03 Jun 2018 - 9:34
Central banks can play major role in promoting ‘green banking’: Doha Bank
DOHA: Central banks of different countries around the world can play important role in promoting the culture of ‘green banking’ by developing a concrete policy framework with regard to growing threat of climate change and its adverse impact the people and the environment, noted Dr R Seetharaman, CEO of Doha Bank at an international event held in Spain.
“Central banks have a key role to play in enabling green financial instruments. This could be done through establishing green finance guidelines and frameworks to integrate environmental and social considerations into bank lending decisions,” said Dr Seetharaman told to the audience at the 50th International Capital Market Association (ICMA) Annual General Meeting & Conference, which concluded on June 1 in Madrid.
Dr R Seetharaman added: “Following the Paris climate agreement in 2015, European financial supervisors have been increasingly scrutinising the banking sectors to understand their exposure to climate risks and their preparedness for a transition to a low-carbon energy system. Bank of England is engaged in an ongoing examination of both physical effects of climate change and the impact of changes associated with the transition to a lower-carbon economy.”
Doha Bank participated in the panel discussion on “Developments in green, social and sustainable finance” at the event.
The Summit witnessed participants such as investors and market infrastructure providers from the fixed income markets, together with market experts, regulators and policy makers to discuss the state of the global industry and future developments.
Dr R Seetharaman said that central bank governors from Europe are considering increasing regulatory oversight to address climate-related risks to the financial system, including carbon stress tests for banks. Bank of England would consider carbon stress tests of banks after its review of the sector’s exposure to climate-related risk is competed this year.
China banking regulatory commission had developed Green Credit Lines, Bangladesh Bank had brought Green Banking Framework, Indonesia Financial Services Authority had developed roadmap for sustainable finance.
The Reserve Bank of India guided credit to priority sectors but also relied on industry- initiatives for green finance guidelines.
Seetharaman also highlighted on sustainable finance. He said that sustainable finance refers to any form of financial service integrating environmental and social into the business or investment decisions for the lasting benefit of both clients and society at large and contribute to green economies.
The 17 Sustainable development goals not just cover climate change but extend to areas such as health, education, infrastructure etc. Institutions should explore the concept of sustainable finance to other sustainable development goals based on their willingness and risk appetite to participate in financing such areas.
“Institutions adopt Environmental, Social and Governance (ESG) Criteria for sustainable finance, which considers social conscious lending or investments. Environmental criteria look at how a company performs as a steward of the natural environment.
“Social criteria examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, audits, internal controls and shareholder rights,” Dr R Seetharaman said.
Dr R Seetharaman also gave insight highlighting the initiatives of Doha bank in CSR activities.