Agribank accelerates greening of banking operations and sustainable development

Sustainable development is the goal of global businesses. According to the commitment at the 2021 United Nations Climate Change Conference (COP26), countries including Vietnam have set a target of net zero emissions by 2050, some economies set a Net Zero target earlier than 2050, but some countries are more cautious about 10-20 years.

According to the reports of countries at the COP27 Conference, Vietnam is one of the countries that has taken quick and timely actions to implement the Net Zero commitment by issuing a green growth policy framework, such as: National Strategy on Green Growth; National Strategy on Climate Change to 2050; Project on tasks and solutions to implement the results of the COP26 Conference; promulgating the Law on Environmental Protection (2020) to create a legal framework to promote economic tools to implement green growth.

As an important financial supply channel for the economy and always a pioneer in all activities, the banking industry also identifies its role and responsibility in "greening" investment capital flows for sustainable development goals. Together with the whole country, the banking industry has been active, proactive and creative towards the goals set by the Government in the National Strategy on Green Growth for the period 2021-2030, with a vision to 2050.

In 2015, the State Bank of Vietnam (SBV) issued Directive No. 03/CT-NHNN on promoting green credit growth and managing environmental and social risks in credit granting activities. Next, SBV issued Decision 1552 promulgating the Action Plan of the Banking Industry to implement the National Strategy on Green Growth to 2020.

The SBV has also oriented the development of green credit for the system through the issuance of many documents such as the Project on developing green banks in Vietnam (according to Decision 1640/QD-NHNN in 2018). Until recently, Circular No. 17/2022/TT-NHNN guiding credit institutions to implement environmental risk management in credit granting activities has officially taken effect from June 1, 2023.

2023 can be said to be the year the banking industry shows its strongest commitment to the green credit sector in particular and the development of Green Banking in general. Many large and small banks have also officially established a Strategic Steering Committee, approved the Green Banking Project, as a basis for the business strategy for the next period.

The latest figures show that in the 2017-2022 period, the system's outstanding credit balance for green sectors had an average growth rate of more than 23% per year. By June 30, 2023, the outstanding green credit balance reached nearly VND530 trillion, accounting for about 4.2% of the total outstanding balance of the entire economy. Among the 12 green sectors that the State Bank of Vietnam has instructed credit institutions to lend, outstanding loans are mainly focused on renewable energy, clean energy (accounting for 45%) and green agriculture (31%).

Recently, many banks such as Agribank continue to promote green credit, while committing to increase capital for environmentally friendly fields, so the green credit balance of Vietnamese banks in the coming time will certainly be higher and continue to increase.

As a leading commercial bank in lending for agricultural and rural development, Agribank is deeply aware of the risks when Vietnam's agriculture is facing a series of challenges from climate change. Therefore, Agribank is determined to take the lead in implementing the State Bank's direction on promoting green credit. With 100% state-owned capital, Agribank is also considered an important "link" in the early days of implementing the banking industry's action plan on green credit.

Accordingly, Agribank has promptly issued documents on promoting green credit growth and managing environmental and social risks in credit granting activities. In the credit process, Agribank's credit handbook always links project appraisal and loan plans with environmental and ecological issues. Projects must have an environmental impact assessment report approved by competent authorities in accordance with the law, resolutely excluding credit granting for projects that are likely to have a large and serious impact on the environment and society, so that Agribank can be more proactive in participating in many projects related to environmental protection sponsored by the World Bank and financial institutions.

Since 2016, Agribank has implemented a preferential credit program to serve "Clean Agriculture" with an unlimited capital scale, initially 50,000 billion VND. From Agribank's capital, many large-scale agricultural production models, applying high technology have been and are being formed in all regions of the country, bringing a new face to Vietnamese agriculture and rural areas, such as flower growing models (Lam Dong), large-scale fields (Can Tho), tra fish (An Giang), pig farming (Ha Nam), sugarcane (Khanh Hoa), corn (Son La) ...

In addition, Agribank also developed a set of ESG policies (Environmental and social risk management policies in credit granting activities; Green finance framework and social finance framework, ESG policies in bank operations, etc.); identified specific goals and developed a short-term and long-term implementation roadmap to create a favorable environment for the development of green credit, green banking and attracting green and sustainable international capital sources; completed the organizational model and functions and tasks of a number of related units in implementing ESG.

Not only that, Agribank actively responded to the Prime Minister's call to plant 1 billion trees in the 2021-2025 period with the message "For a green Vietnam". Through tree planting activities, Agribank has clearly demonstrated its responsibility to the community, social awareness, joining hands and contributing to building the country towards sustainable development, spreading a green lifestyle for a clean and healthy future for future generations.

2023 marks the 35-year development journey, Agribank has implemented many meaningful events and activities to connect internally and the community. The "Agribank - For a Green Future" Run is one of the meaningful highlights that attracts the active participation of a large number of Agribank officers and employees as well as customers and partners across the country. The total number of kilometers of 35,000 athletes participating in the Run has been converted by Agribank to a maximum cost of 35 billion VND in the 2023 social security budget to sponsor community and environmental protection activities with the message "For a Green Future". Across the country, many charity houses, medical equipment, scholarships, social insurance books, health insurance cards, etc. have been handed over by Agribank to families in difficult circumstances, homeless elderly people, and poor but studious students.

In fact, banks will also have activities that directly or indirectly impact the environment. Therefore, Agribank determines that it must be a financial institution with a "green" shift in its business model, in every activity and operation, only then will it be truly green development and have a strong spread to customers and partners. Agribank has invested a lot of resources in digital transformation, focusing on developing products and services on the basis of information technology systems, developing new products and services, bringing the bank closer to the people, especially in rural areas and remote areas. Through that, credit activities have also become "greener" because they reduce paperwork, materials, save travel time for both banks and people, thereby limiting emissions into the environment.

With the goal of greening banking operations, aiming for sustainable development, in the period of 2018 - 2020, green credit balance at Agribank has grown strongly by 350%/year. In the first 6 months of 2023, Agribank's green sector balance continued to grow and equaled the total outstanding balance of this group for the whole year of 2022. Notably, despite the large balance, the number of customers meeting Agribank's green credit standards also accounts for a very high proportion.

In particular, as the leading commercial bank in the "Tam Nong" sector, Agribank has promptly implemented a preferential credit program with a minimum scale of VND 50,000 billion and no limit on capital sources for "clean agricultural" production for public health since 2016 with loan interest rates reduced from 0.5%/year to 1.5%/year. To date, Agribank's lending turnover for clean agriculture and high-tech agriculture has reached over VND 25,000 billion, accounting for 50% of the total investment capital for this sector. Outstanding loans for green sectors of Agribank such as sustainable forestry, renewable energy, clean energy, green agriculture, etc. have also grown steadily over the years.

Aiming to "green" banking activities, Agribank focuses on developing products and services based on information technology systems, proactively applying solutions of the 4.0 industrial revolution to develop new products and services, gradually digitizing banking activities. Up to now, Agribank has provided over 220 banking products and services with many outstanding utilities, fully meeting customers' needs, accelerating the process of cashless payments, contributing to "greening" the banking industry through building environmentally friendly habits for customers in accessing and using banking products and services.

With the key role in providing capital and financial services to the agricultural and rural areas, Agribank is determined to take the lead in implementing the Government's policies and directions on promoting green credit growth, managing environmental and social risks in credit activities, and wishing to build a safe and sustainable agricultural sector.

According to To Quoc newspaper