Dhaka, Bangladesh, April 7, 2010
—IFC, a member of the World Bank Group, is partnering with the Bangladesh Bank and local financial institutions to introduce systemic changes to increase investments in sustainable energy finance and reduce environmental risks in lending.
On April 7, 2010, IFC met with Bangladesh Bank’s governor and leaders of local financial institutions to discuss environmental and climatic risk management for financial institutions and to release results of a baseline survey on financial institutions’ environmental lending practices. The survey found more than 90 percent of the bankers claim not to have any formal process to evaluate the environmental risks related to investments; 70 percent reported having no specialized financial products related to sustainable financing; and 85 percent saw an opportunity to develop business in this area.
IFC is helping the Bangladesh Bank prepare an Environmental Risk Management Guideline to assist banks in increasing their sustainable energy finance portfolios and decrease their nonperforming loans. Financial institutions and private sector stakeholders are providing input. The central bank expects to finalize the Environmental Risk Management Guidelines by June 2010, after which the guidelines will be issued to all the financial institutions in the country. IFC will help train banks on adopting the guidelines.
Atiur Rahman, Governor of the Bangladesh Bank, said, “The financial sector has an important role to play. Bankers are in a position to encourage their clients to pursue renewable energy or energy efficiency initiatives actively.”
The Bangladesh Bank also has created a revolving fund to finance effluent treatment plants and biogas and solar projects. Financial institutions can use this fund to offer small and medium enterprises financing.
Ian Crosby, Head of SEDF, said, “The results from the baseline survey suggest that banks are at risk because they are not aware of potential environmental and social liabilities in their portfolio. At the same time there is a huge opportunity for banks to profitably invest in environmentally friendly projects.”
The South Asia Enterprise Development Facility, managed by IFC in partnership with the United Kingdom’s Department for International Development and the Norwegian Agency for Development Cooperation, is providing advisory support to the Bangladesh Bank and the financial sector to train bankers on energy efficiency and renewable energy financing.
IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by increasing financing for renewable energy or energy efficient projects.
About IFC
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis. For more information, visit
www.ifc.org
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