Environmental Manaement Practices: Banking Sector -Green Banking -Global scenario -Indian scenario -Case study

1. Environmental Management
Practices: Banking Sector
I001- Akash Subramanian
I002 - Pratyaksh Agarwal
I003 - Karan Aggarwal
I004 - Aditya Bansal
I005 - Saloni Bansal

2. 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

3. 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

4. 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

5. 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

6. 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

7. Strategies
for
Green
Banking
Strategies
Managing
environmental
risk
Identifying
opportunities
for innovation
“Environment management for banks is like risk management”

8. Strategies
for
Green
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

9. 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

10. 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.

11. 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.

12. 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 Plan
5. 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

14. Environment
Management
practices:
Indian
scenario
 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.

15. 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:
partnered
with 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

16. Key
Indicators
 Green Grid performance metrics
 UNEP Standards
 LEED standards
 Carbon Credits/Footprint

17. 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

18. 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

19. 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

21. 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

22. Case
Study
ICICI
Bank:
GoGreen
Initiative

23. 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

24. 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

25. 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

26. 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

27. Impact
Green
Banking
380 mn
USD
30,000
trees
3.6 mn
reams of
paper
Solar
Branch

28. THANK YOU

29. 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/

30. Questions?