Nowadays, projects that involve conservation and recycling are no longer limited to just corporate social responsibility undertakings. Going green has gained mainstream consciousness.
Gone are those days where the color green just stands for dollar or any currency for that matter. Environmental protection has already impacted enterprise mentality greatly, so much so that business decisions coincide with programs that encourage and promote the wise use of natural resources. The message is clear: protect the environment and you protect the market.
It is noteworthy to point out that amid this growth in mindset, the rural banking industry has already been very active in green-related endeavors. In fact, it may come as a surprise to some that green banking has long been practiced by a number of rural banks.
Apart from harnessing technology to lessen its carbon footprints, rural banks are at the forefront of financing small and medium enterprises (SMEs) that are responsive to environmental conservation efforts.
These are the little things which, when added up, constitute a significant portion of the overall green initiative.
On a much larger scale, a sustainable green banking policy needs to be institutionalized to achieve a balance between business success and environmental protection in the country.
According to the International Finance Corp. (IFC), the private sector arm of the World Bank, financial institutions like rural banks are key influencers of the private sector in green banking. Rural banks, as source of capital for SMEs, can use environmental consideration in their criteria for approval of loans, which can influence new businesses to adhere to environmentally sound practices.
Our neighboring countries in Asia such as Korea, Indonesia and China have started programs to initiate green banking. Banking regulations and supervision have been enhanced to attune it with environmental protection.
The IFC has observed that when banks adopt environmental and social management systems, financial institutions benefit from lower cost of capital, improved quality of loan portfolio, better terms of insurance, improved brand value, creation of new business opportunities and attraction of funds, among others.
Green banking practices also attracts funding institutions in infusing capital with banks that follow and implement green banking initiatives.
Efforts of rural banks toward green banking would remain inadequate without the support from the government and its regulating bodies. This initiative will be successful only if banks are encouraged for its implementation. Incentives that would boost their operation and financial standing should be included in the policy, to convince financial institutions to shift to green banking.
It is notable that tangible benefits for both the economy and the environment can result from going green. Our hope is that our government will look into the possibility of including green banking among its economic policies, to ensure economic and environmental sustainability in our shores.