Agricultural Bank of China

RATING

SECTOR

Financial Services

WEBSITE

CONTACT

No.69, Jianguomen Nei Avenue, Dongcheng District, Beijing, P.R.China, 100005

Tel: (8610) 8510-9619 (Beijing)
Fax: (8610) 8510-8557 (Beijing)
E-mail: ir@abchina.com

 

STOCK EXCHANGE

LISTING

EMPLOYEES

459,000

EXECUTIVE DIRECTOR

Xu Guang Zhang

 

AWARDS

  • Sustainable Financing Framework won “Demonstration Case of Chinese Services” award from the China International Fair for Trade in Services
  • Green Asset Backed Note won “2020 Asset Securitization Mediate Award”
  • Li Haibo, the director of business management, was awarded “the National Innovation Award for Poverty Alleviation” 
  • ESG Gold Award of 2020 by the Hong Kong magazine The Asset
  • 2020 Tianji Award for Best Inclusive Finance Services
  • Best Green Bond Bank from Asiamon

CONTENT SOURCE

FURTHER READING

Report created by Sonria Willis

Agricultural Bank of China

SECTIONS :  Sustainability  •  Targets    Evaluation   •  Key Points •  Overview

 

Company Activity

The Agricultural Bank of China (ABC) is a state-owned commercial bank and one of the “Big Four” banks in the People’s Republic of China. 

The Agricultural Bank of China provides a diverse portfolio of corporate and retail banking products and services for a broad range of customers; it conducts financial market businesses and asset management. The bank’s business scope also includes, among other things, investment banking, fund management, financial leasing and life insurance.

The bank was restructured into a joint stock limited liability company in January 2009, and was listed on both the Shanghai Stock Exchange and the Hong Kong Stock Exchange in July 2010.

ABC has 320 retail customers, 2.7 million corporate clients, and nearly 24,000 branches.

Company Sustainability Activity

The Agricultural Bank of China states in its Corporate Social Responsibility Report that its first priority is to create value for shareholders and provide the best service for customers. However, the bank states that it has made efforts in promoting:

  • Economic transition
  • Reduction of the gap between rural and urban areas
  • Improvement of people’s livelihoods
  • Fostering environment protection
  • Inclusive finance and supporting vulnerable groups

More specifically, for the year 2020, the Chairman of the Strategic Planning and Sustainable Development Committee for ABC, Gu Shu, stated these five goals:

1. Joining Hands to Battle Against COVID-19

The bank discusses the various prevention and control measures it took to prevent the spread of COVID-19. ABC states it issued strict anti-pandemic policies, opened green channels for companies involved in epidemic prevention and control, and helped the regions of Hubei by donating money and goods to the frontline of the epidemic.

2. Shouldering Responsibilities to Fully Reduce Poverty

The bank states the balance of its loans for 832 targeted poverty alleviation schemes reached RMB 1.23 trillion, a 17.6% increase, 3.4 percentage points higher than the bank’s average growth rate. Moreover, the report mentions solid progress in east-west collaborative poverty alleviation. The bank’s “Poverty Alleviation E-Mall” has offered an online sales platform for agricultural products from poverty-stricken areas.

Additionally, the “Golden Dream” college student subsidy program has funded more than 10,000 poor students. At the National Poverty Alleviation Summary and Commendation Conference, three ABC employees and five ABC institutions were awarded honors.

3. Focusing on Sanong Areas to Support Rural Revitalization

The bank states it is fully committed to implementing strategic planning of rural revitalization. For instance, it promoted the “Fruit Loan”, the “Tea Loan”, the “Chinese Medicinal Herb Loan” and other specialty products based on the characteristics of agricultural and rural industries in order to leverage financial resources to help revitalize rural industries. In 2020, these loans grew by more than 20% from the previous year.

4. Practicing Inclusive Finance to Serve People’s Livelihood

The bank emphasizes its commitment to inclusive finance. It gives as an example its “Sannong + Inclusive Finance” and “Small and Micro e-Loan” initiatives. At the end of 2020, its balance of inclusive finance loans for micro and small enterprises reached RMB 961.52 billion, up by 62% from the previous year. The bank also leverages technology to make banking services more accessible to marginalized regions. 

5. Developing Green Finance for a “Beautiful China”

The bank states it consistently adheres to the concept of green and sustainable development and implements the Green Finance Development Plan and relevant ESG requirements.

ABC expresses its continued conviction to increase the grant of green credit and has sped up to innovate green bonds, green funds and improve their green finance capabilities. By the end of 2020, the bank’s balance of green credit was RMB 1.51 trillion ($236 billion US dollars).

ABC’s key financial support is in the following six major green industries: energy conservation and environmental protection; clean production; clean energy; ecological environment; green upgrade of infrastructure; green services.

In 2020, the Board of Directors of the Bank reviewed and passed the proposal of Adjusting the Setting of Special Committees of the Board of Directors, renaming the “Strategic Planning Committee of the Board of Directors” to the “Strategic Planning and Sustainable Development Committee of the Board of Directors”.

Highlights

GREEN CREDIT

Supporting the development of green energy: 

  • Incorp Anhui Branch guided financial resources to weigh toward green industries, increasing credit loans to the clean green energy sector.
  • As of the end of 2020, the branch has scaled up support to nearly 80 clean energy projects with a cumulative amount of RMB 15 billion ($2.35 billion US dollars).

Support for the protection of the Yangtze River:

  • Provided professional financial services for fourteen projects of the Yangtze River Coordinated Protection which amounted to a total credit line of over RMB 10 billion ($ 1.56 billion US dollars).
  • In 2020, the bank won the title of “Excellent Member of the Yangtze River Eco-Environmental Protection Industry Alliance”.

Support for the ecological protection of the Yellow River Basin:

  • Its Ningxia branch focuses on key projects in the ecological protection of the Yellow River Basin, applying for RMB 2 billion ($ 313 million US dollars) for its protection.

Singapore Sustainable Financing Framework:

  • The Singapore branch has innovated the Sustainable Financing Framework for green club loan financing.
  • Issued loans have been evaluated by a third-party independent institution as compliant with the relevant requirements and reporting standards on fund use.
  • The model won the “Demonstration Case of Chinese Services” award from the China International Fair for Trade in Services.

GREEN INVESTMENT BANKING

Green M&As:

  • Supported customers’ mergers and acquisitions in environmental governance, transportation, sewage treatment and other sectors.
  • Approved green M&A loans of nearly RMB 10 billion ($1.56 billion US dollars), a year-on-year increase of nearly 40%.
  • Issued green M&A loans of over RMB 6 billion ($940 million US dollars), a year-on-year increase of over 30%.

Green Bonds:

  • Participating in two green bond offerings with RMB 4 billion raised, and underwriting a share of RMB 2.5 billion among the total amount.
  • Participating in two green financial bond offerings with RMB2 billion raised, and underwriting a share of RMB 275 million. 

Green syndicated loans:

  • Supporting projects in rail transit, sewage treatment, hydropower, wind power and other new energy sectors.
  • Signing syndicated contracts with a total scale of over RMB 60 billion.

Targets

Strengthening policy guidance for green credit:

  • Identifying development goals, key tasks and management requirements for green credit.
  • Granting more loans to green industries.
  • Incorporating the five green credit indicators of efficiency, benefit, environmental protection, resource consumption and social management into the newly formulated or revised industrial credit policies, with green credit indicators included in more than 50 industrial credit policies.

Innovating regional credit products

  • Supporting the Zhejiang Branch in launching the financial service product of “Ecological Restoration Loan”.
  • Supporting the Huzhou Branch in launching the financial service product of “Green Finance Manufacturing Loan”.

Strengthening environmental and social risk management

  • Implementing the requirements of environmental and social risk management in all links of credit business.
  • Taking differentiated measures based on the levels of customers’ potential environmental and social risks.
  • Keeping credit management in industries with overcapacity and heavy pollution.
  • Boosting environmental and social risk screening to forestall relevant risks.

Improving incentive mechanisms

  • Taking multiple measures to guide the green credit business.

Consolidating management foundation

  • Training employees in green credit and investments.
  • Reinforcing the management of green credit data.

Progress

  • In 2020, scaled up support to nearly 80 clean energy projects with a cumulative amount of RMB 15 billion.
  • In 2020, issued two green asset securitized products with a total size of RMB 2.34 billion.
  • Participated in four green bond offerings raising RMB 6 billion.
  • Signed green syndicated contracts with a total scale of over RMB 60 billion.
  • Participated in setting up the National Green Development Fund, co-establishing with RMB 8 billion.
  • Served as the lead underwriter for the issuance of SIENSOL EP GREEN ASSET-BACKED NOTES 2020-1 which won an award.

Certificates

The bank does not hold any relevant sustainability or ESG certificates at the moment.

UN Sustainable Development Goals

UN SDGs Compliance

SDG 1: No Poverty

  • Inputting RMB 52 million to set up a RMB 8 million “Anti-poverty Fund” and a RMB 5 million “Industrial Poverty Alleviation Development Fund for Rural Revitalization” in each county. 
  • Directly purchased RMB 390 million and helped sell RMB 2.49 billion of agricultural products during COVID-19.

SDG 2: Zero Hunger

  • Inputting RMB 14.06 million of aid funds for food to the rural poor.

SDG 3: Good Health and Well-being

  • Donated 1.47 million pieces of anti-epidemic goods such as masks and protective suits to the Hubei region.
  • Offering exclusive insurance free of charge for 465,000 anti-epidemic workers fighting on the frontline.
  • Launched the “Online Fever Consulting System”.

SDG 4: Quality Education

  • Offering commercial student loans: the “College Student Card”, and the “Overseas Study Kit”.

SDG 8: Decent Work and Economic Growth

  • Mobilized a wide range of leading agricultural enterprises among its customers nationwide to establish stable production and marketing connections with the agricultural product production bases and planters in poverty-stricken areas.
  • Eased the payment limits on the interbank transfer of its corporate online banking and the business restrictions on its micro-payment system during COVID-19.

SDG 9: Industry, Innovation and Infrastructure

  • Underwrote China’s first epidemic prevention and control bond offered by an enterprise engaging in the business of agricultural product wholesale markets.

SDG 11: Sustainable Cities and Communities

  • Launched “Huinonge-Loan”, an Internet financing product enabling online application, approval, issuance, and repayment of farmer loans.

SDG 13: Climate Action

  • Implemented schemes to process 1.64 million tons of garbage in seven cities, generating 460 million kilowatt-hours of on-grid electricity from green energy.
  • Support for the Protection of the Mother River, the Yangtze River.
  • Support for Ecological Protection of Yellow River Basin.

Evaluation

The Agricultural Bank of China states its commitment to the UN SDGs and Paris Agreement by setting goals that align with the SDGs. However, when referenced throughout their 2020 report, it is unclear whether the bank has met these goals or is just listing what it plans to achieve. 

The bank has notably increased green finance schemes by funding and financing green energy projects and environmental protection programs. However, it fails to mention any internal implementations to improve sustainable practices in its operations.

The Bank has received several ESG and sustainability awards; however, all of the awards have been given by Chinese institutions which puts the validity of these in question due to the bank’s ties with the Chinese government. The report does not mention any notable labels or certifications and the Agricultural Bank of China did not make any recognized sustainability listings.

This report gives the Agricultural Bank of China a C.

Analyst Outlook: Negative

Though the bank’s initiatives stated in its report align with the Paris Agreement and the UN’s Sustainable Development Goals, ABC has not used these platforms as inspiration to draw red lines about what it won’t finance such as fossil fuels.

Indeed, the Bank has few to no policy provisions regarding investment in fossil fuels. In 2019, it invested nearly $50 billion in fossil fuels, $4 billion in coal alone.

Key Points

  • Aligns goals with UN SDGs, but lacks specific targets for each goal.
  • Environmental targets are not entirely clear or measurable.
  • Committed to a number of poverty alleviation and social impact projects.
  • Working to improve social and environmental risk assessments.
  • Received several ESG and sustainability awards but most of them were given by Chinese institutions (the bank has strong ties with the Chinese government).
  • The Bank has few to no policy provisions regarding investment in fossil fuels.
    • In 2019, it invested nearly $50 billion in fossil fuels, $4 billion in coal alone.
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