Sustainable finance: From compliance to opportunity

For years, sustainable finance in Bangladesh has been treated as a box-ticking exercise. Banks lent to green projects because the central bank told them to. Corporations publish sustainability reports to keep investors happy. The aim was to comply, not to compete.

That era is ending. Around the world, sustainability is no longer a moral add-on — it is a core strategy. The World Bank poured a record $42 billion into climate finance last year. Global banks now issue green bonds and structure loans that reward companies for cutting emissions. Finance is following a simple logic: climate risk is economic risk, and green investment is smart business.

Bangladesh cannot afford to fall behind. Few countries face climate threats as directly as we do. Rising seas, salinity, cyclones, and floods are already battering lives and livelihoods. But Bangladesh also has a head start. Bangladesh Bank introduced green banking guidelines back in 2009. 

By 2022, more than $12 billion had been mobilised under sustainable finance, with over a billion invested in renewable energy, waste management, and cleaner manufacturing. These are not symbolic gestures — they are proof that finance can build resilience.

The challenge now is scale. Compliance targets and annual disclosures are no longer enough. Our financial system must become a driver of innovation, resilience, and opportunity.

Encouraging signs are visible. The country's first sustainability-linked loan ties a leading conglomerate's financing to its environmental performance. The first green sukuk raised funds for solar energy, blending Islamic finance with climate ambition. IDCOL has already financed millions of solar home systems, transforming rural energy access. These examples show what happens when finance is seen as an opportunity rather than an obligation.

But gaps remain wide. Sustainable finance is still dominated by large corporations. Small and medium enterprises, women entrepreneurs, and rural households — the very groups most exposed to climate shocks — struggle to access green money. This is where innovation is needed most. Digital lending platforms, micro green bonds, and blended finance that lowers risks for lenders could bring green finance to those on the front lines of climate change.

Carbon markets are another untapped tool. Bangladesh has generated millions of carbon credits, but monetised only a fraction. With stronger monitoring and transparent governance, carbon trading could funnel new resources into adaptation and mitigation projects. The emerging Green and Resilient Debt Platform could also help attract global investors — but only if we ensure credibility and clear standards.

Coordination is key. Bangladesh Bank, the securities regulator, infrastructure financiers, and ministries must align taxonomies, disclosure rules, and enforcement. Without a common framework, the risk of greenwashing will grow and investor confidence will fade. Equally important is capacity: banks and corporations need the skills to assess climate risk and design financial products that deliver both returns and resilience.

The real shift, however, is in mindset. If sustainability is treated as a mandate, institutions will aim for the bare minimum. If it is embraced as an opportunity, they will innovate and compete. 

For Bangladesh, the choice could not be clearer. A compliance mindset may help us tick today's boxes, but it will not prepare us for tomorrow's climate shocks. An opportunity mindset can unlock investment, protect communities, and position the country as a leader in green finance.

Bangladesh has already shown it can lead. It built one of the most active sustainable finance frameworks in the developing world. Now the task is to use that framework not defensively, but strategically. Sustainable finance must be more than a requirement — it must be the engine of our economic future.

For a nation on the front lines of climate change, the stakes are existential. Moving from compliance to opportunity is not optional. It is the only path to resilience, competitiveness and prosperity

Shahidul Alam Swapan, Switzerland-based Private Banking Financial Crime Specialist, Columnist, and Poet

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.