Disadvantages Of Green Banking

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GREEN BANKING - BENEFITS AND RISKS IN INDIA
1Dr. C. Eugine Franco 2.G. Bright Jowerts
INTRODUCTION
Green Banking is an effort made by the banks with the ultimate aim of gear up its clients and economy and industries to grow and run green and in the process to restores the natural environment. It means promoting environmental-friendly practices and reducing carbon footprint banking activities. It gives mutual benefits to banks, industry and economy. Green banking system concerned about its loan implication on environment. Ethical which is the other name of green bank or sustainable bank protects the environment
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It is true that industries would have to follow certain standards to run their business. In the case of failure, it would lead to closure of the industries leading to a likelihood of default to the bank. The financial institutions need to engage proactively with the stakeholders on environmental and social policy issues and evaluate the impacts of their client’s investment. In turn, that would force the customers to take care of their management of environmental and social policy issues relating to investment. This should cover all project financing activities across all industries. The importance of Green Banking is immense for both the banks and economy by avoiding the following risks involved in banking…show more content…
Most obviously, banks like other companies are at risk if they themselves do not comply with relevant environmental legislation. An environmental management system helps a bank to reduce risks and costs, enhance its image and take advantage of revenue opportunities.
Reputation Risk
Sometimes while involving green banking practices, banking institutions are more prone to loose their reputations if they are involved in big projects, which are viewed as socially and environmentally damaging. There are also few cases where environmental management system has resulted in cost savings, increase in bond value etc (Heim, G et al, 2005). In few cases the environmental management system resulted in lower risk, greater environmental stewardship and increase in operating profit. Reputation risks involves in the financing of ecologically and ethically questionable projects.

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