While the green economy is gaining popularity worldwide, it has yet to peak in Bangladesh and many other developing countries. With 170 million inhabitants and minimal land, the South Asian nation has tons of challenges for growth. However, it is time for Bangladesh to reflect on the idea of a green economy and prepare the country for the existing and upcoming challenges of pollution, deforestation, unplanned industrialisation, cities, and mega projects. Additionally, Bangladesh is vulnerable to climate change. According to the World Disasters Report, published by the International Federation of Red Cross and Red Crescent Societies (IFRC), Bangladesh ranks eighth among the countries most affected by natural disasters. Between 1980 and 2018, Bangladesh suffered about 429 natural disasters. These include earthquakes, floods, landslides, tornadoes, tropical cyclones, climate change, and erosion. Bangladesh has suffered substantial financial losses through this.
What is the Green Economy & Why is it important?
The phrase “green economy” is growing in popularity worldwide. Many governments and non-government entities around the globe are emphasising the green economy more than ever. Diverse initiatives are being undertaken to establish eco-friendly industries and expand business and commerce. At the national and international levels, multifaceted measures are implemented. It is impossible to conceive a prosperous society and economy that disregards the natural ecosystem. A favourable environment is one of the prerequisites for development. In light of this, everyone now places a premium on ecological equilibrium for economic growth and global prosperity. Due to the effects of global industrialisation and the development of urban civilisation, imbalances in the natural environment have resulted in catastrophic events. As it has been demonstrated that green strategies are practical and beneficial for sustainable development, Bangladesh is now focused on this issue.
What is the global buzz surrounding the green economy?
If economic development can be achieved without compromising the natural equilibrium, it will result in sustainable growth for both developed and developing nations. The key to a green economy is that human development will be ensured, scarcity will be eliminated, and the environment will remain unharmed. Today, the effects of climate change are visible across the globe. Developed nations leave massive carbon footprints due to rapid industrialisation and economic development. Globally, peoples’ behaviours are shifting due to the negative impacts of climate change. As a result, infrastructure, trade, employment, and alleviation of destitution are negatively impacted. According to a recent report from the “United Nations Intergovernmental Panel on Climate Change” (IPCC), if the present carbon emissions trend continues, the world could experience significant natural disasters such as droughts, floods, and severe heat waves within the next 12 years. The report also states that the rate of temperature increase between 2030 and 2052 will exceed the target of 1.5 degrees Celsius if the world fails to act swiftly to mitigate global warming.
How is the green economy relevant in Bangladesh?
European nations comprise the top ten of the Yale University Environmental Performance Index (EPI) 2022. Bangladesh is ranked 177th on the EPI’s annual ranking of 180 countries worldwide based on 40 environmental indicators. In Bangladesh, numerous construction initiatives are ongoing to address infrastructure deficiencies. The current trend in the developed world is to conduct expansion harmoniously with nature. These models place the utmost emphasis on character. Modern economists have identified the crucial connection between the economy and nature. In the green economy, the primary topic of conversation is how to conduct development without affecting the environment. These concepts are already well-known in developing nations such as Bangladesh. However, discussions on the green economy in Bangladesh, such as rules, regulations, and laws, have been held, but structural limitations prevent their full implementation. As a result, Bangladesh’s environmental degradation is occurring at an alarming rate. It affects the economy and overall sustainable development in the long run.
A study by the Department of Urban and Regional Planning of the Bangladesh University of Engineering (BUET) stated that Dhaka Metropolitan should hold 20% of green areas. However, there is less than 8.5% at this moment, which needs to be improved. Commercial activities in green spaces are also a hindrance. Dhaka lost green space at an annual rate of 6.5% between 2002 and 2022, as per the given statistics by BUET. During the winter, air pollution in Dhaka has increased by 19% compared to the previous year. The divisional cities, including Dhaka, are shrouded in fog thanks to dust and smoke. Since the start of winter, Dhaka has consistently ranked first in the world for air pollution. Air pollution poses an extreme risk to public health. According to the World Bank report for 2022, 28% of all fatalities in Bangladesh are attributable to water and air pollution.
To guarantee the sustainable growth of an industrialised economy, it is crucial to preserve ecological balance. In the last four decades, our transition from a least developed country to a developing country has been anchored in the phenomenal growth of industry, particularly the labour-intensive manufacturing sector. Our garment industry is also a leader in eco-friendly green industrialisation. The journey of the green industry began in Bangladesh after the Rana Plaza tragedy in Savar. It was the worst disaster to strike the nation’s apparel industry. Since then, establishing environmentally responsible factories has been a hot topic of discussion.
After the aftermath of Rana Plaza, over 150 green factories have been constructed in roughly eight years. In addition, at least 500 additional green factories have been constructed—those currently awaiting certification. The US Green Building Council (USGBC) is an organisation that certifies green industries worldwide. According to this organisation’s most recent report, 39 of the top 100 world’s greenest factories are in Bangladesh. There are approximately 150 green enterprises in Bangladesh at present, and forty-one have been certified. In addition to ensuring growth continuity by enduring competition in an ever-changing international market, monitoring the industry’s environmental impact is necessary. In the era of global warming and climate change, the world trading system increasingly takes environment and climate into account.
However, Bangladesh has been traditionally an agricultural country, but it has turned into an industrial and serviced-based nation over the last couple of decades, thanks to its cheap labour. In the tide of industrialisation, the agricultural sector of Bangladesh has lost prominence. However, a significant proportion of the working population in this country is engaged in agriculture. According to data released by the Bangladesh Bureau of Statistics, only 11.66% of Bangladesh’s GDP for the fiscal year 2021-22 originated from agriculture. In 1995, this rate was approximately 25%.
In contrast, this percentage has increased to 35.27% in the industrial sector in 2021-22. In 1995, it was only 23.3%. In addition, the service sector contributed 53.01% to Bangladesh’s GDP in 2021-22. Industry and service sectors are necessary to construct a robust economy, but at the same time, the agricultural industry cannot be ignored. Suppose the agricultural belt does not advance in tandem with the industrial and service sectors but instead declines. In that case, it directly opposes the concept of a green economy.
Global Community on the Green Economy
Leading financial institutions, internationally influential agencies, and some governmental entities from Nordic and Scandinavian regions are taking the green economy into account when any nation seeks financial aid from them. For example, the lending system of foreign or multilateral lending financial institutions such as the World Bank Group, Asian Development Bank (ADB), and JICA is subject to environmental and social conditions. Ecological and social needs must be met to obtain the low-interest loans required for development. Many of us are accustomed to considering pollution and climate issues as the industrialised world’s scourge. However, the economic significance of the environment in the global market cannot be denied. During the economic development of nineteenth-century Europe, it was possible to avoid the environment, but this is no longer the case.
Green Finance to Ensure a Sustainable World
Green finance plays a crucial role in determining the growth of commercial entities on the global market, from airlines to on-road industries to ships to manufacturing factories. Let’s explore some examples. According to the World Economic Forum, the aviation industry accounts for 2.5% of global carbon emissions, with most aircraft fueled by jet gasoline. Consequently, leading companies in the aviation industry, such as Airbus, are developing fleets that consume less energy and emit less carbon dioxide. According to the International Air Transport Association (IATA), Sustainable Aviation Fuels (SAF) can reduce emissions by 80%. SAF can be produced from various sources, including agricultural residue and airborne carbon. IATA estimates that SAF could account for 65% of the reduction in emissions required for aviation to reach net zero by 2050. However, this will require a substantial increase in production to meet demand. We can find more examples from other industries that take the green economy seriously.
During Europe’s development, environmental protection was tied to the production process outside the market. However, paying attention to the environment will currently bring the economy to a halt. Let’s reflect on the example of Europe. Due to their carbon emission policies, significant automakers like Volkswagen, BMW, and Mercedes will incur losses. Losing market share to eco-friendly automakers such as Tesla is the result of an inability to produce vehicles with carbon emissions that are low or nonexistent. Again, automakers will need help to generate the vast amounts of capital required to transition from fossil fuels to electric vehicle technology. In this era of information accessibility, consumers are highly informed. Approximately 58% of U.S. consumers contemplate the manufacturer’s environmental impact when purchasing products. This figure is more significant in Europe, and consumers will develop greater concern for the environment as time passes. Large corporations such as H&M and Walmart are environmentally conscious, which helps them maintain their brand image and competitive advantage. Therefore, offering goods produced by contaminating elements and processes are not feasible. More than 80% of our export earnings come from the ready-made garments sector, which is why Bangladesh has the most significant number of green garment factories globally.
Global Initiaves to Establish a Green Financing Eco-system
Over the last 2-3 years, Green Finance initiatives have gained significant momentum globally as countries and organisations recognise the need to promote sustainable development and address climate change. Here are some of the notable green financing initiatives launched around the world:
European Green Deal Investment Plan: In January 2020, the European Union launched the European Green Deal Investment Plan, a €1 trillion investment plan aimed at achieving climate neutrality by 2050. The plan includes a Just Transition Mechanism to help regions and industries most affected by the transition to a low-carbon economy.
Green Climate Fund: The Green Climate Fund (GCF) is a fund established by the United Nations Framework Convention on Climate Change (UNFCCC) to support climate action in developing countries. In the last 2-3 years, the GCF has approved more than $10 billion in funding for renewable energy, energy efficiency, and climate adaptation projects.
China’s Green Finance Guidelines: In 2019, the People’s Bank of China issued new Green Finance guidelines to promote sustainable development and mitigate climate change. The guidelines require financial institutions to disclose their investments’ environmental impact and allocate a certain percentage of their loan portfolios to green projects.
US Climate Finance Plan: In April 2021, the US administration launched a plan to increase climate financing to developing countries to help them reduce greenhouse gas emissions and adapt to the impacts of climate change. The plan includes a commitment to double US international climate finance by 2024 and to promote private sector investment in green projects.
Green Bonds: Green Bonds are a financial instrument that allows issuers to raise capital for projects with environmental benefits. The green bond market has grown significantly in the last 2-3 years, with more than $270 billion issued in 2020. The growth of the green bond market has been driven by increased demand from investors and issuers’ willingness to promote sustainability.
Japan’s Green Innovation Fund: In 2019, the Japanese government launched the Green Innovation Fund, a ¥300 billion fund aimed at promoting investment in green technologies and projects. The fund supports renewable energy, energy efficiency, and sustainable transportation.
African Development Bank’s Green Bond: In 2020, the African Development Bank issued its first-ever green bond, raising $3 billion to support renewable energy and energy efficiency projects in Africa. The bond was oversubscribed, demonstrating the growing demand for green investments in emerging markets.
Singapore’s Green Finance Action Plan: In 2020, the Monetary Authority of Singapore launched a Green Finance Action Plan aimed at promoting sustainable finance in the country. The plan includes a framework to guide financial institutions in incorporating environmental risks into their decision-making and to promote green bonds and sustainability-linked loan issuance.
Prospects of Bangladesh in Green Financing:
Bangladesh has made significant progress in recent years in promoting sustainable development and addressing climate change. The country has set an ambitious target of generating 10% of its electricity from renewable sources by 2021, and 40% by 2030. To achieve this goal, Bangladesh has implemented a range of policies and programs to support renewable energy development.
One of the most significant initiatives in Bangladesh’s green financing landscape is the Green Transformation Fund (GTF). The GTF is a USD 200 million fund established by the government of Bangladesh in partnership with the World Bank. The fund aims to support the development of green projects and promote sustainable development in the country.
The GTF has already supported a range of green projects in Bangladesh. These include the installation of solar power systems in schools and health clinics, the construction of biogas plants, and the promotion of energy-efficient technologies. The fund has also supported the development of a green bond market in Bangladesh, which will enable companies to raise capital for sustainable projects.
Apart from the GTF, there are other initiatives that support green financing in Bangladesh. The Bangladesh Bank, the country’s central bank, has issued guidelines to encourage banks to finance renewable energy projects. The guidelines require banks to allocate a certain percentage of their loan portfolios to green projects.
Another significant initiative is the Sustainable Finance Initiative (SFI), established by the Bangladesh Securities and Exchange Commission. The SFI aims to promote sustainable development by encouraging the issuance of green and sustainability-linked bonds in the country’s capital markets.
What Can Be Done for ?
Climate change impacts mainly the working class and the marginal population. Due to adverse climate change, those living outside the social security zone with limited income opportunities must endure hardships. Currently, future industries must be environmentally conscious to sustain themselves in the long run. Now is the ideal time to consider the impoverished people impacted by climate-related disasters. With their cooperation, it is possible to attain sustainable economic growth. Action strategies must consider environmental and socioeconomic protection to advance the green economy. It is forecasted that if the earth’s temperature rises due to climate change, the global production system will suffer significantly within a few years. By prioritising an eco-friendly, sustainable economy, it may be possible to save the world by adhering to the provisions of the Paris Agreement (to keep the global temperature rise below two degrees in the current century). Green development will take time but substantially increase employment in the renewable energy sector.
Time is running out for appropriate environmental actions to be taken before it is too late. Every year, natural calamities strike the nation. Consequently, establishing green growth has become a formidable obstacle. Environmental Impact Assessment (EIA) is crucial to any development project. The development will be sustainable if the country advances towards a sustainable green economy. The elimination of poverty will be achieved, the employment rate will rise, the quantity of forest land will increase, and rivers and canals will be safeguarded. In addition, reduced carbon emissions and pollution will occur, ensuring the environment is protected above all else. However, sustainable construction and forestry should be given precedence. In the city, sustainable waste management and recycling systems should be prioritised. With a focus on the renewable energy sector, its usage must increase annually, and all government sectors must collaborate and coordinate their efforts to attain green growth. All environmental laws and regulations should be implemented to protect the environment. Involving people in ecological protection allows them to participate in environmental decision-making.
Immersion of Technology and Green Economy for Greater Impact
The world is currently technologically dependent. But just as technology has simplified the world, it is also causing environmental damage. Therefore, technology must also be environmentally favourable because there can be no industrialisation without it. Technology will play a significant role in the era of the green economy, which will contribute to sustainable economic development. The green economy concept is crucial to modernising conventional production and industrial systems by applying contemporary technology.
The Silver Lining of Bangladesh in The Green Economy
While focusing on environmentally friendly economic activities, business, commerce, and industrial development, the green economy has become a hot cake for Bangladesh and the rest of the world amid climate change effects. However, appropriate actions must be taken and well implemented before it creates an imbalance in the long run. After overcoming various adversities, our economy is progressively growing. Both per capita income and average life expectancy are rising, and quality of life is improving. Within the context of the new era, the efficacy of the green economy is growing. It must be acknowledged that a green economy can serve as a catalyst for implementing plans for the sustainable development of the whole planet. Hence, sustainability is only possible by ensuring environmental protection. A green economy is the only way to keep Bangladesh habitable in 2100. Therefore, efforts should be made at all levels—public, private, and individual—to strive for a greener Bangladesh and a greener world.
Author- MD Talebur Islam
The author is simultaneously an independent researcher, columnist, and development practitioner. He can be reached at [email protected]
