UCB’s commitment to inclusive, low-carbon growth

At UCB, we define sustainable finance as more than just a buzzword—it is the provision of financial products and services that explicitly integrate environmental, social, and governance (ESG) considerations.

For me, sustainable finance is about supporting economic growth that is resilient, inclusive, and climate-aware. In Bangladesh, a country that is both rapidly developing and highly vulnerable to climate risks, this means prioritising investments in low-carbon energy, resilient infrastructure, sustainable agriculture, and social projects. The goal is clear: reduce vulnerability while supporting job creation and financial inclusion.

Infograph: TBS

Bangladesh has made a solid start on the regulatory front. The Bangladesh Bank's Sustainable Finance Policy, along with its related circulars, has created a strong foundation, setting disbursement targets and Environmental and Social Risk Management (ESRM) expectations. These guidelines signal the priority of sustainable finance and help mobilise banks like ours. Yet, while the policy is essential, it alone cannot scale finance at the pace our country needs. Complementary measures are needed: clearer incentives for long-tenor green projects, secondary markets for green bonds, and simplified procedures for climate-focused initiatives. Policy is improving, but we still have a long way to go.

Demand for green and ESG-linked financial products is steadily growing. Corporates and institutional investors are increasingly receptive to sustainability-linked instruments; Bangladesh even witnessed its first sustainability-linked bond issuance in 2024. At the retail level, inclination in green loans, green mortgages, and ESG-linked products is rising as awareness grows and regulatory nudges encourage adoption. Still, the market is nascent compared to developed economies, and appetite varies depending on the sector and the borrower's credit profile.

Infograph: TBS

There are, of course, significant barriers. Long-term local currency financing for capital-intensive green projects remains limited. Many projects carry perceived higher upfront costs or technology risks. Technical capacity gaps exist for project preparation and ESG assessment. Secondary markets for tradable green instruments are weak, and macroeconomic factors, such as currency volatility and rising costs of capital, often deter long-tenor financing. These challenges are not unique to Bangladesh—they mirror trends across the region—but they are real obstacles we are working to overcome.

At UCB, we have integrated ESG criteria directly into our lending and investment decisions. Our Environmental and Social Due Diligence (ESDD) checklist is embedded in our core credit risk management framework. It includes an exclusion list, screening and eligibility criteria, DoE categorisation, Environmental and Social Action Plans (ESAPs), an escalation matrix, and ongoing monitoring and reporting. We have also prioritised sustainable and green finance within our credit portfolio. To drive the ESG agenda, we have established 50 Dedicated Sustainable Finance Help Desks across our key branches, all guided by the Sustainable Finance Unit at our corporate office.

I'm particularly proud of some of our recent sustainable finance projects. For instance, we are financing Dynamic Sun Energy Private Ltd.'s 100 MW solar PV project in Bhabanipur, Hemayetpur, Pubna Sadar. This 20-year project, supported by a power purchase agreement with Bangladesh Power Development and an implementation agreement with the Power Grid Company of Bangladesh, is expected to avoid 93,654 tons of carbon dioxide emissions annually. Projects like this show how finance can directly support renewable energy growth while generating measurable environmental impact.

Looking ahead, I see sustainable finance evolving from a regulatory compliance exercise into a strategic economic pillar over the next five to ten years. The driving forces will be renewable energy targets, climate resilience needs, and SDG financing gaps. Banks must transition from mere lenders to impact partners, leveraging technology for transparency and embedding adaptation finance into national budgeting.

Renewable energy financing, for instance, will need to bridge a $1.5 billion annual funding gap to achieve targets of 20% renewables by 2030 and 30% by 2040. Initiatives like credit guarantee schemes for project developers, green bonds for solar manufacturing, and duty reductions on solar components will become crucial. Climate resilience financing will also grow, focusing on adaptation infrastructure—flood-resistant agriculture, cyclone-resilient housing, and water management—supported by blended finance models and microfinance for climate-adaptive livelihoods. Sustainable MSMEs, particularly those engaged in circular economy initiatives like plastic recycling or jute alternatives, will also receive targeted support. Finally, technologies such as AI and blockchain will increasingly track SDG-related expenditures in real time, improving transparency and accountability.

For businesses and financial institutions just starting their sustainability journey, my advice is practical and phased. Begin with governance: assign accountability and publish a clear sustainability policy. Then build basic ESG screening into your credit processes. Pilot a few bankable projects, such as rooftop solar installations or sustainable supply-chain financing, to develop internal capacity and credibility. Leverage central bank incentives and seek blended finance or technical assistance for larger projects. Finally, measure and report outcomes transparently; using SDG or GRI metrics, or sustainability-linked KPIs, not only attracts investors but also reduces the cost of capital.

Sustainable finance is no longer optional—it is becoming an essential part of Bangladesh's growth story. At UCB, we see it as both a responsibility and an opportunity: to support a resilient economy, foster social inclusion, and actively combat climate change. The journey is challenging, but the impact we can create is profound.