KARACHI: Deputy Governor State Bank of Pakistan (SBP), Saeed Ahmed on Friday said that green and sustainable banking may support the Government in its efforts to overcome current electricity shortfall and help increase economic productivity.
The Deputy Governor was presiding over a meeting to initiate Baseline Survey on Environmental and Social Risk Management (ESRM) in Pakistan, being conducted by International Finance Corporation (IFC) in collaboration with SBP.
He emphasized that environmental and social parameters are significant sources of credit, liability and/or reputational risks and may seriously affect economic performance and long term sustainability of a financial institution, if not properly and timely managed.
The ESRM survey is being conducted in 17 countries, State Bank has partnered with IFC for completion of survey in Pakistan.
The results of developmental initiatives, practices and products survey will provide insights to State Bank for streamlining its regulatory policy and encouraging incorporation of environmental and social considerations in banking practices and products.
He informed the participants that the State Bank has taken up green and sustainable banking as a special developmental area for promotion of environment and social considerations in the banking practices. This is in line with the adoption of sustainable banking practices in other central banks in the region and globally.
He further informed that the State Bank has recently joined Sustainable Banking Network – an informal association of regulators established by IFC for knowledge exchange and learning on sustainable banking. He said that the SBP is also exploring the possibility of issuing green banking guidelines including environmental risk management practices for the banks/ DFIs.
Dr. Afifa Raihana of IFC said that the ESRM Survey is being conducted in several countries to take a stock of capacity, business potential as well as current sustainability practices, identify drivers and bottlenecks, assess market demand and recommend an action plan for promotion of sustainable banking.
Head of Corporate & Investment Banking in Habib Bank Ltd Aamir Irshad briefed the participants that HBL started environmental and social measures within its corporate banking two years back and the bank is now establishing Its own ESRM set-up.
He commented that the implementation of ESRM systems is quite simple and has huge potential to provide a framework for properly managing credit, legal and operational risks.
