KARACHI: State Bank of Pakistan (SBP) has issued Green Banking Guidelines (GBG) with a view to safeguarding against environmental risks emerging from banks and Development Financial Institutions (DFIs) business and operations.
In a circular issued on Monday, the SBP said that the guidelines deal with the following three areas:
- Risk Management for increasing financial stability through understanding, management and mitigation of environmental exposures of financing portfolios.
- Business Facilitation for fostering development of ‘green’ market through actively tapping the emerging viable business opportunities of financing to clean energy and resource efficiency projects.
- Own Impact Reduction for potential re-engineering of banks and DFIs’ internal operations and procedures with a view to reducing impact on environment and society.
While primary responsibility to ensure compliance of environmental laws & regulations rests with the Board of Directors and management of the respective borrowers, these Guidelines are expected to reduce potential losses of banks and DFIs through proper management of environmental vulnerability of their financing portfolios.
These Guidelines will also augment banks and DFIs’ profitability by increasing investments in relatively untapped segments of environmentally-compliant, resource-efficient and socially-responsible businesses.
State Bank expects the banks and DFIs to implement these Guidelines within a year of issuance of these Guidelines. State Bank will also play its due facilitative role in implementation of these Guidelines through such measures as regular review of implementation status of banks and DFIs, trainings and awareness sessions and other support measures.
