PREMIER UNIVERSITY, CHATTOGRAM

TERM PAPER ON

“Environmental Accounting and Reporting Practice of BRAC Bank

Limited”

Submitted to
Mrs. Shafaitun Nahar
Lecturer
Discipline of Accounting
Faculty of Business Studies
Premier University, Chattogram

Submitted by
Muhammad Fahad
ID: 1503210108454
32nd Batch
Program: BBA
Discipline of Accounting

Date of Submission: 14th September, 2020.

 Letter of Transmittal

14th September, 2020.

Mrs. Shafaitun Nahar
Lecturer
Discipline of Accounting
Faculty of Business Studies
Premier University, Chattogram

Subject: Acceptance of the Term Paper.

Dear Madam,

With due respect, I am the student of B.B.A 32nd (B) batch who has to present to you my term
paper on ‘ Environmental Accounting’ under the course of Accounting. This term paper is the
result of the knowledge which has been acquired from the respective course.

I am trying my level best to prepare this term paper. The information of this term paper is mainly
based on internet information. Some other details were gathered from the books and company
website. Thank you for your supportive consideration for formulating an idea. Without your
inspiration this term paper would have been an incomplete one.

Therefore, I hope that you would accept the term paper and my gratitude for allowing me to
work on this intellectually stimulating term paper.

Thank You.
Sincerely Yours
---------------------------------

Muhammad Fahad
ID: 1503210108454
Batch: 32

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 Acknowledgement

This term paper is made possible through the help and support from everyone, including:
Teachers, Family and Friends. Especially, please allow me to dedicate my acknowledgement of
gratitude toward the following significant advisors:

First and foremost, I would like to thank the Almighty Allah, for his unconditional guidance and
wisdom as I make my term paper.

Second, I would like to thank my honorable instructor Mrs. Shafaitun Nahar, Lecturer,
Discipline of Accounting, Premier University, Chattogram for her most support and
encouragement for giving me this term paper. This gave me the experience on how to cooperate
and engage myself in a serious project. Her dynamism, Vision, sincerity and motivation have
deeply inspired me. It was a great privilege and honor to work and study under her guidance. I
am extremely grateful for what she has offered me. I would also like to thank him for her
friendship, empathy and great sense of humor.

Sincerely
Muhammad Fahad
ID- 1503210108454

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 Executive Summary

This paper is based on descriptive study to have an understanding of the scenery and degree of
environmental reporting and accounting practices followed by Bangladeshi company and to
determine the factors or attributes that drive the companies to adopt these practices. The
increasing importance of considering environmental aspects within a company’s decisions
demands a broader scope in management accounting. The paper investigated Environmental
Accounting and Practice of BRAC Bank Limited. The study has been initially conducted on the
basis of secondary data regarding Environmental Accounting concept. Environmental
Accounting and Reporting is essential to any country and government especially for keeping
account of natural resources. Worldwide the topic is available and researches have been on the
same topic from various perspectives. The BRAC Bank Limited has popularity in Environmental
Activities. And by keeping in mind I have chosen the Bank for my study.

In the first chapter I have introduced the paper to readers by adding Introduction, clearly
mentioning objective, scope, methodology and limitations. The data have been gathered from
secondary sources and secondary data have also been collected regarding the topic. In the
chapter two, I have explained the overview of BRAC Bank Limited. In the chapter three, I have
represented in theory the Environmental Accounting and its condition in Bangladesh. In chapter
four, I have showed analysis of Environmental Financing of last few years of BRAC Bank
Limited graphically and written about what has been found by the study. In the very last chapter
five, I have delivered the Recommendations for the Bank about Environmental Accounting and
Reporting to follow and practice more clearly and concluded briefly the study.

BRAC Bank Limited merely follows proper reporting and practicing guideline from Bangladesh
Bank about Environmental Accounting. The Bank does not report in the Financial Statement its
environment related costing, investment and accounting. The study has not been able to delineate
proper information regarding the topic. Thus, further study can be conducted regarding the topic
in the future to know more clear study and result.

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 Table of Content

Topics Page

Letter of Transmittal……………………………………………………………… i
Acknowledgement……………………………....................................................... ii
Executive Summary………………………………………………………………… iii
Chapter-1 “Introduction” 1-4
1.1 Introduction…………………………………………………………………….. 2
1.2 Objective………………………………………………………………………... 2
1.3 Scope of the study……………………………………………………………… 2-3
1.4 Methodology of the study……………………………………………………… 3
1.4.1 Sources of data……………………………………………………………….. 3
1.4.2 Techniques of analysis……………………………………………………… 3
1.5 Limitations of the study……………………………………………………… 3-4
Chapter-2 “Overview of the organization” 5-15
2.1 History of BRAC Bank Limited……………………………………………….. 6
2.2 Vision of BRAC Bank Limited ……………………………………………….. 7
2.3 Mission of BRAC Bank Limited………………………………………………. 7
2.4 Goal of BRAC Bank Limited ………………………………………… 7
2.5 Core values of BRAC Bank Limited……………………………………… 7-8
2.6 Future plan……………………………………………………………………. 8
2.7 Product & service of BRAC Bank Limited…………………………………... 8-9
2.8 Five year’s financial summary………………………………………………… 9-15
Chapter-3 “Theoretical Aspects about Environmental Accounting” 16-24
3.1 Definition of Environmental Accounting …………………………………… 17
3.2 Advantage of Environmental Accounting…………………………………… 17
3.3 Reason for use……………………………………………………………….. 18
3.4 Need of Environmental Accounting…………………………………………. 18
3.5 Subfields/Types………………………………………………………………. 18-19
3.6 Legal status of Environmental Accounting and Reporting in Bangladesh…... 19-20

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3.7 Bangladesh Bank issues policy guidelines on ‘Environmental Accounting’… 20-22
3.8 Environmental related disclosures should be ………………………………… 22-23
3.9 Example of major environmental project information………………………… 23-24
Chapter-4 “Analysis and Findings” 25-34
4.1 Analysis of the Study………………………………………………………….. 26-31
4.2 Findings of the study…………………………………………………………... 31
4.3 Environmental Framework of BRAC Bank……………………………………. 32
4.4 Disclosure on Environmental Accounting of BRAC Bank Limited…………… 32-34
Chapter-5 “Recommendation and Conclusion” 35-37
5.1 Recommendation……………………………………………………………….. 36
5.2 Conclusion……………………………………………………………………… 36-37
References…………………………………………………………………………… 38-39

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 Chapter-1
Introduction

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1.1 Introduction

The term Environmental accounting was used for the first time in the year 1980s by Professor
Peter wood. Environmental accounting or environmental accounting is a new branch of
accounting that aims at accounting for the environment and its well-being. Although it is a
completely new field/branch of study and practice; it is soon gaining relevance because of its
importance. The Environmental accounting deals with related environment and social impacts,
regulations and restrictions, safe, environmentally sound and economically viable energy
production and supply. All of these should be essential parts of accounting and management
issues. It, of course, prevents corruption from our society. It also influences the organization’s
behaviors in confronting social and environmental responsibility issues. Sometimes, it is referred
to as resource accounting or integrated economic and environmental accounting. The study will
conduct on Environmental Accounting Reporting and Practice of BRAC Bank Limited.

1.2 Objectives of the study

Main objective of the study is Environmental Accounting and Reporting Practice of BRAC Bank
Limited.

The specific objectives are given below-

To know about Environmental Accounting.

To know the extent of Environmental accounting practices in Bangladesh.
To assess the present scenario of Environmental Accounting Practice of BRAC Bank
Limited
To make some recommendations for BRAC Bank Limited about Environmental
Accounting practices in Bangladesh context.
1.3 Scope of the study

The report will help know about Environmental Accounting Practice and Reporting in BRAC
Bank Limited. As Environmental Accounting is a new and vast concept to know and practice.
People can be known overview of the BRAC Bank Limited and Environmental Accounting in
Bangladesh at the same time. Although, there is some lack in practice as per guideline. The

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report will deliver some important matters about Environmental Accounting Practice status of
Bangladesh.

1.4 Methodology of the study

1.4.1 Sources of data

Mainly secondary data is collected and used for this term paper. The reason is that in our country
the use of green accounting is rare and most of the case, the concept is vague. To make this term
paper more revealing different published textbooks, related articles, journals, published research
papers and newspapers have been analyzed. Literatures were generally collected from the said
sources and the internet. As a result, a though review of literatures enabled me to make a
consistent presentation of the theme of the study.

1.4.2 Techniques of analysis

In this term paper will show five years financial statement of BRAC Bank and also showing
different kinds of percentage and also measure the bank’s Environmental accounting related
policy with the guidelines, rules and regulation set by government. And how BRAC Bank
Limited did its investment and where will show graphically year by year.

1.5 Limitation of the study

Numerous problems have been encountered during the accomplishment of the study. These
problems may be termed as limitations of the study, specified as follows:

Ø Time frame for the term paper was very limited.

Ø Secondary data was prepared for different purpose so, in the absence of field work and
primary data the study’s data is not adequate.

Ø Implementation time of following environmental accounting by all scheduled bank is not over
yet. That’s why information is not available of the bank.

Ø Inappropriate of related clear information regarding topic to use in the paper

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Ø Environmental banking initiatives of other banks are little, that's why good comparison of
bank to bank is not possible.

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 Chapter- 2
Overview of the organization

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2.1 History of BRAC Bank Limited

BRAC Bank was founded on 4 July 2001 to reach the large number of unbanked people which
were not covered by traditional bank. The main concept of the bank was to facilitate small and
medium enterprises (SME).BRAC Bank is a performance-driven organization, where its values
are at the core of every activity.

BRAC Bank Limited began with the vision to provide banking solutions to the ‘unbanked’ Small
and Medium Entrepreneurs. Taking inspiration from its parent organization BRAC, the largest
NGO in the world, BRAC Bank introduced small ticket loans to the small and medium
enterprises (SME), to specifically bring the grassroots entrepreneurs under the umbrella of
formal banking service. Approximately half of BRAC Bank’s lending portfolio comprises of
small and medium enterprises – popularly known as the ‘SME’.

In 2001 BRAC Bank did not start its journey like any other conventional bank. The visionaries
who led the bank realized that the previously neglected Small and Medium Enterprises (SME)
sector plays significant role in generating growth and creating employment in the country. Over
the past few decades, traditional banks were reluctant to invest in this sector. At a time when it
was almost impossible for the SME entrepreneurs to get financing from the banking sector in
Bangladesh, BRAC Bank stepped forward and came to finance these unbanked SME
entrepreneurs.

BRAC Bank is a performance driven dynamic organization, where its values founded at the core
of each and every activity as pillars. It is the only member of the Global Alliance for Banking on
Values (GABV) from Bangladesh. The Global Alliance comprises of 48 (as of May 2018)
financial institutions operating in countries across Asia, Africa, Australia, Latin America, North
America and Europe - serving more than 41 million customers, holding up to USD 127 billion of
combined assets under management and powered by a network of 48,000 co-workers.

BRAC Bank shares the 3P Philosophy – People, Planet and Profit with the other partners of
GABV. We believe that we have responsibility towards the people we work with and the places
we operate in. As a mission-driven bank, we prefer to work for the welfare of our people and
society

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2.2 Vision of BRAC Bank

Building profitable and socially responsible financial institution focused on market and business
with growth potential, thereby assisting BRAC and stakeholders to build a just, enlightened,
healthy democratic and poverty free Bangladesh.

2.3 Mission of BRAC Bank

 Sustained growth in small & medium enterprise sector.

 Continuous low-cost deposit growth with controlled growth in retail assets.
 Corporate assets to be funded through self-liability mobilization growth in assets through
syndications and investment in faster growing sectors.
 Continuous endeavor to increase non-funded income.
 Keep our debt charges at 2% to maintain a steady profitable growth.
 Achieve efficient synergies between the bank branches, SME unit offices and BRAC
field offices for delivery of remittance and Banks other products and services.
 Manage various lines of business in a full controlled environment with no compromise on
service quality.
 Keep a diverse, far flung team fully controlled environment with no compromise on
service quality.
 Keep a diverse, far flung team fully motivated and driven towards materializing the banks
vision and reality.

2.4 Goal of BRAC Bank

BRAC Bank will be the absolute market leader in the number of loans given to small and
medium sized enterprise throughout Bangladesh. It will be a world class organization in terms of
service quality and establishing relationships that help its customers to develop and grow
successfully. It will be the bank of choice both for its employees and its customers, the model
bank in this part of the world.

2.5 Core Values

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Our strength emanates from our owner-BRAC. This means, we will hold the following values
and will be guided by BRAC as we do our work.

 Value the fact that one is a member of the BRAC family.

 Creating an honest, open and enabling environment.
 Have a strong customer focus and build relationships based on integrity, superior service
and mutual benefit.
 Strive for profit & sound growth.
 Work as team to serve the best interest of our owners.
 Relentless in pursuit of business innovation and improvement.
 Value and respect people and make decisions based on merit.
 Base recognition and reward on performance.
 Responsible, trustworthy and law-abiding in all that we do.

2.6 Future Plan

BRAC Bank launched its new product future state account of the children below the age 18 at a
ceremony in the city.

It is a saving account, designed to encourage school children to develop savings habit and
enabling parent to save for their children future.

The account opening amount for future star account is BDT 200 and there is up to 8.0 percent
interest on account balance subject to fulfillment to criteria. The interest is accrued on monthly
average balance and applied to customer account yearly. There is no account maintenance fee
and service like internet banking, phone banking and SME banking are available.

2.7 Products & Services of BRAC Bank Limited

BRAC Bank Ltd. is currently focusing on different areas of business activities. These are:

 SME Banking
 Retail Banking
 Retail Distribution
 Corporate banking

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  Probashi banking
 Cards
 Treasury & financial institution
 Marketing & corporate affairs

2.8 Five Years Financial Summary

Particulars 2018 2017 2016 2015 2014

Financial Position

Cash and bank 37,253 37,681 31,188 38,526 41,668

balance
Money at call and - - - - -
short notice
Investments 25,765 24,966 22,488 19,779 23,899
Loans and 2,38,008 2,02,559 1,73,612 1,47,434 1,21,941
Advances
Fixed asset 4,301 4,275 3,113 2,937 2,893
Other Assets 10,023 9,642 18,142 15,754 14,192
Non-banking 66 63 62 62 -
assets

Total Assets 3,15,417 2,79,187 2,48,605 2,24,492 2,04,592

Borrowing 31,303 28,807 25,591 20,061 9,863

Convertible - 2,850 2,951 3,000 3,000
subordinate bonds
Money at call and - 2,700 1,304 3,780 1,220
short notice

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 Deposit and other 2,28,622 1,96,224 1,68,860 1,50,221 1,48,464
accounts
Other liabilities 23,853 22,615 28,459 28,616 24,290
Total Shareholder 31,638 25,991 21,441 18,815 17,755
equity

Total Liability and 3,15,417 2,79,187 2,48,605 2,24,492 2,04,592

Shareholder equity

AD ratio 82.78% 83.39% 83.47% 82.24% 72.13%

Off balance sheet 79,543 68,250 57,211 49,954 37,713
items
Interest earning 3,07,272 2,71,282 2,32,911 2,10,372 1,91,688
assets
Non- Interest 8,144 7,905 15,694 14,121 12,905
earning assets

Income Statement- Performance and Profitability

Total revenue 19,165 18,710 15,965 14,121 12,781

Interest income 25,090 20,498 17,842 17,373 16,794
Interest expense 11,574 8,351 7,036 8,699 9,192
Investment income 2,961 3,581 2,497 2,454 2,501
Commission 2,573 2,876 2,538 2,915 2,567
exchange
&brokerage
Non-interest 2,688 2,981 2,661 2,994 2,677
income
Total operating 10,343 9,660 7,952 7,286 6,635
expenses

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 Total income 30,739 27,060 23,000 22,820 21,973
Total expenditure 21,917 18,011 14,987 15,985 15,827
Operating profit 8,822 9,050 8,013 6,835 6,146
Profit before tax 8,072 7,897 7,148 4,621 4,163
Net profit after tax 5,547 5,250 4,460 2,436 2,091

Capital Measure

Authorized capital 20,000 12,000 12,000 12,000 12,000

Paid up share 10,725 8,552 7,104 7,093 7,093
capital
Risk weighted 2,33,713 2,09,351 1,88,431 1,66,622 1,33,930
assets
Common equity 28,780 23,534 19,707 17,115 16,005
Tier-1 capital
Total admissible 28,780 23,534 19.707 17,115 16.005
Tier-1 capital
Total admissible 3,175 3,100 3,389 3,260 3,712
Tier-2 capital
Total capital 31,937 26,634 23,095 20,375 19,718
Capital surplus 4,184 3,082 4,252 3,713 6,325
Common equity 12.31% 11.24% 10.46% 10.27% 11.95%
Tier-1 capital ratio
Total capital to 13.67% 12.72% 12.26% 12.23% 14.72%
risk-weighted asset
ratio(CRAR)

Assets Quality

Total loan and 2,38,008 2,02,559 1,73,612 1,47,434 1,21,941

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 advance
Classified loans 7,379 7,221 5,911 8,839 6,980
Provision for 2,504 2,341 2,091 1,528 1,208
unclassified
loans(GP)
Provision for 5,067 5,649 4,865 6,890 5,973
classified
loans(SP)
Provision for off 584 621 490 427 358
balance sheet items
Percentage of 3.10% 3.56% 3.40% 5.99% 5.72%
NPLs to total loan
& advance
NPL coverage ratio 123% 132% 143% 110% 121%
(incl. GP)
NPL coverage ratio 76% 86% 94% 86% 96%

Foreign Exchange Business

Import 1,10,575 98,332 72,142 57,220 45,555

Export 60,800 53,161 44,714 34,078 25,349
Remittance(inward 84,178 57,522 65,596 23,786 28,869
)
Guarantee 4,537 3,673 2,534 3,174 2,578

Operating Profit Ratio

Cost of fund 6.75% 5.69% 5.32% 6.64% 7.43%

Return on assets 1.87% 2.02% 1.89% 1.13% 1.09%

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 Return on equity 19.25% 22.14% 22.16% 13.32% 14.11%
Return on 9.00% 9.41% 9.20% 6.13% 7.13%
investment
Debt equity 8.97 9.74 10.59 10.93 10.52
ratio(times)
GP margin 62% 69% 69% 62% 58%
NP margin 18% 19% 19% 11% 10%

Management Efficiency Ratios

Operating income 2.70 2.74 2.51 1.83 1.86

per employee
Operating cost per 1.46 1.41 1.25 0.95 0.96
employee
Operating profit 1.25 1.32 1.26 0.89 0.89
per employee
PBT per employee 1.14 1.16 1.12 0.60 0.60
Cost to income 54% 52% 50% 52% 52%
ratio

Dividend Payment

Cash 0% 0% 10% 25% 20%

Stock 15% 25% 20% 0% 0%
Total dividend 15% 25% 30% 25% 20%

Shares Information

No. of shares 1,072,500,28 855,209,69 710,436,91 709,287,32 709,287,32

5 4 0 1 1

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 Earnings per share 5.17 4.91 5.23 3.43 3.19
Number of 17,459 15,593 15,560 18,418 26,952
shareholders
Market value per 72.70 108.40 64.10 48.70 37.20
share (year end) in
taka
Price earnings ratio 14.05 22.08 12.26 14.19 11.14
Net asset value per 29.50 24.23 25.07 26.53 25.03
share in taka
Market 77,971 92,363 45,610 34,542 26,385
capitalization at the
year end

Distribution Network

Number of 16,05,423 14,54,315 13,05,211 20,25,472 18,89,218

customers account
Number of loan 2,10,894 1,98,264 2,36,441 2,05,671 1,87,732
accounts
Number of deposit 13,94,529 12,56,051 10,68,770 18,19,801 17,01,486
accounts
Number of 119 118 111 106 96
branches
No. of unit offices 67 68 69 69 69
housed in SME SC
Number of SME 456 457 448 479 458
unit offices
Number of ATMs 448 447 469 457 374
Number of CDM 97 90 81 70 51
Number of 7,085 6,835 6,355 7,700 6,886

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 employees
Number of foreign 370 432 432 429 433
correspondents

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 Chapter- 3
Theoretical Aspects about
Environmental Accounting

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3.1 Definitions of Environmental Accounting

“Environmental accounting is a subset of accounting proper, its target being to incorporate both
economic and environmental information. It can be conducted at the corporate level or at the
level of a national economy through the system of integrated environmental and economic
accounting, a satellite system to the national accounts of countries.”

“Environmental accounting, as defined in these guidelines, aims at achieving sustainable

development, maintaining favorable relationships with the community and pursuing effective
and efficient environmental conservation activities. These accounting procedures allow a
company to identify the cost of environmental conservation during the normal course of
business, identify benefit gained from such activities, provide the best possible means of
quantitative measurement and support the communication of its results.”

“A flexible tool to provide information not necessarily provided in traditional managerial

systems. It can operate at the company level or at the level of the national economy.”

“Environmental accounting, also called social accounting or environmental accounting, is a type

of accounting that attempts to measure both the social and environmental impacts of business
decisions. Environmental accounting can be considered either a subset or superset of accounting
proper. It aims to incorporate both economic and environmental information.”

“In simple words, “Environmental accounting is a method of recording environmental element in

the books of accounts”. Environmental accounting is method of keeping records of
environmental goods and services.”

3.2 Advantages of Environmental Accounting

 Pollution control
 Sustainable development
 Projection, cost, estimating life cycle in the environment
 Product circulation, administration form environmental prospective
 Environmental-centered management system
 Assessing, testing and reporting performance of environmental activities

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3.3 Reason for using Environmental Accounting

There are several advantages environmental accounting brings to business; notably, the complete
costs, including environmental remediation and long term environmental consequences and
externalities can be quantified and addressed. More information about the statistical system of
environmental accounts is available.

3.4 Need of Environmental Accounting

1. To understand the overall environmental performance of organization

2. To identify environmental risk of the organization
3. To know the environmental policy of the organization
4. To measure environmental responsibilities of the organization
5. To assess annual environmental expenditure
6. Calculating costs and savings of environmental projects
7. To show eco-design projects
8. Environmental costs of a business unit may be significantly reduced, if not eliminated
9. Promoting a company having wide environmental attitude
10. Operating in a way that environmental damage does not occur

3.5 Subfields or Types

Environmental accounting is organized in three sub-disciplines: global, national, and corporate

environmental accounting, respectively. Corporate environmental accounting can be further sub

–divided into environmental management accounting and environmental financial accounting .

Global environmental accounting is an accounting methodology that deals areas includes

energetic, ecology and economics at a worldwide level.

National environmental accounting is an accounting approach that deals with economics on a

country's level. Internationally, environmental accounting has been formalized into the System of
Integrated Environmental and Economic Accounting, known as SEEA.SEEA grows out of the
System of National Accounts. The SEEA records the flows of raw materials (water, energy,
minerals, wood, etc.) from the environment to the economy, the exchanges of these materials

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with in the economy and the returns of wastes and pollutants to the environment. Also recorded
are the prices or shadow prices for these materials as are environment protection expenditures.
SEEA is used by 49countries around the world.

Corporate environmental accounting focuses on the cost structure and environmental

performance of a company.

Environmental management accounting focuses on making internal business strategy

decisions. It can be defined as: " the identification, collection, analysis, and use of two types of
information for internal decision making:

1) Physical information on the use, flows and fates of energy, water and materials (including
wastes) and

2) Monetary information on environmentally related costs, earnings and savings.

Environmental financial accounting is used to provide information needed by external

stakeholders on a company’s financial performance. This type of accounting allows companies
to prepare financial reports for investors, lenders and other interested parties.

3.6 Legal Status of Environmental Accounting and Reporting in Bangladesh

1. Ministry of Environment and Forests

2. Forest Department
3. Department of Environment
4. Planning Commission
5. Bank Companies Act, 1991
6. National Environment Policy, 1992
7. Financial Institutions Act, 1993
8. Securities and Exchange Commission Act 1993
9. Financial Institutions Act, 1993
10. Companies Act, 1994
11. National Environmental Management Action Plan, 1995

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 12. Environmental Conversion Act, 1995
13. Environmental Conversion Rules, 1997
14. Bankruptcy Act, 1997
15. Ozone Depleting Substances Rules, 2004
16. Environmental Court Act, 2010
17. Climate Change Trust Act, 2010
18. Credit Risk Management Industry Best Practices by Bangladesh Bank in 2010
19. Environmental Risk Management Guidelines, 2011
20. Policy Guidelines for Environmental Banking, 2011
21. Finance Act (changes from time to time)
22. Bangladesh Biodiversity Act, 2012
23. Securities and Exchange Rules
24. Bangladesh Bank Rules
25. Tax Ordinances
26. IFIC guidelines
27. IASC guidelines
28. FASB guidelines
29. BFRS guidelines

3.7 Bangladesh Bank issues policy guidelines on ‘Environmental Accounting’

The central bank of Bangladesh has issued policy guidelines for environmental banking aiming
to protect environmental degradation and ensure sustainable banking practices, officials said.
“Environmental banking policy needs to be covered through a timeframe which will be
segregated into three phases”, the Bangladesh Bank (BB), the country’s central bank, said in its
guidelines.

Phase-1

1. Policy formulation and governance

2. Incorporation of environmental risk in CRM

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 3. Initiating in-house environment management

4. Introducing environmental finance

5. Creation of climate risk fund

6. Introducing environmental marketing

7. Online banking

8. Supporting employee training, consumer awareness and environmental event

9. Disclosure and reporting of environmental banking activities

Phase-2

1. Sector specific environmental policies

2. Environmental strategic planning

3. Setting up environmental branches

4. Improved in-house environment management

5. Formulation of bank specific environmental risk management plan and guidelines

6. Rigorous programs to educate clients

7. Disclosure and reporting of environmental banking activities

Phase-3

1. Designing and introducing innovative products

2. Reporting in standard format with external verification

Under the guideline, the banks will formulate and adopt broad environmental or environmental
banking policy and strategy approved by their boards of directors.

The banks will approve a considerable fund in their annual budget allocation for environmental
banking. “Banks shall comply with the instructions stipulated in the detailed guidelines on

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environmental risk management (ERM) in consideration of a part of the environmental banking
policy”, the guideline said, adding that the banks will incorporate environmental and climate
change risk as part of the existing credit risk methodology prescribed to assess a prospective
borrower.

The guidelines also said the banks should take steps to save energy from corporate business
travel and encourage employees to purchase energy-efficient cars that can reduce gas and
petroleum consumption.

“Eco-friendly business activities and energy efficient industries will be given preference in
financing by banks. Environmental infrastructure such as renewable energy projects, clean water
supply projects, waste water treatment plants, bio-fertilizer plants should be encouraged and
financed by banks”, it added.

The banks should determine a set of achievable targets and strategies and disclose these in their
annual reports and websites for environmental financing and in-house environment management
as well.

The central bank will declare the names of the top ten banks for their overall performance in
environmental banking activities on its website, the guidelines said, adding that it would actively
consider environmental banking activities/practices of a bank while giving permission for
opening new bank branches.

3.8 Environmental related disclosures should be

1. Environmental pollution control including key performance indicators (KPI)

2. Sustainable development reporting

3. Environmental management

4. Environmental objective, target and achievement

5. Environmental related financial information

6. Stakeholder engagement

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 7. Negative information and information relating laws and regulation

8. Land remediation and contamination

9. Other environmental related disclosure

3.9 Example of major environmental project information

Name of bank Major environmental financing areas

Effluent treatment plant (ETP), biogas plant, solar home

ISLAMI Bank systems, solar panel trades, bio-fertilizer plants, tunnel kilns,
installation of zigzag kilns, waste and hazardous disposal
plants, waste paper recycling plants, waste battery recycling
plants, LED bulb production, safe/ clean water supply
projects, improved cooking stoves, environmental projects,
electricity generation from rice husks, rice bran oil
production, e-commerce and e-business promotions,
investing via online banking.
Solar energy, environmental projects, ETP, double hull oil
BRAC Bank tankers, environment-friendly brickfields, e-commerce and
e-business promotions, investing via online banking.
ETP, renewable energy, clean water supply, waste water
Exim Bank treatment plants, recycling of harmful waste, solid and
hazardous waste disposal plants, biogas plants, bio-fertilizer
plants, environment friendly brickfields, e-commerce and e-
business promotions, investing via online banking.
Renewable energy and carbon offset projects, reducing
Bank Asia energy and resource consumption, solar home systems,
consumption of water, solar energy, biogas, ETP, HHK
projects, greenhouse gas emission projects, waste
management, e-commerce and e-business promotions,
investing via online banking.

Page | 23
 ETP,HHK projects, solid waste management, energy and
Prime Bank water management, renewable energy projects,
environmental travel, e-commerce and e-business
promotions, investing via online banking.

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 Chapter-4
Analysis & Findings

Page | 25
4.1 Analysis of the Study
Environmental financing in 2018-

Aiding the socio-economic development of Bangladesh, BRAC Bank extends its financing
facility to clients whose activities reduce environmental harm, promote energy efficiency and
help communities vulnerable to climate change effects.

 ETP financing (43%)

 Environmental building (21%)

 Energy efficiency (32%)

 Renewable energy (2%)

 Recycling (2%)

Environmental financing in 2017-

The sustainable finance unit (SFU) has allotted more than BDT 5,400 million under
environmental budget for the year 2017, whereby the achievement rate is way more. Investments
areas are as follows:

 LEED certified environmental industry (19%)

 ETP construction (44%)

 Energy efficiency and capital machineries (18%)

 Fire door & Fire Fighting system

 LED bulb manufacture (19%)

 Plastic recycling plant

 Bio gas plant

Environmental financing in 2016-

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Environmental banking unit (EBU) has allotted more than BDT 5,000 million under
environmental budget for the year 2016, whereby the achievement rate is way more. BRAC
Bank financed around BDT 700 million in environmental sector. Investment areas are as follows:

 LEED certified environmental industry (18%)

 ETP construction (58%)

 Energy efficient capital machineries (19%)

 Fire door &Fire fighting system (14%)

 LED bulb manufacture (11%)

 Plastic recycling plant (17%)

 Hoffman Kin auto brick fields

 Bio gas plant

Environmental financing in 2015-

Environmental banking unit (EBU) made allotment of around BDT 5,500 million under
environmental budget for the year 2015, whereby the achievement rate is appreciable. The bank
has gone for direct environmental financing as well as provided working capital financing to
projects ETP, solar panels and double hull oil tanker.

Environmental financing in 2014-

The environmental banking unit (EBU) made allotment of around BDT 3500 million under
environmental budget for the year 2014, which was achieved successfully. BRAC Bank funded
direct environmental financing as well as provided working capital financing to projects ETP,
solar panels and double hull oil tanker. To explore new ventures in environment friendly brick
fields, GBU has conducted several field visits, meetings with existing and prospective
entrepreneurs, brick manufacturing associations, foreign and local consultants and central bank
officials. The outcome is positive and the banks aspire to see the fruition of this endeavor.

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BRAC Bank’s Environmental Banking Unit (E
(EBU) has been invested that data are showing
through graphs:

Years 2018 2017 2016

ETP financing 43% 44% 58%

ETP financing
70%

60%

50%

40%

30% ETP financing

20%

10%

0%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

Environmental building 21% 19% 18%

Environmental building
22%
21%
21%
20%
20%
19% Green building
19%
18%
18%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

Page | 28
Energy efficiency 32% 18% 19%

Energy efficiency
35%

30%

25%

20%

15% Energy efficiency

10%

5%

0%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

LED bulb manufacture 19% 11%

LED bulb manufacture

0.2
0.18
0.16
0.14
0.12
0.1
0.08 LED bulb manufacture
0.06
0.04
0.02
0
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

Plastic Recycling Plant 2% 17%

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 Plastic Recycling Plant
18%
16%
14%
12%
10%
8% Plastic Recycling Plant
6%
4%
2%
0%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

Renewal energy 2%

Renewal energy
3%

2%

2%

1% Renewal energy

1%

0%
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

Years 2018 2017 2016

Fire door &Fire fighting 14%
system

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 Fire door & Fire fighting system
0.16
0.14
0.12
0.1
0.08 Fire door & Fire
0.06 fighting system
0.04
0.02
0
2015.5 2016 2016.5 2017 2017.5 2018 2018.5

4.2 Findings of the study

The environmental accounting can uphold the environmental image of the bank. They can
provide more information
on regarding environmental accounting.
The BRAC Bank increases their environmental financing amount year by year, which will
be good for both the economy and the bank
bank.
The BRAC Bank does not invest sequentially in environmental financing sector. Rather the
bank invested in different sector in different year.
Environmental expenditures related with environmental accounting practice is not
calculated or taken into accou
account.
nt. The bank does not disclose these costs in their financial
statement.
Environmental accounting practice related guideline is not as effective as in Bangladesh.
Absence of proper monitoring system is another barrier to develop the application of
environmental accounting properly.
Environmental accounting practice involves cost. This cost is borne by banking companies
towards the environment.
This practice of BRAC Bank is under process in Bangladesh according to Bangladesh
Bank’s Environmental Banking guid
guideline.

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4.3 Environmental Framework of BRAC Bank:

The value BRAC Bank creates for the natural environment, through businesses we finance or
refrain from financing, investments towards decarbonizing the economy and any other
environmental degradation and by helping our customers to reduce and mitigate the impact of
climate change.

BRAC Bank is a planet caring bank. Its 3P philosophy defines environmental connection of the
bank. BRAC Bank promotes green banking and support green initiatives, through its social
works and banking, to do something for the Mother Nature. BRAC Bank invests 10% of its CSR
Budget in Climate Risk Mitigation & Adaptation Programs. Here are some of the initiatives:

 Creating customer awareness and reiterating commitment to green banking

 Tuning with Green Office guidelines
 Reduce, Reuse, Recycle
 Solarizing SME Unit Offices

4.4 Disclosure on Environmental Accounting of BRAC Bank Limited

Climate change represents the most serious phenomenon in today’s world. Across the globe,
relentless efforts are being made to measure and mitigate climate change risks. Bangladesh is
one of several nations to have made a commitment to controlling such threats. To supplement
governmental efforts, Bangladeshi banks assume a share of the ecological responsibility to
ensure a substantial reduction in carbon emissions. Banks’ internal operations have a limited
environmental impact compared to industrial sectors. However, their decisions can still affect the
environment considerably, particularly if they finance environmentally-irresponsible customers.
It is, after all, often banks who finance major industrial projects, some of which produce
abundant carbon emissions.

Banks, therefore, have a responsibility to balance sustainable economic development with

environmental protection when it comes to making investments. Here, the term ‘green banking’
is pertinent. This refers to activities that assist banks in reducing carbon emissions and
minimizing their carbon footprint. Green banks finance clean technologies and projects seeking
to mitigate pollution. ‘Green banking’ is an element of ‘sustainable banking,’ which means using

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money in an environmentally, socially and culturally conscious manner, fulfilling the needs of
today without endangering the generations of tomorrow. Now, ecological preservation and
sustainable development are cornerstones in the fight against the negative impacts of climate
change.

The United Nations’ Sustainable Development Goals (SDGs) reflect an agenda of worldwide
significance. Along with most nations, Bangladesh is making a determined effort to attain these
SDGs at the national level. This undertaking demands co-operation from various stakeholders.
Among them, the banks and financial institutions that underpin the economy play a central role.
The two basic tenets of sustainable banking are as follows:

• Environmentally-friendly or ‘Green’ banking

• Corporate social responsibility (CSR)

Cohesive endeavors from banks and financial institutions alike can safeguard long-term
sustainability. Bangladesh Bank encourages banks’

 Green Banking Units (GBUs) and CSR desks to cooperate toward making a
sustainable impact BRAC Bank has acted accordingly and established a Sustainable
Finance Unit (SFU) as part of its credit risk management, thereby meeting regulatory
requirements and boosting the efficiency of streamlining processes at the same time.
 Purpose and Scope This disclosure outlines the banking philosophy to which all of our
daily operations adhere. Simultaneously, it contributes toward our regulatory compliance.
Crucially, we strictly abide by regulatory guidelines and follow international best
practices in our green banking. In 2018, we took some bold steps in this regard. The new
initiatives introduced not only cater to the expectations of our key stakeholders and
shareholders, but they also harness the economic growth and sustainable development of
Bangladesh as a whole.

Banks and financial institutions can contribute significantly to ensuring the planet’s
sustainability. BRAC Bank’s efforts in this regard are notable, especially in its green banking
and CSR activities. BBL asserts that both of these elements are imperative for the long-term
stability of the financial sector. By acting responsibly, BRAC Bank’s green steps of today will

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make for a greener tomorrow. Our proactive measures reduce our carbon footprint and increase
environmental and ecological awareness. Green banking encourages clients to be more
environmentally conscious, and to contribute to making the world a safer and healthier place in
which to live. Opportunities are abundant in renewable energy technology, as well as reduced
carbon transportation. These can be fully grasped when all sectors of the economy pull together
in the same direction. It is here that banks play a leading role. As it gains popularity in
Bangladesh, BRAC Bank avidly pursues ways of becoming a national pioneer in green banking.

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 Chapter-5
Recommendation &
Conclusion

Page | 35
5.1 Recommendation

Following recommendations are put forward for improving Environmental Accounting practices
in BRAC Bank Limited.

 A careful assessment of cost of environmental damages and benefits can be introduced to

find the safe limit of environmental degradation and required level of development.
 Non- marketed environmental goods and services should be valued for improving
environmental accounting practice. The valuation of environmental goods and services
will help improving environmental accounting practices
 Both the government and private sector must come forward for improving Bangladesh
performance in environmental accounting and introducing environmental accounting
practice in Bangladesh.
 Proper monitoring should be made on a regular basis in the application of environmental
accounting. The Bank who is already practicing environmental accounting to some extent
should come forward and make more contribution in environmental accounting practice
internally. They should expend more in preserving and protection of the environment.
 Environmental accounting should be presented in the financial statements according
disclosure requirement in Bangladesh is the disclosure of expenditures on energy use.
 Even both the government and Bank should play more effective role to increase
environmental accounting practice.

5.2 Conclusion

Environmental Accounting and Reporting Practice of BRAC Bank Limited is still a little bit
unclear. The bank does not report that investment and accounting related information publicly.
This paper discloses about environmental accounting and its practice in BRAC Bank Limited.
Environmental accounting is a recent phenomenon which is related to environmental information
and environmental eco-system. The study has been able to access Environmental Accounting
practice scenario of BRAC Bank Limited. It reflects the environmental cost and reporting,
environmental sound management and administrative system in our country. BRAC Bank
Limited since five to six years how much investment has made on environment has been focused
on the study. It focuses on improving environmental accounting practices and environmental

Page | 36
quality. At present time the developed world is concerned about the state of environmental
accounting. It is an important tool for understanding the natural environmental role in the
economy and provides adequate data on contribution of natural resources on the economy. In
developing countries like Bangladesh, greening the national accounts is necessary both for
environmental and economic policy formulation. Economy of Bangladesh is based on natural
resources and featured by high population growth and pressure on the natural resources. It is a
good step of BRAC Bank Limited for the countries Welfare. So in Bangladesh misuse and
exhaustion of natural capital of the country will resulting extended valuation of national income
figures. More emphasis should be places for introducing and improving environmental
accounting practices. As a result, some others Banks and organizations will be motivated to
follow Bangladesh Bank’s guidelines for practicing and contributing in Environmental
Accounting.

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