Green Banking Analysis Essay Example

to enhance long-term growth prospects, or sustainability principles on which a firm is based), the growth, variation and innovation behind such developments indicate that we are in the midst of a promising drive towards integrating green financial products into mainstream banking. Further, those industries which have already become green and those, which are making serious attempts to grow green, should be accorded priority to lending by the banks.

This method of finance can be called as "Green Banking", an effort by the banks to make the industries grow green and in the process restore the natural environment. This concept of "Green Banking" will be mutually beneficial to the banks, industries and the economy. CORPORATE ENTREPRENEURSHIP Corporate entrepreneurship refers to the process of creating new business within established firms to improve organizational profitability and enhance a firm’s competitive position or the strategic renewal of existing business (Zahra (1991).

Corporate entrepreneurship is a process of organizational renewal (Sathe,1989) that has two distinct but related dimensions: innovation and venturing, and strategic stress creating new business through market developments on by undertaking product, process, technological and administrative innovations. The second dimension of corporate entrepreneurship embodies renewal activities that enhance a firm’s ability to compete and take risks (Miller, 1983). According to Kuratko et al. 1990) the need to pursue corporate entrepreneurship has arisen from a variety of pressing problems including:

(1) required changes, innovations, and improvements in the marketplace to avoid stagnation and decline (Miller and Friesen, 1982);

(2) perceived weakness in the traditional methods of corporate management;

(3) the turnover of innovative-minded employees who are disenchanted with bureaucratic organizations. Corporate entrepreneurship helps to

respond to these new competitive forces, either through innovations or imitating competitors’ practices.

Corporate venturing includes various methods for creating, adding to or investing in new businesses (Covin et al. , 2003). Corporate venturing have as their commonality the adding of new businesses (or portions of new businesses via equity investments) to the corporation- This can be accomplished through three implementation modes- internal corporate venturing, co-operative corporate venturing and external venturing. Cases on Green banking strategies Various banks in India are undertaking the corporate financial inclusion approach to innovate and adopt green banking strategies for sustainable development of the banks.

For example, ICICI Bank India recognizes that care of the environment and the larger society in which it operates is essential both from business continuity as well as a corporate citizenship perspective. IndusInd Bank, India inaugurated Mumbai’s first solar-powered ATM as part of its Green Office Project campaign ‘Hum aur Hariyali’. It also unveiled a ‘Green Office Manual - A Guide to Sustainable Practices’, prepared in association with the Centre for Environmental Research and Education (CERE). IndusInd’s new Solar ATM has replaced the use of conventional energy for eight hours per day with eco-friendly and renewable solar energy.

The energy saved will be 1980 kW hrs every year and will be accompanied by a simultaneous reduction in CO2 emissions by 1942 kgs. The uniqueness of this solar ATM is the ability to store and transmit power on demand (in case of power failure) or need (time basis). In terms of costs, the savings will be substantial, approximately Rs. 20,000 per year in case of a commercial user with grid power supply. State

Bank of India's Green Banking Policy The State Bank of India (SBI), as part of its Green Banking Policy, will set up windmills to generate 15 MW of power in Tamil Nadu, Maharashtra and Gujarat for its own consumption.

The SBI chairman inaugurated the windmills set up at Panapatti village in Tamil Nadu’s Coimbatore district on April 23, 2010. The mill in Tamil Nadu will generate 4. 5 MW of power, while the Maharashtra mill will have a capacity of 9 MW and Gujarat 1. 5 MW. SBI was the first Bank in the country to think of generating green power as a direct substitute to polluting thermal power and implement the renewable energy project for captive use. The investors in the stock market are equallyawareof environmental pollution andwouldtake a standagainstthose industries/institutions that do not comply with pollution norms (Gupta, 2003; Goldar, 2007).

Banks also need to monitor post transaction for the ideal environmental risk management program (Rutherford, 1994) during the project implementation and operation. Schmidheiny and Zorraquin (1996) conclude from their primary study that banks are not hindering the achievement of sustainability, banks can also play a hindering role for sustainable development because (1) they prefer short-terms payback periods where as sustainable development needs long-term investment (2) investment which take into account of environmental side-effects usually have lower rate of return in short-term (Jeucken and Bouma, 1999).

Therefore we propose the conceptual framework given below. Green banking practices using IT Sustainable development Economic development of the country, better living standards Financial inclusion-innovation Fig. 2: Conceptual model for Green Banking Strategies Conclusion The case study discusses green banking strategy adopted by banking

sector as an innovative initiative for sustainable development. Climate change is the most complicated issue the world is facing. Many countries the world over have made commitments necessary to mitigate climate change.

India has committed to cut its domestic carbon intensity by 20-25 percent from 2005 levels, by the year 2010. As socially responsible corporate citizens (SRCC), Indian banks have a major role and responsibility in supplementing government efforts towards substantial reduction in carbon emission. The banking sector is one of the major sources of financing industrial projects such as steel, paper, cement, chemicals, fertilizers, power, textiles, etc. , which cause maximum carbon emission.

Therefore, the banking sector can play an intermediary role between economic development and environmental protection, for promoting environmentally sustainable and socially responsible investment. Although, banking is never considered a polluting industry, the present scale of banking operations have considerably increased the carbon footprint of banks due to their massive use of energy ( e. g. , lightning, air conditioning, electronic/electrical equipments, IT, etc), high paper wastage, lack of green buildings, etc.

Therefore, banks should adopt technology, process and products which result in substantial reduction of their carbon footprint as well as develop a sustainable business. Pollution prevention is a new concept of the idea of environmental financial inclusion as it is process based and focused on reducing costs rather than increasing revenues (Douglas J. Lober, (1998). Financial inclusion has been recognized as a major conduit for sustainable products and processes, and new ventures are being held up as a panacea for many social and environmental concerns (Hall, Jeremy K. Daneke, Gregory A,Lenox, Michael J). While entrepreneurial activity has

been an important force for social and ecological sustainability; its efficacy is dependent upon the nature of market incentives. This limitation is sometimes explained by the metaphor of the prisoner’s dilemma, which we term the green prison. In this prison, entrepreneurs are compelled to environmentally degrading behavior due to the divergence between individual rewards and collective goals for sustainable development.