Analysis of Listed Banking Companies in Bangladesh\'s Environmental Accounting and Reporting Practices

Liam Patterson^*
*Correspondence: Liam Patterson, Department of Accounting, University of Valencia, 46010 València, Spain, Email:

Keywords

COVID-19 • Environmental accounting • Banking sector • Regulatory frameworks

Introduction

The integration of environmental considerations into business practices has become a focal point in the global business environment. Environmental Accounting and Reporting (EAR) provide essential information about the environmental impacts of an organization's activities, facilitating sustainable decision-making and enhancing transparency. The banking sector, although not directly involved in industrial pollution, plays a significant role in financing environmentally impactful projects, thereby influencing environmental sustainability indirectly.

In Bangladesh, a developing economy with a rapidly expanding financial sector, the role of banks in promoting sustainable development is increasingly recognized. This study examines the environmental accounting and reporting practices of listed banking companies in Bangladesh, aiming to evaluate how these institutions disclose their environmental impacts and sustainability efforts. Through a comprehensive analysis of annual reports, sustainability reports, and other relevant documents, this paper seeks to assess the current state of EAR practices, identify key drivers and barriers, and propose recommendations for enhancing EAR in the banking sector [1].

Literature Review

Environmental accounting and reporting have their roots in the broader concept of Corporate Social Responsibility (CSR), which encompasses economic, social, and environmental dimensions. The Global Reporting Initiative (GRI) and other international standards provide frameworks for EAR, encouraging organizations to disclose their environmental impacts transparently. In the context of the banking sector, EAR is crucial as banks can influence environmental outcomes through their lending and investment decisions. Research indicates that banks globally are increasingly adopting EAR practices, driven by regulatory requirements, stakeholder expectations, and the need to mitigate reputational risks. However, the extent and quality of EAR vary significantly across regions and institutions [2].

Studies on EAR practices in developing countries, including Bangladesh, are relatively sparse. Existing research highlights that while some banks in Bangladesh have begun to integrate environmental considerations into their reporting, many still lag in terms of comprehensiveness and transparency. Factors such as regulatory pressure, stakeholder activism, and organizational culture are identified as critical determinants of EAR practices in the banking sector. An analysis of the annual reports and sustainability disclosures of listed banking companies in Bangladesh reveals a diverse range of EAR practices. Some banks provide detailed accounts of their environmental policies, initiatives, and impacts, while others offer minimal or no information. The following sections explore various aspects of EAR practices among Bangladeshi banks [3].

Discussion

Regulatory frameworks play a crucial role in shaping EAR practices. In Bangladesh, the Bangladesh Bank (the central bank) has issued guidelines on green banking and CSR, encouraging banks to adopt sustainable practices. However, compliance with these guidelines varies, with some banks adhering closely to the directives and others demonstrating only nominal compliance. Stakeholders, including investors, customers, and civil society organizations, are increasingly demanding greater transparency and accountability regarding environmental impacts. Banks that face higher stakeholder pressure tend to disclose more comprehensive environmental information. This trend aligns with the global movement towards greater corporate transparency and accountability [4].

The commitment of top management to sustainability significantly influences EAR practices. Banks with proactive leadership and a strong organizational culture oriented towards sustainability are more likely to implement robust EAR practices. These banks often integrate environmental considerations into their core business strategies and operations. The absence of standardized reporting frameworks specific to the banking sector in Bangladesh leads to inconsistencies in EAR practices. While international standards such as the GRI provide general guidelines, there is a need for sector-specific standards that address the unique environmental impacts of banking activities. Many banks lack the necessary awareness and expertise to implement comprehensive EAR practices. This gap underscores the need for capacity-building initiatives, including training programs and knowledge-sharing platforms, to enhance the understanding and skills of banking professionals in EAR [5].

Resource constraints, particularly in smaller banks, pose significant challenges to the adoption of EAR practices. Implementing robust EAR systems requires financial and human resources, which may be limited in smaller institutions. This disparity highlights the need for tailored support mechanisms to assist smaller banks in enhancing their EAR practices. Regulatory bodies should strengthen existing guidelines and introduce mandatory reporting requirements specific to the banking sector. This approach would ensure consistency and comprehensiveness in EAR practices across the sector. Banks should actively engage with stakeholders to understand their expectations and incorporate their feedback into EAR practices. This engagement can be facilitated through regular consultations, surveys, and transparent communication channels [6].

Conclusion

The analysis of listed banking companies in Bangladesh reveals a varied landscape of environmental accounting and reporting practices. While some banks have made significant strides in disclosing their environmental impacts, others lag, indicating the need for a more standardized and comprehensive approach to EAR. Strengthening regulatory frameworks, enhancing stakeholder engagement, building capacity, leveraging technology, and promoting a sustainability-oriented culture are critical steps towards improving EAR practices in the banking sector. The findings of this study underscore the importance of EAR in promoting sustainable development and highlight the potential of the banking sector to drive positive environmental change. By adopting robust EAR practices, banks in Bangladesh can enhance their transparency, accountability, and contribution to environmental sustainability, ultimately supporting the broader goals of sustainable development.

Acknowledgement

None.

Conflict of Interest

None.

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