladesh can take in order to facilitate the green growth strategy for Bangladesh that will help integrate the socio-economic development with long-term environmental sustainability.
She said: “The pandemic has allowed us to create a new normal. One that is more equitable, inclusive, green and sustainable.”
“Enforcement is needed to establish incentive structures for businesses to adopt green practices and help increase investors’; and financial institutions’ willingness to support green projects. It will encourage businesses to manage their environmental impact, which helps level the playing field between complying and non-complying businesses, thus creating competitiveness.”
Monika added that South Korea’s strategy of Green Growth presents an excellent example for other rapidly growing economies like Bangladesh to follow, meaning, in order to achieve sustainable Green Growth, Bangladesh will have to resort to Green Financing.
Business leaders from the private sector also took part in the discussion where they gave their own opinions about how to make green financing more accessible.
“Financial institutions should not only limit themselves to prioritizing the export-oriented businesses but also fund green startups and factories which are manufacturing for the local market as well,” said Syed Nasim Manzur, managing director of Apex Footwear Ltd.
He suggested outsourcing of inspection and certification to third parties to maintain credibility and also asked to bring both private and public universities together to fill the technology gap which is needed to address the climate issues.
Manzur also said there should not be an import tax imposed on pollution treatment equipment and the policy regarding this should be changed on an urgent basis in order to encourage the private sector.
In the discussion, some major barriers to access green finance were mentioned, such as a lack of legal and regulatory framework, inadequate environmental monitoring, lack of well-coordinated policy oversight body and underdeveloped green financial market knowledge and capacity.
Dr Mashiur Rahman, advisor to the Prime Minister (Economic Affairs) took part in the discussion as the chief guest. He suggested there should be professionals and experts relevant to the environment in the Planning Commission.
“There is way too much advocacy compared to the technical aspects being discussed when it comes to talking about the environment,” he said.
He also suggested that renewable energy sources such as solar power plants should be established in the northern parts of the country to make the best use of the land, as the region itself did not experience too much industrialization due to lack of access to the port or raw materials in comparison to Dhaka, Chittagong and other southern regions of the country.
Dr Ahsan H Manzur, executive director of PRI; Iqbal Abdullah Harun, additional secretary, Ministry of Environment; Naser Ezaz Bijoy, CEO of Standard Chartered bank; KyungJin Hyung, CEO of Blissvine Ventures and the former senior manager of International Business Department of KIBO also spoke at the discussion.
“At a previous discussion regarding how to make housing more affordable, we saw it’s not very expensive to build environmentally friendly buildings, even though that is a common perception. Often the extra 3-4% cost incurred can be recouped from the money saved from electricity and other utility bills,” said Dr Ahsan H Manzur.
The experts also said that to achieve inclusive green growth, the government needs to support Cottage, Micro, Small, and Medium Enterprise (CMSME) well, as the growth depends on accessing new markets with stricter expectations on environmental impact and adopting circular concepts.