What is Green Banking?

Green Banking means reducing carbon emission in banking as well as promoting eco-friendly practices. In green banking they are providing various attractive facilities to businesses that are opting for eco-friendly ways of doing business.

According to Carbon Majors Report 2017 “100 companies are responsible for 71% of global emission”. Sustainable development is the need of the hour. Primary objective of any business is profit motive. Stakeholders of business are taking various measures to encourage business to use eco-friendly modes of production and reduce the pollution caused by them. Stakeholders like financial institutions are promoting business to go environment friendly by their new initiative of “Green Banking”. Banks have moved to the concept of green banking as the pollution reduces the life of asset and in the long run it also reduces the rate of return. Adoption of green banking will help in greater operational efficiency and reducing the cost involved in banking activities. 
Banks may not pollute the environment directly but they do harm environment by lending funds to businesses who pollute environment. Banks are able to influence businesses in going green because of various reasons. Business needs investment or funds for commercial projects. This is where banks influences the decision of business to use environment friendly technology in the project to avail the benefits from bank. Even banks should try to reduce the pollution caused by them through high reliability on paper which leads to paper wastage, high energy consumption (electricity), etc. Banks should also reduce their carbon footprints. Green banking is beneficial both for banks and businesses as they can manage credit risk, legal risk and reputation risk efficiently. Government should also take initiatives to promote green banking by creating awareness to ensure sustainable development of the country.