By Naima Sultana
Green financing has become a critical imperative for Bangladesh, a nation acutely vulnerable to the impacts of climate change. Despite contributing minimally to global greenhouse gas emissions, Bangladesh bears a disproportionate burden of its consequences from recurring cyclones and floods to riverbank erosion, droughts, heatwaves, landslides, and increasingly prolonged summers.
According to the Global Climate Risk Index 2024, Bangladesh ranks as the ninth most disaster-prone country globally, a stark indicator of its heightened exposure to both natural calamities and climate-induced disruptions.
In this context, prioritising green finance is not merely an option; it is a necessity. Green finance mobilises essential resources for climate adaptation initiatives, such as resilient infrastructure, while simultaneously supporting mitigation efforts through investments in low-carbon technologies. By championing renewable energy, including solar, wind, and bioenergy, it reduces dependence on expensive, environmentally damaging fossil fuels.
Moreover, green financing contributes to achieving energy security and widening access to sustainable energy. It fosters environmentally conscious urban development, including mass transit systems, energy-efficient buildings, and waste-to-energy initiatives. It also incentivises private sector participation by encouraging financial institutions to embed environmental considerations into their lending decisions. Instruments such as green bonds and sustainability-linked loans are paving new pathways for sustainable investment.
According to the latest report from the Bangladesh Bank, during the 2023 financial year, banks disbursed Tk 126.41 billion in green finance, while non-bank financial institutions (NBFIs) accounted for Tk 23.58 billion. Green finance constituted 5.84 percent of total term loan disbursements.
At present, banks are financing a diverse range of projects aimed at promoting energy and resource efficiency, effective liquid waste management, circular economy initiatives, LEED-certified factories, green CMSMEs, and ICT-based innovations. BRAC Bank has emerged as one of the country’s leading sustainable financial institutions. Other notable contributors include Eastern Bank PLC, Prime Bank PLC, and Bank Asia PLC.
Yet the pressing question remains: is this sufficient? The short answer is no. More needs to be done. As the world hastens its efforts to combat climate change and foster a more inclusive economy, an emerging force at the intersection of sustainability and technology is gaining momentum — Green Fintech.
This rapidly expanding sector is revolutionising the way capital flows, carbon footprints are monitored, and investment decisions are made. Its ultimate aim is to catalyse environmental and social progress. From mobile applications that incentivise eco-friendly behaviour to blockchain-enabled carbon markets, Green Fintech is no longer a niche concept; it is fast becoming a global necessity.
Bangladesh has immense potential to flourish in this space. Numerous fintech firms are actively seeking financing aligned with Environmental, Social, and Governance (ESG) principles. As Bangladesh transitions from its Least Developed Country (LDC) status, export-oriented industries will increasingly face demands from international buyers to adopt environmentally sustainable practices.
In this landscape, ESG ratings will become a critical factor for exporters. Investments in factory upgrades to meet environmental standards will be inevitable. However, the availability of innovative financial instruments dedicated to environmental sustainability remains limited. This underscores the need for regulators and financial institutions to devise new, creative mechanisms to attract investors.
The question then arises why is now the most opportune moment for green finance? The urgency could not be more pressing. The United Nations (2023) has warned that, without immediate and substantial reductions in global greenhouse gas emissions, the planet is likely to surpass the 1.5°C warming threshold by 2035, an irreversible tipping point.
Green Fintech addresses this urgency by unlocking large-scale private capital. Platforms such as green crowdfunding sites and ESG investment apps channel funding into areas like renewable energy, sustainable agriculture, and climate-resilient infrastructure. These tools are democratising finance, empowering not only institutions but also ordinary citizens to make climate-conscious investment choices.
The sector is also responding to growing demands for transparency and accountability. With increasing scrutiny around greenwashing where organisations make exaggerated or misleading environmental claims Green Fintech offers solutions such as real-time impact tracking, ESG audits, and blockchain-verified disclosures (FSCA, 2024).
In Southeast Asia, adoption is gaining pace. Singapore has committed to issuing up to SGD 35 billion in green bonds by 2030. Malaysia is advancing climate-aligned finance through its Sustainable and Responsible Investment Sukuk framework. Bangladesh has a compelling opportunity to follow suit.
Nevertheless, the path forward is not without obstacles. Challenges abound. Greenwashing continues to erode trust. Fragmented ESG standards make benchmarking and accountability difficult. Regulatory ambiguity slows adoption, as global financial institutions grapple with divergent policies.
Meanwhile, cybersecurity and data privacy concerns compound the complexity. As financial services become increasingly tech-reliant, robust safeguards will be essential.
The integration of Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) promises to enhance real-time sustainability tracking and enable tokenised ESG assets. The rise of Decentralised Sustainable Finance (DeSusFin) could usher in peer-to-peer green investing, circumventing traditional intermediaries and creating novel funding streams for global climate action.
Public-private partnerships will be vital to scaling these innovations. Governments must provide fiscal incentives and clear regulatory frameworks, while tech firms must prioritise ethical innovation that aligns with equity and environmental integrity.
Green Fintech is not a passing trend; it is a transformation. It possesses the potential to reorient global finance from a driver of environmental degradation to a force for regeneration. As we enter a decisive decade for climate action, the role of finance has never been more pivotal or more promising.
For Bangladesh, Green Fintech presents a unique opportunity to align its digital transformation with its urgent climate agenda. As a climate-vulnerable country with a burgeoning fintech ecosystem, Bangladesh stands at a strategic crossroads. By embedding environmental accountability into financial products such as green microloans, digital crop insurance, and carbon-offset payment systems — the country can empower both rural and urban communities to build climate resilience.
With enabling policy frameworks, public-private collaboration, and an emphasis on inclusive innovation, Green Fintech can become a cornerstone in achieving Bangladesh’s Vision 2041 and the Sustainable Development Goals (SDGs).
The Bangladesh Bank has already taken commendable steps, including issuing green banking guidelines, launching refinancing schemes, and developing a green taxonomy to steer investments towards environmentally sound sectors. These efforts align Bangladesh’s financial architecture with its commitments to the SDGs and the Paris Agreement. They also enhance the nation’s access to international climate finance and bolster its global reputation as a responsible development partner.
The time to act is now decisively and innovatively. Green finance is no longer a choice; it is an obligation to the planet and to future generations.
