Alignment of banking sector towards a sustainable economy : the case of Bangladesh

Abstract

This thesis seeks to develop a sustainable banking business model that addresses the funding gap in achieving the Sustainable Development Goals (SDGs) by aligning with the challenges of sustainable development. It commences by identifying key limitations within the prevailing profit-centric sustainable banking model, specifically its lack of objectivity, significance, and efficacy in advancing the SDG implementation. To redress these deficiencies, the thesis introduces an impact-optimizing model, with a focus on augmenting sustainability contributions by banks in various aspects of impacts. Additionally, it adopts a Theory of Change initially proposed by Weiss (1972) and later popularized by Patton (1980) as a qualitative evaluation method for development programs, in order to establish a transparent link between sustainable banking interventions and desired outcomes. This research also entails the development of a multifaceted application framework encompassing planning, implementation, monitoring, and evaluation components to facilitate the practical application of the proposed model. Ultimately, the thesis culminates in the creation of tailored sustainable banking plans for relevant SDGs, accompanied by the formulation of objectively verifiable indicators and an assessment index, serving as a comprehensive test for the proposed model and its associated application framework. Methodologically, existing materials are reviewed, summarized, and analyzed to develop the proposed model and formulate the theory of change. Fundamental tools such as the log frame matrix, theory of action, and theory of change are utilized to devise planning, implementation, monitoring, and evaluation components. Statistical tools are applied alongside the application framework to formulate sustainable banking plans, establish objectively verifiable indicators, and calculate assessment indices for relevant SDGs for a sample bank in Bangladesh. The findings of this study can be categorized into four: first, the development of an impact-optimizing model incorporating strategies to optimize sustainability impact within different components of the Business Model Canvas (BMC); second, the selection of actionable themes from 11 relevant SDGs and the alignment of bank practices with these themes; third, the identification and categorization of objectively verifiable indicators into a triple-bottom-line framework; and fourth, the calculation of an overall composite index to evaluate sustainable banking performance in contributing to SDG implementation. This study guides the bank’s aligning micro-level sustainability efforts with macro-level sustainability themes derived from global goals. The significant contribution of this study lies in providing guidance on aligning existing banks’ micro-level sustainability efforts to address funding gaps in achieving macro-level sustainability themes derived from global sustainability goals