A Green Banking for Sustainable Development in Sharia Banking
Heri Setiawan
1
, Desi Erawati
1
, Akhmad Dakhoir
1
, and Luqman Luqman
2
1
Institut Agama Islam Negeri Palangka Raya, Kota Palangka Raya, Central Kalimantan, Indonesia
2
Institut Agama Islam Negeri Pontianak, Jl. Letjend. Soeprapto No. 19, West Kalimantan, Indonesia.
Keywords: Green Banking, Sustainable, Development, Islamic Banking.
Abstract: Green banking is a policy for protecting the environment. This study attempts to examine the implementation
of green banking in sharia banks. This research used qualitative descriptive method. The data acquired through
observation and interviews to the leader and employees of sharia banks. The results of this research showed
that sharia has applied the concept of green products, green loan, green card, and green portfolio so that the
application of green banking in sharia banking can make energy savings and others costs.
1 INTRODUCTION
Green Banking for sustainable development in the
banking world is one of the banking policies in
addressing global climate change issues. Issues of
climate change, natural disasters, and global warming
continue to be discourse and considered as a result of
the lack of public awareness of the environment. This
discourse is the concern of various circles including
economic actors that led to the discourse of Green
Banking in various countries including Indonesia.
The concept of Green Banking is a long-term
business strategy that aims to profit, but it implies the
benefits of empowerment and environmental
conservation in a sustainable manner. According to
the World Bank, Green Banking is a financial
institution that gives priority to sustainability in its
business practices (World Bank, 2010). The principle
of sustainable development ensures that development
must balance between the economy, social life, and
environmental conservation (profit, people, planet).
The agreement on Green Banking is in line with the
strategic decision of the international Climate Change
meeting in Cancun, Mexico.
Green banking has been widely implemented in
several developed and developing countries. Green
Banking is inseparable from the term green business,
according to Glen Croston, a green business is a
profitable business concept because it can provide
profits and scale economies that are very useful for
overall business continuity. In banking context,
especially green business is perceived by the
distribution of environmentally friendly credit or
known as green credit (green lending or green
banking). Green credit can be interpreted as a loan
from a financial institution to a debtor that engaged in
a business sector that has no impact on the
deterioration of environmental quality or social
condition in society (Glen Croston, 2009).
Ginovsky (2009) states that to support green
banking, bank must launch banking products that
promote sustainable practices and need to restructure
their back office operations in order to implement
environmentally friendly practices. There are two
suggested strategies for banks to follow: (1) the use
of paperless banking which results in carbon emission
reductions from internal banking operations and cost
savings, and (2) adoption of Green Street loans,
which means offering low interest rates to consumers
and businesses to use solar energy systems and
energy-saving equipment.
There are several studies that have been done
related to the application of green banking. Among
them are S.M. Mahfuzur Rahman and Suborna Barua
who conduct research on 42 banks in Bangladesh, the
result of the application showed that the concept of
green banking is not fully implemented. This research
explains that the performance of governmental bank
is much worse than the private and foreign banks
(S.M. Mahfuzur Rahman & Suborna Barua, 2016).
Rahman and Barua's research is very clear
describing the performance of banking in
Bangladesh, it just does not show how the
performance of Islamic banking there which in the
Islamic banking operations refers to the foundation of
Islamic values that sided to the environment.
82
Setiawan, H., Erawati, D., Dakhoir, A. and Luqman, L.
A Green Banking for Sustainable Development in Sharia Banking.
In Proceedings of the Annual Conference on Social Sciences and Humanities (ANCOSH 2018) - Revitalization of Local Wisdom in Global and Competitive Era, pages 82-86
ISBN: 978-989-758-343-8
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Likewise, Neetu Sharma et al in their article
entitled "A study on customer's awareness on Green
Banking initiatives in selected public and private
sector banks with special reference" reveals that this
green banking concept policy has been applied in
India, the society also welcomed this policy. Sharma
revealed that in its findings, foreign banks are paying
more attention to the implementation of green
banking than domestic banks because the paradigm of
foreign banks is better for the sustainability of their
business (Neetu Sharma, p. 28-35).
Implementation of green banking in India is very
vigorous. It is not only on the savings of paper and
natural energy resources that are not renewable, but
banks in India also have tried to use solar energy for
ATMs. Yet, technological advancements that
encourage the implementation of green banking
should be followed by skilled human resource
resulting in a balance between the needs of green
banking concept implementation and human resource
capability, as revealed in a study conducted by Deepti
Narang (Deepti Narang, 2015).
Different studies related to green banking were
conducted by Shaumya revealed that green banking
has an effect on the performance of banks in Sri
Lanka. Quantitative research by using regression
analysis proves that the better implementation of
green banking, the better the performance of the bank.
This means that the bank is able to contribute
positively to its environment (Shaumya, 2017).
From previous research, it was suggested that the
implementation of green banking has been
implemented in several countries. Similarly,
Indonesia encouraged the implementation of this
green banking. Therefore, banks in Indonesia began
to apply this green banking concept. This study
attempts to examine how the application of green
banking in the framework of sustainable development
is based on sharia. Why sharia banks are an option?
The first, Indonesia embraced dual banking system
which means there is conventional banking that
operates in general and there is also sharia banking
that operates based on Islamic values. Both banks
have different characteristics. Secondly, Islamic
banks (Islamic banking) based on Islamic values, in
Islamic values themselves environmental issues are
getting attention. Therefore, the concept of green
banking is indirectly part of Islamic values in which
the environment is a concern. This study wanted to
see how far the application of green banking is
applied then how the impact on the sustainable
development of Islamic banks.
2 RESEARCH METHODS
This research was a field research conducted in 2017.
It used descriptive method with qualitative approach.
The process of data collection was done by
observation, in-depth interview, and documentation.
The observation conducted at PT. Bank Syariah X
Kota Palangka Raya, Central Kalimantan.
Meanwhile, the interview conducted to all subjects
related in this research that is employees of Bank
Syariah X which amounted to 24 people. The model
of analysis in this study was using Miles and
Huberman analysis.
3 RESULT AND DISCUSSION
The concept of green banking which part of the green
economy is in line with sharia economy in sustainable
development that balances economic efficiency,
equitable income, and environmental conservation.
The research looks at three green banking
implementations: implementation of service units,
operational units, and financial units.
3.1 Implementation of Green Banking
toward Service Unit
Based on the results of interviews with several
employees of PT. Bank Syariah X namely RAS and
DET, the implementation of green banking in
customer service activities in PT. Bank Syariah X is
an e-channel facility in the form of SMS banking,
mobile banking, and internet banking. Customer
transaction activity can be done anytime and
anywhere. By the existence of e-channel in PT. Bank
Syariah X, the electronic transaction activities
facilitate customers and indirectly reduce the use of
paper transactions in branch office services.
Implementation of green banking in PT. Bank
Syariah X will directly increase bank profit. The bank
profit is derived from the efficiency of paper and
energy that used such as electricity and air
conditioning (AC).
3.2 Implementation of Green Banking
toward Operational Unit
Paperless efficiency has been done in PT. Bank
Syariah X. The use of paper for bank internal
activities shall be conducted in the following manner:
A Green Banking for Sustainable Development in Sharia Banking
83

1. Use frosted paper for making memos and data for
internal purposes.
2. Use two-sided paper back and forth.
3. Use paper only for some work (paperless),
inputting customer data, online system for
verification process of financing
PT. Bank Syariah X does energy savings in the
following manner:
1. Turn off the AC in the unused room.
2. Turn off the workspace AC during break time and
pray
3. Turn off the computer when not in use.
The employee of PT. Bank Syariah X in
implementing green banking is good, although there
are still some employees who have not been
consistent. As far as it concerned, employees do paper
and energy efficiency because the embodiment of it
is one of the mission of PT. Bank Syariah X to
concern toward environmental sustainability.
3.3 Implementation of Green Banking
toward Financial Unit
In the implementation of green banking toward
financial unit, the sharia bank Syariah X provides
financing facilities to the large commercial customers
with attention to the Environmental Impact Analysis
(AMDAL). For the financing of micro small and
medium enterprises (UMKM), then PT. Bank Syariah
X has set one of its financing requirements with the
building permit (IMB). Related to this financing, PT.
Bank Syariah X shall continue to observe the
prevailing laws and regulations in Indonesia and
Bank Indonesia regulations.
From field observation shown in table 1, the
achievement has been done at Bank Syariah X. The
achievement on product criteria has been
implemented in green banking which is green
product, green loan, green card, and green portfolio.
Talking about the criteria of corporate governance,
green employers have been employed by PT. Bank
Syariah X, but there are still some employees who
have not been consistently implementing it. Green
operational has been done through online application
system, inputting online financing process, and not
using full paper, paperless in transactions by teller
and CS, as well as green business process in
verification of providing financing facility.
Meanwhile, the criteria of environmental and
community, PT. Bank Syariah X has done energy
saving by using energy as needed. Less emission
criteria are done by reducing the use of air
conditioning (AC) in the employee's office, but not in
the banking hall.
Table 1: Achievement Criterion of Green Banking PT.
Bank Syariah X.
Criterion
Achieveme
nt
Green
Company
& Green
Banking
Corpora
te
Governa
nce
Green
employee
√
Green
Building
x
Green
Operational
√
Green
Sustainability
Performance
√
Green
Business
Process
√
Green
Banking
Product
Green Product
√
Green Loan
√
Green Credit
Card
√
Green
Portfolio
(Retail/Consu
mer/Corporate
Banking)
√
Green
Company
Environ
ment
and
Commu
nity
Corporate
Social
Responsibility
√
Less Emission
√
Use
Renewable
Energy
x
Energy Saving
√
3.4 Discussion
In line with the rapid growth of banking activities in
Indonesia, which is marked by the continuous
increase in the value of banking assets and financing
disbursed, as a result that economic activity is running
as it is. Through this economic activity, the financing
that provided by banks, it makes environmental
degradation. One of the environmental concerns that
concern the world today is the soaring CO
2
emissions.
This emission is considered as the main cause of
drastic world climate change. Up to now, national
energy supplies are still dependent on conventional
energy sources, such as petroleum, natural gas, and
coal. The dominance of these three conventional
energy sources reached more than 90 percent. Then,
in terms of consumption, more than two-thirds of the
national fuel supply (BBM) is allocated for
transportation needs. Similarly, the national industry,
which still relies on conventional energy, such as fuel
and coal. Such patterns of production, in addition to
ANCOSH 2018 - Annual Conference on Social Sciences and Humanities
84

boost economic growth, also led to an increase in CO
2
emissions.
The increasing CO
2
emission is not the only
environmental problem facing Indonesia and other
countries. Especially in Indonesia, the contribution of
pollution from other production activities is huge. For
example, the destruction of ecosystems due to
massive mining activities, the decrease of carbon
absorption due to uncontrolled deforestation, and the
decline of river and coastal quality due to disposal of
B
3
(Setyo, 2014, p. 18).
As the results in the field, Bank Syariah X is not
perfect yet, but the implementation of green banking
is good. It shows the commitment of the banking role
seeks to improve the management of the environment
in Indonesia (Djafar Al Bram, 2011).
PT. Bank Syariah X stated that banks need to be
oriented towards green banking as one of the efforts
to support environmental sustainability. This is
reinforced by interviews with one of the employees
of MSA, reduction of AC usage and paperless. The
banking business actually has no direct link with the
environment, however Bank Indonesia with various
regulations and regulations issued can encourage the
increasing role of banks in improving the quality of
environmental management (Makarim, 2004).
Although there are still many problems that must
be anticipated, the existence of green banking in
Indonesia is related to two main reasons are: First,
green banking supports sustainability development. It
is impossible if the concept of sustainable
development is not fully supported by the related
parties. Bank has a central position between the
surplus parties and those who need the funds. Thus,
banks have a 'bargaining position' and a strategic role
to educate and encourage society to participate in the
success of sustainable development. Second, green
banking has potential business. Bank is expected to
make a profit, so it should be able to anticipate the
potential of new business that will emerge. The
existence of a 'green' lifestyle will have a multiplier
effect on the growing demand for environmentally
friendly products as a potential new business (Djafar
Al Bram, 2011, p.40).
Related to the lack of green banking
implementation, this is in line with Rofikoh Rokhim’s
statement that only a small number of companies in
Indonesia that apply green business in the model, and
even it is not optimal. Likewise, it is also in line with
the results of the Asian Corporate Governance
Association (ACGA) survey (Rokhim, 2010).
4 CONCLUSIONS
This study illustrates that the implementation of green
banking in sharia banks is not only driven by the
Indonesian government policy, the application of
green banking is also in accordance with Islamic
values which become the basic philosophy and rules
of sharia banking. The impact of the implementation
of green banking is a good environment and able to
save energy and other operational costs. This is a
form of sustainable development that includes three
pillars of economic (profit), environment (planet) and
social (people).
ACKNOWLEDGEMENTS
The writer is thankful to the Postgraduate Director of
State Islamic Institute of Palangka Raya and the
advisors so that the results of this study can be
completed on time. Further thanks to PT Bank BNI
Syariah Palangka Raya, Central Kalimantan for
helping to be a research location and giving the
provided information which very useful for this
research.
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