Green Finance in the Global South: A Case Study of Bangladesh

The Global South suffers the most from global warming, deteriorating air quality, and so on. But it fails to put the green agenda on the table in a timely fashion. For instance, some South Asian economies attempted to address it in the early 2000s; however, due to governance and institutional failures, the greening agendas slumped. According to the Air Quality Life Index 2023, Bangladesh has the most polluted air in the world. It found that the air in Bangladesh had an average PM 2.5 level of 74 micrograms per cubic meter. Unplanned construction and transport pollution contribute more to making the situation worse. In this chapter, we investigate Bangladesh as a case study, which failed to capture the momentum of green finance. The country started to implement a green finance agenda in 2010, establishing a special fund funded by donor agencies, and the central bank provided policy guidelines for green finance in 2011. However, it seems that the poor capacity of banks and financial institutions to manage green projects, as well as the institutional failure of the central bank to monitor and lead the agendas, could be mentioned as prime reasons for the country’s slow growth of green finance. Our institutional analysis shows that the central bank requires more independence to make decisions on the green finance agenda. We note that the central bank’s independence is important for implementing green finance agendas in emerging economies; Bangladesh could be cited as an example.

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