As the world continues to grapple with the impact of business and economic activities on issues such as climate change, the double-edged sword of economics and the environment continue the debate, ad nauseum. Some comment on the environmental impact of globalized industrialization and the negative impact on the globalized economy. Only recently has the banking industry begun to acknowledge and engage in the conservation debate—the greening of the world.
Green banking comprises of four main elements: economy, nature, society, and well-being. Within the economics of humanity, banking and financial institutions perceived as being disconnected and indifferent to conservation and green ethics. Some infer that banking is unsustainable, that fiscal governance negatively impacts the economy or that green banking practices are “bad” for banking, as profitability is core to the industry.
However, green banking does have positivity. It has an innate impact on banking’s valuation. Instead, green banking is a long-term business strategy that focuses on profit and the continuance and empowerment of the environment. As a requirement of the banking industry, ethical behavior and practice are essential when running an environmentally friendly business, and moral performance is necessary for environmental and social risk management.
Green banking’s basic premise is to improve the primary risks involved relative to the overall environmental impact of banking. Green banking encourages the development of environmentally friendly portfolios, enabling the financing and investment of eco-label products, eco-tourism, energy efficiency, environmental-friendly transportation, organic agriculture, and renewable energy.
Initiating these investments augments a bank’s awareness of environmental risk to their ventures, particularly where their holdings may negatively impact their credibility, credit rating, and reputation. Youtap’s technological advances enable green banking practices to flourish due to its digitization and cloud platform support systems.
Today, green banking is proactively moving forward. Traditional banks adopt green principles, adapting to the societal influences that dictate progressive social mores while promoting a cleaner., greener planet