Sustainability is a core value that drives BRAC Bank’s actions and decisions

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

BRAC Bank's vision is to be the leading bank in the country by incorporating sustainability into banking practices so that growth and responsibilities are intertwined. We are committed to integrating sustainable practices into every aspect of our work, starting from reducing our environmental footprint to supporting eco-friendly projects of our customers. 

To ensure transparency, we have started to publish our annual sustainability report from last year, where we disclose our greenhouse gas (GHG) emission accounting and demonstrate our efforts to minimise the carbon footprint.

In 2023 alone, we disbursed Tk23,643.4 crore in sustainable finance and Tk2,610.4 crore in green finance, underscoring our commitment to funding initiatives that have positive environmental and social impacts. For the last four consecutive years, Bangladesh Bank has recognised us as one of the top sustainable banks, reflecting our strong governance and sustainability efforts.

Sustainability is more than just a strategic priority for us; it is a core value that drives our actions and decisions. By embedding sustainability into our business model, we aim to create long-term value for our stakeholders and contribute to a more sustainable and equitable future for all.

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

Our focus on green and sustainable financing is driven by several key motivations. Firstly, leveraging our legacy in SME banking, we aim to use our strong market position to lead the way in sustainable banking in Bangladesh too. Our vision is to establish ourselves as the top sustainable bank in the country and then fully transform into a green bank. 

Secondly, our commitment is deeply rooted in our global alliances. As a founding member of the Global Alliance for Banking on Values (GABV) and a supporter of the UN Global Compact principles, we are dedicated to aligning our actions with international sustainability standards and goals.

We are also focussing on mitigating environmental and social risks by addressing risks related to climate change, natural resource management, human rights, and community development. Thus, we want to protect our operations and reputation. Strategically, integrating sustainability into our business model aligns with our broader goals of long-term resilience and success. This approach enhances our operational efficiency and contributes positively to the communities we serve. 

We also aim to manage physical and transition risks by boosting green financing and implementing effective strategies. We always seek to turn potential threats into opportunities for sustainable growth. Finally, transitioning to a sustainable bank enhances our brand value and reputation. By positioning ourselves as a leader in sustainability, we build stronger relationships and trust with customers, investors, and stakeholders, reinforcing our role as a responsible and forward-thinking financial entity.

 What specific green financial products or services does your bank offer (e.g., green bonds, sustainable loans)? 

BRAC Bank provides various green and sustainable financial products to support environmental initiatives. We offer green and sustainable finance, which, in many cases, gives low-interest funding to clients investing in applicable projects like renewable energy, waste management, energy-efficient machinery, green or environmentally friendly establishments, etc. 

Most of these products are supported through Bangladesh Bank's refinancing schemes. Additionally, much of our financing is also supported by our partner DFIs. Through these offerings, we aim to assist our clients in advancing their sustainability goals and contribute to a greener future.

How do you ensure these products align with global sustainability standards?

At BRAC Bank, we ensure that our green financial products align with global sustainability standards through several key practices. Since 2023, we have been publishing sustainability reports in line with globally recognised standards such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD). 

As a member of the GABV and the United Nations Global Compact (UNGC) and a signatory of the Partnership for Carbon Accounting Financials (PCAF), we adhere to the principles and guidelines established by these organisations. 

We take pride in regularly reporting our progress to these bodies, ensuring that our products and practices not only meet but exceed rigorous global sustainability benchmarks.

By integrating these standards and continuously monitoring our performance, we ensure that our green and sustainable financial products comply with global sustainability expectations. 

What criteria does your bank use to evaluate the sustainability of projects or companies before offering financing?

Before any financing, we assess the Environmental, Social, and Governance (ESG) factors to ensure that the projects are aligned with our commitment to responsible and ethical investing. This involves examining their environmental impact, social responsibilities, and governance practices. Moreover, we evaluate the economic viability of the project or company, focussing on its financial stability and long-term sustainability to ensure it can deliver sustainable returns. 

In addition, we adhere to the guidelines set forth in Bangladesh Bank's sustainable finance policy, which includes a taxonomy for identifying projects that qualify as green and sustainable. By integrating these criteria into our decision-making process, we aim to support initiatives that positively contribute to environmental and social outcomes while maintaining economic feasibility.

How do you balance risk and return with sustainability considerations when making lending or investment decisions?

Our commitment to values and sustainability is unwavering. It plays a crucial role in our lending and investment decisions, guiding us to maintain a strict exclusion list that prevents us from financing sectors associated with high sustainability risks. While this approach may limit some financial opportunities, it is a testament to our dedication to ethical practices and attracts global investors who are aligned with our values. 

This strategy aligns with our long-term vision of creating value that goes beyond financial returns, fostering a positive societal impact, and building lasting relationships with investors who value sustainability as much as we do.

Does your bank partner with any organisations, governments, or NGOs to enhance your sustainable financing efforts?

BRAC Bank's unwavering commitment to sustainability is evident in our active engagement in partnerships and collaborations to advance our sustainable financing efforts. We are a proud member of the Global Alliance for Banking on Values (GABV) and the United Nations Global Compact (UNGC), and as a GABV member, we are also a signatory of the Partnership for Carbon Accounting Financials (PCAF), underscoring our dedication to measuring and managing carbon emissions in our financing activities.

In addition, we are a participating financial institution (PFI) in all major green financing refinancing schemes Bangladesh Bank provides. Our role in these schemes supports our goal of promoting environmentally sustainable projects within Bangladesh.

BRAC Bank is also an executive agency for the Green Climate Fund (GCF), demonstrating our sustainable finance leadership. We collaborate with various Development Finance Institutions (DFIs) that provide funding for sustainable projects, reinforcing our position as one of the leading sustainable banks in the country.

Our commitment extends to partnerships with non-governmental organisations (NGOs) and other entities. For example, we are currently involved in an agricultural adaptation project in collaboration with two NGOs, two universities, and a government entity. Additionally, we work with some international NGOs that provide us with funding to support our sustainability initiatives.

These diverse partnerships significantly enhance our capacity to deliver on our sustainability goals, enabling us to make a meaningful impact through our financing activities. This impact is a source of pride for us, and we are grateful for the support of our stakeholders in these efforts.

Can you provide examples of successful collaborations that have advanced your green financing agenda?

As a Participating Financial Institution (PFI) in Bangladesh Bank's major green refinancing schemes, BRAC Bank regularly refinances green projects, demonstrating our firm commitment to sustainability. These concessional funds are crucial in incentivising our clients to pursue environmentally friendly projects.

A notable example of our successful collaboration is financing a grid-tied solar power plant. This project, achieved in partnership with another organisation and supported by DFI, underscores our dedication to advancing renewable energy and reducing carbon emissions. Such initiatives support our green financing agenda and contribute significantly to sustainable development goals.

How does your bank measure the environmental and social impact of its sustainable financing activities? Can you share any specific metrics or success stories that demonstrate the positive impact of your sustainable financing initiatives?

Our sustainability report adheres to the GRI and TCFD guidelines. In our report, we disclosed our greenhouse gas (GHG) emissions using the Partnership for Carbon Accounting Financials (PCAF) methodology. Also, we outlined our governance structures, strategies, and risk management practices using TCFD recommendations.

To illustrate the positive impacts of our financing, we include impact stories in our report. These stories highlight specific examples of how our projects have made a difference, and we link them to relevant Sustainable Development Goals (SDGs) to demonstrate their broader contribution to global sustainability efforts.

What challenges has your bank faced in adopting green financing, and how have you addressed them?

BRAC Bank has encountered several challenges in adopting green financing. One major challenge has been integrating comprehensive risk management practices that account for environmental, social, and governance (ESG) factors. Ensuring these risks are adequately assessed, monitored, and mitigated across our extensive portfolio requires a high level of diligence.

Additionally, keeping up with evolving regulatory standards, both local and international, presents another challenge. We must continuously adapt our policies to comply with new requirements, including rigorous quarterly reporting to Bangladesh Bank and adherence to various Development Finance Institutions (DFIs) guidelines.

Another significant challenge is integrating sustainability into our core operations, which involves adapting our credit processes to include robust Environmental and Social Due Diligence (ESDD). This transition demands substantial investments in technology, such as upgrading our core banking systems and digital platforms while balancing physical branches with digital services to effectively serve all segments of society.

To address these challenges, BRAC Bank has taken several strategic actions. We have established a Sustainable Finance Committee (SFC), led by our Deputy Managing Director (DMD) and Chief Sustainability Officer (CSO), to oversee and manage our sustainable finance initiatives. This committee, supported by the Sustainable Finance Unit (SFU), ensures high-level oversight and strategic alignment with our ESG goals. We have integrated ESG principles into our business operations, developed a robust credit process, and adhered to an Exclusion List for responsible lending, all of which are strategic steps towards our future sustainability.

Our digital transformation journey includes deploying advanced systems like our core banking platform, mobile banking app 'Astha', and internet banking for corporate clients. We are also balancing physical and digital services to enhance accessibility. Collaborating with DFIs, Bangladesh Bank, and other credible partners helps us validate our climate and sustainability targets. 

Furthermore, we engage customers through innovative products and services, such as the TARA CMSME platform for women entrepreneurs and Agent Banking, to expand financial inclusion.

We maintain transparency through regulatory reporting and by publishing an annual sustainability report. We want to ensure that our efforts are monitored and validated by external parties properly, reinforcing our commitment to transparency. By focussing on expanding our green and sustainable finance portfolio, we aim to mitigate climate risks and open new avenues for profitable investments.