Loading...

Policy approach for green & inclusive business

| Updated: July 16, 2022 20:56:27


A green textile factory in Bangladesh. 	—BGMEA Photo A green textile factory in Bangladesh. —BGMEA Photo

Green resilient and inclusive development has become a prime driving force towards sustainable development worldwide. The economy of Bangladesh has been progressing rapidly, where business developments have been playing notable roles. However, the booming business sectors are causing a massive depletion of natural resources, greenhouse gas erosion, and toxic waste disposal, which further can cause uncontrolled degradation of air, soil, and water. Greening of businesses is a necessity that received particular attention in the context of the Covid-19 pandemic. However, focusing on the green by excluding the poor can create resistance and make environment-friendly business models increasingly challenging to implement.

On the other hand, inclusion without greening can lead to pollution, ecosystem decay and depletion of natural resources - all of which ultimately harm the poor. Scarcity of natural resources, increase in the world population and the decrease in biodiversity play an important role in the formation of concerns about the ecosystem. In response to these, green, resilient and inclusive development approach necessitates a transformative tactic to the existing economic model through a stronger emphasis on environmental sustainability, inclusivity, and green entrepreneurship development. 

Inclusive business- the inclusion of the poor as consumers or producers - and green business - reducing environmental risks are often highly interlinked. These businesses and entrepreneurs target poverty reduction by including the poor as consumers or producers and greening to decrease ecological impacts with mutually supportive objectives. One critical challenge for these entrepreneurs is to find a sustainable business solution both from an environmental and the financial point of view and also pro-poor. The outcomes of the pandemic have made the situation even more complex. The economic fallout from Covid-19 accentuates existing inequalities, and large segments of the population, women, older persons, persons with disabilities and migrants and refugees, have been disproportionately impacted. The situation demands more allocation of resources to green businesses for inclusive, resilient and green recovery, and ultimately for a sustainable future. This is true for the global developing and emerging economies, including Bangladesh.

Policy and planning documents of the Government of Bangladesh (GoB) rightly recognised the necessity of green and inclusive growth in the context of Bangladesh, and thus identified the prospects and areas of opportunities and attempted to handle the associated challenges. Bangladesh is fully committed to achieving SDGs, and these are reflected in the policy documents and strategies of the country. In line with Paris Agreement (PA), adopted by COP21 in 2015, Bangladesh submitted its Nationally Determined Contributions (NDCs) Roadmap and Action Plan in 2018; as part of the global initiative, Bangladesh updated the NDC incorporating other sectors (updated in August 2021). The updated NDC covers energy, industrial processes and product use, agriculture, forestry and other land use and waste.

Bangladesh Delta Plan (BDP) 2100, published in 2018, is probably the most directly related policy document connected with the green and inclusive business in the context of Bangladesh.   BDP 2100 aims to ensure long-term water and food security, economic growth and environmental sustainability while effectively reducing vulnerability to natural disasters and building resilience to climate change and other delta challenges. To reach that vision, it defines short to medium-term goals to achieve upper-middle-income status and eliminate extreme poverty by 2030. It also set a target of being a prosperous country around 2041 with the longer-term challenge of sustainable management of water, ecology, environment and land resources in the context of their interaction with natural disasters and climate change. BDP 2100 identified macroeconomic strategy covering delta plan financing need, public sector financing, the beneficiary pays principle, a resource from Green Climate Fund, and private sector financing to attain the goals. Sectoral strategies have been identified in BDP 2100 under broad heads of water, ecology and biodiversity, agriculture, fisheries, and livestock, land management, internal water transport, blue economy, renewable energy, and earthquakes. The agriculture sector has been termed as the most vulnerable to climate change, and it has been recognised that several additional initiatives are necessary to cope with the growing risk of climate change for agriculture and livelihood. Necessity or investments and institutional arrangements and coordination are rightly emphasised in the BDP document.

Eighth Five Year Plan (July 2020-June 2025) is instrumental in attaining Sustainable Development Goals (SDGs), realising Bangladesh Delta Plan (BDP)-2100 for smooth transition following the LDC graduation. The main objective of the Eighth Five Year Plan is to start the implementation of PP2021-2041 in a way that brings Bangladesh closer to the goals of attaining SDGs targets through managing the challenges of Least Developed Country (LDC) graduation, which will also help to eliminate extreme poverty by 2031. The Eighth Five Year Plan centres around six core themes. These are (i) rapid recovery from COVID-19; (ii) GDP growth acceleration, employment generation and rapid poverty reduction; (iii) a broad-based strategy of inclusiveness; (iv) a sustainable development pathway that is resilient to disaster and climate change; (v) improvement of critical institutions necessary to lead the economy to Upper Middle Income Country status by 2031; and (vi) attaining SDGs targets and mitigating the impact of LDC graduation. These are associated with sustainable growth, where green and inclusive business development will have tremendous implications.

Agriculture and small enterprises or SMEs are the economic fronts at the centre of inclusive businesses and key drivers in most developing countries like Bangladesh. National SME Policy 2019 of Bangladesh has been formulated with a specific action plan and strategies built upon access to finance, technology, innovation, market, education, training, business support services and information. The strategy of SME Policy 2019 has direct potential implications for green and inclusive business: improving the business environment and institutional framework; increasing the scope of the SME sector to receive institutional funding facility; support to increase competitiveness capability and access to SME products market; support short-term, low-cost SME business support services to the start-ups; develop and expand SME cluster-based business network; increase the use of ICT and other technologies; expansion of skill-developing education and training programs for entrepreneurs; expanding women-focused entrepreneurship development programs and providing specialised services; establishing SME as backward and forward linkage enterprises to the large industries and ensure the protection of SME products; establish environment-friendly SME industries and develop better capacity for waste management; Institutionalise SME statistics and conduct research and development activities. National Agriculture Policy 2018 has been formulated with the broad goal of safe and profitable agriculture and sustainable food and nutrition security. Issues like inclusive participation, adoption of technology, environment-friendly production process and climate change concerns, need for agricultural marketing, and research and development have received emphasis in this national policy document.

Aligned with the GoB's policy approach, Bangladesh Bank installed a policy and regulatory framework to support green and inclusive financing. Policy and financing activities in financial inclusion, agricultural and rural financing, CMSME financing, green financing, and CSR activities are allied with green and inclusive business development. Bangladesh Bank (BB) formulated a Sustainable Finance Policy combining green banking and relevant financing associated with agriculture, MSMEs and other areas of responsible finance. The central bank introduced several refinancing schemes and identified green and inclusive finance products facilitated by the banks and financial institutions to support green and inclusive businesses in the country. National Financial Inclusion Strategy is another recent national policy document (adopted in August 2021) that aims to implement several inclusive and environmentally sustainable action plans. These include reaching all with financial services by June 2026; expanding the scope and practice of 'Cluster' and 'Value Chain' financing; developing a framework for diversifying financing instruments and financing options for MSMEs and low-income households; introducing 'Credit Guarantee Fund' for CMSME finance, agricultural finance and green finance;  expanding the scope of usage alternatives investments like venture capital fund, impact fund, CMSME finance, farm finance and green finance at the remote rural level through appropriate capital market instruments. In addition, policy frameworks associated with microfinance activities and micro insurance have implications for the country's green and inclusive business ventures.

The GoB has been pursuing efforts to create a supportive policy environment to promote green and inclusive entrepreneurship and businesses with the broad goal of green and inclusive growth. With the same objectives, different ministries, central banks, and government agencies also have direct interventions and donor-funded projects. However, it is a multi-stakeholder approach to optimise benefits. There must be adequate responses and activism on the part of entrepreneurs and consumers to the policymakers' green and inclusive policy and incentive frameworks. Participation of the local level entities and NGOs is particularly crucial for attaining the responsible goal of greenness and inclusivity of businesses. Several donor agencies and inter-governmental organisations are already engaged in projects related to improving the livelihood of the marginalised population and resource management that have direct and indirect impacts on pulling green and inclusive businesses. Civil society organisations, research and academic institutions, and media support the process as pressure and advocacy groups in this progression.

 

The writer is a Professor, Bangladesh Institute of Bank Management [email protected] 

 

Share if you like