Agribank Elevating Sustainability through Green Banking

In pursuit of an economy characterized by environmental consciousness, circular practices, and overall eco-friendliness, Agribank has seamlessly integrated a robust green development strategy within its overarching development framework.

Customers enjoy elevated service experiences of Agribank Digital Bank

Given that nearly 70% of Agribank's outstanding loans are dedicated to rural development and agriculture, the imperative of cultivating green credit assumes paramount significance. Agribank is presently executing seven policy credit and lending programs aligned with two national target programs specifically focused on rural agriculture. Significantly, Agribank consistently emphasizes channeling credit toward green projects. The intentional development of green initiatives stands out as a pivotal link in the broader chain of sustainable development and emissions reduction.

Agribank continually refines its mechanisms and processes, implementing innovative approaches such as mobilizing lending teams and leveraging mobile vehicles for streamlined access to green financial systems. Agribank's pioneering initiative of mobile transaction points, approved by the State Bank of Vietnam (SBV), exemplifies its dedication to extending financial capital to remote areas. Agribank has meticulously crafted a set of Environmental, Social, and Corporate Governance (ESG) policies. These policies encompass environmental and social risk management in credit granting, a green financing framework, and a social financing framework. It has defined specific goals and orchestrated a comprehensive short- and long-term action roadmap. This foresight aims to cultivate an enabling environment for the development of green credit, green banking, and the attraction of international capital sources committed to sustainability.

At the forefront of global environmental stewardship, Agribank actively takes part in initiatives sponsored by the World Bank and other financial institutions

Agribank prioritizes the provision of capital and financial services for agricultural and rural development, as well as for farmers. It aims to maintain the proportion of outstanding loans for agriculture and rural development at 65-70% of the total outstanding loans. Agribank is actively researching and deploying green credit products. It is introducing preferential policies and encouraging lending to projects and business plans that are effective and environmentally friendly. These initiatives align with Agribank’s business orientations, customer segments, target markets, and its capabilities and strengths.

Agribank has identified the application of ESG standards as a paramount objective in its development strategy for 2023-2025. To this end, Agribank has taken the significant step of establishing a steering committee and a working group. These entities are tasked with the development of a comprehensive ESG implementation project that will span both short-term and long-term objectives at Agribank. The formation of these units, which are staffed by senior personnel, underscored Agribank’s commitment to the consistent and effective application of ESG standards across all facets of the Agribank system.

For several years, Agribank has been an active participant in numerous environmental protection initiatives funded by the World Bank and other financial institutions. These include the Quality and Safety Enhancement of Agricultural Products and Biogas Development Project, the Coastal Resources for Sustainable Development Project, the Natural Disaster Risk Management Project, the Low Carbon Agriculture Support Project, the Red River Delta Rural Water Supply and Sanitation Project, and the Wind Power Project. Additionally, Agribank has been combating drought and saltwater intrusion in the Mekong Delta and Central Highlands provinces. Since 2016, Agribank has implemented a preferential credit program, committing a minimum of VND50 trillion, with no capital source restrictions, to support clean agricultural production for public health. This program offers a concessional interest rate ranging from 0.5-1.5% per annum.

Pioneering green finance, Agribank steadfastly directs credit toward environmentally conscious projects, underscoring its commitment to the integral nexus of sustainable development and emissions reduction

Between 2018 and 2020, the balance of green credit experienced a rapid growth of up to 350% annually. However, due to macroeconomic factors such as the COVID-19 pandemic, escalating tensions between Russia, Ukraine and Western countries, and economic recessions in major global economies, Vietnam’s economy was impacted, leading to a slight decrease in outstanding loans. Despite this, the value of loans and customer growth remained relatively stable. In the first half of 2023, Agribank’s outstanding loans grew at the same rate as in 2022. Despite the large volume of outstanding loans, the number of customers meeting Agribank’s green credit standards remained the highest, with approximately 43,000 customers. Agribank has particularly focused on expanding green credit balances for sectors such as forestry, renewable energy, clean energy and green agriculture.

Agribank is committed to bringing financial and credit services to individuals in rural agricultural areas. To achieve this, the bank continually refines its lending processes and methods, ensuring convenient transactions for its customers. This strategy positions Agribank as a crucial link in the agricultural production chain, aiding in the creation of high-quality, commercially valuable agricultural products.

In pursuit of 'green' banking excellence, Agribank harnesses the power of information technology, leveraging 4.0 industrial revolution solutions to shape and advance innovative products and services

Internally, Agribank is dedicated to enhancing mechanisms and policies that stimulate the growth of green credit and manage environmental and social risks associated with credit lending. The bank has issued guidelines on promoting green credit growth and managing environmental risks in credit lending.

In its credit operations, Agribank’s handbook consistently integrates project appraisal and loan plans with environmental considerations. A project must have an Environmental Impact Assessment (EIA) report approved by the relevant legal authorities. Agribank firmly declines to provide credit for projects that pose significant potential impacts on the environment and society.

In its pursuit of “greening” banking operations, Agribank places a strong emphasis on the development of products and services powered by information technology. The bank actively employs solutions from Technology 4.0 to create new offerings and progressively digitize banking operations. Currently, Agribank offers over 220 banking products and services, each with unique features designed to meet a wide range of customer needs. The bank is accelerating the transition to non-cash payments and promoting environmentally friendly habits among customers in their use of banking products and services.

As a key provider of capital and financial services to agricultural and rural areas, Agribank is committed to leading the implementation of the Government’s policies and directives on promoting green credit growth and managing environmental and social risks in credit lending. This aligns with the bank’s aspiration to foster a safe and sustainable agricultural sector.

, Vietnam Business Forum