Islami Bank Bangladesh Limited

Risk Management Wing Green Banking Department

Head Office, 40 Dilkusha C/A, Dhaka. We all are aware that the change in climate has direct impact on biodiversity, agriculture, forestry, dry land, water resources and human health. To safeguard the planet and its Eco-system from the adverse effect of environmental degradation caused by rising carbon emission, encroachment of rivers, improper disposal of industrial, medical & household waste, deforestation, loss of open space etc., Bangladesh Bank in line with global norms has already introduced Green Banking and sustainable practices at all the scheduled banks in Bangladesh. In this connection, Bangladesh Bank circulated a policy guidelines for Green Banking, vide BRPD Circular No. 02 dated 27, February 2011. The Guidelines segregated the Green Banking activities for implementing in 03 (three) phases. 1st Phase time lining was within 31st December 2011. 2nd phase is within 31st December 2012. 3rd phase will be within 31st December 2013. Bangladesh Bank declared the following preferential treatments for the compliant banks:

i. Points will be awarded On Management component while computing CAMELS rating resulted ultimately in overall rating of the bank.

ii. Top 10 (ten) Banks’ name will be declared in the Bangladesh Bank website. iii. Consideration will be given while according permission for opening new Branch of the

Bank.

Also a short note on Phase wise Green Banking activities as envisaged by Bangladesh Bank and our position there against is given below:

Phase-I (January - December 2011)

Sl No. Title Functions (description of the Job) Our position

1 Policy

Formulation & Governance

Establishment of a Green Banking Unit, headed bya Senior Executive. Formed under RMW

To formulate a high powered Committeecomprising directors from the Board.

EC has been entrusted

Environmental or Green Banking policy andstrategy Policy drafted

Fund allocation for green banking. Allocated a fund of Tk. 592.37 million

Quarterly reporting of Green Banking activities Being complied

2.

Incorporation of Environmental Risk in CRM/IRM

Environmental and Climate Change Risk rating along-with Credit/ Investment Risk Grading. do

3

Initiating In-house

Environment Management

To prepare an inventory of the consumption of water, paper, electricity, energy etc of the Offices and Branches

Under progress

To take measures for saving electricity, water

Sl No. Title Functions (description of the Job) Our position

and paper consumption. To circulate a set of general instructions (Green Office Guide) to the employees for efficient use of electricity, water, paper and reuse of equipments. To use scrap papers as notepads and to avoid disposable cups/ glasses to become more Eco-friendly. To install energy efficient electronic equipments. To use energy saving bulbs in place of normal bulbs in branches/ offices of the bank. To make plan to use solar energy at premises to save electricity. To encourage employees to purchase energy efficient cars (that consume less fuel) for reducing gas and petroleum consumption. Arrangement of automatic shutdown of equipments do

Use of extensively online communication do Double –side printing. do To apply Eco-font in printing to reduce use of ink. do

4 Introducing

Green finance

To prefer financing in the Eco friendly business activities and energy efficient industries such as:

do

Renewable energy project Clean water supply project Waste water treatment plant Solid & hazardous waste disposal plant, Bio-gas plant Bio-fertilizer plant etc. To promote environmental practices applying consumer finance program.

5

Creation of Climate Risk

Fund

Finance in economic activities of the flood, cyclone and drought prone areas without charging additional risk premium.

do

Creation of Climate Change Risk Fund Allocated a fund of Tk. 50 million

6

Introducing Green

Marketing

To use environmental causes for marketing i.e. financial services to the customer for awareness development among the common people.

Partially implemented

To advise the clients for modifying the product, changing the production & packaging process and modifying advertisement for environmental cause.

Implemented and being practiced

7 Online Banking To allow the customers online banking Implemented

8

Supporting Employee Training, Consumer

Arrangement of employee awareness development and training program on environmental and social risk

More intensive programs to be

taken Arrangement of customer awareness Steps to be taken

Sl No. Title Functions (description of the Job) Our position

Awareness and Green Even

development

9 Reporting

Green Banking Practices

To take measure to report on the initiatives/practices to Bangladesh Bank and disclose in the Bank’s websites.

Implemented

10 Sector Specific Environmental

Policies To be designed Under process

11 Green Strategic

Planning

Determine green targets To determine a set of achievable targets and strategies. To disclose these in the annual report and web-site for green financing and in-house management.

Target areas for green financing: i. To reduce loans/investments for

environmentally harmful activities.

ii. To attain a particular percentage of environmental loans/ investment.

iii. To introduce Eco-friendly financial products.

Steps to be taken

12 Setting up

Green Branches

Features of Green Branches: • To use maximum natural light • To use renewable energy and energy

saving bulbs and other equipments. • To reduce water and electricity use. • To use recycled water. • A green Branch will be entitled to display a special logo

approved by BB.

do

13

Improved In-house

Environment

Management

To take Strategy of reuse, recycling of materials & equipments, and source reduction and waste minimization.

Partially implemented

To rely increasingly on virtual meeting through the use of video conferencing in lieu of physical travel for saving cost and energy.

do

14

Formulation of Bank Specific Environmental Risk Management Plan and Guidelines.

Develop and follow an environmental risk management manual or guidelines for the assessment/ monitoring of project and working capital investments.

Under process

To set internationally accepted higher environmental standards. do

15

Rigorous Programs to Educate Clients to be undertaken.

Encourage the clients and business houses to comply environmental regulation. Steps to be taken

Introduce rigorous program to educate clients about environmental risk. do

Sl No. Title Functions (description of the Job) Our position

16

Disclosure and Reporting of Green Banking Activities.

Publishing independent Green Banking/ Sustainability reports do

To disclose update and detail information about Bank’s environmental activities and performances of major clients.

do

Phase-III (January - December 2013)

To have a system of Environment Management before initiation of the activities of phase- III 1. Designing and Introducing Innovative Products.

• To introduce environment friendly innovative green products to address the core environmental challenges of the country.

• To avoid negative impacts on environment through banking activities. 2. Reporting in Standard Format with External Verification.

• To publish independent Green Annual Report following internationally accepted format like Global Reporting Initiatives (GRI) targeting the stakeholders duly verified by an independent agency or acceptable third party.