MTB helps the country achieve SDGs through green financing

Can you share your bank's overall vision and commitment to sustainability? 
 

We are a responsible financial institution that prioritises care for people and the planet over our own profits. Mutual Trust Bank PLC (MTB) follows environmental, social, and governance (ESG) principles to support both economic and social stability while protecting the environment.

MTB works toward sustainability by focusing on environmental care, financial inclusion, community-focused social responsibility, ethical governance, employee well-being, and eco-friendly operations. Our leadership is committed to sustainability, which guides the bank's long-term goals. 

We strictly follow Bangladesh Bank's regulations on sustainability and climate change, as well as national policies like the Perspective Plan of Bangladesh, National Sustainable Development Strategy, and Sustainable Development Goals (SDGs). MTB is dedicated to continuing these efforts for a safer, more sustainable future.

What motivated your institution to focus on green or sustainable financing?

Our country is one of the worst climate change-affected countries, where we regularly face extreme weather events. Sea level rise, salinity intrusion, cyclones, floods etc. are hampering lives devastatingly. Also, poor implementation of environmental laws, awareness, and accountability is leading to rampant environmental pollution such as water pollution, and land pollution.

In this context, we all are facing the wrath of environmental degradation. These risks can lead to loan defaults, damage to property held as collateral, and overall economic instability. So we need to finance or support initiatives which are favourable to the climate. Climate action initiatives such as supporting renewable energy projects, energy efficiency technologies and sustainable infrastructure, saline resilient seed etc. will reduce the adverse impact of climate change in Bangladesh.  

Bangladesh Bank (BB) has given instructions to financial institutions to achieve a certain amount in green finance, and sustainable finance. BB has also categorised green financing and sustainable financing. As per BB instruction, MTB has been able to achieve the target and secure a place in the Sustainability Rating 2023.    

Globally many pledges or commitments have been adopted to achieve SDGs and net zero emission. Through green financing and sustainable financing, we are helping to meet the global commitment as well. 
 
What specific green financial products or services does your bank offer?

We have 94 products as prescribed by our central bank in our product offering. Moreover, MTB has a dedicated product MTB Green Energy Loan. This loan is an environmentally friendly Green Credit product that enables prospective customers to set up renewable energy projects such as solar, biogas, wind, hydro and any other potential renewable plants and help reduce the carbon footprint of the country. 

MTB is also providing financing in projects/products/initiatives which are eligible for BB refinance schemes such as energy efficient machinery, ETP, green building, solar products, recycling industries etc. There is also a climate-smart product we have in the portfolio which promotes EVs. An appreciable portion of our auto loan has also financed hybrid cars.
  
How do you ensure these products align with global sustainability standards? 
 
We draw knowledge and experience from multifaceted local and foreign partners who are leading sustainability practices with examples. MTB strictly follows the central bank's guidelines on green financing and sustainable financing. We also developed our own Environmental and Social Safeguard Policy by adopting BB's sustainable finance Policy and other international policies. As a result, we could ensure the alignment of Environmental and Social safeguard policy of DFIs, the United Nations Framework Convention on Climate Change (UNFCCC), the Global Reporting Initiative (GRI) Standards, The UN Global Compact etc. Our greatest strength lies within our strict compliance culture and values embedded in the operation. Our empathy for the community we operate in and the stakeholders for whom we dwell is our driving force.    
 
What criteria does your bank use to evaluate the sustainability of projects or companies before offering financing? 
 
Mutual Trust Bank PLC places a high priority on responsible banking by thoroughly assessing environmental and social risks during the credit appraisal process, in line with Bangladesh Bank's sustainable financing guidelines. 

Additionally, MTB follows stringent risk assessment frameworks to evaluate and mitigate potential impacts, ensuring environmental responsibility. Our relationship team, credit officers, and Sustainable Finance Department (SFD) work consistently throughout the year to ensure comprehensive due diligence. MTB also carries out Environmental and Social Risk Ratings and maintains a robust MIS to monitor performance for all applicable projects.
 
How do you balance risk and return with sustainability considerations when making lending or investment decisions? 
 
MTB has a robust risk management framework that spans across the bank and includes all pertinent risks along with environmental and social risks. This framework sets out how risks are identified, assessed, managed, monitored and reported. 

MTB screens its financing through an exclusion list, DoE categorisation, ESDD, Risk rating, Escalation, monitoring and reporting. All those steps ensure the balance of risk and return with sustainability considerations. Risk mitigation measures assist us in having a balanced approach to the lending portfolio.  
 
Does your bank partner with any organisations, governments, or NGOs to enhance your sustainable financing efforts? 
 
MTB is engaged with different organisations from regulatory bodies to non-government organisations, consultants to researchers, multilateral banks to develop financial institutions, and local organisations to UN organisations to enhance sustainable financing efforts. 

MTB collaborates with several types of local as well as international actors, and subject matter experts, including policymakers and many such organisations to scale up sustainable financing efforts and enhance its capabilities and human capital.  
  
Can you provide examples of successful collaborations that have advanced your green financing agenda? 

MTB has many successful collaborations in green financing. To mention a few examples, financing in LEED-certified buildings, financing in environment-friendly brick production, and financing for energy-efficient machinery. 

For climate-smart financing and strong financial inclusion participation, engaged with fintech companies and renowned climate-focused entities. We also collaborate with NGOs and nonprofit organisations to increase our penetration rate, financial literacy, and gender-smart financing.  
 
How does your bank measure the environmental and social impact of its sustainable financing activities, and can you share any specific metrics or success stories?

MTB supports sustainable financing, helping organisations achieve environmental and social impacts like CO2 emissions reduction, energy savings, and increased employment. By meeting key targets in areas such as Sustainable Finance Indicators and Green Refinance, MTB earned recognition in Bangladesh Bank's "Sustainability Rating 2023."

What challenges has your bank faced in adopting green financing, and how have you addressed them?
  
Information asymmetry: Lack of adequate information on green financing. The bank engages stakeholders to stay updated and leverage information for green growth.  

Limited awareness: Green financing awareness is low in Bangladesh. The bank educates clients and builds internal capacity by collaborating with regulatory bodies and market experts. 
 
Timely enforcement of E and S rules: Regulatory bodies need to improve enforcement and timely issuance of environmental and social permits. The bank advocates for better monitoring to ensure green financing benefits.