As the age old saying goes ‘every cloud has a silver lining’, but when the particular ‘cloud’ is the globally devastating COVID-19 pandemic, it is really hard to identify a silver lining. COVID-19 has engulfed majority of the countries in an atmosphere of despair and depression. Economies have suffered huge losses accompanied with a sharp decline in countries GDP and employment rates. However, a silver lining can indeed be observed in this dark COVID-19 cloud and that is the realization of the importance of green financing by the banking sector.
When the whole world was captured in the throes of this novel Coronavirus, digitalization proved to be the savior for the governments, individual businesses, public and the country’s economy. People switched to the virtual market place when the brick and mortar structures were feared to be infected with COVID-19. The banking sector played a pivotal role in this situation by providing online banking services such as internet banking, cyber and mobile banking, e-wallet, mobile ATMs, etc. Digitalization is the underlying spirit of green financial system since it is based on the development of a paperless economy creating less adverse environmental impacts and utilizing reduced natural resources for business operations.
Banks provide green loans to organizations that have integrated the ESG principles in all/certain aspects of their business operations
A Green financial system is based on the ESG (Environmental, Social, and Governance) principles. The vulnerability of the global economic system has enforced the importance and strength of ESG ideology for businesses. Banks provide green loans to organizations that have integrated the ESG principles in all/certain aspects of their business operations. Green management supports the ideology of managing business with less people in branches and offices. During COVID-19, this business concept has worked well and the remote/virtual working is a new normal now for many job types in financial sector. This has helped in reducing the carbon footprint and improving own resource reduction, resulting in less consumption of paper, electricity and improved air quality, both indoors and outdoors.
During COVID-19, the banking sector of Pakistan has showed a lot of resilience and has ensured the provision of digital platform to both the businesses and the customers for conducting economic transactions have somewhat lessened the blow of this novel Coronavirus on the country’s economy. Viewing this as the silver lining, Pakistan banking sector should develop its digital platform and enhance green financing portfolio which can bear the severity of such pandemics. COVID- 19 experiences should teach organizations to enhance green business practices. Governments, central banks and financial institutions can view this as an opportunity to develop the country’s green economy through developing the green financing landscape. A strong nation emerges as more resilient entity after every hardship and if Pakistan succeeds in cultivating the culture of green finance we can indeed capture the silver lining in this cloud.
Ali Ashar Jaffri is the General Manager Supply Chain & Procurement at Bank AL Habib Limited, Pakistan. He has more than 22 years of managerial experience in a number of reputed national and international organizations