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RAM Sustainability assigns environmental and social benefit ratings to Agrobank’s Sustainable Sukuk

Published on 12 Aug 2021.

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RAM Sustainability Sdn Bhd (RAM Sustainability) has assigned Environmental Benefit (EB) ratings to the Sustainable Sukuk to be issued under Bank Pertanian Malaysia Berhad’s (commercially known as Agrobank or the Issuer) RM1 billion Sukuk Murabahah and Wakalah programme. Three green solutions within Agrobank’s Sustainable Sukuk Framework (the Framework) – (1) sustainable water and wastewater management; (2) environmentally sustainable management of living natural resources & land use; (3) terrestrial and aquatic biodiversity conservation – have been assigned EB ratings. We have also assigned Social Benefit (SB) ratings to social solutions under the Framework.

The green solutions have been assigned Tier-2 EB ratings on account of their alignment with the goals of a low-carbon future along with some demonstrable environmental benefits. The Issuer’s food security category has been assigned a Tier-2 SB rating to reflect Agrobank’s core business activity and its strategic role as a development financial institution with the mandate to develop the country’s agricultural industry. Other social solutions, i.e. affordable basic infrastructure; employment generation via Small and Medium Enterprises; and access to essential services have been assigned Tier-3 SB ratings, recognising the importance of these socio-economic agendas, although the expected social benefits may be small given the relative size of Agrobank’s financing compared to other commercial banks in Malaysia.

“As 24% of total global greenhouse gas (GHG) emissions come from the agriculture, forestry and other land use sector, it is crucial to support projects that help reduce GHG emissions going forward through the Issuer’s Sustainable Sukuk, which will not only benefit the environment but society as well,” said Gladys Chua, RAM Sustainability’s head of sustainability services.

RAM Sustainability’s second opinion on the Framework concludes that it outlines key aspects such as the intended use of proceeds, project evaluation and selection, management of proceeds and reporting commitments. The Framework is aligned with the transparency and disclosure requirements of Securities Commission Malaysia’s Sustainable & Responsible Investment (SRI) Sukuk Framework, the ASEAN Green Bond Standards, the ASEAN Social Bond Standards, the ASEAN Sustainability Bond Standards and the globally recognised Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines. In our view, Agrobank’s Proposed Sustainable Sukuk will create a positive environmental and social impact by financing projects and solutions that are essential for a sustainable future.    

 

About RAM Sustainability Sdn Bhd

RAM Sustainability is a provider of sustainability services and environment, social and governance (ESG) analytics. Incorporated on 31 May 2000, RAM Sustainability is a wholly owned subsidiary of RAM Holdings Berhad (RAM Group). RAM Sustainability is the first ASEAN-based provider of sustainability ratings and second opinions, and has the distinction of being the first Registered Observer of the International Capital Market Associations’ (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines in ASEAN. It is also a member of both ICMA’s 2019/2020 New Markets Taskforce and 2020/2021 Advisory Council to the GBP and SBP Executive Committee. On 12 August 2020, RAM Sustainability became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme after having been awarded the status by the Climate Bonds Standards Board. For further details, please refer to https://www.ram.com.my/sustainability

 

Analytical contact
Syafi Sani
(603) 3385 2549
syafi@ram.com.my

 

Published by RAM Sustainability Sdn Bhd

© Copyright 2021 by RAM Sustainability Sdn Bhd



Publication Date Published Category
Bank Pertanian Malaysia Berhad (Agrobank) Sustainable Sukuk 12-Aug-2021 Green Bond/Second Opinion Report View PDF

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