Disclosure On - BRAC Bank Limited

Disclosure onGreen BankingIntroductionClimate change represents the most seriousphenomenon in today’s world. Across the globe,relentless efforts are being made to measure andmitigate climate change risks. Bangladesh is oneof several nations to have made a commitment tocontrolling such threats. To supplement governmentalefforts, Bangladeshi banks assume a share of theecological responsibility to ensure a substantialreduction in carbon emissions. Banks’ internaloperations have a limited environmental impactcompared to industrial sectors. However, theirdecisions can still affect the environment considerably,particularly if they finance environmentally-irresponsible customers. It is, after all, often banks who financemajor industrial projects, some of which produceabundant carbon emissions.Banks, therefore, have a responsibility to balancesustainable economic development with environmentalprotection when it comes to making investments.Here, the term ‘green banking’ is pertinent. This refersto activities that assist banks in reducing carbonemissions and minimizing their carbon footprint.Green banks finance clean technologies and projectsseeking to mitigate pollution. ‘Green banking’ is anelement of ‘sustainable banking,’ which means usingmoney in an environmentally, socially and culturallyconscious manner, fulfilling the needs of today withoutendangering the generations of tomorrow. Now,ecological preservation and sustainable developmentare cornerstones in the fight against the negativeimpacts of climate change.The United Nations’ Sustainable Development Goals(SDGs) reflect an agenda of worldwide significance.Along with most nations, Bangladesh is making adetermined effort to attain these SDGs at the nationallevel. This undertaking demands co-operation fromvarious stakeholders. Among them, the banks andfinancial institutions that underpin the economy playa central role. The two basic tenets of sustainablebanking are as follows: Environmentally-friendly or ‘Green’ banking Corporate social responsibility (CSR)Cohesive endeavors from banks and financialinstitutions alike can safeguard long-termsustainability. Bangladesh Bank encourages banks’3222018 A N N U A L R E P O R TB R A C B A N K .CO MGreen Banking Units (GBUs) and CSR desks tocooperate toward making a sustainable impact.BRAC Bank has acted accordingly and established aSustainable Finance Unit (SFU) as part of its credit riskmanagement, thereby meeting regulatory requirementsand boosting the efficiency of streamlining processes atthe same time.Purpose and ScopeThis disclosure outlines the banking philosophyto which all of our daily operations adhere.Simultaneously, it contributes toward our regulatorycompliance. Crucially, we strictly abide by regulatoryguidelines and follow international best practices inour green banking. In 2018, we took some bold stepsin this regard. The new initiatives introduced not onlycater to the expectations of our key stakeholders andshareholders, but they also harness the economicgrowth and sustainable development of Bangladesh asa whole.BRAC Bank and its Sustainability FrameworkTo monitor the SFU’s activities, BRAC Bank establishedthe Sustainable Finance Committee (SFC). Both theSFU and SFC were created with the Board’s approval.The SFC comprises high-ranking management officials,chaired by our Deputy Managing Director and CRO. Itguides the SFU, adhering to the terms of reference laidout by Bangladesh Bank. The Board Risk ManagementCommittee (BRMC) serves as the apex authority,supervising all of the bank’s sustainability activities.The BRMC is authorized to approve budgets for greenor CSR activities. On a monthly basis, the SFC meets toguide and review all SFU deliverables.Driven by its 3P philosophy (people, planet andprosperity), BRAC Bank has always prioritized thepromotion of responsible and sustainable bankingacross Bangladesh’s real economy. Indeed, the bank’svalue-based ethos and unique culture advocatessustainable banking at all levels. Central to this is ourdevoted SFU which works tirelessly with multilateralstakeholders to make BBL greener. Contributingsignificantly to Bangladesh’s SDG efforts, BBL standsout from the competition in terms of its green orsustainable financing.

Board RiskManagementCommitteeStrategic LayerManagerial LayerSustainableFinanceCommitteeOperational LayerSustainableFinance UnitCSR DeskBRAC Bank’s Galaxy of SustainabilityIn September 2013, Bangladesh Bank introducedrevolutionary guidelines on green banking. BRACBank is one of only a few banks to have adopted itsprinciples. Since the bank’s inception, two specialunits have been dedicated to the following: thepursuit of environmentally and socially responsibleGBUinitiatives; and the integration of environmental andsocial considerations into the bank’s product design,strategic planning and policies. Under the stewardshipof the SFC, the SFU represents the heartbeat of thebank’s sustainability efforts. Its devoted work aims topositively affect not only BBL, but the whole bankingindustry.B R A C B A N K .CO M2018 A N N U A L R E P O R T323

Environmental & Social Risk and OpportunityManagementBRAC Bank takes its responsibilities seriously whenit comes to the planet and sustainability. Accordingly,it abides by all relevant regulations, and applies thehighest international standards of environmentalprotection and social welfare. BBL adheres toBangladesh Bank’s guidelines on Environmental &Social Risk Management (ESRM) for banks and financialinstitutions dated February 8, 2017. Meanwhile,the Environmental Conservation Rule 1997 formsan integral element of its credit risk assessmentframework. Loan proposals over a certain amountare subject to environmental and social due diligence.Within its environmental risk assessment, BBLcomplies with the IFC Safeguard for financing projectproposals. Finally, BBL is the only bank in Bangladeshto have voluntarily complied with the UNEP FI principlesfor energy-efficient financing.Our Sustainable Financing ScopeAs part of its cooperation with multilateralorganizations to apply best global E&S practices, BBLoffers to tailor financial modalities to help clients toadopt green technologies. Examples of such effortsinclude:51 Products under Bangladesh Bank’s GreenRefinancing Scheme across the following businesssegments: Renewable Energy: Solar, Biogas, Wind & HydroElectricity Energy Efficiency: Intervention based on EnergyAudit, LED bulbs, etc. Solid Waste Management: Composting,Electrification3242018 A N N U A L R E P O R TB R A C B A N K .CO M Liquid Waste Management: ETP, STP, WWTPRecycling: Plastic, paper and battery recyclingNon-fire Block Brick: Compressed Block BrickAlternative Energy: Tire PyrolysisFire Brick: Conversion, HHK, TunnelMiscellaneous: Palm oil, VermicompostingA unique green product named Planet Solution thatoffers tailored green products, meeting customers’needs to adopt green technologies

Green Banking PortfolioAiding the socio-economic development of Bangladesh, BRAC Bank extends its financing facility to clients whose activitiesreduce environmental harm, promote energy efficiency, and help communities vulnerable to climate change effects.Portfolio EfficiencyRenewableEnergyRecyclingOur SupportOne-stop solutionfor going greenTechnical supportto clientsOffering a blendedfinancial modelB R A C B A N K .CO M2018 A N N U A L R E P O R T325

Key Milestones So FarClimate FinancingPlanet SolutionUNEP FIOnly bank to have adedicated green productother than BangladeshBank’s schemeAffiliated with UNEP FIas part of the Allianceof Energy EfficiencyFinancing InstitutionClimate Financing capacityboosted by collaborationwith International Centrefor Climate Change andDevelopmentOngoing process to gainaccreditation from GreenClimate FundESMSIFC PaCTGABVOnline ESMS SystemAffiliated with IFC’sPartnership for CleanerTextile ProgramOnly South Asian memberof value-based globalalliance committed topromoting sustainabilityIncorporation of globalstandards within creditrisk assessmentIn-house Green InitiativeSolar panels atSME Unit officeOngoing planningfor RainwaterHarvesting at BBLbranchesIncreased usageof LED lightsOngoingpartnership withCSR edpaper usagein marketingmaterialsMobile banking &increased use ofrecycled paper/biodegradablematerialsActivity Flashback: 2018ETP Financing3262018 A N N U A L R E P O R TB R A C B A N K .CO MRollout of GreenOffice Guidelinewithin theorganization

Green Industry FinancingLED Light financing:Fire & Safety Equipment FinancingEnergy Efficiency Equipment FinancingB R A C B A N K .CO M2018 A N N U A L R E P O R T327

Safe Drinking Water for Climate VulnerableAreasEnvironmental Awareness Program forSchool StudentsCreating Green Banking AwarenessConclusionBanks and financial institutions can contributesignificantly to ensuring the planet’s sustainability.BRAC Bank’s efforts in this regard are notable,especially in its green banking and CSR activities. BBLasserts that both of these elements are imperative forthe long-term stability of the financial sector. By actingresponsibly, BRAC Bank’s green steps of today willmake for a greener tomorrow. Our proactive measuresreduce our carbon footprint and increase environmental3282018 A N N U A L R E P O R TB R A C B A N K .CO Mand ecological awareness. Green banking encouragesclients to be more environmentally conscious, and tocontribute to making the world a safer and healthierplace in which to live. Opportunities are abundantin renewable energy technology, as well as reducedcarbon transportation. These can be fully grasped whenall sectors of the economy pull together in the samedirection. It is here that banks play a leading role. Asit gains popularity in Bangladesh, BRAC Bank avidlypursues ways of becoming a national pioneer in greenbanking.

Structure ofSustainable Finance CommitteeChairMembersMember SecretaryB R A C B A N K .CO M2018 A N N U A L R E P O R T329

SFU and SFC were created with the Board’s approval. The SFC comprises high-ranking management officials, chaired by our Deputy Managing Director and CRO. It guides the SFU, adhering to the terms of reference laid out by Bangladesh Bank. The Board Risk