Sustainability is notan only environmental issue, it also takes into account economic & social issues, labour practices, human rights, economic performance, community, society, corruption, corporate governance and responsibility of product & services. And a sustainable global economy is not a luxury. Without a sustainable business model, environmental and social issues will continue to badly impact our economy and compromise for our future needs. The planet and society need a sustainable global economy and an organization needs at first a long-time strategy and success. How do it get started? The change to a sustainable economy requires organizational change. To drive change,the organization needs to set goals and measures how the organization will forward.
Sustainability Reporting is a key tool to help the organization to set goals, measure progress and manage sustainability within the organization. Reporting on the organization’s sustainability performance will give internal and external stakeholders a clear idea of its impact and can increase the efficiency and improve the performance. And reporting enables the organization to forward into successful sustainable future. In a word, a sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. A sustainability report also presents the organization’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy. Sustainability reporting may be called in different names such as, a nonfinancial reporting or triple bottom line reporting (i.e. People, Planet and Profit) or corporate social responsibility (CSR) reporting, and more.
As the key catalyst of growth and development, banking institutions remains at the centre of an economy. In the economic development of a country holding the key stake, commercial banks remain at the central of entire financial activities. Keeping position at the centre of all economic activities and while patronizing the industrialization, banks have become accountable for the impacts of the industries on the communities and environment. In line with the global development, the commercial banks of Bangladesh and other business bodies as well have been encouraged to take up the concept of sustainability reporting as a cutting- edge technology within a very short span of time. As a facilitator of social and environmental disclosure of the companies, sustainability reporting is anticipated to help cater the confidence of the stakeholders of commercial banks.
Bangladesh Bank as the regulatory authority for the commercial banks in Bangladesh has already set down to report sustainability reporting following the Global Reporting Initiative (GRI) guidelines. Sustainability reporting is a concrete tool that reinforces transparency of the private sector commercial banks and it builds an enabling environment towards achieving Sustainable Development Goals (SDGs) as well. GRI’s standard guidelines have been considered in Bangladesh as standard one and it has been designed to assess how sustainability reporting impacts sustainable development in banking industry of the country that can also focus to formulate future plan for a sustainability reporting culture for banks in Bangladesh while stepping towards a ‘sustainable tomorrow’.
On February 27, 2011, a policy has been issued entitled ‘Guidelines for Green Banking’ by Bangladesh Bank to be followed by the scheduled banks. As per the guidelines, it is provided that for the operating commercial banks to produce their sustainability reporting for their stakeholders under Independent Annual Sustainability Report (IASR) following Global Reporting Initiative (GRI) principles which is an internationally accepted format. As such, all commercial banks and NBFIs in Bangladesh are required to prepare and publish annual sustainability report (ASR) following GRI or any other international guideline. To monitor the activities of banks and NBFIs, Sustainable Finance Unit (SFU) has already been formed in Bangladesh Bank.
Therefore, top managements of Bangladeshi commercial banks and thorough engagement of key stakeholders are intended to reinforce their effort to undertake more organized social accountability for sustainable development. Sustainability reporting has now become a mainstream activity among the financial institutions globally, but most of the banks in Bangladesh are not practising the reporting system known as Independent Annual Sustainable Reporting.
A recent study shows that only 12% banks reported sustainability separately in the annual report according to GRI reporting guideline, but 39% banks though disclosed report of sustainability in the annual report separate it was found without following GRI reporting guidelines and 49% banks did not disclose the separate sustainability report in annual report which signifies the increasing trend in every phase.
Mentionable that Prime Bank Limited has been publishing Sustainability Report since 2013 and the Bank has expanded its Sustainability Reporting scope to provide how Prime Bank sustainability strategic approach align with the Sustainable Development Goals (SDGs). Prime Bank Limited achieved “GOLD RANK” in Asia Sustainability Reporting Rating 2018 by National Centre for Sustainability Reporting (NCSR), Indonesia. The Bank has also published Sustainability Report for the year 2018 under GRI Standards (as per new rules) first time in Bangladesh.
As long as the marketing moving from traditional to digital, the profit-centric business decisions are gradually shifting from exclusive to inclusive, from vertical to horizontal, from individual to social. While getting indulged in the society including its social and natural resources, the responsibility of banking sector towards the society has also been multiplied. Banks are entrusted to offer long term protection for the society which is a greater responsibility in comparison to that of the other businesses who carry fewer responsibilities to the sponsors.
Accordingly, this environmental concern has become the most important issue for banks and sustainability reporting has been branded as one of the most important part for banking sector since the banking activities have undeviating effect to the economic factor and local community. Economic growth is strongly relevant with the growth of banking sector and through the sustainable development in banking sector, the local community is going to get contributed. The state is encouraged to promote sustainability reporting more from its political philosophy than profit orientation.
Based on the results of recent study, more banks should be reported economic indicators such as community investments, climate change risks, and climate change financial implications, defined benefit plan liabilities, how the obligations are to be settled regarding defined benefit plan and government funds, compared to environmental indicators.
There should have a strong commitment to the bank authority regarding sustainable disclosure through sustainability reporting towards sustainable development in banking sector in Bangladesh, otherwise it will never be possible to implement this practice. Stakeholders’ engagement is also to be ensured. Banks as the key stakeholder are required to render full support to sustainability reporting that also require the focus of top management of the organizations, hence, the central bank is expected to come up with special programs for the top bodies. Investors’ and customers’ awareness regarding sustainable disclosure on sustainable development is the key component for sustainable reporting in a standard way.
Awareness to be raised among the bank facility availing entities to make them understand about the significance of sustainability and encourage them maintaining relationship with the banks with sustainable development practices. Policy analysis is also recommended to combine the green banking reporting and sustainable reporting together to prepare a standard reporting guidelines leaving no distinguishing factors between the two standards to reach the ultimate goal of development of the country in a sustainable way to build a ‘sustainable tomorrow’ and a bank, as corporate citizen, to be remembered always this ancient Indian proverb, “Treat the earth well: it was not given to you by your parents, it was loaned to you by your children.”
Md. Touhidul Alam Khan is Deputy Managing Director & Chief Business Officer of Prime Bank Limited. He is the fellow member of Institute of Cost & Management Accountants of Bangladesh (ICMAB) and the first Certified Sustainability Reporting Assurer (CSRA) in Bangladesh.